UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended...............March 31, 1997
OR
( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
Commission file number 0-27206
SPACEHAB, Incorporated
1595 Spring Hill Road
Suite 360
Vienna, Virginia 22182
(703) 821-3000
Incorporated in the State of I.R.S. Employer
Washington
Identification
No. 91-1273737
The number of shares of Common Stock outstanding as of the close of business on
May 06, 1997:
Class Number of Shares Outstanding
Common Stock 11,146,237
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------ ------
<PAGE>
SPACEHAB, INCORPORATED
MARCH 31, 1997 QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART 1 FINANCIAL INFORMATION Page
Item 1. Unaudited Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 1996 and March 31, 1997 3
Condensed Consolidated Statements of Operations for
the Three and Nine months ended March 31, 1996 and 1997 4
Condensed Consolidated Statements of Cash Flows for the
Nine months ended March 31, 1996 and 1997 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II - Other Information
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
PART 1: FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SPACEHAB, INCORPORATED AND SUBSIDIARY
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, March 31,
1996 1997
(audited) (unaudited)
------------- --------------
ASSETS
<S> <C> <C>
Cash and Cash Equivalents ...................... $ 50,795,548 $ 24,299,651
Receivables .................................... 5,445,765 5,103,684
Prepaid and other current assets ............... 184,660 914,775
------------- -------------
Total current assets ...................... 56,425,973 30,318,110
Property, plant and equipment, net of
accumulated depreciation and amortization
of $27,987,042 and $35,407,592 ................ 70,490,451 87,094,680
Deferred mission costs ......................... 2,705,422 2,093,678
Other assets, net .............................. 86,769 3,589,221
------------- -------------
Total assets .............................. $ 129,708,615 $ 123,095,689
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Loan payable under credit agreement,
current portion ........................... $ 2,500,000 $ 500,000
Accounts payable and accrued expenses ..... 3,270,882 2,628,145
Accrued consulting and subcontracting
services .................................. 4,712,733 7,605,365
Deposits and other liabilities ............ -- 707,061
------------- -------------
Total current liabilities ............ 10,483,615 11,440,571
Loan payable under credit agreement, net of
current portion ................................ 6,179,062 1,500,000
Notes payable to shareholder ................... 9,968,503 10,896,001
Convertible note payable ....................... 1,170,338 --
Deferred flight revenue ........................ 30,311,227 16,001,631
------------- -------------
Total liabilities .................... 58,112,745 39,338,203
Commitments
Stockholders' equity
Common stock, no par value, authorized
30,000,000 shares, issued and outstanding
11,069,237 and 11,146,237 shares,
respectively ............................ 79,862,700 81,057,164
Additional paid-in capital ................ 16,299 16,299
Accumulated equity (deficit) .............. (8,283,129) 2,184,023
------------- -------------
Total stockholders' equity ........... 71,595,870 83,257,486
============= =============
Total liabilities and stockholders'
equity ............................. $ 129,708,615 $ 123,095,689
============= =============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
SPACEHAB, INCORPORATED AND SUBSIDIARY
Unaudited Condensed
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
---------------------------- ----------------------------
1996 1997 1996 1997
------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Revenue ............................ $ -- $ 15,031,345 $ -- $ 38,136,763
Costs of revenue:
Integration and operations ...... 2,544,590 5,804,721 8,024,932 14,777,180
Depreciation .................... 2,064,104 2,376,139 6,192,312 7,128,416
Insurance and other ............. -- 136,801 -- 243,051
------------ ------------ ------------ ------------
Total costs of revenue ....... 4,608,694 8,317,661 14,217,244 22,148,647
Gross profit (loss) ................ (4,608,694) 6,713,684 (14,217,244) 15,988,116
Operating expenses:
Marketing, general and .......... 1,848,950 2,663,375 4,001,286 6,543,551
administrative
Research and development ........ -- 136,776 100,000 451,340
------------ ------------ ------------ ------------
Total operating expenses ..... 1,848,950 2,800,151 4,101,286 6,994,891
------------ ------------ ------------ ------------
Income (loss) from operations (6,457,644) 3,913,533 (18,318,530) 8,993,225
Interest expense, net of capitalized
amounts .......................... 75,701 187,201 778,439 865,518
Interest and other income .......... (511,598) (375,501) (590,519) (1,190,075)
Other expense ...................... -- -- 52,599 --
------------ ------------ ------------ ------------
Income (loss) before income .. (6,021,747) 4,101,833 (18,559,049) 9,317,782
taxes
Income tax expense ................. -- 894,659 15,664 2,124,659
------------ ------------ ------------ ------------
Income (loss) before
extraordinary item ......... (6,021,747) 3,207,174 (18,574,713) 7,193,123
Extraordinary item - gain on early
retirement of debt, net of taxes
and legal fees .................... -- -- -- 3,274,029
------------ ------------ ------------ ------------
Net income (loss) ............ $ (6,021,747) $ 3,207,174 $(18,574,713) $ 10,467,152
============ ============ ============ ============
Net income (loss) per common and common equivalent share:
Income (loss) before extraordinary
item ........................... $ (0.55) $ 0.29 $ (2.65) $ 0.65
Extraordinary item ............... -- -- -- 0.29
------------ ------------ ------------ ------------
Net income (loss) per common and
common Equivalent share ............ $ (0.55) $ 0.29 $ (2.65) $ 0.94
============ ============ ============ ============
Shares used in computing net income
(loss)per common and common
equivalent share .................. 10,999,478 11,173,489 7,017,088 11,138,701
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
SPACEHAB, INCORPORATED AND SUBSIDIARY
Unaudited Condensed
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended March 31,
1996 1997
-------------- ---------------
Cash flows provided by operating activities:
<S> <C> <C>
Net income (loss) .................... $(18,574,713) $ 10,467,152
Adjustments to reconcile net income
(loss) to net cash provided (used)by
operating activities:
Depreciation and amortization ....... 6,379,082 7,420,550
Gain on early retirement of debt,
net of taxes, before legal
expenses ........................... -- (3,383,891)
Interest converted to notes payable . 826,948 927,498
Changes in assets and liabilities:
Decrease (increase) in accounts
receivable ....................... (2,057,699) 1,915,136
Decrease (increase) in prepaid
insurance ........................ (56,430) (51,438)
Decrease (increase) in prepaid and
other current assets ............. (224,003) (629,746)
Decrease (increase) in deferred
mission costs .................... (5,904,569) 611,744
Decrease (increase) in other assets 5,942 (145,656)
Increase (decrease) in deferred
flight revenue ................... 29,238,299 (14,309,595)
Increase (decrease) in accounts
payable and accrued expenses ..... 1,147,954 (1,493,235)
Increase (decrease) in launch costs
payable .......................... (152,500) --
Increase (decrease) in accrued
consulting and subcontracting
services ......................... 2,743,071 2,892,632
------------ ------------
Total adjustments ............. 31,946,095 (6,246,001)
------------ ------------
Net cash provided by
operating activities .......... 13,371,382 4,221,151
------------ ------------
Cash flows used by investing activities:
Payments for modules in construction . (8,480,983) (4,607,050)
Purchase of Astrotech, net of cash
acquired ............................. -- (19,960,021)
Purchase of property plant and
equipment ........................... (328,378) (2,878,931)
------------ ------------
Net cash used by investing
activities .................. (8,809,361) (27,446,002)
------------ ------------
Cash flows used by financing activities:
Payment of note payable to Insurers .. -- (3,185,060)
Payment of loan payable under credit
agreement ........................... (3,217,691) --
Payment of loan payable to McDonnell
Douglas ............................. (1,855,235) --
Payment of legal fees on early
retirement of debt .................. -- (109,986)
Proceeds from exercise of employee
stock options ....................... 180,000 24,000
Proceeds from private placement of
stock ............................... 3,600,000 --
Proceeds from issuance of common stock 43,302,319 --
------------ ------------
Net cash provided (used) by
financing activities ........ 42,009,393 (3,271,046)
------------ ------------
Net increase (decrease) in cash
and cash equivalents ........ 46,571,414 (26,495,897)
Cash and cash equivalents at beginning
of period ............................ 1,437,481 50,795,548
------------ ------------
Cash and cash equivalents at end of
period ................................. $ 48,008,895 $ 24,299,651
============ ============
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
SPACEHAB, INCORPORATED
Notes to Unaudited Condensed Consolidated Financial Statements
1. Basis of Presentation
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements reflect all adjustments consisting of only normal recurring
accruals necessary for a fair presentation of the consolidated financial
position of SPACEHAB, Incorporated ("SPACEHAB" or the "Company")and its
wholly-owned subsidiary, Astrotech Space Operations, Inc. as of March 31, 1997,
and the results of their operations for the three and nine months ended March
31, 1996 and 1997 and cash flows for the nine months ended March 31, 1996 and
1997. However, the consolidated financial statements are unaudited, and do not
include all related footnote disclosures.
The results of operations for the three and nine months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the full
year. The Company's results of operations fluctuate significantly from quarter
to quarter. The interim unaudited condensed consolidated financial statements
should be read in conjunction with the Company's audited financial statements
appearing in the Company's Form 10-K/A for the period ended June 30, 1996.
2. Revenue Recognition
Revenue is recognized at the completion of each of the remaining missions under
the existing Russian Space Station Mir contract, including options. For new
contract awards for which the capability to successfully complete the contract
can be demonstrated at contract inception, revenue recognition under the
percentage-of-completion method is reported based on costs incurred over the
period of the contract. During the first quarter of fiscal 1997, SPACEHAB began
integration work on two international experiments, one for NASDA, the Japanese
Space Agency, and one for ESA, the European Space Agency. The percentage of
completion method will result in the recognition of revenue over the period of
contract performance, thereby decreasing the quarter by quarter fluctuation of
reported revenue. Payload processing revenue provided from the Astrotech
facilities (see note 5) is recognized on a straight-line basis over the
occupancy period of the facilities.
3. Statements of Cash Flows - Supplemental Information
(a)Cash paid for interest costs was approximately $778,000 and $866,000 for the
nine months ended March 31, 1996 and 1997, respectively. The Company
capitalized interest of approximately $85,000 and $106,000 during the nine
months ended March 31, 1996 and 1997, respectively.
(b)The Company paid approximately $16,000 and $2.1 million for income taxes
during the nine months ended March 31, 1996 and 1997, respectively.
(c)During the nine months ended March 31, 1996, all of the Company's 4,011,345
shares of preferred stock were automatically converted to 1,671,312 shares of
common stock concurrent with the Company's initial public offering.
(d)During the nine months ended March 31, 1997, the Company's convertible note
payable, with a carrying value of approximately $1.2 million, was converted
into 75,000 shares of common stock.
4. Amended and Restated Credit Agreement
During August 1996, the Company entered into an amended and restated credit
agreement with its two senior lenders, which became effective on August 20,
1996. As a result of this agreement the Company has recognized an extraordinary
gain of approximately $4.2 million, before applicable income taxes and other
related expenses. Prior to the completion of this August 20, 1996 amendment,
SPACEHAB had outstanding debt under the credit agreement of approximately $8.7
million to one of the senior lenders, $3.2 million bearing interest at a rate of
1% per month and $5.5 million non-interest bearing. A payment of $2.5 million
was made on August 20, 1996 and an unsecured note in the amount of $2 million
was given to this senior lender. The $2 million note is non-interest bearing and
will be repaid over five years beginning in August 1997. All other remaining
indebtedness to this senior lender was canceled. There was no outstanding
indebtedness to the second senior lender and the Company projected no
requirements for borrowing under the $6 million revolving line of credit
provided by the second senior lender. This lending commitment was terminated in
the August 20, 1996 amendment and restatement in exchange for release of all
liens and restrictive covenants of this second lender.
5. Acquisition of Astrotech
On February 6, 1997 the Company agreed to acquire the assets and certain
liabilities of Astrotech Space Operations, L.P. ("Astrotech"), a subsidiary of
Northrop Grumman Corporation. Astrotech is nationally recognized as the leading
provider of commercial satellite launch processing services and payload
processing facilities. These services are provided at the Astrotech facilities
in Cape Canaveral, Florida and Vandenberg Air Force Base in California, and are
provided to launch service providers on a fixed price basis. SPACEHAB paid
approximately $20.0 million, including transaction costs, to acquire
substantially all of the assets and certain of the liabilities of Astrotech. The
purchase was effective on February 12, 1997. The business combination is being
accounted for using the purchase method under Accounting Principles Board
Opinion No. 16, "Business Combinations," ("APB Opinion 16") to record the
purchase of the assets and certain liabilities of Astrotech. The purchase price
has been allocated to the assets and liabilities acquired based on preliminary
estimates of fair value as of the date of acquisition. The final allocation of
the purchase price will be determined when appraisals and other studies are
completed. Based on the allocation of the purchase price over the net assets
acquired, goodwill of approximately $3,357,000 was recorded. Such goodwill is
being amortized on a straight-line basis over 20 years. The purchase price has
been allocated as follows: <TABLE>
<S> <C>
Petty cash ...................... $ 2,042
Receivables ..................... 1,573,055
Land ............................ 580,000
Buildings ....................... 13,389,000
Furniture, fixtures and equipment 2,319,159
Goodwill ........................ 3,356,796
Other assets .................... 48,931
Accounts payable ................ (141,025)
Customer deposits ............... (1,165,895)
------------
Total purchase price ............ $ 19,962,063
============
</TABLE>
APB Opinion 16 requires, for purchase business combinations, the presentation of
pro forma combined results of operations for the current year and preceding year
as if the combination had occurred at the beginning of the period. The following
unaudited pro forma results of operations are not necessarily indicative of
actual or future results of operations.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
---------------------------- ----------------------------
1996 1997 1996 1997
------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
Revenue .................... $ 2,615,006 $ 15,819,518 $ 8,412,000 $ 41,893,936
Gross profit (loss) ........ (2,777,371) 6,939,331 (8,102,396) 17,439,282
Income (loss)before
extraordinary item ......... (4,650,998) 3,331,155 (13,712,787) 7,244,246
Net income (loss) .......... $ (4,650,998) $ 3,331,155 $(13,712,787) $ 10,518,861
============ ============ ============ ============
Net income (loss) per common
and common equivalent share $ (0.42) $ 0.30 $ (1.95) $ 0.95
============ ============ ============ ============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This document may contain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, including (without limitation) under the "General" and
"Liquidity and Capital Resources" sections of this Item 2. Such statements are
subject to certain risks and uncertainties, including those discussed herein,
that could cause actual results to differ materially from those projected in
such statements.
GENERAL
SPACEHAB, Incorporated ("SPACEHAB" or the "Company") was incorporated in 1984
to commercially develop space habitat modules to operate in the cargo bay of the
Space Shuttles. On February 12, 1997 the Company acquired the assets and certain
of the liabilities of Astrotech Space Operations, L.P. ("Astrotech"), a
subsidiary of Northrop Grumman Corporation. Astrotech is nationally recognized
as the leading provider of commercial satellite launch processing services and
payload processing facilities. These services are provided at the Astrotech
facilities in Cape Canaveral, Florida and Vandenberg Air Force Base in
California, and are provided to launch service providers on a fixed price basis.
SPACEHAB recognizes revenue under its two principal contracts with the U.S.
National Aeronautics and Space Administration ("NASA"), the CMAM Contract and
the Mir Contract, upon the completion of each Space Shuttle mission carrying
SPACEHAB Modules. The CMAM contract supported scientific and commercial
microgravity research on five Space Shuttle flights while the Mir Contract
provides logistics to the Russian Mir Space Station. Revenue is comprised of
payment for leasing lockers and/or volume within the SPACEHAB Modules and for
the integration and operations support services provided to scientists and
researchers responsible for the experiments and/or logistics supplies for
SPACEHAB missions aboard the shuttle system. For new contract awards for which
the capability to successfully complete the contract can be demonstrated at
contract inception, revenue recognition under the percentage-of-completion
method is being reported based on costs incurred over the period of the
contract. In late September of 1996, SPACEHAB entered into an agreement with the
Japanese Space Agency (NASDA) and with the European Space Agency (ESA)(the
"NASDA/ESA" contract), pursuant to which SPACEHAB will provide hardware and
integration and operations for scientific microgravity experiments to NASDA and
ESA aboard the SPACEHAB Double Module on STS-84. This mission is currently
scheduled for May of 1997. During the first quarter of fiscal 1997, SPACEHAB
began integration work on the NASDA/ESA contract. The percentage of completion
method results in the recognition of revenue over the period of contract
performance, thereby decreasing the quarter by quarter fluctuation of reported
revenue. Revenue provided by the Astrotech payload processing facilities is
recognized on a percentage of completion basis. Revenue is recognized ratably
over the occupancy period of the facilities. Astrotech recently signed an
exclusive contract with Lockheed Martin to process all Atlas launch vehicle
payloads for the next three years as well as a fifteen year contract to support
Boeing's Sea Launch program.
Costs of revenue include integration and operations expenses associated with
the performance of two types of efforts: (i) sustaining engineering in support
of all missions under a contract and (ii) mission specific experiment support.
Expenses associated with sustaining engineering are expensed as incurred.
Mission specific expenses relating to the CMAM Contract and the Mir Contract are
recorded as assets and not expensed until the specific Space Shuttle mission is
flown and the related revenue is recognized. Costs associated with performance
of the NASDA/ESA contract are expensed as incurred. Other costs of revenue
include depreciation expense, which is allocated to each SPACEHAB Module on a
straight line basis over a ten year useful life. Flight related insurance
covering transportation of the SPACEHAB Modules from SPACEHAB's payload
processing facility to the Space Shuttle, in-flight insurance and third-party
liability insurance are also included in costs of revenue and are recorded as
incurred. Marketing, general and administrative, interest, and other expenses
are recognized when incurred.
RESULTS OF OPERATIONS
For the three months ended March 31 , 1997 as compared to the three months ended
March 31, 1996.
Revenue. The Company recorded revenue of approximately $15.0 million for the
three months ended March 31, 1997. There was no revenue recognized during the
three months ended March 31, 1996. In accordance with the Company's revenue
recognition policy for the Mir and the CMAM Contracts, revenue is recorded at
the completion of a mission when the SPACEHAB modules are returned to the
Company. Revenue of approximately $13.6 million was recognized for a Mir flight
during the third quarter of 1997. Approximately $204,000 of the Company's
revenue for the three months ended March 31, 1997 was related to the NASDA/ESA
contract and is recorded on a percentage of completion basis. There was
approximately $1.2 million in revenue recorded from the Company's payload
processing subsidiary, which is recognized on a straight-line basis over the
period of occupancy of the facilities.
Costs of Revenue. Costs of revenue for the quarter ended March 31, 1997
increased 80.40% to $8.3 million, as compared to $4.6 million for quarter ended
March, 1996. This increase is due primarily to an increase of approximately $3.3
million of integration and operations expenses. Because mission specific
expenses are reported at the time of a flight under the Mir and CMAM contracts,
these expenses are significantly higher during a quarter in which there is a
flight. There was one flight during the quarter March 31, 1997 and no flights
during the quarter ended March 31, 1996. The flight during the quarter ended
March 31, 1997 was a Logistics Double Module flight. Flights using Double
Modules incur more integration and operation expenses than those of a Single
Module. Integration costs related to the CMAM and Mir Contracts were $0 and $5.3
million, respectively, for the quarter ended March 31, 1997, as compared with
$0.7 million and $1.4 million, respectively, for the quarter ended March 31,
1996. NASDA/ESA contract costs were approximately $0.2 million for the quarter
ended March 31, 1997. There were no NASDA/ESA costs incurred during the quarter
ended March 31, 1996. Additionally, integration and operation costs incurred by
Astrotech's payload processing facilities were approximately $0.3 million for
the period February 13, 1997 through March 31, 1997.
Operating Expenses. Operating expenses increased approximately 51.4% to
approximately $2.8 million for the three months ended March 31, 1997 as compared
to approximately $1.8 million for the three months ended March 31, 1996. This
increase is due primarily to the Company's efforts to increase staff, adding
strength in engineering, design and research and development. As of March 31,
1997, the Company's staff had increased by over fifty percent compared to the
quarter ended March 31, 1996. Additionally, the Company incurred operating
expenses from its payload processing facilities of approximately $0.2 million
during the period February 13, 1997 through March 31, 1997.
Interest Expense. Interest expense was approximately $0.3 million for the
three months ended March 31, 1997 as compared to approximately $0.4 million for
the three months ended March 31, 1996. Of this amount, approximately $0.1
million was capitalized for the quarter ended March 31, 1997. This compared to
approximately $0.3 million for the quarter ended March 31, 1996. Interest was
capitalized during the construction of the Company's Science Double Module
during the quarter ended March 31, 1997 whereas capitalized amounts during the
quarter ended March 31, 1996 were based on the Logistics Double Module. It is
anticipated that this Science Double Module will be available for flight during
the second quarter of fiscal year 1999.
Interest and Other Income. Interest and other income was approximately $0.4
million for the three months ended March 31, 1997 as compared to $0.5 million
for the quarter ended March 31, 1996. This decrease is due to short term
interest earned by the Company for the investment of proceeds received from the
Company's initial public offering of common stock (the "Offering").
Net Income/Loss. Net income was approximately $3.2 million, or $0.29 per
share for the quarter ended March 31, 1997, on 11,173,489 weighted average
shares, as compared to a net loss of $6.0 million, or $.55 per share for the
quarter ended March 31, 1996, on 10,999,478 shares.
For the nine months ended March 31, 1997 as compared to the nine months ended
March 31, 1996.
Revenue. The Company recorded revenue of approximately $38.1 million for the
nine months ended March 31, 1997. No revenue was recorded during the nine months
ended March 31, 1996 since there were no Space Shuttle flights carrying SPACEHAB
Modules during that period. Approximately $1.1 million of the Company's revenue
for the nine months ended March 31, 1997, was related to the NASDA/ESA contract
and is recorded on a percentage of completion basis. There was approximately
$1.2 million in revenue recorded from the Company's payload processing
subsidiary, which is recognized on a straight-line basis over the period of
occupancy of the facilities.
Costs of Revenue. Costs of revenue for the nine months ended March 31, 1997
increased 55.8% to $22.1 million, as compared to $14.2 million for nine months
ended March 31, 1996. This increase is due primarily to an increase of
approximately $6.8 million of integration and operations expenses. This increase
is primarily attributable to the difference in flight schedules. Integration and
operations costs relating to the CMAM and the Mir Contracts were approximately
$1.0 million and $12.4 million, respectively, for the nine months ended March
31, 1997, as compared with $4.1 million and $3.3 million, respectively, for the
nine months ended March 31, 1996. The NASDA/ESA contract costs were
approximately $1.0 million for the nine months ended March 31, 1997. There were
no NASDA/ESA costs incurred during the nine months ended March 31, 1996.
Additionally, integration and operation costs incurred by Astrotech's payload
processing was approximately $0.3 million for the period February 13, 1997
through March 31, 1997.
Operating Expenses. Operating expenses increased by approximately 70.6% to
approximately $7.0 million for the nine months ended March 31, 1997 as compared
to approximately $4.1 million for the nine months ended March 31, 1996. This
increase is due primarily to the Company's efforts to add strength to its
engineering, design and research and development departments. Additionally, the
Company incurred operating expenses from its payload processing facilities of
approximately $0.2 million during the period February 13, 1997 through March 31,
1997.
Interest Expense. Interest expense was approximately $1.0 million for the
nine months ended March 31, 1997 as compared to approximately $1.1 million for
the nine months ended March 31, 1996. Of this amount, there was approximately
$0.1 million and $0.5 million of interest capitalized during the nine months
ended March 31, 1997 and 1996, respectively. Interest was capitalized during the
construction of the Company's Science Double Module for the nine months ended
March 31, 1997 and the Logistics Double Module for the nine months ended March
31, 1996.
Interest and Other Income. Interest and other income was approximately $1.2
million for the nine months ended March 31, 1997 as compared to approximately
$.6 million for the nine months ended March 31, 1996. This increase is due to
short term interest earned by the Company for the investment of proceeds
received from the Company's Offering.
Net Income/Loss. Net income was approximately $10.5 million, or $0.94 per
share for the nine months ended March 31, 1997, on 11,138,701 weighted average
shares, as compared to a net loss of $18.6 million, or $2.65 per share for the
nine months ended March 31, 1996, on 7,017,088 weighted average shares.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its capital expenditures, research and
development and working capital requirements with progress payments under both
the CMAM Contract and the Mir Contract, and proceeds received from private
equity offerings and borrowings under credit facilities. During December 1995,
SPACEHAB completed the Offering which provided the Company with net proceeds of
approximately $43.5 million.
Cash Flows provided by Operating Activities. Cash provided by operations for
the nine months ended March 31, 1997 and 1996, were $4.2 million and $13.4
million, respectively. This decrease is substantially due to a significant
decrease in deferred flight revenue. This decrease is offset by decreases in
deferred mission costs and accounts receivable related to missions that were
flown during the nine months ended March 31, 1997.
Cash Flows used by Investing Activities. For the nine months ended March 31,
1997 and 1996, cash flows used by investing activities were approximately $27.4
million and $8.8 million, respectively. A significant portion of the
expenditures during the nine months ended March 31, 1997 were attributed to the
purchase of Astrotech, and the continuing construction of the Company's Science
Double Module. The Company began work at the beginning of fiscal year 1997 on
its Science Double Module. The Company anticipates that it will spend between
$30.0 million and $35.0 million on the project. This compares to the nine months
ended March 31, 1996, where substantially all of the investing activity was due
to capital expenditures for the Company's Logistics Double Module.
Cash Flows provided (used) by Financing Activities. Cash flows provided
(used) by financing activities were approximately ($3.3) million and $42.0
million for the nine months ended March 31, 1997 and 1996, respectively. On
August 20, 1996, the Credit Agreement was amended and restated. Under this
amendment, the revolving credit commitment from McDonnell Douglas was canceled.
In addition, in exchange for the full satisfaction of two term loans owed to a
group of insurance companies, the Company paid $2.5 million to said companies at
closing and agreed to pay an additional $2.0 million under a new non-interest
bearing term loan. The new term loan is due in installments of $0.5 million in
each of August 1997 and 1998, and $0.333 million in each of August 1999, 2000
and 2001. Under the new agreement all prior liens and encumbrances on the
Company's assets and all prior restrictive covenants have been released. A
significant portion of the cash provided by financing activities during the nine
months ended March 31, 1996 was provided by the proceeds of approximately $43.3
million from the Company's issuance of common stock in the Offering and $3.8
million in proceeds from a private placement of common stock and the exercise of
employee stock options.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 2. CHANGES IN SECURITIES
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
NONE
ITEM 5. OTHER INFORMATION
NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The separate Index to Exhibits accompanying this
filing is incorporated herein by reference.
(b) Reports on Form 8-K.
During the three months ended March 31, 1997, the following report was
filed on Form 8-K under Item 2, Acquisition or Disposition of Assets:
1. The report was dated February 12, 1997 and filed on February 27,
1997 announcing the Registrant's acquisition of substantially all
of the assets of Astrotech Space Operations, L.P.
Exhibit No. Description of Exhibits
10.1** NASDA Contract, dated July 1996, between the Registrant and
Mitsubishi Corporation (the "NASDA/ESA Contracts").
10.2** ESA Contract, dated September 18, 1996, between the
Registrant and INTOSPACE GmbH (the "NASDA/ESA Contracts")
10.3* Amended and Restated Credit Agreement, dated August 20, 1996,
among the Registrant, the insurers listed therein and the Chase
Manhattan Bank (National Association), as agent.
11. Statement re Computation of Per Share Earnings.
27 Financial Data Schedule
* Incorporated by reference to the Registrant's Annual Report on Form
10-K/A for the year ending June 30, 1996 filed with the Securities and
Exchange Commission on December 20, 1996.
** Incorporated by reference to the Registrant's Form 10-Q/A for the
quarter ended September 30, 1996 filed with the Securities and
Exchange Commission on December 20 1996.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPACEHAB, INCORPORATED
Date: May 09, 1997 /S/ MARGARET E. GRAYSON
------------------ ----------------------------------
Margaret E. Grayson
Vice President of Finance (CFO)
Treasurer, and Assistant Secretary
(Principal Financial and Accounting
Officer)
<PAGE>
Exhibit 11
SPACEHAB, INCORPORATED AND SUBSIDIARY
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
1996 1997 1996 1997
------------- ------------ ------------ -------------
Net Income (Loss) and Adjusted
Earnings:
Net income (loss) applicable to
common shareholders used for
<S> <C> <C> <C> <C>
primary computations ........... $ (6,021,747) $ 3,207,174 $(18,574,713) $ 10,476,152
------------ ------------ ------------ ------------
Fully diluted adjustments:
Savings in convertible note
payable interest expense,
net of tax ..................... 19,228 -- 57,122 --
------------ ------------ ------------ ------------
Adjusted net income (loss)
applicable to common
shareholders assuming
full dilution ................ $ (6,002,519) $ 3,207,174 $(18,517,591) $ 10,476,152
============ ============ ============ ============
Average number of shares of common
stock and common stock equivalents
used for primary computation ...... 10,999,478 11,173,489 7,017,088 11,138,701
------------ ------------ ------------ ------------
Fully diluted adjustments (2):
Weighted Average Shares and
Share Equivalents Outstanding:
Assumed exercise of options
and warrants ................ 126,096 16,656 -- --
Assumed conversion of
convertible debt .............. 75,000 -- 75,000 36,405
------------ ------------ ------------ ------------
Total number of shares assumed to be
outstanding assuming full dilution 11,200,574 11,190,145 7,092,088 11,175,106
------------ ------------ ------------ ------------
Earnings Common Per Share:
Income (loss) per common and common
equivalent share:
Income (loss) before
extraordinary item ............ $ (0.55) $ 0.29 $ (2.65) $ 0.65
Extraordinary item ............... -- -- -- 0.29
------------ ------------ ------------ ------------
Primary (1) ...................... $ (0.55) $ 0.29 $ (2.65) $ 0.94
============ ============ ============ ============
Income (loss) before
extraordinary item ............ $ (0.55) $ 0.29 $ (2.61) $ 0.65
Extraordinary item ............... -- -- -- 0.29
------------ ------------ ------------ ------------
Fully Diluted (2): ............... $ (0.54) $ 0.29 $ (2.61) $ 0.94
============ ============ ============ ============
</TABLE>
(1) The assumed exercise of options and warrants in periods of net loss are
anti-dilutive and are not included in the computation and presentation of
primary earnings per share.
(2) The assumed exercise of options, warrants, conversion of convertible debt,
and conversion of preferred stock are anti-dilutive but are included in the
calculation of fully dilutive earnings per share in accordance with
Regulation S-K Item 601 (a)(11).
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001001907
<NAME> SPACEHAB, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 24,299,651
<SECURITIES> 0
<RECEIVABLES> 5,103,684
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30,318,110
<PP&E> 87,094,680
<DEPRECIATION> 35,407,592
<TOTAL-ASSETS> 123,095,689
<CURRENT-LIABILITIES> 11,440,571
<BONDS> 0
0
0
<COMMON> 81,057,164
<OTHER-SE> 16,299
<TOTAL-LIABILITY-AND-EQUITY> 123,095,689
<SALES> 15,031,345
<TOTAL-REVENUES> 15,031,345
<CGS> 8,317,661
<TOTAL-COSTS> 11,117,812
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 187,201
<INCOME-PRETAX> 4,101,833
<INCOME-TAX> 894,659
<INCOME-CONTINUING> 3,207,174
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,207,174
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.29
</TABLE>
