ORBCOMM Inc. (ORBC, Financial) filed Quarterly Report for the period ended 2009-09-30.
ORBCOMM INC.is a leading global satellite data communications companyfocused on Machine-to-Machine communications. Its customers include General ElectricCaterpillar Inc.Volvo Group and Komatsu Ltd. among other industry leaders. By means of a global network of twenty nine low-earth orbit satellites and accompanying ground infrastructureORBCOMM's low-cost and reliable two-way data communications products and services trackmonitor and control mobile and fixed assets in four core markets: commercial transportation; heavy equipment; industrial fixed assets; and marine/homeland security. The company's products are installed on truckscontainersmarine vesselslocomotivesbackhoespipelinesoil wellsutility metersstorage tanks and other assets. ORBCOMM is headquartered in Fort LeeNew Jersey and has a Network Control Center in DullesVirginia. Orbcomm Inc. has a market cap of $101 million; its shares were traded at around $2.38 with and P/S ratio of 3.36.
Three Months: Costs of services increased by $8.2 million, or 311.4%, to $10.8 million for the three months ended September 30, 2009 from $2.6 million during the three months ended September 30, 2008. The increase is primarily due to an increase in depreciation expense of $8.0 million resulting primarily from $7.5 million in depreciation related to the remaining two quick-launch satellites that were placed in service in August 2009 and are being depreciated over three and five months. As a percentage of service revenues, cost of services were 155.6% of service revenues for the three months ended September 30, 2009 compared to 41.4% for the three months ended September 30, 2008.
Nine Months: Costs of services increased by $10.5 million, or 155.1%, to $17.3 million for the nine months ended September 30, 2009 from $6.8 million during the nine months ended September 30, 2008. The increase is primarily due to depreciation expense of $9.3 million resulting primarily from $7.5 million in depreciation to the remaining two quick-launch satellites that were placed in service in August 2009 and are being depreciated over three and five months and $1.3 million of depreciation expense from the Coast Guard demonstration satellite placed in service during the third quarter of 2008, a charge of $0.3 million from a satellite insurance policy that expired in June 2009, network telecommunications costs to support higher service revenues of $0.4 million and the consolidation of ORBCOMM Japan of $0.4 million. As a percentage of service revenues, cost of services were 85.3% of service revenues for the nine months ended September 30, 2009 compared to 40.0% for the nine months ended September 30, 2008.
Three Months: Selling, general and administrative expenses decreased by $1.0 million, or 21.0%, to $3.6 million for the three months ended September 30, 2009 from $4.6 million for the three months ended September 30, 2008. This decrease is primarily due to lower employee costs of $0.7 million including decreases in stock-based compensation of $0.5 million and lower auditing and litigation fees of $0.3 million.
Nine Months: Selling, general and administrative expenses decreased by $1.4 million, or 9.5%, to $12.8 million for the nine months ended September 30, 2009 from $14.2 million for the nine months ended September 30, 2008. This decrease is primarily due to lower employee costs of $1.7 million including decreases in stock-based compensation of $1.5 million, and decrease in recurring professional fees of $0.5 million. These decreases were offset primarily by increases in expenses related to the consolidation of ORBCOMM Japan, unanticipated expenses of $0.6 million incurred in connection with our contested proxy, $0.2 million in legal fees related to the preparation of filing our satellite insurance claim and an increase in bad debts of $0.6 million.
On March 25, 2008, we received a 37% equity interest in ORBCOMM Japan and cash of $0.6 million in satisfaction of claims against ORBCOMM Japan, pursuant to a voluntary reorganization of ORBCOMM Japan in accordance with the rehabilitation plan approved by the Tokyo district court on December 25, 2007. The fair value of the consideration we received for settlement of claims against ORBCOMM Japan exceeded the $0.4 million carrying value of current and long-term receivables from ORBCOMM Japan by $0.9 million and we recognized a gain for the same amount for the three months ended March 31, 2008. On May 15, 2008, we received 616 newly issued shares of common stock from ORBCOMM Japan representing an additional 14% equity interest and recognized a gain of $0.2 million during the nine months ended September 30, 2008.
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ORBCOMM INC.is a leading global satellite data communications companyfocused on Machine-to-Machine communications. Its customers include General ElectricCaterpillar Inc.Volvo Group and Komatsu Ltd. among other industry leaders. By means of a global network of twenty nine low-earth orbit satellites and accompanying ground infrastructureORBCOMM's low-cost and reliable two-way data communications products and services trackmonitor and control mobile and fixed assets in four core markets: commercial transportation; heavy equipment; industrial fixed assets; and marine/homeland security. The company's products are installed on truckscontainersmarine vesselslocomotivesbackhoespipelinesoil wellsutility metersstorage tanks and other assets. ORBCOMM is headquartered in Fort LeeNew Jersey and has a Network Control Center in DullesVirginia. Orbcomm Inc. has a market cap of $101 million; its shares were traded at around $2.38 with and P/S ratio of 3.36.
Highlight of Business Operations:
Operating expenses increased during the nine months ended September 30, 2009 due $0.7 million in operating expenses of ORBCOMM Japan, $0.3 million of a satellite insurance policy that expired in June 2009 for the Coast Guard Demonstration and quick-launch satellites, $0.6 million for bad debt reserves, unanticipated expenses of $0.6 million for a contested proxy vote, $0.1 million in severance payments and $0.2 million in legal fees related to the preparation of our satellite insurance claim.Three Months: Costs of services increased by $8.2 million, or 311.4%, to $10.8 million for the three months ended September 30, 2009 from $2.6 million during the three months ended September 30, 2008. The increase is primarily due to an increase in depreciation expense of $8.0 million resulting primarily from $7.5 million in depreciation related to the remaining two quick-launch satellites that were placed in service in August 2009 and are being depreciated over three and five months. As a percentage of service revenues, cost of services were 155.6% of service revenues for the three months ended September 30, 2009 compared to 41.4% for the three months ended September 30, 2008.
Nine Months: Costs of services increased by $10.5 million, or 155.1%, to $17.3 million for the nine months ended September 30, 2009 from $6.8 million during the nine months ended September 30, 2008. The increase is primarily due to depreciation expense of $9.3 million resulting primarily from $7.5 million in depreciation to the remaining two quick-launch satellites that were placed in service in August 2009 and are being depreciated over three and five months and $1.3 million of depreciation expense from the Coast Guard demonstration satellite placed in service during the third quarter of 2008, a charge of $0.3 million from a satellite insurance policy that expired in June 2009, network telecommunications costs to support higher service revenues of $0.4 million and the consolidation of ORBCOMM Japan of $0.4 million. As a percentage of service revenues, cost of services were 85.3% of service revenues for the nine months ended September 30, 2009 compared to 40.0% for the nine months ended September 30, 2008.
Three Months: Selling, general and administrative expenses decreased by $1.0 million, or 21.0%, to $3.6 million for the three months ended September 30, 2009 from $4.6 million for the three months ended September 30, 2008. This decrease is primarily due to lower employee costs of $0.7 million including decreases in stock-based compensation of $0.5 million and lower auditing and litigation fees of $0.3 million.
Nine Months: Selling, general and administrative expenses decreased by $1.4 million, or 9.5%, to $12.8 million for the nine months ended September 30, 2009 from $14.2 million for the nine months ended September 30, 2008. This decrease is primarily due to lower employee costs of $1.7 million including decreases in stock-based compensation of $1.5 million, and decrease in recurring professional fees of $0.5 million. These decreases were offset primarily by increases in expenses related to the consolidation of ORBCOMM Japan, unanticipated expenses of $0.6 million incurred in connection with our contested proxy, $0.2 million in legal fees related to the preparation of filing our satellite insurance claim and an increase in bad debts of $0.6 million.
On March 25, 2008, we received a 37% equity interest in ORBCOMM Japan and cash of $0.6 million in satisfaction of claims against ORBCOMM Japan, pursuant to a voluntary reorganization of ORBCOMM Japan in accordance with the rehabilitation plan approved by the Tokyo district court on December 25, 2007. The fair value of the consideration we received for settlement of claims against ORBCOMM Japan exceeded the $0.4 million carrying value of current and long-term receivables from ORBCOMM Japan by $0.9 million and we recognized a gain for the same amount for the three months ended March 31, 2008. On May 15, 2008, we received 616 newly issued shares of common stock from ORBCOMM Japan representing an additional 14% equity interest and recognized a gain of $0.2 million during the nine months ended September 30, 2008.
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