SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] For the Fiscal Year Ended
June 30, 2001.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required] For the
transition period from _____________ to ____________
Commission File No. 0-27206
SPACEHAB, Incorporated
300 D Street, SW
Suite 814
Washington, D.C. 20024
(202) 488-3500
Incorporated in the IRS Employer Identification
State of Washington Number 91-1273737
Securities Registered pursuant to Section 12(b) of the Act: None
Securities Registered pursuant to Section 12(g) of the Act:
Title of Each Class Name of Each Exchange
Common Stock on which Registered
(no par value) NASDAQ National Market
Number of shares of Common Stock (no par value) outstanding as of
August 23, 2001:11,528,145. Aggregate market value of Common Stock (no par
value) held by non-affiliates of the registrant on August 19, 2001, based upon
the closing price of the Common Stock on the Nasdaq National Market of $1.91 was
approximately $22,018,757.
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 ___.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ].
Item 8. Financial Statements and Supplementary Data
(As amended October 17, 2001, to include signature on Report of Independent
Auditors).
Report of Independent Auditors
The Board of Directors
SPACEHAB, Incorporated and Subsidiaries
We have audited the accompanying consolidated balance sheet of SPACEHAB,
Incorporated and subsidiaries (the Company) as of June 30, 2001, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of SPACEHAB,
Incorporated and subsidiaries at June 30, 2001, and the consolidated results of
their operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As more fully described in Note 1, the
Company has incurred significant losses from operations, negative cash flows and
has a working capital deficiency. In addition, the Company has not complied with
certain covenants of loan agreements with banks. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 1. The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the outcome of this
uncertainty.
/s/ Ernst & Young LLP
McLean, Virginia
October 12, 2001
21
Report of Independent Auditors
The Board of Directors
SPACEHAB, Incorporated and Subsidiaries:
We have audited the accompanying consolidated balance sheet of
SPACEHAB, Incorporated and subsidiaries (the Company) as of June 30, 2000, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the two-year period ended June 30, 2000.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SPACEHAB,
Incorporated and subsidiaries as of June 30, 2000, and the results of their
operations and their cash flows for each of the years in the two-year period
ended June 30, 2000, in conformity with accounting principles generally
accepted in the United States of America.
/s/ KPMG LLP
KPMG LLP
McLean, Virginia
August 31, 2000
22
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data)
June 30,
------------------------
Assets 2001 2000
------------------------------------------------------------------------------------------------------------------------
Current assets:
Cash and cash equivalents $ 34 $ 6,949
Accounts receivable, net (note 4) 17,358 25,798
Prepaid expenses and other current assets 1,381 2,328
------------------------------------------------------------------------------------------------------------------------
Total current assets 18,773 35,075
------------------------------------------------------------------------------------------------------------------------
Property and equipment:
Flight assets 159,400 106,950
Module improvements in progress 24,188 66,066
Payload processing facilities 40,192 29,398
Furniture, fixtures equipment and leasehold improvements 13,854 12,650
------------------------------------------------------------------------------------------------------------------------
237,634 215,064
Less accumulated depreciation and amortization (63,580) (56,380)
-----------------------------------------------------------------------------------------------------------------------
Property and equipment, net 174,054 158,684
Goodwill, net of accumulated amortization of $3,500 and 2,428, respectively 21,347 23,301
Investment in Guigne, net (note 19) 1,800 1,800
Other assets, net 6,503 6,249
------------------------------------------------------------------------------------------------------------------------
Total assets $ 222,477 $ 225,109
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
------------------------------------------------------------------------------------------------------------------------
Current liabilities:
Loans payable under credit agreement, current portion (note 6) $ 333 $ 333
Loans payable, current portion (note 8) 3,126 3,126
Revolving loan payable (note 8) 6,750 4,500
Accounts payable 10,533 10,540
Accounts payable-Astrium 2,751 807
Accrued expenses 7,739 6,986
Accrued subcontracting services 2,112 1,999
Convertible notes payable to shareholder (note 7) 7,860 -
Deferred revenue 18,993 8,385
------------------------------------------------------------------------------------------------------------------------
Total current liabilities 60,197 36,676
------------------------------------------------------------------------------------------------------------------------
Loans payable under credit agreement, net of current portion (note 6) - 333
Loans payable, net of current portion (note 8) 1,139 4,458
Convertible notes payable to shareholder (note 7) - 7,860
Accrued contract costs 100 880
Miscellaneous note payable 200 -
Deferred revenue 7,235 6,870
Deferred income taxes (note 13) - 2,080
Convertible subordinated notes payable (note 8) 63,250 63,250
------------------------------------------------------------------------------------------------------------------------
Total liabilities 132,121 122,407
------------------------------------------------------------------------------------------------------------------------
Commitments and contingencies (notes 1, 11 and 16) Stockholders' equity (notes
7, 8, 11 and 12):
Preferred stock, no par value, convertible, authorized 2,500,000 shares, issued and
outstanding 1,333,334 shares, (liquidation preference of $12,000) 11,892 11,892
Common stock, no par value, authorized 30,000,000 shares, issued
and outstanding 11,528,145 and 11,345,032 shares, respectively 82,513 82,074
Additional paid-in capital 16 16
Retained earnings (accumulated deficit) (4,065) 8,720
------------------------------------------------------------------------------------------------------------------------
Total stockholders' equity 90,356 102,702
------------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 222,477 $ 225,109
------------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
23
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Operations
(In thousands, except share data)
-----------------------------------------------------------------------------------------------------------------------
Year ended Year ended Year ended
June 30, June 30, June 30,
2001 2000 1999
-----------------------------------------------------------------------------------------------------------------------
Revenue $ 105,254 $ 105,708 $ 107,720
-----------------------------------------------------------------------------------------------------------------------
Costs of revenue 92,243 87,931 89,283
-----------------------------------------------------------------------------------------------------------------------
Gross profit 13,011 17,777 18,437
-----------------------------------------------------------------------------------------------------------------------
Operating expenses:
Selling, general and administrative 21,796 17,832 14,599
Research and development 393 2,440 3,636
-----------------------------------------------------------------------------------------------------------------------
Total operating expenses 22,189 20,272 18,235
-----------------------------------------------------------------------------------------------------------------------
Income (loss) from operations (9,178) (2,495) 202
Interest expense, net of capitalized interest (note 3) (4,804) (3,773) (4,905)
Interest and other income, net 311 662 1,615
-----------------------------------------------------------------------------------------------------------------------
Loss before income taxes (13,671) (5,606) (3,088)
Income tax benefit (note 13) (886) (1,762) (499)
-----------------------------------------------------------------------------------------------------------------------
Net Loss $ (12,785) $ (3,844) $ (2,589)
-----------------------------------------------------------------------------------------------------------------------
Basic Loss per share:
Net Loss per share - basic $ (1.12) $ (0.34) $ (0.23)
-----------------------------------------------------------------------------------------------------------------------
Shares used in computing net loss per share - basic 11,400,482 11,272,767 11,184,742
-----------------------------------------------------------------------------------------------------------------------
Diluted Loss per share:
Net loss per share - diluted $ (1.12) $ (0.34) $ (0.23)
-----------------------------------------------------------------------------------------------------------------------
Shares used in computing net loss per share - diluted 11,400,482 11,272,767 11,184,742
-----------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
24
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
(In thousands, except share data)
---------------------------------------------------------------------------------------------------------------------
Convertible
Preferred Stock Common Stock Additional
--------------------- ---------------------- Paid-In
Shares Amount Shares Amount Capital
---------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1998 - $ - 11,168,161 $ 81,239 $ 16
Common stock issued upon stock option exercises - - 1,070 8 -
Common stock issued under employee stock purchase plan - - 60,415 338 -
Net income - - - - -
--------------------------------------------------------------------------------------------------------------------
Balance at June 30, 1999 - $ - 11,229,646 $ 81,585 $ 16
--------------------------------------------------------------------------------------------------------------------
Preferred stock issued 1,333,334 11,892 - - -
Common stock issued under employee stock purchase plan - - 115,386 489 -
Net loss - - - - -
--------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2000 1,333,334 $11,892 11,345,032 $ 82,074 $ 16
--------------------------------------------------------------------------------------------------------------------
Common stock issued under employee stock purchase plan - - 183,113 439 -
Net loss - - - - -
--------------------------------------------------------------------------------------------------------------------
Balance at June 30, 2001 1,333,334 $11,892 11,528,145 $ 82,513 $ 16
---------------------------------------------------------------------------------------------------------------------
-----------------------------
Retained
Earnings Total
(Accumulated Stockholders'
Deficit) Equity
-----------------------------
Balance at June 30, 1998 $ 15,153 $ 96,408
Common stock issued upon stock option exercises - 8
Common stock issued under employee stock purchase plan - 338
Net income (2,589) (2,589)
------------------------------------------------------- ---------------------------
Balance at June 30, 1999 $ 12,564 $ 94,165
------------------------------------------------------- ---------------------------
Preferred stock issued - 11,892
Common stock issued under employee stock purchase plan - 489
Net loss (3,844) (3,844)
------------------------------------------------------- ---------------------------
Balance at June 30, 2000 $ 8,720 $ 102,702
------------------------------------------------------- ---------------------------
Common stock issued under employee stock purchase plan - 439
Net loss (12,785) (12,785)
------------------------------------------------------- ---------------------------
Balance at June 30, 2001 $ (4,065) $ 90,356
------------------------------------------------------- ---------------------------
See accompanying notes to consolidated financial statements
25
SPACEHAB, INCORPORATED AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
Year ended Year ended Year ended
June 30, 2001 June 30, 2000 June 30, 1999
----------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities:
Net loss $ (12,785) $ (3,844) $ (2,589)
Adjustments to reconcile net loss to net cash provided
by (used for) operating activities:
Depreciation 8,691 7,133 5,909
Amortization 1,259 1,089 1,108
Amortization of debt placement costs 623 528 538
Valuation allowance of deferred tax asset 3,292 - -
Valuation allowance of investment in Guigne - (200) -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 8,440 (8,327) (3,126)
(Increase) decrease in prepaid expenses and other
current assets 947 (1,182) (290)
Decrease (increase) in deferred mission costs - (1,031) -
Increase in other assets (1,064) (240) (14)
Increase (decrease) in deferred flight revenue 10,973 11,093 (7,762)
Increase in accounts payable and accrued expenses 2,007 1,955 345
Increase (decrease) in advance billings - - (1,567)
Increase (decrease) in accrued subcontracting
services 113 (4,788) 97
Increase (decrease) in deferred taxes (5,372) (762) 1,020
----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) operating activities 17,124 1,424 (6,331)
----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Payments for flight assets under construction (20,150) (23,009) (27,381)
Payments for building under construction (8,934) (4,868) (871)
Purchases of property, equipment and leasehold improvements (1,558) (2,361) (4,222)
Cash received from sale of Flight assets 7,566
Purchase of Johnson Engineering, net of cash acquired - 1,200 (24,745)
Purchase of The Space Store - (156) -
Investment in Guigne - (600) (1,400)
----------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (23,076) (29,794) (58,619)
----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Payments of note payable to insurers (333) (333) (500)
Proceeds from issuance of convertible preferred stock - 11,892 -
Proceeds from note payable - - 1,000
Proceeds from revolving line of credit 2,250 4,500 -
Payments of note payable (3,319) (2,575) (2,842)
Payments of note payable to shareholder - - (4,035)
Proceeds from exercise of stock options - - 8
Proceeds from issuance of common stock, net of expenses 439 489 338
----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities (963) 13,973 (6,031)
----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (6,915) (14,397) (70,981)
Cash and cash equivalents at beginning of year 6,949 21,346 92,327
----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 34 $ 6,949 $ 21,346
----------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements
26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Description of the Company, Operating Environment and Liquidity
Description of the Company and Operating Environment
SPACEHAB, Incorporated (the "Company") is the first company to
commercially develop, own and operate habitable modules that provide
space-based laboratory research facilities and cargo services aboard
the U.S. Space Shuttle system. The Company currently owns and operates
four pressurized laboratory and logistics supply modules, which
significantly enhance the capabilities of the Space Shuttle fleet. The
Company is currently constructing a module that will attach to the
International Space Station ("ISS") and be primarily used for storage,
power and utility service and laboratory facilities for long-duration
research. The Company's modules are unique to the Space Shuttle fleet
and ISS.
To date, the Company has successfully completed sixteen missions
aboard the Space Shuttle and substantially all of the Company's revenue
has been generated under contracts with National Aeronautics and Space
Administration ("NASA"). The Company's contracts are subject to
periodic funding allocations by NASA. NASA's funding is dependent on
receiving annual appropriations from the United States government.
During the years ended June 30, 2001, 2000, and 1999 approximately 83%,
86% and 80% of the Company's revenues were generated under U.S.
Government contracts.
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, a provider of
commercial satellite launch processing services and payload processing
facilities in the United States. 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. Additionally, Astrotech provides management and
consulting services to the Boeing Company for its Sea Launch program at
the Sea Launch facility in Long Beach, California.
On July 1, 1998, the Company acquired all of the outstanding
shares of capital stock of Johnson Engineering Corporation ("JE"). JE
performs several critical services for NASA including flight crew
support services, operations, training and fabrication of mockups at
NASA's Neutral Buoyancy Laboratory and at NASA's Space Vehicle Mockup
Facility, where astronauts train for both Space Shuttle and ISS
missions. JE also designs and fabricates flight hardware, such as
flight crew equipment and crew quarters' habitability outfitting as
well as providing stowage integration services. JE is also responsible
for configuration management of the ISS.
On April 11, 2000, the Company announced the formation of Space
Media, Inc. ("SMI"), a majority-owned subsidiary that intends to create
proprietary space-themed content for education and commerce. During the
year ended June 30, 2001, SMI's activities were refocused primarily to
develop content for the STARS Academy(TM), corporate promotion and
advertising opportunities and offering a library of content that can be
redistributed through various media channels. The STARS Academy is a
global education program offering students a scientific, cultural and
social adventure across the earth, into the oceans and aboard the
International Space Station. SMI offers retail products associated with
the STARS Academy. The STARS Academy program currently is planning to
launch student-designed experiments on a Space Shuttle mission next
year for schools in Australia, Canada, China, Israel, Japan, Singapore,
Thailand, and the United States. During the year ended June 30, 2000,
SMI acquired The Space Store, an online retail operation, anticipating
that e-commerce is expected to be an integral part of its Internet
business. The Space Store currently offers an assortment of
space-related products through its Space Store website,
www.spacestore.com.
------------------
In the year ended June 30, 2000, the Company also began
development and completed the preliminary design phase, in partnership
with RSC Energia ("Energia") of Korolev, Russia, of a commercial space
station habitation module. Named Enterprise(TM), this multipurpose
module will be attached to the ISS. The Company anticipates that
Enterprise will be the world's first commercial real estate in space
and the first commercial module attached to the ISS. Enterprise is
27
currently designed to offer space station users habitation, stowage
space, communications, power and other utilities, and laboratory
facilities for long-duration research.
The Company and Energia completed the organization of Space
Station Enterprise, LLC ("SSE LLC"), a Delaware limited liability
corporation, to complete development and future operation of
Enterprise. The Company and Energia have an equal ownership interest in
SSE LLC. SSE LLC is actively pursuing additional investors to provide
investment funds and participate as owners of SSE LLC in completing
Enterprise. Enterprise is anticipated to be launched in early 2004.
Liquidity
The Company has incurred net losses in the years ended June
30, 2001, 2000 and 1999. Historically, the Company has financed its
capital expenditures, research and development and working capital
requirements with progress payments under its various contracts, as
well as with proceeds received from both public and private debt and
equity offerings and borrowings under credit facilities.
The accompanying consolidated financial statements have been
prepared on a going concern basis, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of
business. The financial statements do not include any adjustments
relating to the recoverability of assets and classification of
liabilities that might be necessary should the Company be unable to
continue as a going concern.
The Company's liquidity has been constrained over the past
fiscal year. A significant portion of this constraint arose from
funding of new operations and assets to support future Company growth
and construction of the new Astrotech Florida facility prior to
obtaining external financing. In addition, the Company was committed to
capital investments to complete certain flight assets.
Due to changes in the external markets, the Company reevaluated
its strategy. Beginning in the third quarter of the fiscal year,
management began an aggressive multi-faceted plan to improve the
Company's financial position and liquidity. This plan included the
following components: i) completing the external financing for the new
facility required to support operations at Astrotech's Florida
location; ii) reducing operating costs and establishing an operating
plan for fiscal year 2002 which provides for sufficient cash flow to
support efficient operations; iii) renegotiating the terms and
conditions of the Revolving Line of Credit (note B); iv) limiting cash
commitments for future capital investments and new asset development;
v) restructuring the repayment of certain debts maturing in fiscal year
2002; vi) divesting non-core assets; vii) obtaining external investor
funding for its Space Media subsidiary; viii) completing negotiations
for certain contract equitable adjustments due to the Company under it
long-term services contract with NASA (note 10); and ix) improving the
overall liquidity of the Company. Management anticipates that this
strategy will generate sufficient additional liquidity to support its
operations and satisfy its debt obligations.
Under this Plan, the Company undertook extensive efforts to
reduce cash required for both operations and capital investments.
Specifically, the Company took steps to reduce overhead beginning in
the third quarter of the fiscal year and reduced its workforce by
approximately 10%. The Company's fiscal year 2002 operating plan will
continue to realize efficiencies from these actions. Subsequent to June
30, 2001, Astrotech obtained $20 million of financing for the expansion
of its payload processing facilities. The financing provides funds for
completion of the facility construction as well as a return of
approximately $6.5 million of previously invested working capital of
the Company. The Company used approximately $3.1 million of these
working capital funds to repay an existing obligation under Astrotech's
credit facility (note 8). Additionally, the Company completed planned
divesting of non-core assets (note 21). Development and construction of
new assets is currently limited to those assets required to fulfill
existing commitments under contracts. The Company has no further
on-going commitments to fund development or construction of any asset.
Under this Plan, the Company refocused the scope of SMI's
operations on near term initiatives in order to maximize the potential
return of capital invested to date in SMI. Subsequent to year end, the
Company obtained $750,000 from an investor to fund future operations of
SMI in
28
exchange for equity in SMI. As a result, the Company's ownership
interest in SMI was reduced to approximately 51% in September 2001.
The Company's ability to continue as a going concern is
dependent on its ability to complete the restructure of certain debt
obligations, secure the remaining portion of contract funding on the
equitable adjustment due under its contract with NASA, achieve its
fiscal year 2002 operating and cash flow objectives, and comply with
the terms of its credit facility. The Company is in ongoing
negotiations with its senior lender to renegotiate the terms and
conditions of its credit facility and with Alenia Spazio S.p.A. to
restructure its debt. The Company continues to receive negotiated
interim funding for work performed under the NASA contract equitable
adjustment (note 10). Management believes it will be successful in
negotiating the repayment terms of its debt due to Alenia Spazio
S.p.A.; however, there can be no assurances that the Company will be
able to reach agreement with Alenia Spazio S.p.A. on the terms and
conditions of a restructure. Additionally, management of the Company
strongly believes such funding under its equitable adjustment with
NASA will continue, although there can be no assurances that the
contract will be fully funded in a timely manner to provide sufficient
operating cash flow to support operations.
The Company's plans indicate that all cash generated from
operations during the next fiscal year will be used to fund operations
and reduce existing debt. The Company believes that the cash flows from
operations, borrowings under the New Credit Facility and spending
reductions related to discretionary capital expenditures and other
expenses will be sufficient to enable the Company to meet its cash
requirements for the next twelve months.
As discussed above, management has implemented and completed a
significant portion of the plan begun in the third quarter of the
fiscal year and expects that it will be successful in accomplishing the
remaining portion of the plan; however, no assurance can be given that
the Company will be successful in achieving the remaining goals. If the
Company is unable to complete its strategy, cash flow may be
insufficient to cover the Company's operating and debt service
requirements in fiscal year 2002.
(2) Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of
SPACEHAB, Incorporated and its wholly owned and majority-owned
subsidiaries Astrotech, JE and SMI. All significant intercompany
transactions have been eliminated in consolidation.
Cash and Cash Equivalents
For purposes of its consolidated statements of cash flows, the
Company considers short-term investments with original maturities of
three months or less to be cash equivalents. Cash equivalents are
primarily made up of money market investments and overnight repurchase
agreements recorded at cost, which approximates market value.
Property and Equipment
Property and equipment are stated at cost. All furniture,
fixtures and equipment are depreciated using the straight-line method
over the estimated useful lives of the respective assets, which is
generally five years. The Company's payload processing facilities are
depreciated using the straight-line method over their estimated useful
lives ranging from sixteen to forty-three years.
Goodwill
The excess of the cost over the fair value of net tangible and
identifiable intangible assets acquired in business combinations
accounted for as a purchase has been assigned to goodwill. Goodwill is
being amortized on a straight-line basis over five to twenty-five
years.
29
The Company periodically evaluates whether changes have
occurred that would require revision of the remaining estimated useful
life of the assigned goodwill or render the goodwill not recoverable.
If such circumstances arise, the Company would use an estimate of the
undiscounted value of expected future operating cash flows to determine
whether the goodwill is recoverable.
Investments in Affiliates
The Company generally uses the equity method of accounting for
its investments in, and earnings of, investees. In accordance with the
equity method of accounting, the carrying amount of such an investment
is initially recorded at cost and is increased to reflect the Company's
share of the investor's income and is reduced to reflect the Company's
share of the investor's losses. Investments in which the Company has
less than 20% ownership and no significant influence are accounted for
under the cost method and are carried at cost.
Impairment of Long-Lived Assets
The Company accounts for long-lived assets in accordance with
the provisions of Statements of Financial Accounting Standards ("SFAS")
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of. This Statement requires that
long-lived assets and certain identifiable intangibles be reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Recoverability
of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be
generated by the asset. If such assets are considered to be impaired,
the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.
Stock-Based Compensation
The Company accounts for stock-based employee compensation
arrangements using the intrinsic value method as prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued
to Employees ("APB Opinion 25"), and related interpretations.
Accordingly, compensation cost for options to purchase common stock
granted to employees is measured as the excess, if any, of the fair
value of common stock at the date of the grant over the exercise price
an employee must pay to acquire the common stock. The Company has
adopted the disclosure requirements of SFAS No. 123, Accounting for
Stock-based Compensation ("SFAS 123").
Warrants to purchase common stock granted to other than
employees as consideration for goods or services rendered are
recognized at fair value.
Revenue Recognition
Revenue generated under the REALMS Contract and for all other
contract awards for which the capability to successfully complete the
contract can be reasonably assured and costs at completion can be
reliably estimated at contract inception, revenue recognition under the
percentage-of-completion method is being used based on costs incurred
over the period of the contract. Revenue provided by JE is primarily
derived from cost-plus award fee contracts, whereby revenue is
recognized to the extent of costs incurred plus estimates of award fee
revenues using the percentage-of-completion method. Award fees, which
provide earnings based on the Company's contract performance as
determined by NASA evaluations, are recorded when the amounts can be
reasonably estimated, or are awarded. Changes in estimated costs to
complete, provisions for contract losses and estimated amounts
recognized as award fees are recognized in the period they become
known. Revenue provided by Astrotech's payload processing services is
recognized ratably over the occupancy period of the satellite while in
the Astrotech facilities.
Research and Development
Research and development costs are expensed as incurred.
30
Income Taxes
The Company recognizes income taxes under the asset and
liability method. Deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities
and their respective tax bases and operating loss and tax credit carry
forward. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment
date.
Net Income (Loss) Per Share
Net income (loss) per share is presented on both a basic and
diluted basis in accordance with the provisions of SFAS No. 128,
Earnings per Share.
Basic earnings (loss) per share are calculated by dividing net
income (loss) by the weighted average number of common shares
outstanding during the period. Diluted earnings (loss) per share
includes all common stock options and warrants and other common stock,
to the extent dilutive, that potentially may be issued as a result of
conversion privileges, including the convertible subordinated notes
payable (note 8).
Accounting Estimates
The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the consolidated financial statements
and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from these estimates.
Reclassifications
Certain 2000 and 1999 amounts have been reclassified to conform
with the 2001 consolidated financial statement presentation.
New Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board issued
SFAS No. 142, "Accounting for Goodwill and Other Intangible Assets."
The Statement eliminates the requirement to amortize costs in excess of
net assets acquired (goodwill) under the purchase method of accounting,
and sets forth a new methodology for periodically assessing and, if
warranted, recording impairment of goodwill. Early adoption of this
standard is permitted July 1, 2001, however, the Company does not plan
to early adopt. The Company will be required to adopt the new rules
effective July 1, 2002. The elimination of amortization of goodwill is
expected to increase earnings by approximately $1.0 million. The
Company will analyze and assess the impairment provisions of the new
Statement, but has not yet determined the impact, if any, of the
adoption of those provisions.
(3) Statements of Cash Flows - Supplemental Information
Cash paid for interest costs was approximately $7.0 million;
$6.9 million and $5.4 million for the years ended June 30, 2001, 2000
and 1999, respectively. The Company capitalized interest of
approximately $2.7 million, $3.7 million and $2.5 million during the
years ended June 30, 2001, 2000 and 1999, respectively, related to the
module improvements and a building in progress.
The Company paid no income taxes for the years ended June 30,
2001 and 2000, and paid income taxes of approximately $400,000 for the
year ended June 30, 1999.
31
(4) Accounts Receivable
At June 30, 2001 and 2000, accounts receivable consisted of (in
thousands):
2001 2000
--------------------------------------------------- ---------------- --------------
U.S. government contracts:
Billed $ 9,181 $ 18,506
Unbilled 3,085 3,400
--------------------------------------------------- ---------------- --------------
Total U.S. government contracts 12,266 21,906
--------------------------------------------------- ---------------- --------------
Commercial contracts:
Billed 4,378 1,612
Unbilled 714 2,280
--------------------------------------------------- ---------------- --------------
Total commercial contracts 5,092 3,892
--------------------------------------------------- ---------------- --------------
Total accounts receivable $ 17,358 $ 25,798
--------------------------------------------------- ---------------- --------------
The Company anticipates collecting substantially all receivables
within one year.
The accuracy and appropriateness of the Company's direct and
indirect costs and expenses under its government contracts, and
therefore its accounts receivable recorded pursuant to such contracts,
are subject to extensive regulation and audit, including by the U.S.
Defense Contract Audit Agency or by other appropriate agencies of the
U.S. government. Such agencies have the right to challenge the
Company's cost estimates or allocations with respect to any government
contract. Additionally, a substantial portion of the payments to the
Company under government contracts are provisional payments that are
subject to potential adjustment upon audit by such agencies. In the
opinion of management, any adjustments likely to result from inquiries
or audits of its contracts would not have a material adverse impact on
the Company's financial condition or results of operations.
(5) Acquisition
The Space Store
On June 28, 2000, the Company paid approximately $200,000
including transaction costs, to acquire all of the capital stock of The
Space Store. The business combination has been accounted for using the
purchase method under APB Opinion 16. The purchase price has been
allocated to the assets and liabilities acquired based on estimates of
fair value as of the date of acquisition. Based on the allocation of
the net assets acquired, goodwill of approximately $200,000 was
recorded. Such goodwill is being amortized on a straight-line basis
over 5 years. Historical results of operations of The Space Store are
insignificant. The Space Store is a wholly owned subsidiary of SMI. The
Space Store is involved in e-commerce and sells space related items.
(6) Loans Payable Under Credit Agreement
Prior to an August 1996 amendment, the Company's credit
agreement consisted of a $6.5 million term loan bearing interest at 1
percent per month and a $5.5 million non-interest-bearing term loan
with several insurance companies. In addition, a revolving credit
commitment with a subcontractor and former shareholder provided a
maximum outstanding balance of $6.0 million and bore interest at a rate
of 1 percent per month.
In August 1996, the Company's credit agreement was amended. In
exchange for the full satisfaction of the Company's term loans with the
various insurance companies, the Company paid the insurance companies
$2.5 million and agreed to pay an additional $2.0 million under a new
non-interest-bearing term loan. As of June 30, 2001, the remaining
balance due under the term
32
loan is $0.33 million due on August 1, 2001, which was repaid
subsequent to the year ended June 30, 2001.
In conjunction with a payment in December 1998 of certain
principal of notes payable due to Alenia Spazio S.p.A., (note 7), the
annual interest rate on the outstanding balances under the credit
agreement was amended to be 8.25 percent per year. Aggregate interest
cost incurred on the debts due under the credit agreement was
approximately $30,000, $57,000 and $40,000 for the years ended June 30,
2001, 2000 and 1999, respectively.
(7) Convertible Notes Payable to Shareholder
The Company issued subordinated notes for a portion of the
amount due to Alenia Spazio S.p.A. ("Alenia"), a shareholder, under a
previously completed construction contract for the Company's flight
modules. In December 1998, the Company amended its agreement with
Alenia Spazio S.p.A. relative to the subordinated notes payable with a
then outstanding principal balance of $11.9 million due in August 2001.
In exchange for payment of $4.0 million, Alenia agreed to waive the
interest payment due for the quarter ended December 31, 1998 and to
reduce the annual interest rate on the subordinated notes from 12 to 10
percent on the outstanding balance as of January 1, 1999. In addition,
Alenia may elect to convert, in whole or part, the remaining principal
amount into equity, on terms and conditions to be agreed with the
Company.
The subordinated notes had aggregate outstanding balances of
$7.9 million at June 30, 2001. The notes bear interest at an annual
rate of 10 percent. No amount of principal or accrued interest on the
notes is due until all amounts under the amended and restated credit
agreement due to the various insurance companies (note 6) are repaid.
All principal payments were due under these notes on August 1, 2001.
The maturity date of this debt was extended from August 1, 2001 to
October 31, 2001. The Company is in ongoing discussions with Alenia to
restructure the terms of this debt to provide for repayment over an
extended period.
During the year ended June 30, 1998, the Company began paying
interest on these notes quarterly. The Company paid approximately
$800,000 interest during each of the years ended June 30, 2001 and 2000
and $400,000 in 1999.
(8) Other Debt
Revolving Loan Payable
On June 16, 1997, the Company entered into a $10.0 million
revolving loan payable line of credit agreement with a financial
institution. Outstanding balances on the line of credit accrue interest
at either the lender's prime rate or a LIBOR-based rate. Certain assets
of the Company collateralize this loan. The agreement expired on August
31, 2000. Through June 30, 2000, the Company had drawn $4.5 million
against the line of credit.
On August 9, 2000, the Company entered into a $15 million
revolving credit facility with a financial institution that provides a
working capital line of credit with a letter of credit sub-limit of
$10.0 million. This new credit facility replaced the current $10
million revolving line of credit. Certain assets of the Company
collateralize the new credit facility. The term of the agreement is
through August 2003. Through June 30, 2001, the Company had drawn $6.75
million against the line of credit.
In conjunction with the Astrotech financing of its satellite
processing facility in Titusville, Florida, in August 2001, the terms
of the credit facility have been amended. Astrotech is no longer a
party to the credit facility and the maximum amount allowable to be
drawn under the Credit Facility has been reduced to $6.5 million. The
Company is in the process of negotiating new covenants and revisions
to certain terms of the New Credit Facility.
Loans Payable
On July 14, 1997, the Company's subsidiary, Astrotech, entered
into a credit facility for loans of up to $15.0 million with a
financial institution. The term of the agreement is through
33
July 13, 2002. This loan is collateralized by the assets of Astrotech
and certain other assets of the Company, and is guaranteed by the
Company. Interest accrues at LIBOR plus three percent. Principal and
interest are payable on a quarterly basis. In April 1999, the Company
borrowed an additional $1.0 million under this credit facility with
the same terms, conditions and expiration date of the original loan.
Principal payments of approximately $3.1 million are due fiscal year
ended 2002, $1.1 million are due in the fiscal year early 2003, and
$40,000 in the fiscal year ending 2004. At June 30, 2001, the Company
had an outstanding balance of $4.3 million under this credit facility
and accrued interest of $87,000. In conjunction with the Astrotech
financing, $3.1 million of the balance outstanding at the year ended
June 30, 2001 was subsequently repaid.
Convertible Subordinated Notes
In October 1997, the Company completed a private placement
offering for $63.25 million of aggregate principal of unsecured 8
percent Convertible Subordinated Notes due 2007. Interest is payable
semi-annually. The notes are convertible into the common stock of the
Company at a rate of $13.625 per share. This offering provided the
Company with net proceeds of approximately $59.9 million to be used for
capital expenditures associated with the development and construction
of space related assets and for other general corporate purposes.
Loan Covenants
For the year ended June 30, 2001 the Company was in breach of
certain loan covenants of the Term Loan and New Credit Facility. The
Company received a waiver of the covenant violation on the New Credit
Facility as of June 30, 2001 and also received a waiver and covenant
reset for the Term Loan. For the year ended June 30, 2000, the Company
was in breach of certain covenants of the Term Loan and Revolving Line
of Credit facility. The covenant for the Revolving Line of Credit was
waived through its term and the covenant on the Term Loan agreement
was waived and amended on a going forward basis. The Company is in the
process of negotiating new covenants on the New Credit Facility for
future periods. Although there can be no assurances, the Company
believes it will be in compliance with the amended covenants of the
Term Loan and existing covenants of the New Credit Facility during the
year ended June 30, 2002.
(9) Fair Value of Financial Instruments
The following table presents the carrying amounts and estimated
fair values of the Company's financial instruments as of June 30, 2001
and 2000 in accordance with SFAS No. 107, Disclosures about Fair Value
of Financial Instruments (in thousands):
June 30, 2001 June 30, 2000
-------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------------------------------------------- ------------- ------------- ------------ -------------
Financial liabilities:
Loans payable under
credit agreement $ 333 $ 333 $ 667 $ 579
Notes payable to shareholder 7,860 7,860 7,860 7,860
Loans payable under credit facility 4,264 4,264 7,583 7,583
Convertible notes payable 63,250 38,029 63,250 44,908
-------------------------------------------- ------------- ------------- ------------ -------------
The fair value of the Company's long-term debt is based on
quoted market price or is estimated based on the current rates offered
to the Company for debt of similar remaining maturities and other
terms. The carrying amounts of cash and cash equivalents, accounts
receivable, and accounts payable and accrued expenses approximate their
fair market value because of the relatively short duration of these
instruments.
34
(10) NASA Contracts
Research and Logistics Module Services Contract
On December 21, 1997, the Company entered into the REALMS
Contract to provide to NASA its flight modules and related integration
services over three missions at an aggregate fixed price of $44.9
million. This contract provides for NASA to use the flight modules for
both science and logistics missions. During the period from December
21, 1997 to June 30, 2001, this contract was amended whereby the REALMS
contract value was increased to $160.3 million and the number of
missions was increased to seven.
During the years ended June 30, 2001, 2000 and 1999, the Company
recognized $36.6 million, $33.3 million and $28.2 million of revenue,
respectively, under this contract. SPACEHAB has a claim in excess of
the REALMS contract value of approximately $7.9 million relative to an
equitable adjustment due to a two-year slip in the launch date of the
Space Shuttle flight STS-107.
Flight Crew Systems Development Contract ("FCSD")
JE primarily operates under the Flight Crew Systems
Development contract ("FCSD" Contract") which is currently a $366.6
million multitask cost-plus-award and incentive-fee contract. The
contract commenced in May 1993 and was scheduled to conclude in April
2001. NASA has exercised its option to extend certain tasks for an
additional year through April 2002. JE performs several critical
services for NASA including flight crew support services, operations,
training and fabrication of mockups at NASA's Neutral Buoyancy
Laboratory and at NASA's Space Vehicle Mockup Facility, where
astronauts train for both Space Shuttle and ISS missions. JE also
provides stowage integration services and is also responsible for
configuration management of the ISS.
During the years ended June 30, 2001, 2000 and 1999, the
Company recognized $50.7 million, $57.9 million, $57.7 million of
revenue, respectively, under this contract.
(11) Stockholder Rights Plan
On March 26, 1999, the Board of Directors adopted a Stockholder
Rights Plan designed to deter coercive takeover tactics and to prevent
a potential acquirer from gaining control of the Company without
offering a fair price to all of the Company's stockholders. A dividend
of one preferred share purchase right (a "Right") was declared on every
share of Common Stock outstanding on April 9, 1999. Each Right under
the Plan entitles the holder to buy one one-thousandth of a share of a
new series of junior participating preferred stock for $35. If any
person or group becomes the beneficial owner of 15 percent or more of
common stock (with certain limited exceptions), then each Right (not
owned by the 15 percent stockholder) will then entitle its holder to
purchase, at the Right's then current exercise price, common shares
having a market value of twice the exercise price. In addition, if
after any person has become a 15 percent stockholder, and is involved
in a merger or other business combination transaction with another
person, each Right will entitle its holder (other than the 15 percent
stockholder) to purchase, at the Right's then current exercise price,
common shares of the acquiring company having a value of twice the
Right's then current exercise price. The rights were granted to each
shareholder of record on April 9, 1999. At any time before a person or
group acquires a 15% position, the Company generally will be entitled
to redeem the Rights at a redemption price of $0.01 per Right. The
Rights will expire on April 9, 2009.
(12) Common Stock Option and Stock Purchase Plans
As of June 30, 2001, approximately 1,538,798 shares of common
stock were reserved for future grants of stock options under the
Company's three stock option plans.
35
Non-qualified Options
Non-qualified options are granted at the sole discretion of the
Board of Directors. Prior to the adoption of the 1994 Stock Incentive
Plan (the "1994 Plan"), stock options granted to the Company's officers
and employees were part of their employment contract or offer. The
number and price of the options granted was defined in the employment
agreements and such options vest incrementally over a period of four
years and generally expire within ten years of the date of grant.
The 1994 Plan
Under the terms of the 1994 Plan, the number and price of the
options granted to employees is determined by the Board of Directors
and such options vest, in most cases, incrementally over a period of
four years and expire no more than ten years after the date of grant.
The Directors' Stock Option Plan
Prior to an amendment on October 21, 1997, each non-employee
member of the Board of Directors was annually granted options to
purchase 5,000 shares of common stock at exercise prices equal to the
fair market value on the date of grant. Subsequent to the amendment,
each non-employee member of the Board of Directors received a one-time
grant of an option to purchase 10,000 shares of common stock. Further,
each new non-employee director after the amendment date receives a
one-time grant of an option to purchase 10,000 at an exercise price
equal to fair market value on the date of grant. In addition, effective
as of the date of each annual meeting of the Company's stockholders on
or after the effective date, each non-employee director who is elected
or continues as a member of the Board of Directors of the Company shall
be awarded an option to purchase 5,000 shares of common stock. Options
under the Director's Plan vest after one year and expire seven years
from the date of grant.
1997 Employee Stock Purchase Plan
During the year ended June 30, 1998, the Company adopted an
employee stock purchase plan that permits eligible employees to
purchase shares of common stock of the Company at prices no less than
85 percent of the current market price. Eligible employees may elect to
participate in the plan by authorizing payroll deductions from one
percent to ten percent of gross compensation for each payroll period.
On the last day of each quarter, each participant's contribution
account is used to purchase the maximum number of whole and fractional
shares of common stock determined by dividing the contribution
account's balance by the lesser of 85 percent of the price of a share
of common stock on the first day of the quarter or the last day of a
quarter. The number of shares of common stock that may be purchased
under the plan is 1,500,000. Through June 30, 2001, employees have
purchased approximately 372,000 shares under the plan.
Space Media, Inc. Stock Option Plan
During the year ended June 30, 2000, Space Media, Inc., a
majority owned subsidiary of the Company, adopted an option plan ("SMI
Plan") for employees, officers, directors and consultants of Space
Media, Inc. Under the terms of the SMI Plan, 1,500,000 shares have been
reserved for future grants for which the number and price of the
options granted is determined by the Board of Directors and such
options vest, in most cases, incrementally over a period of four years
and expire no more than ten years after the date of grant. At June 30,
2001, there were 611,250 options issued and outstanding under the SMI
Plan at a weighted average exercise price of $1.23. The options vest
equally over a four-year period and have a life of 10 years. There were
148,734 options exercisable as of June 30, 2001.
36
Stock Option Activity Summary
The following table summarizes the Company's stock option plans,
excluding the SMI plan:
Non-qualified Options 1994 Plan Directors' Plan
--------------------------- ------------------------- -------------------------
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Shares Exercise
outstanding Price Outstanding Price Outstanding price
-------------------------------------------------------------------------------------------------------------------
Outstanding at June 30, 1998 300,045 $ 12.33 1,478,253 $ 8.62 190,000 $ 9.99
Granted 300,000 14.00 572,713 11.69 50,000 7.00
Exercised - - 1,070 9.69 - -
Forfeited 106,241 12.00 140,670 9.16 - -
-----------------------------------------------------------------------------------------------------------------
493,804 $ 13.42 1,909,226 $ 9.50 240,000 $ 9.37
Outstanding at June 30, 1999
Granted - - 1,034,674 5.10 35,000 4.13
Exercised - - - - - -
Forfeited 95,831 12.39 360,287 7.06 - -
-----------------------------------------------------------------------------------------------------------------
Outstanding at June 30, 2000 397,973 $ 13.66 2,583,613 $ 8.05 275,000 $ 8.70
Granted - - 1,036,040 4.44 40,000 4.00
Exercised - - - - - -
Forfeited 67,707 12.55 967,539 8.11 - -
-----------------------------------------------------------------------------------------------------------------
Outstanding at June 30, 2001 330,266 $ 13.89 2,652,114 $ 6.62 315,000 $ 8.11
-----------------------------------------------------------------------------------------------------------------
Options exercisable at:
June 30, 1999 191,770 $ 12.39 1,072,121 $ 8.56 190,000 $ 9.99
June 30, 2000 397,973 13.66 1,423,660 8.58 240,000 9.37
June 30, 2001 330,266 13.89 1,272,238 7.89 275,000 8.70
Weighted-average fair value at
date of grant during the fiscal
period ended
June 30, 1999 300,000 $ 3.12 572,713 $ 4.50 50,000 $ 2.21
June 30, 2000 - - 1,034,674 3.02 35,000 1.87
June 30, 2001 - - 1,036,040 2.06 40,000 1.85
-------------------------------------------------------------------------------------------------------------------
The following table summarizes information about the Company's
stock options outstanding at June 30, 2001:
Options outstanding Options exercisable
----------------------------------------- ------------------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Number Contractual Exercise Number Exercise
Range of exercise prices Outstanding life (years) price exercisable Price
----------------------------- -------------- ------------- ------------ -------------- ---------------
$ 2.81 - 4.75 552,000 9.16 $ 3.69 53,750 $ 4.34
4.88 - 5.75 1,036,310 7.64 5.06 305,586 5.21
6.63 - 10.13 693,889 2.10 7.02 691,889 7.01
10.63 - 14.50 1,009,081 4.63 12.28 820,179 12.42
24.00 6,100 1.25 24.00 6,100 24.00
----------------------------- -------------- -------- ------------ -------------- ---------------
$ 2.81 - $24.00 3,297,380 5.79 $ 7.49 $ 1,877,504 9.06
----------------------------- -------------- -------- ------------ -------------- ---------------
The Company applies APB Opinion 25 and related interpretations
in accounting for its plans. Accordingly, as all options have been
granted at exercise prices equal to the fair market value as of the
date of grant, no compensation cost has been recognized under these
plans in the accompanying consolidated financial statements. Had
compensation cost been determined
37
consistent with SFAS 123, the Company's net income (loss) and earnings
(loss) per common share would have been reduced (increased) to the pro
forma amounts indicated below (in thousands, except per share data):
Year Ended Year Ended Year Ended
June 30, 2001 June 30, 2000 June 30, 1999
-------------------------------------------------------------------------------------------------
Net income (loss):
As reported $ (12,785) $ (3,844) $ (2,589)
Pro forma $ (13,982) (4,996) (4,424)
-------------------------------------------------------------------------------------------------
Net income (loss) per share - basic:
As reported $ (1.12) $ (0.34) $ (0.23)
Pro forma $ (1.23) (0.44) (0.40)
-------------------------------------------------------------------------------------------------
The fair value of each option granted and each employee stock
purchase right is estimated using the Black-Scholes option-pricing
model with the following weighted average assumptions used for grants
in fiscal years 2001, 2000 and 1999, respectively: 0.0 percent dividend
growth; expected volatility ranging from 35 percent to 50 percent;
risk-free interest rates ranging from 5.68 percent to 7.875 percent;
and expected lives ranging from three months to seven years.
The effects of compensation cost as determined under SFAS 123 on
pro forma net income (loss) in years ended June 30, 2001, 2000 and 1999
may not be representative of the effects on pro forma net income (loss)
in future periods.
Warrants
The Company also has 53,000 currently exercisable warrants
outstanding to purchase the Company's common stock at $9.00 per share,
with an expiration date of June 2002. The fair market value of these
warrants was recognized at issuance. All such warrants were issued at
exercise prices equivalent to, or in excess of, the determined fair
market value of the Company's common stock at the date of issuance.
(13) Income Taxes
The Company accounts for taxes under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes (SFAS 109).
Under SFAS 109, deferred tax liabilities and assets are determined
based on the difference between the financial statement and tax basis
of assets and liabilities using enacted rates expected to be in effect
during the year in which the differences reverse.
The components of income tax expense (benefit) from continuing
operations are as follows (in thousands):
Years Ended June 30,
------------------------------------------------
2001 2000 1999
---------------------------------------------------------------------------------------------------
Current:
Federal $ - $ - $ (1,447)
State 127 - 15
Foreign 70
---------------------------------------------------------------------------------------------------
197 - (1,432)
---------------------------------------------------------------------------------------------------
Deferred:
Federal (685) (1,477) 847
State and Local (398) (285) 86
Foreign
---------------------------------------------------------------------------------------------------
(1,083) (1,762) 933
--------------------------------------------------------------------------------------------------
Income Tax Expense (Benefit) $ (886) $(1,762) $ (499)
---------------------------------------------------------------------------------------------------
38
A reconciliation of the reported income tax expense to the amount that
would result by applying the U.S. federal statutory rate of 34 percent
to the income (loss) before income taxes to the actual amount of income
tax expense (benefit) recognized follows (in thousands):
Years Ended June 30,
------------------------------------------------
2001 2000 1999
---------------------------------------------------------------------------------------------------
Expected expense (benefit) $ (4,648) $ (1,906) $ (1,050)
Change in valuation allowance 3,948 43 169
State income taxes (491) (188) (15)
Other, primarily goodwill amortization 305 289 397
Total $ (886) $ (1,762) $ (499)
---------------------------------------------------------------------------------------------------
The Company's deferred tax asset as of June 30, 2001 and 2000 consists
of the following (in thousands):
2001 2000
--------------------------------------------------------------------------------------------------
Deferred Tax Assets:
Net Operating Loss Carryforwards $ 15,818 $ 10,472
General business Credit Carryforwards 2,170 2,170
Alternative Minimum Tax Credit Carryforwards 3,292 3,292
Accrued Expenses 1,636 999
Capitalized Start-up and Organization Costs 1,602 751
Other 190 110
--------------------------------------------------------------------------------------------------
Total Gross Deferred Tax Assets 24,708 17,794
Less - Valuation Allowance (4,160) (212)
--------------------------------------------------------------------------------------------------
Net Deferred Tax Assets 20,548 17,582
--------------------------------------------------------------------------------------------------
Deferred Tax Liabilities:
Property and Equipment, principally due to
differences in depreciation 20,493 18,550
Other 55 115
--------------------------------------------------------------------------------------------------
Total Gross Deferred Tax Liabilities 20,548 18,665
--------------------------------------------------------------------------------------------------
Net Deferred Tax Assets/(Liabilities) 0 $ (1,083)
--------------------------------------------------------------------------------------------------
As of June 30, 2000, current deferred tax assets of $997,000 are
included in prepaid expenses and other current assets in the
accompanying balance sheet.
The net changes in the total valuation allowance for the years
ended June 30, 2001, 2000, and 1999 were increases of approximately
$3.9 million, $43,000 and $169,000, respectively.
At June 30, 2001, the Company had accumulated net operating
losses of approximately $41.7 million for Federal income tax purposes,
which are available to offset future regular taxable income. These
operating loss carryforwards expire between the years 2007 and 2021.
Utilization of these net operating losses may be subject to limitations
in the event of significant changes in stock ownership of the Company.
Additionally, the Company has approximately $2.2 million and
$3.3 million of research and experimentation and alternative minimum
tax credit carryforwards, respectively, available to offset future
regular tax liabilities. The research and experimentation credits
expire between the years 2002 and 2008; the alternative minimum tax
credits carry-forward indefinitely.
In assessing the realizability of its net deferred tax assets,
management considers whether it is more likely than not that some
portion or all of the net deferred tax assets are realizable.
Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning
strategies in making this assessment. As of June 30, 2001, the Company
provided a full valuation allowance of approximately $4.2 million
against its net deferred tax assets.
39
(14) Net Income (Loss) Per Share
The following are reconciliation's of the numerators and
denominators of the basic and diluted earnings (loss) per share
computations for the years ended June 30, 2001, 2000 and 1999 (in
thousands, except share data):
Per common Assuming
share Dilution
-------------------------------------------------------------------------------------------------
Year Ended June 30, 2001
Net loss $ (12,785) $ (12,785)
Net loss, as adjusted $ (12,785) $ (12,785)
----------------------------------------------------------------------------------------------------
Weighted average outstanding common shares 11,400,482 11,400,482
Adjusted shares 11,400,482 11,400,482
----------------------------------------------------------------------------------------------------
Year Ended June 30, 2000
Net loss $ (3,844) $ (3,844)
Net loss, as adjusted $ (3,844) $ (3,844)
----------------------------------------------------------------------------------------------------
Weighted average outstanding common shares 11,272,767 11,272,767
Adjusted shares 11,272,767 11,272,767
----------------------------------------------------------------------------------------------------
Year Ended June 30, 1999
Net loss $ (2,589) $ (2,589)
Net loss, as adjusted $ (2,589) $ (2,589)
----------------------------------------------------------------------------------------------------
Weighted average outstanding common shares 11,184,742 11,184,742
----------------------------------------------------------------------------------------------------
Adjusted shares 11,184,742 11,184,742
All options and warrants to purchase shares of common stock were
excluded from the computations of diluted earnings (loss) per share for
the years ended June 30, 2001, 2000 and 1999, because the impact of
such options and warrants is anti-dilutive.
(15) Employee Benefit Plan
The Company has a defined contribution retirement plan, which
covers all employees and officers. For the years ended June 30, 2001,
2000 and 1999, the Company contributed $1.8 million, $1.5 million and
$0.8 million, respectively, to the plan. The Company has the right, but
not the obligation, to make contributions to the plan in future years
at the discretion of the Company's Board of Directors.
(16) Commitments
Integration and Operations Contracts
On August 13, 1997, the Company initiated a letter agreement
with The Boeing Company ("Boeing"), a major subcontractor and
shareholder, for standard integration and operation services to the
Company for future missions that were not already provided for under
its contract for missions to the Mir Space Station. In August 1998,
this letter agreement became a cost plus incentive fee contract whereby
Boeing will provide integration and operations services required to
successfully complete four research missions (one single module mission
and three double module missions) and seven logistics double module
missions. Additionally, there are several tasks that are separately
priced to yield a contract value of up to $139.5 million. As of June
30, 2001, $75.1 million has been incurred under this commitment.
Module Construction Contracts
During the year ended June 30, 1997, the Company entered into a
$43.1 million cost-plus-fee contract with Boeing to construct a new
research module with associated double module hardware. The Company has
taken initial delivery of the module and has completed its
construction. The Company has incurred approximately $43.0 million in
construction costs through June 30, 2001.
40
During the year ended June 30, 1999, the Company entered into a
$4.6 million letter agreement with Boeing to initiate activities to
support the fabrication of an adaptable double module. The letter
contract period of performance is through November 2000. The Company
has incurred $3.9 million in costs through June 30, 2001.
Leases
The Company is obligated under capital leases for equipment and
noncancelable operating leases for equipment, office space, storage
space, and the land for a payload processing facility. Future minimum
payments under these capital leases and noncancelable operating leases
are as follows (in thousands):
Capital Operating
Year ending June 30, Leases Leases
--------------------------------------------------------------------------------------------------
2002 $ 40 $ 2,265
2003 28 1,824
2004 22 864
2005 1 668
2006 and thereafter - 4,904
--------------------------------------------------------------------------------------------------
91 $ 10,525
---------
Less: amount representing interest between 9% and 12% (8)
---------------------------------------------------------------------------------
Present value of net minimum capital lease payments $ 83
---------------------------------------------------------------------------------
Rent expense for the years ended June 30, 2001, 2000 and 1999 was
approximately $2.9 million, $2.1 million and $2.2 million respectively.
For the year ended June 30, 2001, the capitalized lease assets are
recorded at $365,424 and the annual amortization is $44,000.
(17) Segment information
Based on its organization, the Company operates in four business
segments: SPACEHAB, now designated Flight Services for Company
management reporting, JE, Astrotech and SMI. SPACEHAB was founded to
commercially develop space habitat modules to operate in the cargo bay
of the Space Shuttles. Flight Services provides access to the modules
and integration and operations support services for both NASA and
commercial customers. JE is primarily engaged in providing engineering
services and products to the Federal Government and NASA, primarily
under the FCSD Contract. Astrotech provides payload-processing
facilities to serve the satellite manufacturing and launch services
industry. Astrotech currently provides launch site preparation of
flight ready satellites to major U.S. space launch companies and
satellite manufacturers. SMI was established in April 2000, to develop
space themed commercial business activities.
The Company's chief operating decision maker utilizes both
revenue and income before taxes, including allocated interest based on
the investment in the segment, in assessing performance and making
overall operating decisions and resource allocations. As such, other
income/expense items including taxes and corporate overhead have not
been allocated from Flight Services to the various segments.
41
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies, see note
2. Information about the Company's segments is as follows:
(in thousands)
Year Ended June 30, 2001: Net Depreciation
Pre-Tax Fixed And
Revenue Income (loss) Assets Amortization
------------------------------------------------------------------------
Flight Services $44,997 $(7,868) $135,055 $7,107
Johnson Engineering 53,526 (887) 2,806 1,647
Astrotech 6,230 18 36,135 966
SMI 501 (4,934) 58 230
------------------------------------------------------------------------
$105,254 $(13,671) $174,054 $9,950
------------------------------------------------------------------------
Year Ended June 30, 2000: Net Depreciation
Pre-Tax Fixed And
Revenue Income (loss) Assets Amortization
------------------------------------------------------------------------
Flight Services $39,871 $(928) $129,709 $5,702
Johnson Engineering 58,254 108 3,000 1,537
Astrotech 7,583 (2,944) 25,975 983
SMI - (1,842) - -
------------------------------------------------------------------------
$105,708 $(5,606) $158,684 $8,222
------------------------------------------------------------------------
Year ended June 30, 1999: Net Depreciation
Pre-Tax Fixed And
Revenue Income Assets Amortization
------------------------------------------------------------------------
Flight Services $39,477 $(2,925) $109,912 $4,689
Johnson Engineering 58,398 342 1,647 1,164
Astrotech 9,845 (505) 20,625 1,164
SMI - - - -
------------------------------------------------------------------------
$107,720 $(3,088) $132,184 $7,017
------------------------------------------------------------------------
Foreign revenue for the years ended June 30, 2001, 2000 and
1999 was approximately $6.6 million, $1.7 million and $10.9 million
respectively. Domestic revenue for the years ended June 30, 2001, 2000
and 1999 was approximately $98.7 million, $104.0 million and $96.8
million respectively.
(18) Convertible Preferred Stock
On August 2, 1999, Astrium, a related party, a shareholder,
purchased an additional $12.0 million equity stake in SPACEHAB
representing 1,333,334 shares of Series B Senior Convertible Preferred
Stock. Under the agreement, Astrium, a related party, purchased all of
SPACEHAB's 975,000 authorized and uninsured shares of preferred stock.
At the annual stockholders meeting held on October 14, 1999, the
shareholders approved the proposal to increase the number of authorized
shares of preferred stock to 2,500,000, in order to complete the
transaction with Astrium, a related party, allowing them to purchase
the additional 358,334 preferred shares. The preferred stock purchase
increased Astrium's, a related party, voting interest in SPACEHAB to
approximately 11.5 percent. The Series B Senior Convertible Preferred
Stock is: convertible at the holders' option on the basis of one share
of preferred stock for one share of common stock, entitled to vote on
an "as converted" basis the equivalent number of shares of common stock
and has preference in liquidation, dissolution or winding up of $9.00
per preferred share. No dividends are payable on the convertible
preferred shares.
Astrium, a related party, provides unpressurized payload and
integration efforts to SPACEHAB on a fixed price basis in addition to
providing engineering services as required. For the years ended June
30, 2001, 2000 and 1999, Astrium's, a related party, payload and
integration services included in cost of revenue was approximately $4.3
million, $3.6 million and $2.1 million respectively.
42
(19) Investment in Guigne
During June 1998, the Company entered into a joint venture
agreement with Guigne Technologies Limited ("GTL"), a Canadian company,
for the purpose of developing, fabricating, marketing and selling of
SpaceDRUMS services, a containerless processing facility intended to be
deployed on the ISS. In accordance with the joint venture agreement,
the Company had contributed, in exchange for a 50 percent interest in
the joint venture, an aggregate of $2.0 million of working capital to
the joint venture through December 1999. The Company's contributions
were made in the form of an unsecured non-interest bearing note. The
joint venture has entered into contracts with an aggregate value of
$6.9 million for the lease of the SpaceDRUMS facility with an unrelated
party.
The joint venture agreement contained an option whereby the
Company could exchange its interest in the joint venture and the $2.0
million note for a common equity interest in Guigne Inc. ("GI"), the
ultimate parent of GTL. In accordance with the terms of the joint
venture agreement, in December 1999 the Company notified GI of its
intention to exercise its option. Under the option, the equity interest
obtained in GI was determined by dividing the $2.0 million contributed
by the Company by the fair market value of GI, as determined by
independent appraisal, at the date of exchange. However, such equity
interest could not exceed 19% of the outstanding equity of GI. The
independent appraisal and conversion were finalized subsequent to June
30, 2000, with an effective date of January 1, 2000, and resulted in
the Company obtaining a 15% common equity interest in GI. The Company
accounts for its investment in GI on the cost method. Upon the
exchange, the joint venture was dissolved and all property, rights,
assets and liabilities of the joint venture became the property,
rights, assets and liabilities of GI.
The Company did not have the ability to exclusively control the
operational and financial policies of the joint venture, although the
Company did exert significant influence and as such recognized its
investment in the joint venture prior to the exchange using the
modified equity method of accounting. During the year ended December
31, 1999, no revenues and no expenses were recognized by the joint
venture. During the quarter ended December 31, 1999, at the time of the
Company's exercise of its option, the Company recognized a $0.2 million
valuation allowance against its investment in GI based on the Company's
estimate of the fair value of GI.
(20) Asset Sale
On November 30, 2000, Astrium, a related party, entered into
an agreement with the Company to purchase the Company's Integrated
Cargo Carrier ("ICC") and Vertical Cargo Carrier ("VCC") flight assets.
The total purchase price of $15.4 million is comprised of both cash and
services payments. The transaction will occur in two phases. The first
phase is for the purchase of the ICC assets and the second phase is for
the purchase of the VCC assets. Phase one of the transactions was
completed in the three months ended March 31, 2001. The sale was
approximately at book value and the Company recognized a minimal loss.
SPACEHAB has entered into an agreement with Astrium, a related party,
to lease these assets for a period of four years with two additional
four-year options.
(21) Subsequent Events
On August 2, 2001, SPACEHAB'S Astrotech subsidiary sold the
assets of its Oriole sounding rocket program and related property for
approximately $1.2 million to DTI Associates, of Arlington, Virginia.
The sale, effective July 26, 2001, turns over all physical and
intellectual property assets of Astrotech's sounding rocket program,
including the design of the Oriole Rocket, except for those assets
required for Astrotech to fulfill the terms of an agreement with an
existing customer. The terms of the sale are as follows; an initial
cash payment at closing, five equal monthly payments beginning
September 2001 and a promissory interest bearing note, secured by the
Astrotech Sounding Rocket Program intellectual property, due July 26,
2002. Astrotech is expected to record a gain on the sale.
On August 9, 2001, SPACEHAB's Johnson Engineering (JE)
Subsidiary sold its Filter Housing Machining operations assets and
technology for approximately $850,000 to Clear Lake Industries Holdings
LLC (CLI), a company recently formed by W.T (Tom) Short, Retired
SPACEHAB Senior Vice President for JE. The sale was effective July 1,
2001. The termS of the
43
sale are as follows: an initial cash payment at closing and an
interest bearing note due June 29, 2006. The sale was recorded at book
value.
On September 10, 2001, SPACEHAB's Astrotech subsidiary
completed a $20 million financing of its satellite processing facility
expansion project in Titusville, Florida with a financial institution.
The proceeds of this financing are to be used to complete the
construction of the payload process facility and supporting
infra-structure. The loan is collaterized primarily by the multi year
payload processing contracts with Boeing and Lockheed Martin. Interest
accrues on the outstanding principal balance at a LIBOR-based rate,
adjustable quarterly. The loan is payable on January 15, 2011. In
conjunction with this financing, a swap agreement was entered into to
provide for a fixed rate of interest under the loan commitment
beginning January 2002.
On October 1, 2001, SPACEHAB received a $750,000 equity
investment in Space Media, Inc. from EscottVentures II, LLC, of
Melbourne, Florida. EscottVentures II has assumed a seat on SMI's board
of directors along with its equity stake. SPACEHAB's ownership in Space
Media, Inc. has been reduced to approximately 51% as a result of
EscottVentures II equity investment.
(22) Summary of Selected Quarterly Financial Data (Unaudited)
The following is a summary of selected quarterly financial
data for the previous three fiscal years (in thousands, except per
share data):
Three months ended
-----------------------------------------------------------------
September 30 December 31 March 31 June 30
-------------------------------------------------------------------------------------------- ------------
Year ended June 30, 2001
Revenue $26,966 $23,975 $24,453 $29,860
Income (loss) from operations (1,602) (3,066) (3,089) (1,421)
Net income (loss) (1,480) (2,738) (2,973) (5,594)
Net income (loss) per share - basic (0.13) (0.24) (0.26) (0.49)
Net income (loss) per share - diluted (0.13) (0.24) (0.26) (0.49)
-----------------------------------------------------------------------------------------------------------
Year ended June 30, 2000
Revenue $25,978 $26,011 $25,057 $28,662
Income (loss) from operations (2,087) (1,239) 111 720
Net income (loss) (1,959) (1,272) (635) 22
Net income (loss) per share - basic (0.17) (0.11) (0.06) 0.00
Net income (loss) per share - diluted (0.17) (0.11) (0.06) 0.00
------------------------------------------------------------------------------------------------------------
Year ended June 30, 1999
Revenue $28,273 $23,634 $26,693 $29,120
Income (loss) from operations 2,151 (2,007) 338 (280)
Net income (loss) 413 (1,851) (541) (610)
Net income (loss) per share - basic 0.04 (0.17) (0.05) (0.05)
Net income (loss) per share - diluted 0.04 (0.17) (0.05) (0.05)
------------------------------------------------------------------------------------------------------------
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
None
44
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information required by this item will be contained in the
Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders
and is hereby incorporated by reference thereto.
Item 11. Executive Compensation.
The information required by this item will be contained in the
Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders
and is hereby incorporated by reference thereto.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this item will be contained in the
Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders
and is hereby incorporated by reference thereto.
Item 13. Certain Relationships and Related Transactions.
The information required by this item will be contained in the
Company's definitive Proxy Statement for its 2001 Annual Meeting of Stockholders
and is hereby incorporated by reference thereto.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(As Amended October 17, 2001, to include Consent of Independent
Auditors, Exhibit 23.1)
(a) The following documents are filed as part of the report:
1. Financial Statements.
The following consolidated financial statements of SPACEHAB,
Incorporated and its wholly owned and majority-owned subsidiaries and
related notes, are set forth herein as indicated below.
Page
----
Report of Ernst & Young LLP, Independent Auditors ........ 1
Report of KPMG LLP, Independent Auditors.................. 2
Consolidated Balance Sheets .............................. 3
Consolidated Statements of Operations .................... 4
Consolidated Statements of Stockholders' Equity .......... 5
Consolidated Statements of Cash Flows .................... 6
Notes to Consolidated Financial Statements ............... 7
2. Financial Statement Schedules.
All financial statement schedules required to be filed in Part IV, Item
14 (a) have been omitted because they are not applicable, not required,
or because the required information is included in the financial
statements or notes thereto.
3. Exhibits.
45
Exhibit No. Description of Exhibit
3.1* Amended and Restated Articles of Incorporation of the Company.
3.2 Designation of Rights, Terms and Preferences of Series A Junior
Preferred Stock (see Exhibit 4.4 of this Report on Form 10-K).
3.3++ Designation of Rights, Terms and Preferences of Series B Senior
Convertible Preferred Stock of SPACEHAB, Incorporated.
3.4* Articles of Amendment of SPACEHAB, Incorporated, including the
Designation of Rights, Terms and Preferences of Additional
Shares of Series B Senior Convertible Preferred Stock of
SPACEHAB, Incorporated.
3.5* Amended and Restated By-Laws of the Company.
4.1++ Designation of Rights, Terms and Preferences of Series B Senior
Convertible Preferred Stock of the Registrant.
4.2++ Preferred Stock Purchase Agreement between the Registrant and
DaimlerChrysler Aerospace AG dated as of August 2, 1999.
4.3++ Registration Rights Agreement between the Registrant and
DaimlerChrysler Aerospace AG dated as of August 5, 1999.
4.4+ Rights Agreement, dated as of March 26, 1999, between the
Registrant and American Stock Transfer & Trust Company. The
Rights Agreement includes the Designation of Rights, Terms and
Preferences of Series A Junior Preferred Stock as Exhibit A, the
form of Rights Certificate as Exhibit B and the Summary of
Rights as Exhibit C.
10.3* Cost Plus Incentive Fee Contract (Number SHB 1009), dated
November 23, 1994, between the Registrant and McDonnell Douglas
(including the amendments thereto) (the "Mir Contract").
10.6* Amended and Restated Representation Agreement, dated August 15,
1995, by and between the Registrant and Mitsubishi Corporation.
10.7* Letter Agreement dated August 15, 1995, by and between the
Registrant and Mitsubishi Corporation.
10.12*** 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.
10.13*////// SPACEHAB, Incorporated 1995 Directors' Stock Option Plan (as
amended and restated effective October 21, 1997).
10.27** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Shelley A. Harrison.
10.28** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Edward E. David, Jr.
10.32** Indemnification Agreement, dated December 27, 1995, between the
Company and James R. Thompson.
10.36** Indemnification Agreement, dated December 27, 1995, between the
Company and David A. Rossi.
10.37** Indemnification Agreement, dated December 27, 1995, between the
Company and Dr. Shi H. Huang.
10.38** Indemnification Agreement, dated December 27, 1995, between the
Company and Nelda J. Wilbanks.
10.39** Indemnification Agreement, dated December 27, 1995, between the
Company and M. Dale Steffey.
10.43** Indemnification Agreement, dated December 27, 1995, between the
Company and Hironori Aihara.
46
10.49*// Cost Plus Fee Contract (Number SHB 1013), dated July 31, 1997,
between the Registrant and McDonnell Douglas Corporation,
McDonnell Douglas Aerospace Huntsville Division (the "Research
Double Module Contract").
10.52*// Office Building Lease Agreement, dated October 6, 1993, between
Astrotech and the Secretary of the Air Force (Lease number
SPCVAN - 2-94-001).
10.54*// Loan and Security Agreement, dated June 16, 1997, between the
Registrant, Astrotech and First Union National Bank (formerly
known as Signet Bank) (the "Revolving Credit Agreement").
10.55*// Loan and Security Agreement, dated July 14, 1997, between
Astrotech and the CIT Group/Equipment Financing, Inc. (the "Term
Loan Agreement").
10.57*// Employment and Non-Interference Agreement, dated April 10, 1997,
between the Company and John M. Lounge.
10.58*// Indemnification Agreement, dated October 22, 1996, between the
Company and John M. Lounge.
10.69*/// ESA Contract, Dated October 10, 1997, between the Registrant and
Intospace GmbH (the "ESA Contract").
10.70*//// NAS 9-97199, dated December 21, 1997, between the Registrant and
NASA (the "REALMS Contract").
10.73*//// Employment Agreement and Non-Interference Agreement dated
January 15, 1998, between the Company and David A. Rossi.
10.74*//// Amendment number 1 to Loan and Security Agreement dated December
31, 1997, between the Company and First Union National Bank.
10.80*///// CSA Contract, dated May 21, 1998, between the Registrant and the
Canadian Space Agency.
10.81*///// Gemini Office Building Lease Agreement, dated January 14, 1998,
between the Registrant and Puget of Texas
10.82*///// SHB98006, dated July 8, 1998, between the Registrant and Benz
Aerospace AG, Raumfahrt-Infrastuktur
10.84*///// Capital Office Park Lease as amended, dated April 23, 1998,
between Astrotech and Eleventh Springhill Lake Associates L.L.P.
10.85+++ Letter Agreement between the Company and Alenia Aerospazio.
10.86+++ Employment and Non-Interference Agreement dated July 1, 1998
between the Company and William A. Jackson
10.87+++ Employment and Non-Interference Agreement dated July 1, 1998
between the Company and Eugene A. Cernan
10.88+++ Employment and Non-Interference Agreement dated July 1, 1998
between the Company and W.T. Short
10.89+++ Modification S/A 14 to NAS9-97199 dated November 25, 1998,
between the Company and NASA.
10.90++++ SPACEHAB, Incorporated 1994 Stock Incentive Plan (as amended and
restated effective October 14, 1999).
47
10.92++++ Employment and Non-Interference Agreement, dated March 1, 1999,
between the Company and Michael Kearney.
10.93++++ Contract No. NAS 9-18800 between NASA and Johnson Engineering
dated April 28, 1993.
10.94++++ Cost Plus Incentive Fee Contract No. SHB 1014 dated August 14,
1997 between the Boeing Company and the Registrant.
10.95++++ Amended and Restated Employment and Non-Interference Agreement,
dated April 1, 1997, between the Company and Dr. Shelly A.
Harrison, amended and restated as of January 15, 1999.
10.97++++ Lease for property at 555 Forge River Dr. Suite #150, Webster,
TX between Johnson Engineering and CD UP LP a wholly owned
subsidiary of Carey Diversified LLC, successor in interest to
J.A. Billip Development Corporation dated April 30, 1993, as
amended.
10.98++++ Lease for property at 18100 Upper Bay Road, Suite #208, Houston,
TX between Johnson Engineering Corporation and Nassau
Development Company, dated February 19, 1998.
10.99++++ Lease for property at 920, 926 and 928 Gemini Ave., Houston, TX
under Standard Commercial Lease between Johnson Engineering
Corporation and Lakeland Development dated February 1, 1998.
10.100++++ Lease for property at 300 D Street, SW, Suite #814, Washington,
DC, between the Registrant and The Washington Design Center, LLC
dated December 16, 1998.
10.101++++ Lease for property at 16850 Titan, Houston, TX between Johnson
Engineering Corporation and Computer Extension Systems, Inc.
dated August 1, 1999.
10.102++++ Agreement of Sale and Purchase of Leasehold Interest between
Eastern American Technologies Corporation and SPACEHAB,
Incorporated dated August 1997.
10.103*////// SPACEHAB, Incorporated 1997 Employee Stock Purchase Plan.
10.104 Secured Promissory Note, dated March 30, 1999, between the
Company and The CIT Group/Equipment Financing, Inc.
10.105 Amendment No 2 to Loan and Security Agreement, dated October 15,
1999 between the Company, First Union National Bank and certain
other parties.
10.106+++++ Agreement between Astrotech Space Operations, Inc. and McDonnell
Douglas Corporation, dated January 7, 2000.
10.107+++++ Agreement between Astrotech Space Operations, Inc. and Lockheed
Martin Commercial Launch Services, Inc. dated January 24, 2000.
10.108 Amendment No. 3 to Loan and Security Agreement, dated January
31, 2000 between the Company, First Union National Bank and
certain other parties.
10.109 Employment and Non-Interference Agreement, dated February 14,
2000, between the Company and Julia A. Pulzone.
10.110 Amendment No. 4 to Loan and Security Agreement, dated May 18,
2000 between the Company, First Union National Bank and certain
other parties.
10.111 Third Amendment and Assignment of Industrial Real Estate Lease,
and Consent to Assignment of Industrial Real Estate Lease, dated
July 24, 2000, between the Company, American National Insurance
Company and Pall Corporation.
48
10.112 Financing and Security Agreement, dated August 9, 2000, by and
among Bank of America, N.A. and the Company, Johnson Engineering
Corporation, Astrotech Space Operations, Inc. and Space Media,
Inc.
10.113*++++ Employment and Non-Interference Agreement, dated as of January
1, 2001, between the Company and Michael Kearney.
16.*++ Changes in Registrant's Certifying Accountant.
21.*// Subsidiary of the Registrant.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of KPMG LLP.
* Incorporated by reference to the Registrant's Registration
Statement on Form S-1 (File No. 33-97812) and all amendments
thereto, originally filed with the Securities and Exchange
Commission on October 5, 1995.
** Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended December 31, 1995, filed February 14,
1996.
*** Incorporated by reference to the Registrant's Report on Form
10-K for the fiscal year ended June 30, 1996, filed with the
Securities and Exchange Commission on September 17, 1996.
**** Incorporated by reference to the Registrant's Annual Report on
Form 10-K/A for the year ended June 30, 1996, filed with the
Securities and Exchange Commission on December 20, 1996.
***** Incorporated by reference to the Registrant's Report on Form
10-Q/A for the quarter ended September 30, 1996, filed with the
Securities and Exchange Commission on December 20, 1996.
*/ Incorporated by reference to the Registrant's Report on Form 8-K
filed with the Securities and Exchange Commission on February
27, 1997.
*// Incorporated by reference to the Registrant's Report on Form
10-K for the fiscal year ended June 30, 1997, filed with the
Securities and Exchange Commission on September 12, 1997.
*/// Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended September 30, 2000, filed November
14, 2000.
*//// Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended December 31, 1997, filed February 5,
1998.
*///// Incorporated by reference to the Registrant's Report on Form
10-K for the fiscal year ended June 30, 1998, filed with the
Securities and Exchange Commission on September 17, 1998.
*////// Incorporated by reference to the Registrant's Definitive Proxy
Statement, filed with the Securities and Exchange Commission on
September 12, 1997.
+ Incorporated by reference to the Registrant's Report on Form 8-K
filed with the Securities and Exchange Commission on April 1,
1999.
49
++ Incorporated by reference to the Registrant's Report on Form 8-K
filed with the Securities and Exchange Commission on August 19,
1999.
+++ Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended December 31, 1998.
++++ Incorporated by reference to the Registrant's Report on Form
10-K for the fiscal year ended June 30, 1999, filed with the
Securities and Exchange Commission on September 17, 1999.
+++++ Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended March 31, 2000, filed with the
Securities and Exchange Commission on May 12, 2000.
*+ Incorporated by reference to the Registrant's Report on Form
10-K for the fiscal year ended June 30, 2000, filed with the
Securities and Exchange Commission on September 12, 2000.
*++ Incorporated by reference to the Registrant's Report on Form 8-K
filed with the Securities and Exchange Commission on September
13, 2000.
*+++ Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended September 30, 2000.
*++++ Incorporated by reference to the Registrant's Report on Form
10-Q for the quarter ended March 31, 2001.
The following Reports on Form 8-K were filed by the Registrant during the period
covered by this report.
(a) Reports on Form 8-K.
A report on Form 8-K was filed September 13, 2000 announcing the
dismissal of KPMG LLP as the independent public accountants of
the Company and the appointment of Ernst & Young LLP as its new
independent accountants for the fiscal year ended June 30, 2001,
subject to stockholder ratification. Stockholder ratification
was obtained at the Annual Meeting of Stockholders on October
12, 2000.
50
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, hereunto duly authorized.
SPACEHAB, Incorporated
By: /s/ Dr. Shelley A. Harrison
---------------------------
Dr. Shelley A. Harrison
Chairman of the Board and
Chief Executive Officer
Date:
By: /s/ Julia A. Pulzone
-----------------------
Julia A. Pulzone
Senior Vice President, Finance
and Chief Financial Officer
Date:
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of this
registrant in the capacities and on the dates indicated.
/s/ Hironori Aihara Director October 15, 2001
------------------------------------
Hironori Aihara
/s/ Melvin D. Booth Director October 15, 2001
------------------------------------
Melvin D. Booth
/s/ Dr. Edward E. David, Jr. Director October 15, 2001
------------------------------------
Dr. Edward E. David, Jr.
/s/ Richard Fairbanks.III Director October 15, 2001
------------------------------------
Richard Fairbanks
/s/ Michael E. Kearney Director October 15, 2001
------------------------------------
Michael Kearney
/s/ Josef Kind. Director October 15, 2001
------------------------------------
Josef Kind
/s/ Gordon S. Macklin Director October 15, 2001
------------------------------------
Gordon S. Macklin
/s/ Yury P. Semenov Director October 15, 2001
------------------------------------
Dr. Yury P. Semenov
/s/ James R. Thompson Director October 15, 2001
------------------------------------
James R. Thompson
51