<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended
MARCH 31, 1997
ORBITAL SCIENCES CORPORATION
Commission file number 0-18287
<TABLE>
<S> <C>
DELAWARE 06-1209561
- --------------------------------------------- -------------------------------------
(State of Incorporation) (IRS Identification number)
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166 (703) 406-5000
- --------------------------------------------- -------------------------------------
(Address of principal executive offices) (Telephone number)
</TABLE>
The registrant has (1) 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,
and (2) has been subject to such filing requirements for the past 90 days.
As of April 30, 1997, 32,109,716 shares of the registrant's common stock were
outstanding.
<PAGE> 2
PART 1
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED; IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
A S S E T S
-----------
MARCH 31, DECEMBER 31,
1997 1996
-------------- -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $29,249 $26,859
Short-term investments, at market 10,022 5,827
Receivables, net 147,381 144,774
Inventories, net 23,459 27,159
Deferred income taxes and other assets 7,723 6,475
--------------- -----------------
TOTAL CURRENT ASSETS 217,834 211,094
PROPERTY, PLANT AND EQUIPMENT, AT COST, LESS ACCUMULATED
depreciation and amortization of $71,607 and $68,161, respectively 102,130 102,673
SATELLITE SYSTEMS, AT COST, LESS ACCUMULATED
depreciation of $1,593 and $1,373, respectively 27,907 25,189
INVESTMENTS IN AFFILIATES, NET 86,252 86,524
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED,
less accumulated amortization of $16,963 and $15,972, respectively 68,688 69,512
DEFERRED INCOME TAXES AND OTHER ASSETS 12,310 9,720
-------------- -----------------
TOTAL ASSETS $515,121 $504,712
============== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term borrowings and current portion of
long-term obligations $40,902 $38,519
Accounts payable 29,272 25,789
Accrued expenses 33,698 32,372
Deferred revenue 34,416 30,741
-------------- -----------------
TOTAL CURRENT LIABILITIES 138,288 127,421
LONG-TERM OBLIGATIONS, NET OF CURRENT PORTION 29,346 33,076
OTHER LIABILITIES 14,009 15,523
-------------- -----------------
TOTAL LIABILITIES 181,643 176,020
NON-CONTROLLING INTERESTS IN
NET ASSETS OF CONSOLIDATED SUBSIDIARIES (2,356) (1,810)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.01; 10,000,000 shares authorized:
Series A Special Voting Preferred Stock, one share authorized and outstanding - -
Class B Preferred Stock, 10,000 shares authorized and outstanding - -
Common Stock, par value $.01; 40,000,000 shares authorized,
32,209,013 and 32,160,598 shares outstanding,
after deducting 15,735 shares held in treasury 322 322
Additional paid-in capital 324,034 323,592
Unrealized gains (losses) on short-term investments (6) 14
Cumulative translation adjustment (3,865) (3,681)
Retained earnings 15,349 10,255
-------------- -----------------
TOTAL STOCKHOLDERS' EQUITY 335,834 330,502
-------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $515,121 $504,712
============== =================
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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<PAGE> 3
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited; in thousands, except share data)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
------------------------------------
1997 1996
------------ ------------
<S> <C> <C>
REVENUES $122,112 $104,894
COSTS OF GOODS SOLD 88,434 72,582
------------ ------------
GROSS PROFIT 33,678 32,312
RESEARCH AND DEVELOPMENT EXPENSES 7,012 6,378
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 19,878 19,265
AMORTIZATION OF EXCESS OF PURCHASE PRICE OVER
NET ASSETS ACQUIRED 741 797
------------ ------------
INCOME FROM OPERATIONS 6,047 5,872
NET INVESTMENT INCOME (EXPENSE) 260 (635)
EQUITY IN LOSSES OF AFFILIATES (1,268) (2,018)
NON-CONTROLLING INTERESTS IN LOSSES
OF CONSOLIDATED SUBSIDIARIES 621 257
------------ ------------
INCOME BEFORE PROVISION FOR INCOME TAXES 5,660 3,476
PROVISION FOR INCOME TAXES 566 348
------------ ------------
NET INCOME $5,094 $3,128
============ ============
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $0.16 $0.12
SHARES USED IN COMPUTING NET INCOME
PER COMMON AND COMMON EQUIVALENT SHARE 32,819,432 27,154,259
============ ============
NET INCOME PER COMMON SHARE, ASSUMING FULL DILUTION $0.16 $0.12
SHARES USED IN COMPUTING NET INCOME
PER COMMON SHARE, ASSUMING FULL DILUTION 32,819,432 31,050,110
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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<PAGE> 4
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
-----------------------------
1997 1996
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $5,094 $3,128
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation and amortization expense 6,461 6,117
Equity in losses of affiliates 1,268 2,018
Non-controlling interests in losses of consolidated subsidiaries (621) (257)
Foreign currency translation adjustment (184) (393)
CHANGES IN ASSETS AND LIABILITIES:
(Increase) decrease in receivables (5,780) (10,410)
(Increase) decrease in inventories 3,700 (106)
(Increase) decrease in other current assets (1,454) (526)
(Increase) decrease in other non-current assets (2,515) (1,736)
Increase (decrease) in accounts payable and accrued expenses 4,892 (7,901)
Increase (decrease) in deferred revenue 4,201 (1,017)
Increase (decrease) in other liabilities (1,514) (2,975)
------------- -------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 13,547 (14,058)
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,995) (4,040)
Investments in satellite systems (1,738) (1,603)
Purchases of available-for-sale investment securities (9,454) --
Sales of available-for-sale investment securities 553 8,543
Maturities of available-for-sale investment securities 4,686 --
Investments in affiliates (1,304) (7,174)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (10,252) (4,274)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net of repayments 3,350 12,700
Principal payments on long-term obligations (4,697) (3,452)
Net proceeds from issuances of common stock to employees 442 429
------------- -------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (905) 9,677
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,390 (8,655)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 26,859 15,317
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $29,249 $6,662
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
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<PAGE> 5
ORBITAL SCIENCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997 AND 1996
(UNAUDITED)
BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited interim
financial information reflects all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation thereof. Certain information and
footnote disclosure normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to instructions, rules and regulations prescribed by the
Securities and Exchange Commission ("SEC"). Although the company believes that
the disclosures provided are adequate to make the information presented not
misleading, these unaudited interim condensed consolidated financial statements
should be read in conjunction with the audited consolidated financial
statements and the footnotes thereto included in the company's Annual Report on
Form 10-K for the year ended December 31, 1996. Operating results for the
three-month period ended March 31, 1997 are not necessarily indicative of the
results expected for the full year.
Orbital Sciences Corporation is hereafter referred to as "Orbital" or the
"company."
(1) Common Stock and Income Per Share
Income per common and common equivalent share ("primary EPS") is
calculated using the weighted average number of common and common
equivalent shares, to the extent dilutive, outstanding during the
periods. Income per common share assuming full dilution
("fully-diluted EPS") is calculated using the weighted average number
of common and common equivalent shares outstanding during the periods.
Any reduction of less than three percent in the aggregate has not been
considered dilutive in the calculation and presentation of income per
common share assuming full dilution.
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"),
"Earnings Per Share." SFAS No. 128 provides new procedures for the
computation, presentation and disclosure of primary EPS and
fully-diluted EPS, simplifying the calculations and making them more
comparable with international accounting standards. Pursuant to SFAS
No. 128, the company will adopt the new requirements in the fourth
quarter of 1997, restating all prior periods. The company expects
that the adoption of SFAS No. 128 will not materially impact 1997 EPS
or previously reported amounts.
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<PAGE> 6
(2) Income Taxes
The company has recorded its interim income tax provision based on
estimates of the company's effective tax rate expected to be
applicable for the full fiscal year. Estimated effective rates
recorded during interim periods may be periodically revised, if
necessary, to reflect current estimates.
(3) Reclassifications
Certain reclassifications have been made to the 1996 condensed
consolidated financial statements to conform to the 1997 condensed
consolidated financial statement presentation.
(4) Subsequent Events
On May 8, 1997, the company's subsidiary, Orbital Imaging Corporation
("ORBIMAGE"), completed a private placement of 300,100 shares of
convertible preferred stock, raising approximately $30,010,000. On
that date, Orbital also increased its common equity investment in
ORBIMAGE, bringing its total equity invested to approximately
$88,000,000. Pursuant to the terms of the sale of the preferred
stock, Orbital no longer controls ORBIMAGE's financial and operational
affairs and, accordingly, will no longer consolidate ORBIMAGE's
financial results.
On May 7, 1997, the company borrowed $25,000,000 from a syndicate of
six banks under a six-month credit facility. The facility bears
interest at approximately 8.25%, and expires on October 24, 1997.
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
Statements included in this discussion relating to future revenues, sales,
expenses, growth rates, net income, new business, operational performance,
schedules, sources and uses of funds, and the level of the company's investment
in satellite imaging projects and the ORBCOMM business are forward-looking
statements that involve risks and uncertainties. Factors that may cause the
actual results, performance or achievements of the company to differ materially
from any future results, performance, achievements, or investments expressed or
implied by such forward-looking statements include, among other things, general
and economic business conditions, launch success, product performance,
availability of required capital, market acceptance of new products and
technologies and other factors more fully described in Exhibit 99 to this
Report on Form 10-Q.
The company's products and services are grouped into three business sectors:
Space and Ground Infrastructure Systems, Satellite Access Products, and
Satellite-Delivered Services. Space and Ground Infrastructure includes Launch
Systems, Satellites, Electronics and Sensor Systems, and Ground Systems. The
company's Satellite Access Products sector consists of satellite-based
navigation and communications products. The company's Satellite-Delivered
Services sector includes satellite-based, two-way mobile data communications
services and satellite-based imagery services.
REVENUES. Orbital's revenues for the three-month periods ended March 31, 1997
and 1996 were $122,112,000 and $104,894,000, respectively.
Space and Ground Infrastructure Systems
Revenues from the company's Space and Ground Infrastructure Systems totaled
$106,199,000 and $81,661,000 for the three months ended March 31, 1997 and
1996, respectively. Revenues from the company's launch systems increased to
$29,894,000 in the first quarter of 1997, from $19,317,000 in the first quarter
of 1996. The significant increase in revenues in 1997 compared to a year ago is
attributable to increased revenues from the company's Taurus launch vehicle
program, and from the resumption of production and launch of the company's
Pegasus launch vehicle. Additionally, the company generated significantly more
revenues in the 1997 first quarter for work performed on the X-34 reusable
launch vehicle. During 1997, Orbital has carried out six successful space
missions, including five suborbital missions and a successful Pegasus launch
from the Canary Islands, Spain. Orbital expects total 1997 launch systems
revenues to exceed total 1996 launch systems revenues.
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<PAGE> 8
For the three months ended March 31, 1997, satellite revenues increased to
$30,803,000 from $22,559,000 in the first quarter of 1996. The increase in
satellite sales is primarily due to additional revenues generated from new
satellite orders received in the second half of 1996. Revenues for the three
months ended March 31, 1997 include sales to ORBCOMM Global, L.P. ("ORBCOMM"),
a Delaware limited partnership in which Orbital holds a 50% equity interest, of
$11,500,000 as compared to first quarter 1996 sales to ORBCOMM of $13,700,000.
The company expects revenues from satellites to continue to exceed 1996
revenues on a quarterly basis, throughout the remainder of 1997.
Revenues from electronics and sensor systems were approximately $28,066,000 for
the three months ended March 31, 1997 as compared to $16,479,000 in the
comparable 1996 period. The significant increase in revenues is primarily a
result of work performed on defense electronics and transportation management
systems orders received during the second half of 1996. Orbital expects sales
of electronics and sensor systems to continue to exceed 1996 levels, throughout
the remainder of 1997 due to the new orders received during the second half of
1996.
Revenues from the company's ground systems products were $17,436,000 in the
first quarter of 1997 as compared to $23,306,000 in the 1996 quarter. The 1996
first quarter revenues include approximately $4,500,000 of sales generated by
the company's former subsidiary, The PSC Communications Group Inc. ("PSC"); the
company sold substantially all the assets of PSC during the fourth quarter of
1996. The remaining slight decrease in ground systems products revenues during
the first quarter of 1997 is primarily a result of the company nearing
completion of a large defense contract for the Canadian government. The
company expects 1997 annual ground systems products revenue to slightly exceed
1996 annual revenues, excluding the revenues attributable to PSC, due to new
orders received during the fourth quarter of 1996.
Satellite Access Products
Revenues from sales of navigation and communications products decreased to
$15,646,000 for the 1997 first quarter as compared to $22,768,000 for the
comparable 1996 period. The first quarter of 1996 reflected strong sales
resulting from the company closing out a large number of orders that could not
be completed in the previous quarter (fourth quarter of 1995) due to a shortage
of available components. Revenues for the first quarter of 1997 are generally
consistent with, or higher than, the immediately preceding two quarters. The
company anticipates the introduction of several new navigation and
communications products during the remainder of 1997. Should such products
achieve anticipated market acceptance, the company expects navigation and
communications products revenues to increase from the first quarter 1997
amounts.
Satellite-Delivered Services
The company's ORBCOMM and ORBIMAGE start-up businesses generated service
revenues of approximately $267,000 in the 1997 first quarter as compared to
$465,000 in the first quarter of 1996. Significant revenues from either
business are not expected until 1998.
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<PAGE> 9
GROSS PROFIT. Gross profit depends on a number of factors, including the
company's mix of contract types and costs incurred thereon in relation to
estimated costs. The company's gross profit for the first quarter of 1997 was
$33,678,000 as compared to $32,312,000 in the 1996 first quarter. Gross profit
margin as a percentage of sales for those periods was approximately 27.6% and
30.8%, respectively. The decreased gross profit margin as a percentage of
sales in 1997 is primarily attributable to completing work on certain lower
margin launch vehicle contracts and to increased revenues generated from lower
margin transportation management systems products. The company expects that
its gross profit margin for the remainder of 1997 will be generally consistent
with the margin achieved during the first quarter.
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses represent
Orbital's self-funded product development activities, and exclude direct
customer-funded development. Research and development expenses during the
three-month periods ended March 31, 1997 and 1996 were $7,012,000 and
$6,378,000, respectively. Research and development expenses in both quarters
relate primarily to the development of new or improved navigation and
communications products, improved launch vehicles and new satellite
initiatives. The company expects its research and development expenditures, on
a quarterly basis, for the rest of 1997 to be lower than the first quarter of
1997. Additionally, the company expects total 1997 expenditures to be slightly
lower than 1996 expenditures both as a percentage of revenues and in absolute
dollars.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses include the costs of marketing, advertising,
promotional and other selling expenses as well as the costs of the finance,
administrative and general management functions of the company. Selling,
general and administrative expenses for the first quarters of 1997 and 1996
were $19,878,000 (or 16.3% of revenues) and $19,265,000 (or 18.4% of revenues),
respectively. The decrease in selling, general and administrative expenses as
a percentage of revenues during 1997 as compared to 1996 was primarily
attributable to substantial revenue growth, particularly in launch vehicles and
defense electronics, with only a modest growth in selling, general and
administrative expenses. The company expects selling, general and
administrative expenses as a percentage of revenues during the remainder of
1997 to be higher than the percentage attained during the first quarter of 1997
but still lower than 1996 levels.
INTEREST INCOME AND INTEREST EXPENSE. Net interest income was $260,000 for the
three months ended March 31, 1997 as compared to net interest expense of
$635,000 in the 1996 first quarter. Interest income for the periods reflects
interest earnings on short-term investments. Interest expense in 1997 is
primarily for outstanding amounts on Orbital's revolving credit facilities and
on other secured and unsecured debt. In 1996, interest expense included
interest on the company's convertible debentures, which were converted to
common stock in August 1996. Interest expense has been reduced by capitalized
interest of $1,313,000 and $1,682,000 in 1997 and 1996, respectively. The
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<PAGE> 10
company expects net interest expense for the remainder of 1997 to be less than
1996, primarily as a result of the conversion of the convertible debentures in
1996.
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES AND NON-CONTROLLING INTERESTS IN
CONSOLIDATED SUBSIDIARIES. Equity in earnings (losses) of affiliates and
non-controlling interests in (earnings) losses of consolidated subsidiaries for
the first quarters of 1997 and 1996 were ($647,000) and ($1,761,000),
respectively. These amounts primarily represent (i) elimination of 50% of the
profits on sales of infrastructure products to ORBCOMM, (ii) the company's pro
rata share of ORBCOMM's and ORBCOMM International Partners L.P.'s current
period earnings and losses and (iii) non-controlling shareholders' pro rata
share of ORBCOMM USA L.P.'s current period earnings and losses. The company
expects ORBCOMM's losses to increase during the remainder of 1997 and further
in 1998. As a result, the company expects its share of ORBCOMM Global's losses
to increase from 1996 amounts.
Based on the terms of the sale of ORBIMAGE preferred stock discussed below, the
company will record its share of ORBIMAGE's start-up losses as Equity in Losses
of Affiliates beginning in the second quarter of 1997.
PROVISION FOR INCOME TAXES. The company recorded an income tax provision of
$566,000 and $348,000 for the three month periods ended March 31, 1997 and
1996, respectively. The company records its interim income tax provisions
based on estimates of the company's effective tax rate expected to be
applicable for the full fiscal year. Estimated effective rates recorded during
interim periods may be periodically revised, if necessary, to reflect current
estimates.
At December 31, 1996, Orbital had approximately $120,000,000 and $3,000,000 of
net operating loss and tax credit carryforwards, respectively, which are
available to reduce future income tax obligations, subject to certain annual
limitations and other restrictions.
LIQUIDITY AND CAPITAL RESOURCES
The company's growth has required substantial capital to fund both an expanding
business base and significant research and development and capital
expenditures. The company has funded these requirements to date, and expects
to fund its requirements in the future, through cash generated by operations,
working capital, loan facilities, asset-based financings, joint venture
arrangements, and private and public equity and debt offerings. Additionally,
the company has historically made strategic acquisitions of businesses and
routinely evaluates potential acquisition candidates. The company expects to
continue to pursue potential acquisitions that it believes would enhance its
businesses. The company has historically financed its acquisitions, and
expects to finance its future acquisitions, through cash on hand, cash
generated by operations, the issuance of debt and/or equity securities, and/or
asset-based financings.
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<PAGE> 11
Cash, cash equivalents and short-term investments were $29,249,000 at March 31,
1997, and the company had short-term and long-term debt obligations outstanding
of approximately $70,248,000. The outstanding debt relates primarily to
advances under the company's line of credit facilities, secured and unsecured
notes, and fixed asset financings.
Orbital's $20,000,000 unsecured note agreement was amended during the first
quarter of 1997 primarily to permit future investments by the company in
ORBIMAGE. In connection with this amendment, the interest rate on the note was
increased from 11 1/2% to 12% effective March 31, 1997.
The company's primary revolving credit facility provides for total borrowings
from an international syndicate of six banks ("credit facility bank group") of
up to $65,000,000, subject to a defined borrowing base comprised of certain
contract receivables. Approximately $5,000,000 of borrowings were outstanding
under the facility at March 31, 1997, and the available facility limit was
approximately $31,000,000. At March 31, 1997, the average interest rate on
outstanding borrowings under this facility was approximately 7.75%. Borrowings
are secured by contract receivables and certain other assets. The facility
prohibits the payment of dividends and contains certain covenants with respect
to the company's working capital, fixed charge ratio, leverage ratio and
tangible net worth, and expires in September 1997. The company is currently in
discussions with the credit facility bank group to replace the credit facility
with a new facility which would include similar terms and provide an increased
borrowing capacity. The company (or its subsidiaries) also maintains two
additional, smaller revolving credit facilities, under which approximately
$29,500,000 was outstanding March 31, 1997. The borrowing capacity of the two
additional agreements is approximately $35,000,000.
The company's operations provided net cash of approximately $13,500,000 in the
first quarter of 1997. The company expects quarterly cash provided by
operations during the remainder of 1997 to be significantly less than the
amount achieved during the first quarter. During the first quarter, the
company invested approximately $1,310,000 in ORBCOMM (consisting solely of
capitalized interest costs), incurred $1,738,000 in capital expenditures
related to ORBIMAGE, and incurred approximately $2,995,000 in capital
expenditures for office equipment and various spacecraft, launch vehicle and
other production and test equipment.
On May 8, 1997, the company's subsidiary, ORBIMAGE, completed a private
placement of 300,100 shares of convertible preferred stock, raising
approximately $30,010,000. On that date, Orbital also increased its common
equity investment in ORBIMAGE, bringing its total equity to approximately
$88,000,000.
ORBIMAGE currently expects that it will require approximately $65,000,000 in
additional financing to fund fully its current business plan. To the extent
some or all of the additional funding can not be raised, Orbital has agreed to
provide up to $50,000,000
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<PAGE> 12
(up to $30,000,000 by December 31, 1997 and up to $20,000,000 by June 30, 1998)
for two different classes of preferred stock.
On May 7, 1997, the company borrowed $25,000,000 under a six-month credit
facility from the credit facility bank group. The facility bears interest at
approximately 8.25%, and expires on October 24, 1997. The company anticipates
repaying the loan with proceeds from an expanded revolving credit facility with
the same bank group.
Orbital expects that its capital needs for the remainder of 1997 will in part
be provided by working capital, cash flows from operations, existing and
planned credit facilities, customer financings and operating lease
arrangements. The company may also consider new debt financings to realign its
debt structure and to fund its currently planned operations and capital
requirements through 1997.
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<PAGE> 13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - A complete listing of exhibits required is
given in the Exhibit Index that precedes the exhibits
filed with this report.
(b) Not applicable.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ORBITAL SCIENCES CORPORATION
DATED: May 14, 1997 By: /s/ David W. Thompson
---------------------------------------------
David W. Thompson, President
and Chief Executive Officer
DATED: May 14, 1997 By: /s/ Jeffrey V. Pirone
---------------------------------------------
Jeffrey V. Pirone, Senior Vice President
and Principal Financial Officer
<PAGE> 15
EXHIBIT INDEX
The following exhibits are filed as part of this report.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
10.2.4 Fourth Amendment to NWML Note Agreement, dated as of March 31, 1997.
10.15.1 Amendment No. 1 to Restated Master Agreement, restated as of September 12,
1995, by and among the Company, OCC, Teleglobe Inc. and Teleglobe Mobile
Partners filed on August 30, 1996.
10.19 Orbital Sciences Corporation 1997 Stock Option and Incentive Plan
11 Statement re: Computation of Earnings Per Share (transmitted herewith).
27 Financial Data Schedule (such schedule is furnished for the information of the
Securities and Exchange Commission and is not to be deemed "filed" as part of
the Form 10-Q, or otherwise subject to the liabilities of Section 18 of the
Securities Exchange Act of 1934) (transmitted herewith).
99 Important Factors Regarding Forward-Looking Statements (transmitted herewith).
</TABLE>
<PAGE> 1
EXHIBIT 10.2.4
FOURTH AMENDMENT TO NOTE AGREEMENT
THIS FOURTH AMENDMENT to Note Agreement dated as of March 31, 1997
("Fourth Amendment"), is entered into between Orbital Sciences Corporation, a
Delaware corporation (the "Company") and The Northwestern Mutual Life
Insurance Company (the "Purchaser").
RECITALS:
A. The Company and the Purchaser have heretofore entered into the
Note Agreement dated as of June 1, 1995, the First Amendment to Note Agreement
dated as of June 30, 1995, the Second Amendment to Note Agreement dated as of
March 15, 1996 and the Third Amendment to Note Agreement dated as of July 31,
1996 (as amended, the "Note Agreement").
B. The Company and the Purchaser now desire to further amend,
effective on and as of March 31, 1997 (the "Effective Date"), certain of the
terms of the Note Agreement.
C. In consideration of the Purchaser's agreeing to amend the Note
Agreement as set forth herein, the Company has agreed to increase the interest
rate on the Notes outstanding under the Note Agreement.
D. Capitalized terms used herein shall have the respective
meanings ascribed thereto in the Note Agreement unless herein defined or the
context shall otherwise require.
E. All requirements of law have been fully complied with and all
other acts and things necessary to make this Fourth Amendment a valid, legal
and binding instrument according to its terms for the purposes herein expressed
have been done or performed.
NOW, THEREFORE, the Company and the Purchaser, in consideration of
good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENT.
Section 1.1. From and after the Effective date, the Note Agreement
shall be and is hereby amended as follows:
(i) the references to "11.50%" throughout the Note Agreement,
including each of the exhibits thereto, shall be changed to "12.00%";
(ii) the reference to 10.50% in the definition of "Make Whole
Amount" contained in Section 8.1 of the Note Agreement shall be changed to
12.00%;
(iii) the references to "13.50%" throughout the Note Agreement,
including each of the exhibits thereto, shall be changed to "14.00%"; and
(iv) the references to "American Space Lines" throughout the Note
Agreement, including each of the exhibits thereto, shall be changed to
"ORBIMAGE".
Section 1.2. Section 5.9 of the Note Agreement is hereby amended
in its entirety to read as follows:
"Section 5.9. Priority Funded Debt Ratio. The Company will not at
any time permit the ratio of Consolidated Priority Funded Debt to Consolidated
Tangible Net Worth to exceed .65 to 1.OO."
<PAGE> 2
Section 1.3. Section 8.1 of the Note Agreement shall be and is
hereby amended as follows:
(a) The definition of "Reinvestment Rate" contained
within the definition of "Make Whole Amount:" shall be and is hereby amended in
its entirety to read as follows:
"Reinvestment Rate" shall mean (1) the sum of 2.00%, plus the yield
reported on page "USD" of the Bloomberg Financial Markets Services
Screen (or, if not available, any other nationally recognized trading
screen reporting on-line intraday trading in the United States
government Securities) at 11:00 A.M. (New York, New York time) for the
United States government Securities having a maturity (rounded to the
nearest month) corresponding to the remaining Weighted Average Life to
Maturity of the principal of the Notes being prepaid or paid (taking
into account the application of such prepayment and payments required
by Section 2.1) or (2) in the event that no nationally recognized
trading screen reporting on-line intraday trading in the United States
government Securities is available, Reinvestment Rate shall mean the
sum of 2.00%, plus the arithmetic mean of the yields for the two
columns under the heading "Week Ending" published in the Statistical
Release under the caption "Treasury Constant Maturities" for the
maturity (rounded to the nearest month) corresponding to the Weighted
Average Life to Maturity of the principal of the Notes being prepaid or
paid (taking into account the application of such prepayment payments
required by Section 2.1). If no maturity exactly corresponds to such
Weighted Average Life to Maturity, yields for the two published
maturities most closely corresponding to such Weighted Average Life to
Maturity shall be calculated pursuant to the immediately preceding
sentence and the Reinvestment Rate shall be interpolated or
extrapolated from such yields on a straight-line basis, rounding in
each of such relevant periods to the nearest month. For the purposes of
calculating the "Reinvestment Rate", the most recent Statistical
Release published prior to the date of determination of the Make-Whole
Amount shall be used:
(b) Clause (d) of the definition of "Restricted
Investments" shall be and is hereby amended in its entirety to read as follows:
Investments made by the Company (i) after the Closing Date in
connection with the development and growth of the business of ORBCOMM
Development, and (ii) after December 31, 1996 in connection with the
formation and development of the business of ORBIMAGE, provided that
the aggregate amount of such additional Investments described in
clauses (i) and (ii) shall not exceed $75,000,000, and provided
further that the amount of such additional Investments described in
clause (ii) shall not exceed $55,000,000.
SECTION 2. WAIVER.
The Purchaser hereby waives from and after the Effective Date any
Default or Event of Default arising under Section 5.13(c) of the Note Agreement
arising or resulting from the sale by the Company of preferred shares of
ORBIMAGE to third party purchasers.
2
<PAGE> 3
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Section 3.1. To induce the Purchaser to execute and deliver this
Fourth Amendment, the Company represents and warrants to the Purchaser (which
representations shall survive the execution and delivery of this Fourth
Amendment) that:
(a) this Fourth Amendment has been duly authorized, executed and
delivered by it and this Fourth Amendment constitutes the legal, valid and
binding obligation, contract and agreement of the Company enforceable against
it in accordance with its terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally;
(b) the Note Agreement, as amended by this Fourth Amendment,
constitutes the legal, valid and binding obligation, contract and agreement of
the Company enforceable against it in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally;
(c) the execution, delivery and performance by the Company of this
Fourth Amendment (i) has been duly authorized by all requisite corporate action
and, if required, shareholder action, (ii) does not require the consent or
approval of any governmental or regulatory body or agency, and (iii) will not
(A) violate (1) any provision of law, statute, rule or regulation or its
certificate of incorporation or bylaws, (2) any order of any court or any rule,
regulation or order of any other agency or government binding upon it, or (3)
any provision of any material indenture, agreement or other instrument to which
it is a party or by which its properties or assets are or may be bound, or (B)
result in a breach or constitute (alone or with due notice or lapse of time or
both) a default under any indenture, agreement or other instrument referred to
in clause (iii)(A)(3) of this Section 3.1(c); and
(d) as of the date hereof and after giving effect to this Fourth
Amendment, no Default or Event of Default has occurred which is continuing.
SECTION 4. CONDITIONS TO EFFECTIVENESS OF FOURTH AMENDMENT.
Section 4.1. This Fourth Amendment shall not become effective
until, and shall become effective when, each and every one of the following
conditions shall have been satisfied:
(a) executed counterparts of this Fourth Amendment, duly executed
by the Company and the Purchaser, shall have been delivered to the Purchaser;
(b) the Purchaser shall have received a new Note in the form of
Exhibit A hereto duly executed by the appropriate officer of the Company which
reflects the amendment to the interest rate set forth in Section 1.1 hereof;
and
(c) the representations and warranties of the company set forth in
Section 3 hereof shall be true and correct on and with respect to the date
hereof.
Upon receipt of all of the foregoing, this Fourth Amendment shall on the
Effective Date become effective.
SECTION 5. MISCELLANEOUS.
Section 5.1. Except as modified and expressly amended by this
Fourth Amendment, the Note Agreement is in all respects ratified, confirmed and
approved and all of the terms, provisions and conditions thereof shall be and
remain in full force and effect.
3
<PAGE> 4
Section 5.2. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Fourth Amendment may refer to the Note Agreement without making specific
reference to this Fourth Amendment but nevertheless all such references shall
include this Fourth Amendment unless the context otherwise requires.
Section 5.3. This Fourth Amendment shall be governed by and
construed in accordance with the laws of the State of Illinois.
Section 5.4. This Fourth Amendment may be executed and delivered
in any number of counterparts, each of such counterparts constituting an
original, but all together only one Fourth Amendment.
IN WITNESS WHEREOF, the Company and the Purchaser have caused this
instrument to be executed, all as of the day and year first above written.
ORBITAL SCIENCES CORPORATION
By:
---------------------------------
Accepted and Agreed to:
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By:
---------------------------------
4
<PAGE> 5
EXHIBIT A
(To Fourth Amendment)
ORBITAL SCIENCES CORPORATION
12.00% Senior Note
Due June 14, 2001
No. R-3 December 15, 1996
ORBITAL SCIENCES CORPORATION, a Delaware corporation (the "Company"),
for value received, hereby promises to pay to
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
or registered assigns
on the fourteenth day of June, 2001
the principal amount of
TWENTY MILLION DOLLARS ($20,000,000)
and to pay interest (computed on the basis of a 360-day year of twelve 30-day
months) on the principal amount from time to time remaining unpaid hereon at
the rate of 12.00% per annum from the date hereof until maturity, payable
semiannually on the fourteenth of June and December in each year (commencing on
December 14, 1995) and at maturity. The Company agrees to pay interest on
overdue principal (including any overdue required or optional prepayment of
principal) and premium, if any, and (to the extent legally enforceable) on any
overdue installment of interest, at the rate Overdue Rate after the due date,
whether by acceleration or otherwise, until paid. "Overdue Rate" shall mean the
lesser of (a) the maximum interest rate permitted by law and (b) the greater of
(1) 14.00% per annum and (2) the rate which Morgan Guaranty Trust Company of
New York, New York City, New York, announces from time to time as its prime
lending rate as in effect from time to time, plus 2.00%.
Both the principal hereof and interest hereon are payable at the
principal office of the Company in Dulles, Virginia in coin or currency of the
United States of America at which the time of payment shall be legal tender for
the payment of public and private debts. If any amount of principal, premium,
if any, or interest on or in respect of this Note becomes due and payable on
any date which is not a Business Day, such amount shall be payable on the
immediately preceding Business Day. "Business Day" means any day other than a
Saturday, Sunday or other day on which banks in Dulles, Virginia or New York,
New York are required by law to close or are customarily closed.
This Note is one of the 12.00% Senior Notes due June 14, 2001 (the
"Note") of the Company in the aggregate principal amount of $20,000,000 issued
or to be issued under and pursuant to the terms and provisions of the Note
Agreement dated as of June 1, 1995 as amended by the First Amendment dated as
of June 1, 1995, the Second Amendment dated as of March 15, 1996, Third
Amendment dated as of July 31, 1996, and the Fourth Amendment dated as of March
31, 1997 (collectively, the "Note Agreement"), entered into by the Company with
the original Purchaser therein referred to and this Note and the holder hereof
are entitled equally and ratably with the holders of all other Notes
outstanding under the Note Agreement to all the benefits provided for thereby
or referred to therein. Reference is hereby made to the Note Agreement for a
statement of such rights and benefits.
5
<PAGE> 6
This Note and the other Notes outstanding under the Note Agreement may
be declared due prior to their expressed maturity date and certain prepayments
are required to be made thereon, all in the events, on the terms and in the
manner and amounts as provided in the Note Agreement.
The Notes are not subject to prepayment or redemption at the option of
the Company prior to their expressed maturity dates except on the terms and
conditions and in the amounts and with the premium, if any, set forth in the
Note Agreement.
This Note is registered on the books of the Company and is
transferable only by surrender thereof at the principal office of the Company
duly endorsed or accompanied by a written instrument of transfer duly executed
by the registered holder of this Note or its attorney duly authorized in
writing. Payment of or on account of principal, premium, if any, and interest
on this Note shall be made only to or upon the order in writing of the
registered holder.
This Note and said Note Agreement are governed by and construed in
accordance with the laws of Illinois, including all matters of construction,
validity and performance.
ORBITAL SCIENCES CORPORATION
By:
---------------------------------
Document No. 58707
6
<PAGE> 1
EXHIBIT 10.15.1
AMENDMENT NO. 1
TO
RESTATED MASTER AGREEMENT
This Amendment No. 1 to the Restated Master Agreement ("Amendment No.
1") is made and entered into this 5th day of February 1997 by and among Orbital
Sciences Corporation ("Orbital"), Orbital Communications Corporation
("ORBCOMM"), Teleglobe Inc. ("Teleglobe") and Teleglobe Mobile Partners
("Teleglobe Mobile").
W I T N E S S E T H
WHEREAS, Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile previously
entered into a Restated Master Agreement dated as of September 12, 1995 (the
"Restated Master Agreement"); and
WHEREAS, Orbital, ORBCOMM, Teleglobe and Teleglobe Mobile desire to
amend and modify the Restated Master Agreement.
NOW, THEREFORE, the parties agree as follows:
SECTION 1. Terms used but not otherwise defined herein shall have the
meanings assigned thereto in the Restated Master Agreement.
SECTION 2. Section 4.1(d) of the Restated Master Agreement is hereby
amended to replace the number "750,000" appearing therein with the number
"900,000".
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
the Restated Master Agreement as of the day and year first above written.
ORBITAL SCIENCES CORPORATION
By: /s/ BRUCE W. FERGUSON
------------------------------------
Name: Bruce W. Ferguson
Title: Executive Vice President and General
Manager/Communications and
Information Systems Group
<PAGE> 2
ORBITAL COMMUNICATIONS CORPORATION
By: /s/ ALAN L. BARKER
------------------------------------
Name: Alan L. Parker
Title: President
TELEGLOBE INC.
By: /s/ CLAUDE SEGUIN
------------------------------------
Name: Claude Seguin
Title: Executive Vice President, Finance and
Corporate Development and
Chief Financial Officer
TELEGLOBE MOBILE PARTNERS
By: Teleglobe Mobile Investment Inc.,
its Managing Partner
By: /s/ CLAUDE SEGUIN
------------------------------------
Name: Claude Seguin
Title: Chairman of the Board and
Chief Executive Officer
2
<PAGE> 1
EXHIBIT 10.19
ORBITAL SCIENCES CORPORATION
1997 STOCK OPTION AND INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of this 1997 Stock Option and Incentive Plan (the "Plan")
is to advance the interests of Orbital Sciences Corporation and its
stockholders by enabling Orbital and Participating Companies (as defined below)
to attract and retain highly talented employees, directors, consultants and
advisers who are in a position to make significant contributions to the success
of Orbital, to reward them for their contributions to the success of Orbital,
and to encourage them, through stock ownership, to increase their proprietary
interest in Orbital and their personal interest in its continued success and
progress.
The Plan provides for the award of Orbital stock options and Orbital
common stock. Options granted pursuant to the Plan may be incentive or
nonstatutory stock options. Options granted pursuant to the Plan shall be
presumed to be nonstatutory options unless expressly designated as incentive
options at the time of grant.
2. DEFINITIONS
For the purposes of this Plan and related documents, the following
definitions apply:
"Award Agreement" means the stock option agreement, restricted stock
agreement or other written agreement between Orbital and a Grantee that
evidences and sets out the terms and conditions of a Grant.
"Board" means the Board of Directors of the Company.
"Committee" means a committee of, and designated from time to time by
resolution of the Board, which shall consist of no fewer than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any affiliate, and each of whom shall qualify in all respects as a
"non-employee director" within the meaning of Rule 16b-3 under the Exchange Act
or any successor rule or regulation. Commencing on the Effective Date, and
until such time as the Board shall determine otherwise, the Committee shall be
the Human Resources and Nominating Committee of the Board.
"Company" or "Orbital" means Orbital Sciences Corporation, a Delaware
corporation, or any successor thereof.
"Effective Date" means January 24, 1997.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
<PAGE> 2
"Fair Market Value" means the closing sale price of Stock on the
national securities exchange on which the Stock is then principally traded or,
if that measure of price is not available, on a composite index of such
exchanges or, if that measure of price is not available, in a national market
system for securities on the date of the option grant (or such other date as is
specified herein). In the event that there are no sales of Stock on any such
exchange or market on date of the option grant (or such other date as is
specified herein), the fair market value of Stock on the date of the grant (or
such other date as is specified herein) shall be deemed to be the closing sales
price on the next preceding day on which Stock was sold on any such exchange or
market. In the event that the Stock is not listed on any such market or
exchange on the applicable date, a reasonable valuation of the fair market
value of the Stock on such date shall be made by the Board.
"Grant" means an award of an option or Restricted Stock under the
Plan.
"Grantee" means a person who receives or holds an option or Restricted
Stock under the Plan.
"I.R.C." means the Internal Revenue Code of 1986, as it may be
amended from time to time.
"Incentive Option" means any option granted under the Plan intended to
satisfy the requirements under I.R.C. Section 422(b) as an incentive stock
option.
"Nonstatutory Option" means any option granted under the Plan that
does not qualify as an Incentive Option.
"Old Option Plans" shall mean Orbital's 1990 Stock Option Plan and
Orbital's 1990 Stock Option Plan for Non-Employee Directors.
"Option Termination Date" is defined in Section 11(c) below.
"Outside Director" means a member of the Board who is not an officer
or employee of the Company.
"Parent" means a parent corporation as defined in I.R.C. Section
424(e).
"Participating Company" means the Company, any Parent of the Company,
and any subsidiary (as defined in Rule 405 under the Securities Act of 1933, as
amended) of the Company or its Parent.
"Plan" means this 1997 Stock Option and Incentive Plan.
"Restricted Stock" means shares of Stock awarded to a Grantee pursuant
to Section 13 hereof.
2
<PAGE> 3
"Stock" means shares of the Company's authorized Common Stock, $.01
par value per share.
"Subsidiary" means a subsidiary corporation as defined in I.R.C.
Section 424(f).
"Terminating Transaction" means any of the following events: (a) the
dissolution or liquidation of the Company; (b) a reorganization, merger or
consolidation of the Company with one or more other persons in which the
Company is not the surviving corporation or becomes a subsidiary of another
corporation other than a corporation that was a Participating Company
immediately prior to such event; (c) a sale of substantially all the Company's
assets to a person or entity other than a corporation that was a Participating
Company immediately prior to such event; or (d) a person (or persons acting as
a group or otherwise in concert) owning equity securities of the Company that
represent a majority or more of the aggregate voting power of all outstanding
equity securities of the Company. As used herein or elsewhere in this Plan,
the word "person" shall mean an individual, corporation, partnership,
association or other person or entity, or any group of two or more of the
foregoing that have agreed to act together.
"Total Disability" means a "total and permanent disability" as defined
in I.R.C. Section 22(e)(3).
3. ADMINISTRATION OF PLAN
(a) Administration by Board. The Plan shall be administered by
the Board. The Board shall have authority, not inconsistent with the express
provisions of the Plan, to:
(i) award Grants consisting of options or Restricted
Stock, or both, to such eligible persons as the Board may select;
(ii) determine the timing of Grants and the number of
shares of Stock subject to each Grant;
(iii) determine the terms and conditions of each Grant,
including whether an option is an Incentive Option or a Nonstatutory
Option (consistent with the requirements of the I.R.C.) and the nature
and duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting or forfeiture of a Grant;
(iv) adopt such rules and regulations as the Board may
deem necessary or appropriate to carry out the purposes of the Plan;
and
(v) interpret the provisions of the Plan and of any
Grants made hereunder and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan.
3
<PAGE> 4
All decisions, determinations, interpretations or other actions by the Board
with respect to the Plan shall be final, conclusive and binding on all persons,
including the Company, Participating Companies and Grantees and their
respective legal representatives, their successors in interest and permitted
assigns and upon all other persons claiming by, through, under or against any
of them.
(b) Administration and Delegation by Committee. The Board, in its
sole discretion, may delegate some or all of its powers with respect to the
Plan to a Committee (in which case references to the Board in this Plan shall
be deemed to refer to the Committee, where appropriate) except for interpreting
or making changes to Section 9 or Section 11(b) and except with respect to any
grants to directors of the Company under Sections 8 and 13. The Committee, in
its sole discretion, may delegate to the Chairman, the President and the Chief
Executive Officer, or any of them, while any such officer is a member of the
Board, authority to award Grants under the Plan. Such authority shall be on
such terms and conditions, and subject to such limitations, as the Committee
shall specify in its delegation of authority. Except to the extent otherwise
specified by the Committee in such delegation, the delegated authority to grant
awards of options and Restricted Stock shall include the power to:
(i) award Grants consisting of options or Restricted Stock, or
both, to such eligible persons as the authorized officer may select;
(ii) determine the timing of Grants and the number of shares
of Stock subject to each award; and
(iii) determine the terms and conditions of each Grant,
including whether an option is an Incentive Option or a Nonstatutory
Option (consistent with the requirements of the I.R.C.) and the nature
and duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting or forfeiture of a Grant.
Except to the extent otherwise specified by the Committee in such delegation,
the authority so delegated shall be in addition to, and not in lieu of, the
authority of the Committee to make awards under the Plan.
4. SHARES SUBJECT TO THE PLAN
(a) Availailability. Subject to adjustment as provided in
Section 4(c) below, the maximum aggregate number of shares of Stock available
for issuance under the Plan shall be 1,600,000.
(b) Reavailability of Options; Stock to be Delivered. If any
Stock covered by a Grant is not purchased or is forfeited, or if a Grant
otherwise terminates without delivery of any Stock subject thereto, then the
number of shares of Stock so terminated or forfeited shall again be
4
<PAGE> 5
available for making Grants under the Plan. In the event that Stock that was
previously issued by the Company is reacquired by the Company as part of the
consideration received (in accordance with Section 12(b) below) upon the
subsequent exercise of an option, such reacquired Shares shall again be
available for the granting of options hereunder. Stock delivered under the
Plan shall be authorized but unissued shares or, at the Board 's discretion,
previously issued Stock acquired by the Company and held in its treasury. No
fractional shares of Stock shall be delivered under the Plan.
(c) Changes in Stock. In the event of a stock dividend, stock
split or combination of shares, exchange of shares, distribution payable in
capital stock, recapitalization or other change in Orbital's capital stock, the
number and kind of shares of Stock subject to Grants then outstanding or
subsequently awarded under the Plan, the exercise price of any outstanding
option, the maximum number of shares of Stock that may be delivered under the
Plan, and other relevant provisions shall be appropriately adjusted by the
Board, so that the proportionate interest of the Grantee immediately following
such event shall, to the extent practicable, be the same as immediately before
such event.
5. EFFECTIVE DATE.
The Plan shall be effective as of the Effective Date, subject to
approval of the Plan within one year of the Effective Date by Orbital's
shareholders. Upon approval of the Plan by the stockholders of Orbital as set
forth above, all Grants made under the Plan on or after the Effective Date
shall be fully effective as if Orbital's stockholders had approved the Plan on
the Effective Date. If the stockholders fail to approve the Plan within one
year of the Effective Date, any Grants made hereunder shall be null and void
and of no effect.
6. AWARD AGREEMENT
Each Grant pursuant to the Plan shall be evidenced by an Award
Agreement, to be executed by Orbital and by the Grantee, in such form or forms
as the Board shall from time to time approve. Each Award Agreement evidencing
a Grant of options shall specify whether such options are intended to be
Nonstatutory Options or Incentive Options.
7. OPTION EXERCISE PRICE
The option exercise price for shares of Stock to be issued under the
Plan shall be the Fair Market Value of the Stock on the Grant date (or 110% of
the Fair Market Value in the case of an Incentive Option granted to a
ten-percent shareholder).
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<PAGE> 6
8. DISCRETIONARY OPTION GRANTS. Grants may be made under the Plan to any
employee or director of any Participating Company as the Board shall determine
and designate from time to time. Grants of options may be made under the Plan
to any consultant or adviser to any Participating Company whose participation
in the Plan is determined by the Board to be in the best interests of the
Company and is so designated by the Board. Notwithstanding the foregoing,
grants to persons who are not employees of the Company or any Parent or
Subsidiary of the Company shall not be Incentive Options.
9. OUTSIDE DIRECTOR OPTION GRANTS
(a) Automatic Grants. On January 2 of each year, each Outside
Director shall automatically be awarded a Grant of a Nonstatutory Option to
purchase 3,000 shares of Stock.
(b) Grants in Lieu of Annual Fee. Each Outside Director shall be
entitled to receive a Nonstatutory Option to purchase a specified number of
shares of Stock in lieu of his or her annual Board retainer fee. Such specified
number (i) shall be calculated by the Chief Financial Officer of the Company,
using a Black-Scholes (or other generally accepted) valuation method based on
the Fair Market Value of the Stock on January 15 of the applicable year (or the
next business day, if January 15 falls on a weekend), assuming a ten-year
option term and (ii) shall be adjusted upward by 10% to take into account the
one-year vesting term. The exercise price of such option shall be equal to the
Fair Market Value of Shares on January 15 (or the next business day, if January
15 falls on a weekend), which shall also be the Grant date. Any Outside
Director desiring to receive an option in lieu of cash shall notify the Company
of this election, which shall be irrevocable, by submitting a written notice to
the Corporate Secretary in accordance to procedures as determined by the Board.
10. LIMITATIONS ON GRANTS
(a) Limitation on Shares of Stock Subject to Grants. The maximum
number of shares of Stock subject to Options that can be awarded under the Plan
to any person eligible for a Grant under Section 8 hereof is 750,000 shares of
Stock during the first ten (10) calendar years of the Plan, and 100,000 per
year thereafter. The "per individual" limitations described in this paragraph
shall be construed and applied consistent with the rules and regulations under
I.R.C. Section 162(m).
(b) Limitations on Incentive Options. Incentive Options may only
be granted to employees of the Company or any Parent or Subsidiary of the
Company.
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<PAGE> 7
11. VESTING AND TERMINATION OF OPTIONS
(a) Vesting of Discretionary Options. Subject to the other
provisions of this Section 11, Options granted pursuant to Section 8 shall vest
and become exercisable at such time and in such installments as the Board shall
provide in each individual Award Agreement. Notwithstanding the foregoing, the
Board may, in its sole discretion, accelerate the time at which all or any part
of an option may be exercised.
(b) Vesting of Outside Director Options. Subject to the other
provisions of this Section 11, options granted under Section 9 shall become
exercisable as to 100% of the Stock covered thereby on the first anniversary of
the Grant date.
(c) Termination of Options. All options shall expire and
terminate on such date as the Board shall determine ("Option Termination
Date"), which in no event shall be later than ten (10) years from the date
such option was granted. In the case of an Incentive Option granted to a
ten-percent stockholder, the option shall not be exercisable after the
expiration of five (5) years from the date such option was granted. Upon
termination of an option or portion thereof, the Grantee shall have no further
right to purchase Stock pursuant to such option.
(d) Termination of Employment or Service.
(i) Termination of Employment or Directorship.
Upon the termination of the employment or directorship of a Grantee with a
Participating Company for any reason other than for "cause" (pursuant to
Section 14 below) or by reason of death or Total Disability, all options that
are not exercisable shall terminate on the employment/directorship termination
date. Options that are exercisable on the employment/directorship termination
date shall continue to be exercisable for (A) six (6) months following the
employment/directorship termination date (in the case of Nonstatutory Options),
(B) three (3) months following the employment termination date (in the case of
Incentive Options), or (C) the Option Termination Date, whichever occurs first.
A Grantee who is an employee or director of a Participating Company shall be
deemed to have incurred a termination for purposes of this Section 11 (d)(i) if
such Participating Company ceases to be a Participating Company, unless such
Grantee is an employee, director, consultant or adviser of any other
Participating Company.
(ii) Service Termination. In the case of an
optionee who is not an employee or director of any Participating Company,
provisions relating to the exercisability of options following termination of
service shall be specified in the award. If not so specified, all options held
by such optionee that are not then exercisable shall terminate upon termination
of service for any reason. Unless such termination was for "cause" (pursuant
to Section 14 below), options that are exercisable on the date the optionee's
service as a consultant or adviser terminates shall continue to be exercisable
for a period of six (6) months following the service termination date (as
defined in a consulting or similar agreement or as determined by the Board) or
the Option Termination Date, whichever occurs first.
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<PAGE> 8
(e) Rights in the Event of Death. In the event that the
employment and/or directorship of an optionee with a Participating Company is
terminated by reason of death, all options that are not exercisable shall
terminate on the date of death. Options that were exercisable on the date
prior to the optionee's death may be exercised by the optionee's executor or
administrator or by the person or persons to whom the option is transferred by
will or the applicable laws of descent and distribution, at any time within the
one-year period (or such longer period as the Board may determine prior to the
expiration of such one-year period) beginning with the date of the optionee's
death, but in no event beyond the Option Termination Date.
(f) Rights in the Event of Total Disability. In the event that
the employment and/or directorship of an optionee with a Participating Company
is terminated by reason of Total Disability, all options that are not
exercisable shall terminate on the employment/directorship termination date.
Options that were exercisable on the employment/directorship termination date
may be exercised at any time within the one-year period (or such longer period
as the Board may determine prior to the expiration of such one-year period)
beginning with the commencement of the optionee's Total Disability (as
determined by the Board) but in no event beyond the Option Termination Date.
(g) Leave of Absence. An approved leave of absence shall not
constitute a termination of employment under the Plan. An approved leave of
absence shall mean an absence approved pursuant to the policy of a
Participating Company for military leave, sick leave, or other bona fide leave,
not to exceed ninety (90) days or, if longer, as long as the employee's right
to re-employment is guaranteed by contract, statute or the policy of a
Participating Company. Notwithstanding the foregoing, in no event shall an
approved leave of absence extend an option beyond the Option Termination Date.
12. EXERCISE OF OPTIONS; NON-TRANSFERABILITY
(a) Exercise of Options. Vested options may be exercised, in
whole or in part, by giving written notice of exercise to the Company, which
notice shall specify the number of shares of Stock to be purchased and shall be
accompanied by payment in full of the purchase price in accordance with Section
12(b) below and the full amount of any federal and state withholding and other
employment taxes applicable to such person as a result of such exercise. No
shares of Stock shall be issued until full payment of the purchase price and
applicable withholding tax has been made. Until the issuance of stock
certificates, no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to optioned shares notwithstanding the
exercise of the option.
(b) Payment. Full payment of the purchase price for the Stock as
to which an option is being exercised shall be made (i) in United States
dollars in cash or by check in a form satisfactory to the Company, (ii) at the
Grantee's election, and subject to discretion of the Board, through delivery of
Shares having a Fair Market Value on the day immediately preceding the day
notice of exercise is received by the Company equal to the cash exercise price
of the option, (iii)
8
<PAGE> 9
in accordance with a so-called cashless exercise plan established with a
securities brokerage firm, or (iv) by any combination of the permissible forms
of payment.
(c) Non-Transferability of Options. Except as the Board may
otherwise determine, no option may be transferred other than by will or by the
laws of descent and distribution, and during an optionee's lifetime an option
may be exercised only by the Grantee.
13. RESTRICTED STOCK
(a) Grant of Restricted Stock. The Board may from time to time
grant Restricted Stock to certain employees and directors of a Participating
Company, subject to such restrictions, conditions and other terms, if any, as
the Board may determine.
(b) Restrictions. At the time a Grant of Restricted Stock is
made, the Board may establish a period of time (the "Restricted Period") during
which a Grantee's right to all or a portion of such Restricted Stock shall vest
over time, subject to certain terms and conditions. Each Grant of Restricted
Stock may be subject to a different Restricted Period. The Board may, in its
sole discretion, at the time a Grant of Restricted Stock is made, prescribe
forfeiture or vesting conditions in addition to or other than the expiration of
the Restricted Period. The Board also may, in its sole discretion, shorten or
terminate the Restricted Period or waive any other restrictions applicable to
all or a portion of the Restricted Stock. Restricted Stock may not be sold,
transferred, assigned, pledged or otherwise encumbered or disposed of during
the Restricted Period or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Stock.
(c) Restricted Stock Certificates. Orbital shall issue, in the
name of each Grantee to whom Restricted Stock has been granted, stock
certificates representing the total number of shares of Restricted Stock
granted to the Grantee. The Secretary of Orbital shall hold such certificates
for the Grantee's benefit until such time as the restrictions lapse or the
Restricted Stock is forfeited to Orbital.
(d) Rights of Holders of Restricted Stock. Unless the Board
otherwise provides in an Award Agreement, holders of Restricted Stock shall
have the right to vote such Stock and the right to receive any dividends
declared or paid with respect to such Stock. The Board may provide that any
dividends paid on Restricted Stock must be reinvested in Stock, which may or
may not be subject to the same vesting conditions and restrictions applicable
to such Restricted Stock. All distributions, if any, received by a Grantee
with respect to Restricted Stock as a result of any stock split, stock
dividend, combination of shares, or other similar transaction shall be subject
to the restrictions applicable to the original Grant.
(e) Termination of Employment. Upon termination of the
employment/directorship of a Grantee with Orbital, other than by reason of
death or Total Disability, any Restricted Stock held by such Grantee that has
not vested, or with respect to which all applicable restrictions and conditions
have not lapsed, shall immediately be deemed forfeited, unless the Board, in
its
9
<PAGE> 10
discretion, determines otherwise. Upon forfeiture of Restricted Stock, the
Grantee shall have no further rights with respect to such Grant, including but
not limited to any right to vote Restricted Stock or any right to receive
dividends with respect to shares of Restricted Stock.
(f) Rights in the Event of Total Disability or Death. The rights
of a Grantee with respect to Restricted Stock in the event such Grantee
terminates employment/directorship with Orbital by reason of Total Disability
or death shall be determined by the Board at the time of Grant.
(g) Delivery of Stock and Payment Therefor. Upon the expiration
or termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Board, the restrictions applicable to shares of
Restricted Stock shall lapse, and, upon payment by the Grantee to Orbital, in
cash or by check, of the aggregate par value of the shares of Stock represented
by such Restricted Stock, a stock certificate for such shares shall be
delivered, free of all such restrictions, to the Grantee or the Grantee's
beneficiary or estate, as the case may be.
14. FORFEITURE CONDITIONS.
The Board may provide in an Award Agreement for conditions of
forfeiture for "cause" of any Grantee's rights with respect to a Grant.
"Cause" shall include engaging in an activity that is detrimental to the
Company including, without limitation, criminal activity, failure to carry out
the duties assigned to the Grantee as a result of incompetence or willful
neglect, conduct casting such discredit on the Company as in the opinion of the
Board justifies termination or forfeiture of the Grant, or such other reasons,
including the existence of a conflict of interest, as the Board may determine.
"Cause" is not limited to events that have occurred prior to the Grantee's
termination of service, nor is it necessary that the Board's finding of "cause"
occur prior to such termination. If the Board determines, subsequent to a
Grantee's termination of service but prior to the exercise of any rights under
a Grant, that either prior or subsequent to the Grantee's termination the
Grantee engaged in conduct that would constitute "cause," then the rights with
respect to a Grant shall be forfeited.
15. COMPLIANCE WITH SECURITIES LAWS.
(a) The delivery of Stock upon the exercise of an option or lapse
of a Restricted Period shall be subject to compliance with (i) applicable
federal and state laws and regulations, (ii) all applicable listing
requirements of any national securities exchange or national market system on
which the Stock is then listed or quoted, and (iii) Company counsel's approval
of all other legal matters in connection with the issuance and delivery of such
Stock. If the sale of Stock has not been registered under the Securities Act
of 1933, as amended, the Company may require, as a condition to exercise of the
option or receipt of Restricted Stock, such representations or agreements as
counsel for the Company may consider appropriate to avoid violation of such Act
and may require that the certificates evidencing such Stock bear an appropriate
legend restricting transfer.
10
<PAGE> 11
(b) It is the intent of the Company that Grants pursuant to the
Plan and the exercise of options granted hereunder will qualify for the
exemption provided by Rule 16b-3 under the Exchange Act. To the extent that
any provision of the Plan or action by the Board does not comply with the
requirements of Rule 16b-3 in respect of an employee or director subject to
Section 16(b) of the Exchange Act, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board, and shall not affect the
validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the
Board may exercise its discretion to modify this Plan in any respect necessary
to satisfy the requirements of, or take advantage of any features of the
revised exemption or its replacement.
16. MERGERS, etc.
(a) Effect on Options and Plan. Except as otherwise provided
herein, all options outstanding under the Plan shall accelerate and become
immediately exercisable for a period of fifteen days (or such longer or shorter
period as the Board may prescribe) immediately prior to the scheduled
consummation of a Terminating Transaction, which exercise shall be (i)
conditioned upon the consummation of the Terminating Transaction and (ii)
effective only immediately before the consummation of such Terminating
Transaction. Upon consummation of any such event, the Plan and all
outstanding but unexercised options shall terminate. Notwithstanding the
foregoing, to the extent provision is made in writing in connection with such
Terminating Transaction, for the continuation of the Plan and the assumption of
options under the Plan theretofore granted, or for the substitution for such
options of new options covering the stock of a successor company, or a parent
or subsidiary thereof, with appropriate adjustments as to the number and kinds
of shares or units and exercise prices, then the Plan and options theretofore
granted shall continue in the manner and under the terms so provided, and the
acceleration and termination provisions set forth in the first two sentences of
this Section 16(a) shall be of no effect. The Company shall send written
notice of a Terminating Transaction to all individuals who hold options not
later than the time at which the Company gives notice thereof to its
stockholders.
b. Effect on Restricted Stock. All outstanding shares of
Restricted Stock shall be deemed to have vested, and all restrictions and
conditions applicable to such shares of Restricted Stock shall be deemed to
have lapsed immediately prior to the occurrence of a Terminating Transaction.
17. TAXES
The Board shall make such provisions and take such steps as it deems
necessary or appropriate for the withholding of any federal, state, local and
other tax required by law to be withheld with respect to the grant or exercise
of options, or the vesting of or other lapse of restrictions applicable to
Restricted Stock, or with respect to the disposition of Stock acquired pursuant
to the Plan, including, but without limitation, the deduction of the amount of
any such
11
<PAGE> 12
withholding tax from any compensation or other amounts payable to a Grantee, or
requiring a Grantee (or the optionee's beneficiary or legal representative), as
a condition of a Grant or exercise of an option or receipt of Restricted Stock,
to pay to the appropriate Participating Company any amount required to be
withheld, or to execute such other documents as the Board deems necessary or
desirable in connection with the satisfaction of any applicable withholding
obligation.
18. EMPLOYMENT RIGHTS
Neither the adoption of the Plan nor the making of any Grants shall
confer upon any Grantee any right to continue as an employee or director of, or
consultant or adviser to, any Participating Company or affect in any way the
right of any Participating Company to terminate them at any time. Except as
specifically provided by the Board in any particular case, the loss of existing
or potential profit in Grants under this Plan shall not constitute an element
of damages in the event of termination of the relationship of a Grantee even if
the termination is in violation of an obligation of the Company to the Grantee
by contract or otherwise.
19. AMENDMENT OR TERMINATION OF PLAN
(a) Neither adoption of the Plan nor the making of any Grants
shall affect the Company's right to make awards to any person that is not
subject to the Plan, to issue to such persons Stock as a bonus or otherwise, or
to adopt other plans or arrangements under which Stock may be issued.
(b) The Board may at any time discontinue granting awards under
the Plan. With the consent of the Grantee, the Board may at any time cancel an
existing Grant in whole or in part and make any other Grant for such number of
shares as the Board specifies. The Board may at any time, prospectively or
retroactively, amend the Plan or any outstanding Grant for the purpose of
satisfying the requirements of I.R.C. Section 422 or of any changes in
applicable laws or regulations or for any other purpose that may at the time be
permitted by law, or may at any time terminate the Plan as to further grants of
awards, but no such amendment shall materially adversely affect the rights of
any Grantee (without the Grantee's consent) under any outstanding Grant.
(c) In the Board's discretion, the Board may, with an optionee's
consent, substitute Nonstatutory Options for outstanding Incentive Options, and
any such substitution shall not constitute a new option grant for the purposes
of the Plan, and shall not require a revaluation of the option exercise price
for the substituted option. Any such substitution may be implemented by an
amendment to the applicable option agreement or in such other manner as the
Board in its discretion may determine.
12
<PAGE> 13
20. GENERAL PROVISIONS
(a) Titles and Headings. Titles and headings of sections of the
Plan are for convenience of reference only and shall not affect the
construction of any provision of the Plan.
(b) Governing Law. The Plan shall be governed by, interpreted
under and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of Delaware,
applicable to agreements made and to be performed wholly within the State of
Delaware.
(c) Severability. If any provision of the Plan or any Award
Agreement shall be determined to be illegal or unenforceable by any court of
law in any jurisdiction, the remaining provisions hereof and thereof shall be
severable and enforceable in accordance with their terms, and all provisions
shall remain enforceable in any other jurisdiction.
* * *
The Plan was duly adopted by the Board of Directors of the Company as
of January 24, 1997.
-------------------------------------------------
Leslie C. Seeman
Senior Vice President, General Counsel and Secretary
of the Company
The Plan was duly approved by the stockholders of the Company on April
_____, 1997.
-------------------------------------------------
Leslie C. Seeman
Senior Vice President, General Counsel and Secretary
of the Company
13
<PAGE> 1
EXHIBIT 11.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTH PERIOD ENDED MARCH 31, 1997
- ------------------------------------------------------------------------------------------------------
ASSUMING
PRIMARY FULL DILUTION
----------------- --------------------
<S> <C> <C>
WEIGHTED AVERAGE OF OUTSTANDING
SHARES 32,172,963 32,172,963
COMMON EQUIVALENT SHARES:
OUTSTANDING STOCK OPTIONS 646,469 646,469
OTHER POTENTIALLY DILUTIVE SECURITIES: N/A N/A
----------------- --------------------
SHARES USED IN COMPUTING
NET INCOME PER SHARE 32,819,432 32,819,432
================= ====================
NET INCOME $5,093,592 $5,093,592
ADJUSTMENTS ASSUMING FULL DILUTION: N/A N/A
----------------- --------------------
NET INCOME $5,093,592 $5,093,592
================= ====================
NET INCOME PER SHARE $0.155 $0.155
DILUTION PERCENTAGE ASSUMING FULL DILUTION (1) N/A 0.0%
NET INCOME PER SHARE $0.16 $0.16
================= ====================
</TABLE>
NOTES:
(1) - DILUTION CAUSED BY COMMON STOCK EQUIVALENTS AND OTHER POTENTIALLY
DILUTIVE SECURITIES THAT IS LESS THAN 3% IS CONSIDERED IMMATERIAL,
AND ONLY PRIMARY EARNINGS PER SHARE IS PRESENTED IN THE ACCOMPANYING
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS.
NOTE - SUBSIDIARY STOCK OPTIONS THAT ENABLE HOLDERS TO OBTAIN SUBSIDIARY'S
COMMON STOCK PURSUANT TO EFFECTIVE STOCK OPTION PLANS ARE INCLUDED IN
COMPUTING THE SUBSIDIARY'S EARNING PER SHARE, TO THE EXTENT DILUTIVE.
THOSE EARNINGS PER SHARE DATA ARE INCLUDED IN THE COMPANY'S PER SHARE
COMPUTATIONS, TO THE EXTENT DILUTIVE, BASED ON THE COMPANY'S HOLDINGS
OF THE SUBSIDIARY'S STOCK. FOR THE THREE MONTHS ENDED MARCH 31, 1997,
ALL SUCH SUBSIDIARY STOCK OPTIONS WERE ANTI-DILUTIVE.
<PAGE> 1
Exhibit 99
IMPORTANT FACTORS REGARDING
FORWARD LOOKING STATEMENTS
The following factors, among others, could affect the Company's actual
results and could cause Orbital's actual consolidated results during the second
quarter of 1997 and beyond, to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. (Capitalized
terms used herein have the meanings assigned to them in Orbital Sciences
Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997 with which this exhibit is filed.)
- - Orbital, like most companies and governments that have launch and satellite
programs, has experienced occasional product failures and other problems,
including with respect to certain of its launch vehicles and satellites.
In addition to any costs resulting from product warranties, contract
performance or required remedial action, product failures may result in
increased costs or loss of revenues due to postponement or cancellation of
subsequently scheduled launches or spacecraft operations or other product
deliveries.
- - As of December 31, 1996, approximately 60% of Orbital's backlog is with the
U.S. Government and its agencies or from subcontracts with prime
contractors to the U.S. Government. Most of Orbital's government contracts
are funded incrementally on a year-to-year basis. Changes in government
policies, priorities or funding levels through agency or program budget
reductions by the U.S. Congress or the imposition of budgetary constraints
could materially adversely affect Orbital's financial condition or results
of operations. All the Company's U.S. Government contracts and, in
general, its subcontracts with U.S. Government prime contractors, provide
that such contracts may be terminated at will by the U.S. Government or
the prime contractor, respectively. There can be no assurance that these
contracts will not be terminated or suspended in the future, or that
contract suspensions or termination will not result in unreimbursable
expenses or charges or other adverse effects on the Company.
- - Certain of the Company's revenues have been generated under fixed-price
incentive fee, firm fixed-price and cost-plus-fee long-term contracts.
Revenue recognition and profitability, if any, from a particular contract
may be adversely affected to the extent that original cost estimates,
estimated costs to complete or incentive or award fee estimates are
revised, delivery schedules are delayed, or progress under a contract is
otherwise impeded.
- - The accuracy and appropriateness of Orbital's direct and indirect costs and
expenses under its U.S. Government contracts are subject to extensive
regulation and audit by the Defense Contract Audit Agency or by other
appropriate agencies of the U.S. Government. These agencies have the
right to challenge Orbital's cost estimates or allocations with respect to
any such contract. Additionally, a substantial portion of payments to the
Company under U.S.
<PAGE> 2
Government contracts are provisional payments that are subject to potential
adjustment upon audit by such agencies.
- - Start-up of the ORBCOMM System will produce significant ORBCOMM Global
operating losses for several more years. Even if the ORBCOMM System is
fully constructed and operational, there can be no assurance that an
adequate market will develop for ORBCOMM services, that ORBCOMM Global will
achieve profitable operations or that Orbital will recover any of its past
or anticipated investment in the ORBCOMM System. Because Orbital (through
OCC) has a 50% participating interest in ORBCOMM Global, Orbital expects to
recognize its proportionate share of ORBCOMM Global profits and losses. If
full development and implementation of the ORBCOMM System were to be
delayed or significantly restricted, the Company could be required to
expense part or all of its investment in the ORBCOMM System.
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS AT AND FOR
THE THREE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000820736
<NAME> ORBITAL SCIENCES CORP/DE/
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 29,249
<SECURITIES> 10,022
<RECEIVABLES> 148,983
<ALLOWANCES> (1,602)
<INVENTORY> 23,459
<CURRENT-ASSETS> 217,834
<PP&E> 203,237
<DEPRECIATION> (73,200)
<TOTAL-ASSETS> 515,121
<CURRENT-LIABILITIES> 138,288
<BONDS> 29,346
0
0
<COMMON> 322
<OTHER-SE> 335,512
<TOTAL-LIABILITY-AND-EQUITY> 515,121
<SALES> 122,112
<TOTAL-REVENUES> 122,112
<CGS> 88,434
<TOTAL-COSTS> 88,434
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 142
<INTEREST-EXPENSE> 97
<INCOME-PRETAX> 5,660
<INCOME-TAX> 566
<INCOME-CONTINUING> 5,094
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,094
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.16
</TABLE>
