<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
JUNE 30, 1998
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 July 31, 1998, 36,766,746 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
-----------
JUNE 30, DECEMBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 45,757 $ 12,553
Short-term investments, at market 439 2,573
Receivables, net 217,155 190,204
Inventories, net 47,898 50,925
Deferred income taxes and other assets 10,486 8,190
--------------- ---------------
TOTAL CURRENT ASSETS 321,735 264,445
PROPERTY, PLANT AND EQUIPMENT, AT COST, LESS ACCUMULATED
depreciation and amortization of $93,030 and $79,347, respectively 145,897 137,498
INVESTMENTS IN AND ADVANCES TO AFFILIATES, NET 195,687 159,230
EXCESS OF PURCHASE PRICE OVER NET ASSETS ACQUIRED,
less accumulated amortization of $23,877 and $19,794, respectively 185,623 181,955
DEFERRED INCOME TAXES AND OTHER ASSETS 28,084 28,511
--------------- ---------------
TOTAL ASSETS $ 877,026 $ 771,639
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Short-term borrowings and current portion of
long-term obligations $ 16,079 $ 29,317
Accounts payable 40,493 36,217
Accrued expenses 87,264 100,274
Deferred revenues 47,765 46,138
--------------- ---------------
TOTAL CURRENT LIABILITIES 191,601 211,946
LONG-TERM OBLIGATIONS, NET OF CURRENT PORTION 156,109 198,394
OTHER LIABILITIES 418 2,443
--------------- ---------------
TOTAL LIABILITIES 348,128 412,783
NON-CONTROLLING INTERESTS IN
NET ASSETS OF CONSOLIDATED SUBSIDIARIES (510) 3,755
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.01; 10,000,000 shares authorized:
Series A Special Voting Preferred Stock, none and one share
authorized and outstanding, respectively - -
Common Stock, par value $.01; 80,000,000 shares authorized,
36,901,818 and 32,481,719 shares outstanding, respectively,
after deducting 20,877 shares held in treasury 368 325
Additional paid-in capital 487,164 326,187
Unrealized gains on short-term investments 136 272
Cumulative translation adjustments (5,458) (4,943)
Retained earnings 47,198 33,260
--------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 529,408 355,101
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 877,026 $ 771,639
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-2-
<PAGE> 3
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED; IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
JUNE 30,
---------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
REVENUES $ 184,516 $ 142,226
COSTS OF GOODS SOLD 133,665 102,553
--------------- ---------------
GROSS PROFIT 50,851 39,673
RESEARCH AND DEVELOPMENT EXPENSES 10,451 4,682
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 28,984 23,244
AMORTIZATION OF EXCESS OF PURCHASE PRICE OVER
NET ASSETS ACQUIRED 1,978 742
--------------- ---------------
INCOME FROM OPERATIONS 9,438 11,005
NET INVESTMENT INCOME (EXPENSE) 331 50
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES (8,213) (5,393)
NON-CONTROLLING INTERESTS IN (EARNINGS) LOSSES
OF CONSOLIDATED SUBSIDIARIES 1,895 563
GAIN ON SALE OF SUBSIDIARY STOCK 4,793 --
--------------- ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES 8,244 6,225
PROVISION FOR INCOME TAXES 825 622
--------------- ---------------
NET INCOME $ 7,419 $ 5,603
=============== ===============
NET INCOME PER COMMON SHARE $ 0.21 $ 0.17
SHARES USED IN COMPUTING NET INCOME
PER COMMON SHARE 35,979,989 32,688,563
=============== ===============
NET INCOME PER COMMON SHARE, ASSUMING DILUTION $ 0.21 $ 0.17
SHARES USED IN COMPUTING NET INCOME
PER COMMON SHARE, ASSUMING DILUTION 40,815,134 32,743,578
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-3-
<PAGE> 4
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED; IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
---------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
REVENUES $ 370,675 $ 264,338
COSTS OF GOODS SOLD 268,450 190,987
--------------- ---------------
GROSS PROFIT 102,225 73,351
RESEARCH AND DEVELOPMENT EXPENSES 17,516 11,694
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 55,286 43,122
AMORTIZATION OF EXCESS OF PURCHASE PRICE OVER
NET ASSETS ACQUIRED 3,938 1,483
--------------- ---------------
INCOME FROM OPERATIONS 25,485 17,052
NET INVESTMENT INCOME (EXPENSE) (166) 310
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES (18,890) (6,661)
NON-CONTROLLING INTERESTS IN (EARNINGS) LOSSES
OF CONSOLIDATED SUBSIDIARIES 4,265 1,184
GAIN ON SALE OF SUBSIDIARY STOCK 4,793 ---
--------------- ---------------
INCOME BEFORE PROVISION FOR INCOME TAXES 15,487 11,885
PROVISION FOR INCOME TAXES 1,549 1,188
--------------- ---------------
NET INCOME $ 13,938 $ 10,697
=============== ===============
NET INCOME PER COMMON SHARE $ 0.41 $ 0.33
SHARES USED IN COMPUTING NET INCOME PER SHARE 34,408,545 32,753,415
=============== ===============
NET INCOME PER COMMON SHARE, ASSUMING DILUTION $ 0.41 $ 0.33
SHARES USED IN COMPUTING NET INCOME
PER COMMON SHARE, ASSUMING DILUTION 39,284,011 32,753,689
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-4-
<PAGE> 5
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED; IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30,
---------------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 13,938 $ 10,697
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Depreciation and amortization expense 18,566 12,115
Equity in losses of affiliates 19,164 6,661
Non-controlling interests in losses of consolidated subsidiaries (4,265) (1,184)
Gain on sale of subsidiary stock (4,793) --
Foreign currency translation adjustment (515) (323)
CHANGES IN ASSETS AND LIABILITIES:
(Increase) decrease in current and other non-current assets (34,277) 1,649
Increase (decrease) in current and other non-current liabilities (13,814) 11,411
--------------- ---------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (5,996) 41,026
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (23,478) (18,656)
Proceeds from sales of fixed assets -- 34,085
Purchases, sales and maturities of available-for-sale investment securities, net 2,134 1,631
Investments in and advances to affiliates (44,954) (92,884)
--------------- ---------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (66,297) (75,824)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings, net of (repayments) (3,316) (5,210)
Principal payments on long-term obligations (74,207) (5,604)
Net proceeds from issuance of long-term obligations 22,000 22,893
Net proceeds from issuances of common stock 161,020 919
Proceeds from issuance of short-term bridge loan -- 25,000
--------------- ---------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 105,497 37,998
--------------- ---------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 33,204 3,200
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 12,553 26,859
--------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 45,757 $ 30,059
=============== ===============
</TABLE>
SEE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
-5-
<PAGE> 6
ORBITAL SCIENCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
(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. 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, 1997. Operating results for the three- and six-month periods ended
June 30, 1998 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) Inventories
Inventories consist of components inventory, work-in-process
inventory and finished goods inventory and are generally stated at
the lower of cost or net realizable value on a first-in, first-out,
or specific identification basis, net of allowances for estimated
obsolescence.
Components and raw materials are purchased to support future
production efforts. Work-in-process inventory consists primarily of
(i) costs incurred under long-term fixed-price contracts accounted
for using the percentage-of-completion method of accounting applied
on a units of delivery basis and (ii) partially assembled commercial
products, and generally includes direct production costs and certain
allocated indirect costs (including an allocation of general and
administrative costs). Work-in-process inventory has been reduced by
contractual progress payments received. Finished goods inventory
consists of fully assembled commercial products awaiting shipment.
(2) Earnings Per Share
Net income per common share is calculated using the weighted average
number of common shares outstanding during the periods. Net income
per common share assuming dilution is calculated using the weighted
average
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number of common and common equivalent shares outstanding during the
periods, plus the effects of an assumed conversion of the company's
convertible notes, after giving effect to all net income adjustments
that would result from the assumed conversion. Net income and
outstanding shares of common stock used in calculating earnings per
share differed from those amounts reported in the consolidated
financial statements as follows:
<TABLE>
<CAPTION>
Net Income Per Net Income Per Common
Common Share Share, Assuming Dilution
------------ ------------------------
<S> <C> <C>
Three months ended June 30, 1998:
Net income $ 7,419,000 $ 7,419,000
Assuming conversion of convertible notes N/A 985,565
---------- ----------
Net income, as adjusted $ 7,419,000 $ 8,404,565
============ ============
Outstanding common shares 36,901,818 36,901,818
Effect of weighting outstanding shares (921,829) (921,829)
Stock options (treasury method) N/A 1,263,716
Convertible notes N/A 3,571,429
--------- ---------
Adjusted shares 35,979,989 40,815,134
========== ==========
Six months ended June 30, 1998:
Net income $ 13,938,000 $ 13,938,000
Assuming conversion of convertible notes N/A 2,039,645
---------- ----------
Net income, as adjusted $ 13,938,000 $ 15,977,645
============= =============
Outstanding common shares 36,901,818 36,901,818
Effect of weighting outstanding shares (2,493,273) (2,493,273)
Stock options (treasury method) N/A 1,304,037
Convertible notes N/A 3,571,429
---------- ----------
Adjusted shares 34,408,545 39,284,011
========== ==========
Three months ended June 30, 1997:
Net income $ 5,603,000 $ 5,603,000
Assuming conversion of convertible notes N/A N/A
--------- ---------
Net income, as adjusted $ 5,603,000 $ 5,603,000
============= =============
Outstanding common shares 32,269,326 32,269,326
Effect of weighting outstanding shares (33,742) (33,742)
Stock options (treasury method) N/A 507,994
Convertible notes N/A N/A
--------- ---------
Adjusted shares 32,235,584 32,743,578
========== ==========
Six months ended June 30, 1997:
Net income $ 10,697,000 $ 10,697,000
Assuming conversion of convertible notes N/A N/A
---------- ----------
Net income, as adjusted $ 10,697,000 $ 10,697,000
============= =============
Outstanding common shares 32,269,326 32,269,326
Effect of weighting outstanding shares (60,623) (60,623)
Stock options (treasury method) N/A 544,986
Convertible notes N/A N/A
---------- ----------
Adjusted shares 32,208,703 32,753,689
========== ==========
</TABLE>
(3) 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.
7
<PAGE> 8
(4) Reclassifications
Certain reclassifications have been made to the 1997 condensed
consolidated financial statements to conform to the 1998 condensed
consolidated financial statement presentation.
(5) Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income." Disclosure requirements with respect to
comprehensive income, as of and for the six months ended June 30,
1998 and 1997, are as follows (in thousands):
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Differences between net income, as
reported, and comprehensive income:
Net income, as reported $ 13,938 $ 10,697
Unrealized losses on
short-term investments (136) (20)
Translation adjustments (515) (323)
------------ ------------
Comprehensive income $ 13,287 $ 10,354
============ ============
Accumulated differences between
net income, as reported, and
comprehensive income:
Beginning of period $ (4,671) $ (3,667)
Unrealized losses on
short-term investments (136) (20)
Translation adjustments (515) (323)
------------ ------------
End of period $ (5,322) $ (4,010)
============ ============
</TABLE>
(6) Common Stock
In April 1998, the company sold 3,450,000 shares of its common stock
in a public offering at $45.81 per share, generating net proceeds to
the company of approximately $150,000,000 after deducting
underwriters' discounts and other offering expenses.
(7) Commitments and Subsequent Events
In June 1998, the company signed a satellite and launch vehicle
procurement contract with CCI International N.V. ("CCI") valued at
approximately $480,000,000. Subject to negotiation of definitive
documentation, the company may also provide CCI with up to
8
<PAGE> 9
$100,000,000 in debt, equity and/or vendor financing, with an option
to invest up to an additional $50,000,000.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
Certain 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, "Year 2000" issues, and the
performance of the company's affiliates, Orbital Imaging Corporation
("ORBIMAGE") and ORBCOMM Global L.P. ("ORBCOMM"), are forward-looking statements
that involve known and unknown risks, uncertainties and other factors that may
cause the actual results, performance, achievements or investments of the
company to differ materially from any future results, performance, achievements
or investments expressed or implied by such forward-looking statements. Such
factors include: general and economic business conditions, launch results,
product performance, risks associated with government contracts, the
introduction of products and services by competitors, risks associated with
acquired businesses, availability of required capital, the ability of customers
and suppliers to assess timely and accurately "Year 2000" issues, market
acceptance of new products and technologies, and other factors more fully
described in "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Outlook: Issues and Uncertainties" incorporated in the
company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997.
The company's products and services are grouped into three business sectors:
Space and Ground Infrastructure Systems, Satellite Access Products and Satellite
Services. Space and Ground Infrastructure Systems include launch vehicles,
satellites, electronics and sensor systems, and satellite ground systems. The
company's Satellite Access Products sector consists of recreational,
high-precision and automotive satellite-based navigation products, satellite
communications products and transportation management systems. The company's
Satellite Services sector includes satellite-based, two-way mobile data
communications services and satellite-based imagery services, conducted through
the company's ORBCOMM and ORBIMAGE affiliates, respectively. The company does
not control the operational and financial affairs of ORBCOMM or ORBIMAGE, and
consequently their financial results are not consolidated with the company's
results.
RECENT DEVELOPMENTS. The company's stock began trading on the New York Stock
Exchange in early July 1998 under the ticker symbol "ORB." The company's stock
had previously traded on the Nasdaq National Market under the symbol "ORBI."
In April 1998, the company sold 3,450,000 shares of its common stock in a public
offering at $45.81 per share, generating net proceeds of approximately
$150,000,000 (see Liquidity and Capital Resources).
10
<PAGE> 11
In July 1998, ORBCOMM Corporation announced that it elected to postpone its
proposed initial public offering of common stock. ORBCOMM Corporation was
organized for the sole purpose of investing in and acting as a general partner
of ORBCOMM. Orbital, through its subsidiary Orbital Communications Corporation,
and Teleglobe Mobile Partners, an affiliate of Teleglobe Inc., the existing
fifty-percent partners in ORBCOMM, each has reaffirmed its commitment to provide
funding to ORBCOMM while considering options for future financing at ORBCOMM
(see Liquidity and Capital Resources).
In June 1998, the company signed a satellite and launch vehicle procurement
contract with CCI International N.V. ("CCI") valued at approximately
$480,000,000. Subject to negotiation of definitive documentation, the company
may also provide CCI with up to $100,000,000 in debt, equity and/or vendor
financing, with an option to invest up to an additional $50,000,000.
The company has made a preliminary assessment of potential "Year 2000" issues
with respect to various financial and operational computer-related systems. The
company has developed an initial corrective action plan that includes (i)
reprogramming affected software when appropriate and feasible, (ii) obtaining
vendor-provided software upgrades when available, and (iii) completely
replacing affected systems when necessary. The company currently expects that
identified "Year 2000" affected systems will be corrected by the end of 1998.
There can be no assurance that the company has identified all "Year 2000"
affected systems or that its corrective action plan will be timely and
successful. While the company has not determined to date that "Year 2000"
issues will materially impact its customers or suppliers, it continues to
assess risks associated with such third parties and will develop corrective
plans accordingly as more information becomes available.
REVENUES. Orbital's revenues for the three-month periods ended June 30, 1998 and
1997 were $184,516,000 and $142,226,000, respectively. Revenues for the
six-month periods ended June 30, 1998 and 1997 were $370,675,000 and
$264,338,000, respectively.
Space and Ground Infrastructure Systems. Revenues from the company's Space and
Ground Infrastructure Systems sector totaled $155,701,000 and $122,523,000 for
the three months ended June 30, 1998 and 1997, respectively. Revenues from this
sector totaled $312,042,000 and $228,722,000 for the six months ended June 30,
1998 and 1997, respectively.
Revenues from the company's launch vehicles increased to $47,387,000 in the
second quarter of 1998 from $27,223,000 in the second quarter of 1997, and to
$93,427,000 for the six months ended June 30, 1998 from $57,117,000 for the six
months ended June 30, 1997. The increase in revenues in 1998 as compared to
1997 is attributable to a number of factors, including (i) increased work
performed under contracts received for the company's Taurus launch vehicle,
(ii) a significant increase in new orders received during
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<PAGE> 12
1997 for the company's Pegasus and suborbital launch vehicles and (iii)
increased work performed on the X-34 reusable launch vehicle.
For the three months ended June 30, 1998, satellite revenues were $57,051,000 as
compared to $56,481,000 for the three months ended June 30, 1997. Satellite
revenues were $118,583,000 for the six months ended June 30, 1998 as compared to
$87,284,000 for the six months ended June 30, 1997. Revenues during 1998
included sales generated by the satellite business acquired from CTA
INCORPORATED in August 1997 of approximately $13,282,000 and $29,872,000,
respectively, for the three- and six-month periods ended June 30, 1998.
Revenues from electronics and sensor systems increased to $29,464,000 for the
three months ended June 30, 1998 from $22,172,000 for the three months ended
June 30, 1997, and to $56,812,000 for the six months ended June 30, 1998 from
$50,193,000 for the six months ended June 30, 1997. The increase in 1998
revenues is primarily due to work performed in 1998 on new orders for defense
electronics products received during the second half of 1997.
Revenues from the company's ground systems products were $21,799,000 for the
three months ended June 30, 1998 as compared to $16,692,000 for the three
months ended June 30, 1997. Ground systems products revenues were $43,220,000
for the six months ended June 30, 1998 as compared to $34,128,000 for the six
months ended June 30, 1997. The increase in 1998 revenues is primarily due to
work performed on orders received in 1997 for new satellite ground systems and
system upgrades.
Although overall infrastructure revenues increased, revenues under procurement
agreements with ORBCOMM and ORBIMAGE for the three months ended June 30, 1998
decreased significantly to $27,119,000 from $51,053,000 for the three months
ended June 30, 1997. Revenues from sales to ORBCOMM and ORBIMAGE also decreased
for the six months ended June 30, 1998 to $52,759,000 from $62,653,000 for the
six months ended June 30, 1997, primarily due to a lesser amount of work under
the ORBCOMM procurement agreement as it nears completion.
Satellite Access Products. Revenues from sales of navigation, communications and
transportation management systems and products increased to $28,556,000 for the
three months ended June 30, 1998 from $19,899,000 for the three months ended
June 30, 1997. Satellite access products revenues were $58,310,000 for the six
months ended June 30, 1998 as compared to $35,535,000 for the six months ended
June 30, 1997. The three- and six-month periods ended June 30, 1998 included
approximately $11,661,000 and $22,665,000, respectively, of sales generated by
the company's high-precision navigation products that were acquired as a result
of the December 1997 merger of Ashtech Inc. ("Ashtech") with the company's
subsidiary, Magellan Corporation ("Magellan").
GROSS PROFIT/COSTS OF GOODS SOLD. Costs of goods sold include the costs of
personnel, materials, subcontracts and overhead related to sales of commercial
products and revenue earned under various long-term development and production
contracts. Gross profit
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<PAGE> 13
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 second quarter of 1998 was $50,851,000 as compared to $39,673,00
in the second quarter of 1997. The company's gross profit for the first half of
1998 was $102,225,000 as compared to $73,351,000 for the first half of 1997.
Gross profit as a percentage of revenues was approximately 28% for the three-
and six-month periods ended June 30, 1998 and 1997.
Space and Ground Infrastructure Systems. Gross profit from the company's Space
and Ground Infrastructure Systems sector was $41,988,000 (or 27% of revenues)
and $33,770,000 (or 28% of revenues) for the three months ended June 30, 1998
and 1997, respectively. Gross profit for this sector was $84,828,000 (or 27% of
revenues) and $62,362,000 (or 27% of revenues) for the six months ended June 30,
1998 and 1997, respectively.
Gross profit margins from the company's space and ground infrastructure systems
for the three- and six-month periods ended June 30, 1998 were generally
consistent with comparable 1997 periods. Gross margins for the company's
satellite products decreased to 28% for the six months ended June 30, 1998 from
30% for the six months ended June 30, 1997, primarily due to production delays
experienced in 1998 on certain commercial satellite contracts.
Satellite Access Products. Gross profit for satellite access products was
$9,584,000 (or 34% of revenues) and $5,456,000 (or 27% of revenues) for the
three months ended June 30, 1998 and 1997, respectively, and $19,692,000 (or 34%
of revenues) and $11,051,000 (or 31% of revenues) for the six months ended June
30, 1998 and 1997, respectively. The overall increase in gross margins is due to
the inclusion of higher margin high-precision navigation product lines acquired
from Ashtech offset, in part, by lower margins achieved on automotive navigation
product sales.
During the three months ended June 30, 1998, Magellan disposed of approximately
$5,000,000 of certain obsolete inventory for which adequate reserves had
previously been recorded. Magellan continues to face changing market
conditions placing significant pressure on individual product life-times and
inventory levels.
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 for the three
months ended June 30, 1998 and 1997 were $10,451,000 (or 5.7% of revenues) and
$4,682,000 (or 3.3% of revenues), respectively. Research and development
expenses were $17,516,000 (or 4.7% of revenues) and $11,694,000 (or 4.4% of
revenues) for the six months ended June 30, 1998 and 1997, respectively.
Research and development expenses for the second quarter of 1998 included
approximately $2,000,000 of costs related to identifying and correcting
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<PAGE> 14
anomalies experienced on certain ORBCOMM satellites. Current year expenses also
included increased research and development efforts for satellite access
products.
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 three months ended June 30, 1998 and 1997 were
$28,984,000 (or 15.7% of revenues) and $23,244,000 (or 16.3% of revenues),
respectively. Selling, general and administrative expenses for the six months
ended June 30, 1998 and 1997 were $55,286,000 (or 14.9% of revenues) and
$43,122,000 (or 16.3% of revenues), respectively. The decrease in selling,
general and administrative expenses as a percentage of revenues during 1998 as
compared to 1997 was primarily attributable to substantial revenue growth,
particularly in launch vehicles and satellite systems, with only a modest growth
in selling, general and administrative expenses.
INTEREST INCOME AND INTEREST EXPENSE. Interest income for the periods reflects
interest earnings on cash equivalents and short-term investments. Interest
expense includes the cost of borrowings on Orbital's convertible subordinated
notes, revolving credit facilities and on other secured and unsecured debt.
Interest income and interest expense was $1,425,000 and $1,095,000,
respectively, for the three months ended June 30, 1998 as compared to interest
income and interest expense of $630,000 and $580,000, respectively, for the
three months ended June 30, 1997. The company's interest income and interest
expense for the first six months of 1998 was $1,873,000 and $2,041,000,
respectively, while for the first six moths of 1997, the company incurred
interest income and interest expense of $986,000 and $676,000, respectively.
Interest expense has been reduced by capitalized interest of $5,693,000 and
$1,636,000 for the three months ended June 30, 1998 and 1997, respectively, and
by $8,599,000 and $2,971,000 for the six months ended June 30, 1998 and 1997,
respectively.
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES AND NON-CONTROLLING INTERESTS IN
(EARNINGS) LOSSES OF CONSOLIDATED SUBSIDIARIES. Equity in earnings (losses) of
affiliates net of non-controlling interests in (earnings) losses of consolidated
subsidiaries were ($6,318,000) and ($4,830,000) for the three months ended June
30, 1998 and 1997, respectively, and were ($14,625,000) and ($5,477,000) for the
six months ended June 30, 1998 and 1997, respectively. These amounts primarily
represent (i) elimination of proportionate profits or losses on sales of
infrastructure products to ORBCOMM and ORBIMAGE, (ii) the company's pro rata
share of ORBCOMM's, ORBCOMM International Partners. L.P.'s and ORBIMAGE's
current period earnings and losses and (iii) non-controlling stockholders' pro
rata share of ORBCOMM USA L.P.'s and Magellan's current period earnings and
losses. The increase in total losses during 1998 is primarily due to losses at
ORBCOMM.
PROVISION FOR INCOME TAXES. The company recorded an income tax provision of
$825,000 and $622,000 for the three months ended June 30, 1998 and 1997,
respectively
14
<PAGE> 15
and of $1,549,000 and $1,188,000 for the six months ended June 30, 1998 and
1997, 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, 1997, Orbital had approximately $150,000,000 of U.S. Federal net
operating loss carryforwards and $3,000,000 of U.S. Federal research and
experimental tax credit carryforwards, 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 expanding working
capital needs, investments in ORBCOMM and ORBIMAGE, certain business
acquisitions, new business initiatives, research and development and capital
expenditures. The company has funded these requirements to date, and expects to
fund its future requirements, through cash generated by operations, working
capital, loan facilities, asset-based financings, joint venture arrangements and
private and public equity and debt offerings. The company expects to continue to
pursue potential acquisitions and equity investments that it believes would
enhance its businesses and to fund such transactions through cash generated by
operations, existing cash and loan facilities, the issuance of equity and/or
debt securities and asset-based financings.
In April 1998, the company sold 3,450,000 shares of its common stock in a public
offering, generating net proceeds of approximately $150,000,000 (the
"Offering"). Orbital plans to use the net proceeds from the Offering for (i)
investments in ORBCOMM, new projects or emerging space-related businesses, such
as CCI, (ii) expanded research and development for new products, (iii)
acquisitions of businesses and/or product lines complementary to the company's
existing businesses, and (iv) for other general corporate purposes.
In July 1998, ORBCOMM Corporation announced that it elected to postpone its
proposed initial public offering of common stock. Orbital, through its
subsidiary Orbital Communications Corporation, and Teleglobe Mobile Partners, an
affiliate of Teleglobe Inc., the existing fifty-percent partners in ORBCOMM,
each has reaffirmed its commitment to provide funding to ORBCOMM while
considering options for future financing at ORBCOMM. Orbital expects to fund its
share of ORBCOMM's capital needs through existing resources, including credit
facilities. If such funding is required, the company currently estimates that
its share of such funding could be as much as $20,000,000 through the remainder
of 1998.
Cash, cash equivalents and short-term investments were $45,757,000 at June 30,
1998, and the company had total debt obligations outstanding of approximately
$172,188,000 at June 30, 1998. The outstanding debt is comprised of the
company's convertible
15
<PAGE> 16
subordinated notes, advances under the company's line of credit facilities,
secured and unsecured notes, and asset-based financings.
The company's primary revolving credit facility provides for total borrowings
from an international syndicate of six banks of up to $100,000,000. No
borrowings were outstanding under the facility at June 30, 1998. Borrowings are
secured by contract receivables, and the facility prohibits the payment of cash
dividends, contains certain covenants with respect to the company's working
capital, fixed charge ratio, leverage ratio and consolidated net worth, and
expires in August 2001. The company (or its subsidiaries) also maintains
additional, smaller revolving credit facilities, under which approximately
$1,400,000 was outstanding at June 30, 1998 at a weighted average interest rate
of 10%. Additional borrowing capacity on these other agreements is approximately
$28,000,000 at June 30, 1998. The company used approximately $94,250,000 of
proceeds from the Offering to pay down outstanding borrowings on these credit
facilities.
The company's operations used net cash of approximately $5,996,000 during the
first half of 1998. The company provided $15,000,000 in capital and $21,513,000
in vendor financing (approximately one-half of which has been advanced to
Orbital by an affiliate of Teleglobe Inc.) to ORBCOMM during the first half of
1998. In addition, during the first half of 1998, the company invested
$23,478,000 in capital expenditures for various satellite and launch vehicle
equipment and other production, manufacturing, test and office equipment.
Orbital plans to expand its offices and its satellite-related engineering,
manufacturing and operations facilities. The company anticipates that the new
construction will be conducted in two phases during 1998-1999 and 2000-2001. To
finance the expansion, Orbital is currently pursuing various financing
alternatives, including third-party debt financings and "built-to-suit"
agreements. Consequently, the company does not expect to spend a material amount
of cash to finance this construction.
Orbital expects that its capital needs for the remainder of 1998 will
be provided by working capital, cash flows from operations, existing credit
facilities, and operating lease arrangements.
16
<PAGE> 17
ORBITAL SCIENCES CORPORATION
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
(a) The annual meeting of stockholders of the Company was held
on April 23, 1998.
(b) Not applicable.
(c)(i) Election of five directors, each serving for a three-year
term ending in 2001:
Fred C. Alcorn
--------------
Votes: For: 30,436,192
Withheld: 78,595
Lennard A. Fisk
---------------
Votes: For: 30,439,976
Withheld: 74,811
Jack L. Kerrebrock
------------------
Votes: For: 30,431,280
Withheld: 83,507
17
<PAGE> 18
David W. Thompson
-----------------
Votes: For: 30,438,551
Withheld: 76,236
James R. Thompson
-----------------
Votes: For: 30,436,366
Withheld: 78,421
(ii) Proposal to approve the adoption of an amendment to the
Orbital Sciences Corporation 1997 Stock Option and Incentive
Plan increasing the number of shares of Common Stock
authorized for issuance from 1,600,000 to 3,200,000.
Votes: For: 21,839,679 Against: 8,533,649
Abstain: 141,459
(iii) Proposal to ratify the selection of KPMG Peat Marwick LLP as
the Company's independent accountants for the fiscal year
ending December 31, 1998.
Votes: For: 30,361,359 Against: 86,901
Abstain: 66,526
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.
18
<PAGE> 19
(b) Reports on Form 8-K.
(i) On April 13, 1998, the Company filed a Current
Report on Form 8-K, dated April 1, 1998, disclosing
its Pegasus launch and the current status of
testing of ORBCOMM satellites and its INDOSTAR-1
satellite.
(ii) On April 28, 1998, the Company filed a Current
Report on Form 8-K, dated April 21, 1998, disclosing
the financial results of the Company for the quarter
ended March 31, 1998.
(iii) On May 6, 1998, the Company filed a Current Report
on Form 8-K, dated May 4, 1998, disclosing its
selection as a space segment contractor of CCI and
announcing the termination of its discussions with
Mobile Communications Holdings, Inc.
19
<PAGE> 20
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: August 14, 1998 By: /s/ David W. Thompson
--------------------------------------
David W. Thompson, President
and Chief Executive Officer
DATED: August 14, 1998 By: /s/ Jeffrey V. Pirone
--------------------------------------
Jeffrey V. Pirone
Executive Vice President and Principal
Financial Officer
20
<PAGE> 21
EXHIBIT INDEX
The following exhibits are filed as part of this report.
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
10.1.3 Amendment No. 3 to Second Amended and Restated Credit and
Reimbursement Agreement dated as of June 18, 1998, among Orbital
Sciences Corporation, Morgan Guaranty Trust Company of New York
and the Banks listed therein.
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 Act of
1934) transmitted herewith).
</TABLE>
21
<PAGE> 1
EXHIBIT 10.1.3
AMENDMENT NO. 3
TO
SECOND AMENDED AND RESTATED
CREDIT AND REIMBURSEMENT AGREEMENT
AMENDMENT No. 3 dated as of June 18, 1998 among ORBITAL SCIENCES
CORPORATION (the "Company"), MORGAN GUARANTY TRUST COMPANY OF NEW YORK, the
BANKS listed on the signature pages hereof and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent (the "Administrative Agent") and as Collateral
Agent.
W I T N E S S E T H:
WHEREAS, the parties hereto have heretofore entered into a Second
Amended and Restated Credit and Reimbursement Agreement dated as of August 5,
1997 (as amended from time to time, the "Credit Agreement"); and
WHEREAS, the parties hereto wish to amend the terms of the Credit
Agreement as set forth herein;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically
defined herein, each term used herein that is defined in the Credit Agreement
shall have the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof", "hereunder", "herein" and "hereby" and each other similar
reference and each reference to "this Agreement" and each other similar
reference contained in the Credit Agreement shall from and after the Amendment
Effective Date (as defined in Section 4 below) refer to the Credit Agreement as
amended hereby.
SECTION 2. Additional Permitted Investment. Section 5.07 of the
Credit Agreement is amended by (i) deleting the "and" at the end of the clause
(k) thereof, (ii) changing the reference to "clause (l)" contained in clause (l)
to "clause (m)", (iii) renumbering clause (l) thereof as clause (m) and (iv)
adding a new clause (l) immediately after clause (k) thereof to read in its
entirety as follows:
<PAGE> 2
(l) (i) Investments by the company or any of its Subsidiaries in an
aggregate amount not to exceed $50,000,000 and consisting of shares of
capital stock of CCI International N.V. ("CCI"), a company formed and
existing under the laws of the Netherlands Antilles, made at any date (x)
on or after the date on which the Company and CCI shall have entered into
a Space Segment Contract substantially on the terms described by the
Company to the Banks prior to June 18, 1998 and pursuant to which the
Company shall have been appointed as the general contractor for the
design, implementation and use of a low-Earth orbit satellite-based
digital telephone system and prior to December 31, 1998, (ii) Investments
(other than Investments permitted pursuant to clause (i)) in an aggregate
amount up to $50,000,000 and consisting of shares of capital stock of CCI
made on any date after December 31, 1998 and on or prior to June 31, 2000;
provided that (l) prior to making any such Investment, the aggregate
amount of Investments permitted pursuant to clause (i) has been made and
(2) on any date (an "Investment Date") immediately after giving effect to
any such proposed Investment, the Company is in pro forma compliance with
the covenants set forth in Sections 5.08, 5.09 and 5.10, after giving
effect to such proposed Investment (and for such purposes, "Consolidated
EBITDA" and "Earnings Available for Fixed Charges" shall be calculated for
the period of four consecutive fiscal quarters most recently ended on or
prior to such Investment Date, adjusted to give effect to such proposed
Investment), (iii) Investments by the Company or any of its Subsidiaries
consisting of warrants exercisable for the capital stock of CCI; provided
that (1) such warrants are acquired contemporaneously with the making of
any Investment permitted by clause (ii), (2) no cash consideration is paid
by the Company or any of its Subsidiaries for the acquisition of any such
warrants and (3) such warrants are substantially on the terms described by
the Company to the Banks prior to June 18, 1998 and (iv) Investments by
the Company or any of its Subsidiaries in CCI constituting "vendor
financing" substantially on the terms described by the Company to the
Banks prior to June 18, 1998.
SECTION 3. New York Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 4. Counterparts; Effectiveness. This Amendment may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective on the date (the "Amendment Effective
Date") on which the Administrative Agent shall have received duly executed
counterparts hereof signed by the Company and the Banks (or, in the case of any
party as to which an executed counterpart shall not have been received, the
Administrative Agent shall have received telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
party).
2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first above written.
ORBITAL SCIENCES CORPORATION
By /s/ Kenneth Sunshine
----------------------------------------
Title: Vice President and Treasurer
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
By /s/ Diana H. Imhof
----------------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ Barry Luter
----------------------------------------
Title: Division Head
NATIONSBANK, N.A.
By /s/ Michael Brick
----------------------------------------
Title: Vice President
3
<PAGE> 1
EXHIBIT 11.
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE-MONTH PERIOD ENDED JUNE 30, 1998
- -------------------------------------------------------------------------------------------------------------------
ASSUMING
BASIC DILUTION (2)
-------------- --------------
<S> <C> <C>
WEIGHTED AVERAGE OF OUTSTANDING SHARES 35,979,989 35,979,989
COMMON EQUIVALENT SHARES:
OUTSTANDING STOCK OPTIONS N/A 1,263,716
OTHER POTENTIALLY DILUTIVE SECURITIES:
CONVERTIBLE NOTES (1) N/A 3,571,429
-------------- --------------
SHARES USED IN COMPUTING
NET INCOME PER COMMON SHARE 35,979,989 40,815,134
============== ==============
NET INCOME $ 7,419,000 $ 7,419,000
ADJUSTMENTS ASSUMING DILUTION:
INTEREST EXPENSE ADJUSTMENT, NET OF APPLICABLE TAXES N/A 985,565
-------------- --------------
NET INCOME $ 7,419,000 $ 8,404,565
============== ==============
NET INCOME PER COMMON SHARE $ 0.21 $ 0.21
============== ==============
</TABLE>
<TABLE>
<CAPTION>
SIX-MONTH PERIOD ENDED JUNE 30, 1998
- -------------------------------------------------------------------------------------------------------------------
ASSUMING
BASIC DILUTION (2)
-------------- --------------
<S> <C> <C>
WEIGHTED AVERAGE OF OUTSTANDING SHARES 34,408,545 34,408,545
COMMON EQUIVALENT SHARES:
OUTSTANDING STOCK OPTIONS N/A 1,304,037
OTHER POTENTIALLY DILUTIVE SECURITIES:
CONVERTIBLE NOTES (1) N/A 3,571,429
-------------- --------------
SHARES USED IN COMPUTING
NET INCOME PER COMMON SHARE 34,408,545 39,284,011
============== ==============
NET INCOME $ 13,938,000 $ 13,938,000
ADJUSTMENTS ASSUMING DILUTION:
INTEREST EXPENSE ADJUSTMENT, NET OF APPLICABLE TAXES N/A 2,039,645
-------------- --------------
NET INCOME $ 13,938,000 $ 15,977,645
============== ==============
NET INCOME PER COMMON SHARE $ 0.41 $ 0.41
============== ==============
</TABLE>
NOTES:
(1) - ON SEPTEMBER 16, 1997, THE COMPANY SOLD $100 MILLION OF 5% CONVERTIBLE
SUBORDINATED NOTES DUE OCTOBER 2002. THE NOTES ARE CONVERTIBLE AT THE
OPTION OF THE HOLDERS INTO ORBITAL COMMON STOCK AT A CONVERSION PRICE OF
$28.00 PER SHARE.
(2) - 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 EARNINGS PER SHARE, TO THE EXTENT DILUTIVE.
THOSE EARNINGS PER SHARE DATA ARE INCLUDED IN THE COMPANY'S PER SHARE
COMPUTATIONS BASED ON THE COMPANY'S HOLDINGS OF THE SUBSIDIARY'S STOCK.
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1998, ALL SUCH SUBSIDIARY
STOCK OPTIONS WERE ANTI-DILUTIVE.
<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 SIX MONTHS ENDED JUNE 30, 1998 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-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 45,757
<SECURITIES> 439
<RECEIVABLES> 225,256
<ALLOWANCES> (8,101)
<INVENTORY> 47,898
<CURRENT-ASSETS> 321,735
<PP&E> 238,927
<DEPRECIATION> (93,030)
<TOTAL-ASSETS> 877,026
<CURRENT-LIABILITIES> 191,601
<BONDS> 156,109
0
0
<COMMON> 368
<OTHER-SE> 529,040
<TOTAL-LIABILITY-AND-EQUITY> 877,026
<SALES> 370,675
<TOTAL-REVENUES> 370,675
<CGS> 268,450
<TOTAL-COSTS> 268,450
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 721
<INTEREST-EXPENSE> 2,040
<INCOME-PRETAX> 15,487
<INCOME-TAX> 1,549
<INCOME-CONTINUING> 13,938
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,938
<EPS-PRIMARY> 0.41
<EPS-DILUTED> 0.41
</TABLE>
