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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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ANNUAL REPORT ON
FORM 11-K
For the fiscal year ended December 31, 1999
COMMISSION FILE NUMBER 0-18287
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ORBITAL SCIENCES CORPORATION
(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
DELAWARE 06-1209561
<S> <C>
(State of Incorporation of Registrant) (I.R.S. Employer I.D. No.)
</TABLE>
21700 ATLANTIC BOULEVARD
DULLES, VIRGINIA 20166
(Address of principal executive offices)
(703) 406-5000
(Registrant's telephone number)
MAGELLAN SYSTEMS' RETIREMENT SAVINGS PLAN
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(Full Title of the Plans)
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Magellan Systems' Retirement Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of the Magellan Systems' Retirement Savings Plan (the "Plan") at December 31,
1999 and 1998, and the changes in net assets available for benefits for the year
ended December 31, 1999 in conformity with accounting principles generally
accepted in the United States. These financial statements are the responsibility
of the Plan's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets held
for investment purposes at end of year is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
PricewaterhouseCoopers LLP
McLean, Virginia
June 28, 2000
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MAGELLAN SYSTEMS' RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Assets:
Investments (see note 4) $ 21,285,189 $ 7,813,326
Contributions receivable:
Participant 50,110 32,728
Company 23,083 28,736
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Total assets 21,358,382 7,874,790
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Net assets available for benefits $ 21,358,382 $ 7,874,790
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</TABLE>
See accompanying notes to financial statements.
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MAGELLAN SYSTEMS' RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Year Ended
December 31,
1999
----
<S> <C>
Additions to net assets attributable to:
Investment income
Net appreciation in fair value of investments $ 3,073,206
Interest and dividends 198,039
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Total investment income 3,271,245
Contributions
Employee 2,342,520
Company 829,087
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Total additions 6,442,852
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Deductions from net assets attributable to:
Benefits paid to participants 2,213,945
Administrative expenses 4,592
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Total deductions 2,218,537
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Net increase prior to transfer 4,224,315
Transfers to the Plan 9,259,277
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Net increase in net assets available for benefits 13,483,592
Net assets available for benefits, beginning of year 7,874,790
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Net assets available for benefits, end of year $ 21,358,382
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</TABLE>
See accompanying notes to financial statements.
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MAGELLAN SYSTEMS' RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN
GENERAL
The following description of the Magellan Systems' Retirement Savings Plan (the
"Plan") provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
On December 31, 1997, Magellan Corporation merged with Ashtech Inc, ("Ashtech"),
with Magellan Corporation (the "Company") being the surviving entity. Effective
January 1, 1999, the Ashtech, Inc. 401(k) Plan was merged with and into the
Plan. The transfer of assets was completed in April 1999. The Plan is a defined
contribution plan, which provides for voluntary participation by eligible
employees of the Company. The Plan incorporates a salary reduction feature under
Section 401(k) of the Internal Revenue Code (the "Code"). The Company is a
majority owned subsidiary of Orbital Sciences Corporation ("Orbital" or the
"Plan Administrator"). The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974 ("ERISA").
ELIGIBILITY
An employee of the Company who has attained at least 21 years of age and is
scheduled to work 1,000 hours during a consecutive 12-month period, or is not so
scheduled but in fact completes a year of service for participation, is an
eligible employee.
CONTRIBUTIONS
Participants may elect to contribute up to 15 percent of their pre-tax
compensation to the Plan, subject to certain annual limitations under the Plan
and the Code. Effective January 1, 1999, the Company matches 100 percent of
participant contributions up to the first 4 percent of the participant's pre-tax
compensation. Prior to January 1, 1999, the Company matched 150 percent of
participant contributions up to the first 2 percent of the participant's pre-tax
compensation, and 50 percent of participant contributions up to the next 2
percent of the participant's pre-tax compensation. In addition, the Company may
elect, at the discretion of Orbital's Board of Directors, to make additional
discretionary contributions based on performance of the Company and availability
of funds. For the year ended December 31, 1999, the Company made no additional
contributions to the Plan. Effective January 1, 1999, participants are permitted
to invest all or a portion of their contributions in the Orbital Sciences
Corporation Common Stock Account. Also, effective January 1, 1999, participants
are permitted to make employee contributions to the Plan on an after-tax basis.
The Plan allows participants to make rollover contributions from other tax
qualified plans.
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Rollover contributions are included in the accompanying financial statements as
a component of employee contributions.
PARTICIPANTS' ACCOUNTS
Each participant's account is credited with the participant's contributions,
transfers, and rollovers, and applicable Company matching contributions and an
allocation of discretionary contributions and investment income earnings.
Allocations are based on participant contributions, earnings, or account
balances, as applicable and as defined in the Plan document. Participants are
entitled to a benefit equal to the vested portion of their participant account
at the date of separation.
VESTING
Participants are immediately vested in their voluntary contributions and
rollovers plus actual earnings thereon. The Company's matching and discretionary
contributions, plus earnings thereon, vest over a period of three years at the
rate of 33 1/3 percent per year of service (1,000 hours) or immediately upon
death or long-term disability.
FORFEITURES
Forfeitures by terminated employees of non-vested Company contributions are held
in a separate account and are used to offset either future Company contributions
or administrative expenses of the Plan.
PAYMENT OF BENEFITS
Participants may withdraw their vested account balances in a lump sum, annual
installments, or a combination of both, upon attaining age 59 1/2 or upon
retirement at age 65 or after death, long-term disability or qualified financial
hardship, as defined in the Plan document. Participants may also withdraw their
vested account balances while still in the service of the Company or upon
termination of employment with the Company, subject to certain restrictions.
TERMINATION OF PLAN
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan subject to the provisions of ERISA. In the event of Plan termination,
participants will become 100 percent vested in their accounts.
PARTICIPANT LOANS
Participants may borrow the lesser of $50,000 or 50 percent of their vested
balance, minus the participant's highest outstanding loan balance in the past
twelve months, from their respective participant accounts. Loan terms generally
may not exceed five years. Loans for the purchase of a primary residence may not
exceed ten years. The loans are made using an interest-rate
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commensurate with local prevailing rates as determined by the Plan
Administrator.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements have been prepared on the accrual basis of
accounting.
INVESTMENTS
The Plan's investments are carried at fair market value, except for the CIGNA
Guaranteed Long-Term Account, which is valued at contract value. As discussed in
Note 5, due to the periodic rate reset process, the CIGNA Guaranteed Long-Term
Account contract value approximates fair value. Quoted market prices as of
December 31, 1999 and 1998 are used to value investments. Participant loans
receivable are carried at cost, which approximates fair market value. Purchases
and sales of securities are recorded on a trade-date basis.
BENEFIT PAYMENTS
Benefits are recorded when paid.
ADMINISTRATIVE EXPENSES
The Plan document provides that administrative expenses may be paid by either
the Plan or the Company. For the year ended December 31, 1999, certain
administrative services, such as audit and legal fees and Plan management costs,
were provided by the Company and the Plan Administrator at no cost to the Plan.
Direct transaction expenses are paid by the Plan and are either netted against
investment income or recorded as a deduction from net assets.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of additions to and deductions from net assets available
for benefits during the reporting period. Such estimates include those regarding
fair value. Actual results could differ from those estimates.
NOTE 3 - FEDERAL INCOME TAXES
The Plan is intended to be qualified under Section 401(a) of the Code and is
intended to be exempt from taxation under Section 501(a) of the Code. The Plan
received a favorable tax determination letter dated June 5, 1995. The Plan has
been amended since receiving the last determination letter. However, the Plan
Administrator believes that the Plan is currently designed and operating in
compliance with the applicable requirements of the Code, and
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therefore, believes that the Plan remains qualified. Therefore, no provision for
income taxes has been included in the accompanying financial statements.
NOTE 4 - INVESTMENTS
The following investments represent five percent or more of the Plan's total net
assets available for benefits at December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
CIGNA Guaranteed Long-term Account $ 3,113,805 $ 930,105
Fidelity Advisor Growth Opportunities Fund Account 3,605,095 2,573,865
Fidelity Equity - Income II Fund Account 1,480,388 727,710
Vanguard Growth and Income Fund Account 4,210,604 1,701,336
Janus Worldwide Fund Account 3,097,371 520,159
Vanguard Wellington Fund Account 1,366,835 338,525
PBHG Growth Fund Account 1,445,309 108,337
Warburg Pincus Emerging Growth Fund Account 1,324,636 165,177
</TABLE>
During 1999, the Plan's investments (including gains and losses on investments
bought and sold, as well as held during the year) appreciated (depreciated) in
value by $3,073,206 as follows:
<TABLE>
<S> <C>
Pooled separate accounts $ 3,406,389
Common stock (333,183)
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Total $ 3,073,206
============
</TABLE>
NOTE 5 - DEPOSIT WITH INSURANCE COMPANY
The Plan participates in a contract via an investment in the CIGNA Guaranteed
Long-Term Account. For the Plan's investment in the CIGNA Guaranteed Long-Term
Account, the Plan was credited with interest at the rate specified in the
contract, which was 6.15% and 6.35% for the years ended December 31, 1999 and
1998, respectively. The guaranteed rate of return is stated semi-annually and is
guaranteed against change for a six-month period. The interest rate was 6.15%
and 6.45% at June 30, 1999 and 1998, respectively.
NOTE 6 - RELATED PARTY TRANSACTIONS
The Plan's investments are held by CIGNA in pooled separate accounts, which
invest in various mutual funds, and in Orbital Sciences Corporation Common
Stock. For the year ended December 31, 1999 participants could allocate
contributions to various investment alternatives, including Orbital Sciences
Corporation Common Stock. In 1998, participants were allowed to invest their
contributions in all investment options, with the exception of the Orbital
Services Corporation Common Stock Account, Rockwell Common Stock Account, or
Meritor Common Stock Account. As of December 31, 1999 all investments in the
Rockwell Common Stock Account and the Meritor Common Stock Account were
liquidated.
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Orbital, as plan administrator, is also a related party. Investments include
shares of Orbital Sciences Corporation Common Stock. Purchases of $731,935 and
sales of $131,756 of Orbital Sciences Corporation Common Stock were made during
1999. The share price of Orbital Sciences Corporation common stock at December
31, 1999 and 1998 was $18.56 and $44.00, respectively
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ADDITIONAL INFORMATION
SCHEDULE I
MAGELLAN SYSTEMS' RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END
OF YEAR DECEMBER 31, 1999
<TABLE>
<CAPTION>
Current
Identity of Issue Asset Description Units Cost Value
----------------- ----------------- ----- ---- -----
<S> <C> <C> <C> <C>
Connecticut General Life Insurance Company
Retirement & Investment Services*
CIGNA Guaranteed Long-Term Account Investment Contract 88,981.19205 $ 3,113,805 $ 3,113,805
Vanguard Wellington Fund Account Pooled Separate Account 31,358.25649 1,294,798 1,366,835
Fidelity Equity - Income II Fund Account Pooled Separate Account 32,737.66371 1,287,015 1,480,388
Vanguard Growth and Income Fund
Account Pooled Separate Account 76,462.13447 3,006,540 4,210,604
Fidelity Advisor Growth Opportunities
Fund Account Pooled Separate Account 44,585.16339 2,828,847 3,605,095
PBHG Growth Fund Account Pooled Separate Account 29,405.50381 879,499 1,445,309
Warburg Pincus Advisor Emerging Growth
Fund Account Pooled Separate Account 19,351.96447 915,639 1,324,636
Janus Worldwide Fund Account Pooled Separate Account 34,615.77154 2,024,018 3,097,371
CIGNA Small Company Stock - Value I
Fund Account Pooled Separate Account 8,302.34936 87,610 93,981
Warburg Pincus Advisor International
Equity Fund Account Pooled Separate Account 11,269.26537 277,853 412,925
Orbital Sciences Corporation* Common Stock 34,843.01215 789,554 648,217
Various Plan Participants * Participant Loans** - 486,023
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$ 21, 285,189
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</TABLE>
* Denotes a party-in-interest
** Interest rates ranging from 7.75% to 10.5% and maturity dates ranging from
2/15/2000 to 8/24/2009.
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SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934,
Orbital Sciences Corporation, the administrator of the employee benefit plan
covered by this Report on Form 11-K, has duly caused this annual report to be
signed on its behalf by the undersigned hereunto duly authorized.
ORBITAL SCIENCES CORPORATION, Plan Administrator
for the Magellan Systems' Retirement Savings Plan
Dated: June 28, 2000 By: /s/ JEFFREY V. PIRONE
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Jeffrey V. Pirone
Executive Vice President and Chief
Financial Officer
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EXHIBIT INDEX
Exhibit 23 Consent of PricewaterhouseCoopers LLP (transmitted herewith)
11
