SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarter ended
June 30, 1999
ORBITAL SCIENCES CORPORATION
Commission file number 0-18287
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)
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 August 12, 1999, 37,396,444 shares of the registrant's common stock
were outstanding.
<PAGE>
Explanatory Note
Orbital Sciences Corporation ("Orbital") has determined to restate its
consolidated financial statements for the years ended December 31, 1998,
1997, 1996 and 1995 and its condensed consolidated quarterly financial
statements for 1999, 1998, 1997, 1996 and 1995. This amendment includes in
Item 1 such restated condensed consolidated financial statements and related
footnotes thereto for the three and six months ended June 30, 1999 and 1998,
and other information relating to such restated condensed consolidated
financial statements. This amendment also includes in Item 2 the company's
restated results of operations, as described in Management's Discussion and
Analysis of Financial Condition and Results of Operations.
Except for Items 1 and 2 and Exhibits 11 and 27, no other information
included in the original report on Form 10-Q is amended by this amendment.
For current information regarding risks, uncertainties and other factors that
may affect Orbital's future performance, please see "Outlook: Issues and
Uncertainties" included in Item 7 of Orbital's Annual Report on Form 10-K for
the year ended December 31, 1999.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
A S S E T S
June 30, December 31,
1999 1998
-------- ------------
<S> <C> <C>
CURRENT ASSETS: (Restated) (Restated)
Cash and cash equivalents $ 29,148 $ 15,268
Restricted cash and short-term investments, at market 13,682 7,922
Receivables, net 270,446 215,110
Inventories, net 59,531 58,141
Deferred income taxes and other assets 12,255 7,686
---------- -------
Total current assets 385,062 304,127
PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated
depreciation and amortization of $111,685 and
$99,839, respectively 156,115 139,401
INVESTMENTS IN AND ADVANCES TO AFFILIATES, net 202,243 199,267
GOODWILL,less accumulated amortization of $35,254 and
$28,744, respectively 276,654 227,351
DEFERRED INCOME TAXES AND OTHER ASSETS 68,813 25,046
--------- --------
TOTAL ASSETS $1,088,887 $895,192
========= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and current portion of
long-term obligations $ 52,160 $ 26,814
Accounts payable 75,001 39,095
Accrued expenses 108,217 108,488
Deferred revenues 135,171 76,678
---------- --------
Total current liabilities 370,549 251,075
DUE TO JOINT VENTURE PARTNER 21,911 26,829
LONG-TERM OBLIGATIONS, net of current portion 302,452 181,281
OTHER LIABILITIES 15,080 3,007
---------- -------
TOTAL LIABILITIES 709,992 462,192
NON-CONTROLLING INTERESTS IN
NET ASSETS OF CONSOLIDATED SUBSIDIARIES 8,132 13,648
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock, par value $.01; 10,000,000
shares authorized, none outstanding -- --
Common Stock, par value $.01; 80,000,000 shares
authorized, 37,204,523 and 37,018,256 shares
outstanding, respectively after deducting
20,877 shares held in treasury 372 370
Additional paid-in capital 493,018 490,540
Accumulated other comprehensive income (5,984) (7,149)
Accumulated deficit (116,643) (64,409)
-------- -------
Total stockholders' equity 370,763 419,352
--------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,088,887 $895,192
========== ========
See accompanying notes to condensed consolidated financial statements.
-3-
</TABLE>
<PAGE>
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
--------------------
1999 1998
---- ----
(Restated) (Restated)
<S> <C> <C>
REVENUES $226,484 $181,926
COSTS OF GOODS SOLD 177,230 138,379
--------- --------
GROSS PROFIT 49,254 43,547
RESEARCH AND DEVELOPMENT EXPENSES 10,622 12,016
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 28,891 27,930
AMORTIZATION OF GOODWILL 3,233 2,278
--------- --------
INCOME FROM OPERATIONS 6,508 1,323
NET INVESTMENT INCOME (EXPENSE) (5,409) (802)
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES (27,334) (14,579)
NON-CONTROLLING INTERESTS IN (EARNINGS) LOSSES
OF CONSOLIDATED SUBSIDIARIES 2,192 6,075
-------- -------
LOSS BEFORE PROVISION FOR INCOME TAXES (24,043) (7,983)
PROVISION FOR INCOME TAXES 2,028 1,390
-------- -------
NET LOSS $ (26,071) $ (9,373)
========= =======
NET LOSS PER COMMON AND DILUTIVE SHARE $(0.70) $(0.26)
SHARES USED IN COMPUTING NET LOSS PER COMMON
AND DILUTIVE SHARE 37,196,970 35,979,989
========== ==========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
-4-
<PAGE>
<TABLE>
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share data)
<CAPTION>
For the Six Months Ended
June 30,
------------------------
1999 1998
---- ----
(Restated) (Restated)
<S> <C> <C>
REVENUES $426,656 $367,953
COSTS OF GOODS SOLD 336,351 273,436
-------- --------
GROSS PROFIT 90,305 94,517
RESEARCH AND DEVELOPMENT EXPENSES 20,703 22,634
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 57,434 55,170
AMORTIZATION OF GOODWILL 6,099 4,539
------ ------
INCOME FROM OPERATIONS 6,069 12,174
NET INVESTMENT INCOME (EXPENSE) (8,707) (2,865)
EQUITY IN EARNINGS (LOSSES) OF AFFILIATES (51,723) (44,310)
NON-CONTROLLING INTERESTS IN (EARNINGS) LOSSES
OF CONSOLIDATED SUBSIDIARIES 5,453 9,057
--------- ---------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (48,908) (25,944)
PROVISION FOR INCOME TAXES 3,326 2,760
--------- --------
NET LOSS $ (52,234) $(28,704)
========== =========
NET LOSS PER COMMON AND DILUTIVE SHARE $(1.41) $ (0.83)
SHARES USED IN COMPUTING NET LOSS PER COMMON AND DILUTIVE SHARE 37,167,662 34,408,545
========== ==========
See accompanying notes to condensed consolidated financial statements.
-5-
</TABLE>
<PAGE>
ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
------------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES: (Restated) (Restated)
Net loss $ (52,234) $ (28,704)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization expenses 22,434 17,088
Amortization of prepaid financing costs 1,297 265
Equity in losses of affiliates 51,723 44,310
Non-controlling interests in losses of
consolidated subsidiaries (5,453) (9,057)
Changes in assets and liabilities:
(Increase) decrease in current and other
non-current assets (34,185) 4,382
Increase (decrease) in current and other
non-current liabilities 38,654 (36,550)
---------- --------
Net cash provided by (used in) operating activities 22,236 (8,266)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (24,914) (17,879)
Payments for business combinations (22,501) --
Purchase of other assets (14,006) --
Purchases, sales and maturities of available-for-sale
investment securities, net --- 8,160
Investments in and advances to affiliates (45,533) (60,974)
-------- --------
Net cash used in investing activities (106,954) (70,693)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowings (repayments) (1,176) (3,316)
Principal payments on long-term obligations (55,090) (71,457)
Net proceeds from issuances of long-term obligations 156,000 22,000
Advances from (repayments to) joint venture partner (4,918) 10,593
Net proceeds from issuances of common stock 2,480 161,020
-------- --------
Net cash provided by financing activities 97,296 118,840
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 1,302 (515)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,880 39,366
CASH AND CASH EQUIVALENTS, beginning of period 15,268 6,391
--------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 29,148 $ 45,757
========= =========
</TABLE>
<PAGE>
ORBITAL SCIENCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999 AND 1998
(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 (the "Commission").
The company believes that the disclosures provided are adequate to make
the information presented not misleading when these unaudited interim
condensed consolidated financial statements are read in conjunction with
the audited consolidated financial statements and the footnotes thereto
included in the company's Annual Report on Form 10-K/A for the year ended
December 31, 1998. Operating results for the three- and six-month periods
ended June 30, 1999 are not necessarily indicative of the results expected
for the full year. Orbital Sciences Corporation, together with its
subsidiaries, is hereafter referred to as "Orbital" or the "company."
(1) Preparation of Condensed Consolidated Financial Statements
The preparation of condensed consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the consolidated financial statements and
the reported amounts of revenues and expenses during the reporting period.
Management periodically assesses and evaluates the sufficiency and/or
deficiency of estimated liabilities recorded for various operational and
business risks and uncertainties. Actual results could differ from these
estimates.
Certain reclassifications have been made to the 1998 financial statements
and footnote disclosures to conform to the 1999 financial statement
presentation. All financial amounts are stated in U.S. dollars unless
otherwise indicated.
(2) Restatements
Management has determined to restate its previously issued unaudited
consolidated financial statements for 1999 and 1998 with respect to its
accounting treatment for certain matters, including among other things,
its accounting for equity method investments, capitalized costs and
certain other matters. For a full description of the restatement matters,
refer to Notes 2A and 13 to the company's consolidated financial satements
included in the company's 1999 Annual Report on Form 10-K previously filed
with the Commission.
The effect of the restatement matters on the company's previously reported
revenues, gross profit, income from operations, net income (loss) and net
income (loss) per common and dilutive share for the periods is as follows:
<TABLE>
<CAPTION>
Quarter Six Months
Ended Ended
June 30, June 30,
-------- --------
<S> <C> <C>
1999, restated:
Revenues $ 226,484 $426,656
Gross profit 49,254 90,305
Income from operations 6,508 6,069
Net loss (26,071) (52,234)
Net loss per common and dilutive share (0.70) (1.41)
1999, as previously reported:
Revenues $ 232,286 $436,624
Gross profit 54,832 101,143
Income from operations 12,504 16,140
Net loss (10,149) (26,020)
Net loss per common and dilutive share (0.27) (0.70)
1998, restated:
Revenues $ 181,926 $367,953
Gross profit 43,547 94,517
Income from operations 1,323 12,174
Net loss (9,373) (28,704)
Net loss per common and dilutive share (0.26) (0.83)
1998, as previously reported
Revenues $ 184,516 $370,675
Gross profit 50,851 102,225
Income from operations 8,251 21,616
Net income 5,998 10,743
Net income per common and dilutive share 0.17 0.31
</TABLE>
(3) Inventories
Inventories consist of components and raw materials 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.
(4) Disaggregated Financial Information
Orbital's operations are organized into three business sectors, which
correspond to different product and service types, the different markets
served by such products and services, and the manner in which these
products and services are managed. Orbital's three business sectors are:
space and ground infrastructure systems, satellite access products and
satellite services. Space and ground infrastructure systems include launch
vehicles, satellites and related space systems, electronics and sensor
systems, satellite ground systems and software, and transportation
management systems. Satellite access products include satellite-based
navigation, positioning and communications products. Satellite services
include satellite-based mobile data communications services, satellite-
based remote imaging services, satellite-based automotive information
services and satellite-based voice communications services.
The following table presents operating information for the three and six
months ended June 30, 1999 and 1998 by business sector. Operating income
(loss) is total revenues less costs of goods sold, research and development
expenses, selling, general and administrative expenses, and amortization of
goodwill. Identifiable assets are those assets used in the operations of
each business. There were no significant sales or transfers between
consolidated sectors.
<TABLE>
<CAPTION>
(In thousands) Three Three Six Six
Months Months Months Months
(1999) (1998) 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Space and ground (Restated) (Restated) (Restated) (Restated)
infrastructure systems:
Revenues $195,190 $156,651 $366,272 $316,074
Operating income 10,443 15,171 21,482 31,834
Identifiable assets (1) 752,161 605,316 752,161 605,316
Capital expenditures 10,049 10,856 19,081 16,173
Depreciation and
amortization 9,577 6,503 17,178 13,269
Satellite access products:
Revenues $ 26,775 $ 25,016 $ 52,947 $ 51,556
Operating loss (2,627) (13,064) (5,444) (17,240)
Non-controlling interests
in (earnings)losses of
consolidated subsidiaries 1,555 5,726 2,889 7,941
Identifiable assets (1) 134,483 121,196 134,483 121,196
Capital expenditures 690 761 1,371 1,265
Depreciation and amortization 2,178 2,047 4,131 3,819
Satellite services:
Revenues $ 4,519 $ 259 $ 7,437 $ 323
Operating loss (1,308) (784) (9,969) (2,420)
Equity in earnings
(losses) of affiliates (27,334) (14,579) (51,723) (44,310)
Non-controlling interests
in (earnings)losses of
consolidated subsidiaries 637 349 2,564 1,116
Identifiable assets (1) 202,243 168,680 202,243 168,680
Capital expenditures 4,459 28 4,462 441
Depreciation and amortization 499 -- 1,125 --
Consolidated:
Revenues $226,484 $181,926 $426,656 $367,953
Operating income 6,508 1,323 6,069 12,174
Equity in earnings
(losses) of affiliates (27,334) (14,579) (51,723) (44,310)
Non-controlling interests
in (earnings)losses of
consolidated subsidiaries 2,192 6,075 5,453 9,057
Identifiable assets (1) 1,088,887 895,192 1,088,887 895,192
Capital expenditures 15,198 11,645 24,914 17,879
Depreciation and amortization 12,254 8,550 22,434 17,088
(1) Identifiable assets are as of June 30, 1999 and December 31, 1998.
</TABLE>
(5) Business Combinations and Investments in and Advances to Affiliates
During the second quarter of 1999, the company finalized a $50,000,000
joint venture with The Hertz Corporation ("Hertz") whereby Hertz will offer
Orbital's automotive navigation systems in its rental cars in the U.S.,
Canada and Europe. Under the terms of the joint venture agreement, the
company will receive a 60% interest in the venture in exchange for a
$30,000,000 investment. The company had contributed $3,000,000 of its
total investment through June 30, 1999, with the balance to be paid over
the next nine months.
In May 1999, the company acquired all the assets and certain liabilities of
the space robotics division of Toronto-based Spar Aerospace Limited
("Spar") for approximately $43,000,000. The company paid one-half of the
purchase price in cash at closing and issued an unsecured 8% note, due May
2000, for the remainder. The company will account for the acquisition
using the purchase method of accounting. The purchase price exceeded the
fair value of the net assets acquired by approximately $56,000,000.
Orbital anticipates that the excess of purchase price over net assets
acquired will be amortized on a straight-line basis over 30 years.
However, the final amortization period as well as the final allocation of
purchase price to net assets acquired will be determined as appraisals and
other studies are completed.
In May 1999, the company also entered into a $37,000,000 long-term license
agreement with the British Columbia provincial government whereby the
company obtained the exclusive rights to use certain government information
databases (the "License Agreement"). The company intends to provide
internet-based services pursuant to the License Agreement. The company
paid approximately $13,000,000 in cash and borrowed approximately $24,000,000
to acquire the license. The cost of this license is classified as an other
long-term asset and is being amortized on a straight line basis over
ten years.
The company provided ORBCOMM Global, L.P. $34,000,000 in capital and
$7,000,000 of deferred invoicing for work performed under a satellite and
launch procurement contract (approximately one-half of the deferred
invoicing has been advanced to Orbital by an affiliate of Teleglobe, Inc.)
during the first half of 1999.
(6) Income Taxes
The company has recorded its interim income tax provision (for U.S. Federal
and state taxes and foreign taxes) based on an estimate of its full-year
provision. Estimated provisions recorded during interim periods may be
periodically revised, if necessary, to reflect current estimates.
(7) Earnings Per Share
Net income (loss) per common share is calculated using the weighted average
number of common shares outstanding during the periods. Net income (loss)
per common share, assuming dilution, is calculated using the weighted
average number of common and common equivalent shares outstanding during
the periods, plus the dilutive effects of stock options and the assumed
conversion of the company's convertible notes, after giving effect to all
net income adjustments that would result from the assumed conversion.
In periods of net loss, the assumed conversion of convertible notes and
exercise of stock options are anti-dilutive. Assuming conversion of
convertible notes and the dilutive impact of outstanding stock options for
the three and six months ended June 30, 1999, dilutive shares would have
been 41,544,655 and 41,733,440, respectively and 40,815,134 and 39,284,011,
respectively for the three and six months ended June 30, 1998.
(8) Comprehensive Loss
Comprehensive loss and associated differences are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
(In thousands) 1999 1998 1999 1998
---- ---- ---- ----
(Restated) (Restated) (Restated) (Restated)
Differences between net loss, as
reported, and comprehensive loss:
<S> <C> <C> <C> <C>
Net loss, as reported $ (26,071) $ (9,373) $ (52,234) $(28,704)
Unrealized gains (losses) on
short-term investments -- -- -- (136)
Translation adjustments 840 (758) 1,165 (515)
---------- -------- -------- -------
Comprehensive loss $ (25,231) $ (10,131) $ (51,069) $(29,355)
========== ========= ========= ========
Accumulated differences between
net income (loss), as reported, and
comprehensive income (loss):
Beginning of period $ (6,824) $ (4,564) $ (7,149) $ (4,671)
Unrealized gains (losses) on
short-term investments -- -- -- (136)
Translation adjustments 840 (758) 1,165 (515)
--------- -------- -------- --------
End of period $ (5,984) $ (5,322) $ (5,984) $ (5,322)
========= ======== ======== ========
</TABLE>
(9) Commitments and Contingencies
In March 1999, the company signed a merger agreement with Lowrance
Electronics, Inc. ("Lowrance"), a leading manufacturer of marine and
recreational electronics using GPS-satellite navigation and sonar
technology. Under the terms of the merger, the company will acquire all
the outstanding common stock of Lowrance and Lowrance stockholders will
receive between 745,000 and 1,250,000 shares of Orbital common stock, based
on the fair market value of its stock prior to closing. The transaction is
expected to close in the second half of 1999. Closing is subject to
completion of securities registration requirements, regulatory approvals
and Lowrance stockholder approval.
During the first quarter of 1999, a number of class action lawsuits were
filed in the U.S. District Court for the Eastern District of Virginia (the
"District Court") against the company, an officer and an officer/director
alleging violations of the federal securities laws, on behalf of purchasers
of the company's stock during the period from April 21, 1998 through
February 16, 1999, and seeking monetary damages. On May 21,1999, the cases
were consolidated into a single class action and, on May 28, 1999, an
amended consolidated class action complaint was filed with the District
Court. An additional class action complaint was filed on behalf of
purchasers of call options on July 1, 1999. The District Court
consolidated that case with the previous action on July 30, 1999. While the
amounts to be claimed may be substantial, the company believes that the
allegations are without merit and intends to defend vigorously against such
allegations.
On July 15, 1999, a class action complaint was filed by Veston W. Bush, Jr.
on behalf of a class comprised of purchasers and lessees of a high
precision GPS product manufactured by the company (as a successor to
Ashtech Inc.) against Sokkia Corporation and certain of its affiliates, the
company and others in the Circuit Court of Henry County, Alabama. The
complaint alleges breach of contract and warranty claims and seeks
unspecified compensatory and punitive damages.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Certain statements included in this discussion relating to future revenues,
expenses, growth rates, net income, new business, operational performance,
schedules, sources and uses of funds, "Year 2000" issues, the outcome of
pending litigation and the performance of our affiliates, Orbital Imaging
Corporation ("ORBIMAGE"), ORBCOMM Global L.P. ("ORBCOMM") and CCI
International NV ("CCI"), 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 Orbital to
differ materially from any future results, performance, achievements, or
investments expressed or implied by such forward-looking statements. Such
factors include general economic and business conditions, launch results,
product performance, risks associated with government contracts, market
acceptance of consumer and industrial products, the introduction of
products and services by competitors, risks associated with acquired
businesses, the availability of required capital, our ability and the
ability of our customers and suppliers to assess and correct timely and
accurately "Year 2000" issues, market acceptance of new products and
technologies, risks associated with long-term contracts, the effects of
pending or possible litigation or government investigations and other
factors more fully described in "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Outlook: Issues and
Uncertainties" included in our Annual Report on Form 10-K/A for the year
ended December 31, 1998.
Our 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 and related space systems, electronics and sensor systems,
satellite ground systems and software and transportation management
systems. Our satellite access products sector consists of satellite-based
navigation, positioning and communications products. Satellite services
include the following services provided by our affiliates, ORBCOMM,
ORBIMAGE and CCI and our subsidiaries, Radarsat International Inc. ("RSI")
and Orbital Navigation Corporation ("ORBNAV"): satellite-based mobile data
communications services, satellite-based remote imaging services, satellite-
based automotive information services and satellite-based voice
communications services. We do not control the operational and financial
affairs of ORBCOMM, ORBIMAGE or CCI and consequently their financial
results are not consolidated with our results.
Recent Developments. During the second quarter of 1999, we finalized a
$50,000,000 joint venture with The Hertz Corporation ("Hertz") whereby
Hertz will offer our automotive navigation systems in its rental cars in
the U.S., Canada and Europe. Under the terms of the joint venture
agreement we will receive a 60% interest in the venture in exchange for a
$30,000,000 investment. We have contributed $3,000,000 of our total
investment through June 30, 1999, with the balance to be paid in several
installments through March 31, 2000.
In May 1999, we acquired all the assets and certain liabilities of the
space robotics division of Toronto-based Spar Aerospace Limited for
approximately $43,000,000, (the "Spar Acquisition"). We paid approximately
one-half of the purchase price in cash at closing and issued an unsecured
8% note, due May 2000 for the remainder. We will account for the
acquisition using the purchase method of accounting. The purchase price
exceeded the fair value of the net assets acquired by approximately
$56,000,000. Orbital anticipates that the excess of purchase price over
net assets acquired will be amortized on a straight-line basis over 30
years. However, the final amortization period as well as the final
allocation of purchase price to net assets acquired will be determined as
appraisals and other studies are completed.
In May 1999, we also entered into a $37,000,000 long-term license agreement
with the British Columbia provincial government, whereby we obtained the
exclusive rights to use certain government information databases (the
"License Agreement"). We intend to provide internet-based services using
these databases pursuant to the License Agreement. We paid approximately
$13,000,000 in cash and borrowed $24,000,000 to acquire the license.
In March 1999, we signed a merger agreement with Lowrance Electronics, Inc.
("Lowrance"), a leading manufacturer of marine and recreational electronics
using GPS-satellite navigation and sonar technology. Under the terms of
the merger, we will acquire all the outstanding common stock of Lowrance
and Lowrance stockholders will receive between 745,000 and 1,250,000 shares
of our common stock, based on the fair market value of our stock prior to
closing. The transaction is expected to close in the second half of 1999.
Closing is subject to completion of securities registration requirements,
regulatory approvals and Lowrance stockholder approval.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1999
AND 1998
Certain of the 1999 and 1998 financial information has been restated. See
note 2 to the condensed consolidated financial statements.
REVENUES. Our consolidated revenues for the three-month periods ended June
30, 1999 and 1998 were $226,484,000 and $181,926,000, respectively.
Consolidated revenues for the six-month periods ended June 30, 1999 and
1998 were $426,656,000 and $367,953,000, respectively.
Space and Ground Infrastructure Systems. Revenues from our space and
ground infrastructure systems sector totaled $195,190,000 and $156,651,000
for the three months ended June 30, 1999 and 1998, respectively. Revenues
from this sector totaled $366,272,000 and $316,074,000 for the six months
ended June 30, 1999 and 1998, respectively.
Revenues from launch vehicles decreased to $36,098,000 in the second
quarter of 1999 from $47,828,000 in the second quarter of 1998, and to
$79,509,000 for the six months ended June 30, 1999 from $93,736,000 for the
six months ended June 30, 1998. The decrease in 1999 revenues compared to
1998 revenues is primarily attributable to launch delays caused by late
delivery of customer satellites and payloads.
For the three months ended June 30, 1999, satellite and related space
systems revenues were $87,472,000 as compared to $54,020,000 for the three
months ended June 30, 1998. Satellite and related space systems revenues
increased to $150,638,000 for the six months ended June 30, 1999 as
compared to $115,552,000 for the six months ended June 30, 1998. Revenues
during the first half of 1999 included sales generated by the Spar
Acquisition of approximately $13,738,000 for the three- and six-month
periods ended June 30, 1999. The remaining increase in satellite and
related space systems revenues is due to revenues generated, in part, from
a new commercial geosynchronous satellite contract received in 1998.
Revenues from electronics and sensor systems increased to $36,804,000 for
the three months ended June 30, 1999 from $33,004,000 for the three months
ended June 30, 1998, and to $72,617,000 for the six months ended June 30,
1999 from $63,566,000 for the six months ended June 30, 1998. The overall
increase in 1999 is primarily due to an increase in revenues of
transportation management systems attributable to an acquisition in late
1998 as well as new contract awards in early 1999.
Revenues from our satellite ground systems and software products were
$34,816,000 for the three months ended June 30, 1999 as compared to
$21,799,000 for the three months ended June 30, 1998, and $63,507,000 for
the six months ended June 30, 1999 as compared to $43,220,000 for the six
months ended June 30, 1998. Revenues during the first half of 1999
included sales generated pursuant to the License Agreement of $5,530,000
for the three- and six-month periods ended June 30, 1999. The remaining
increase in 1999 revenues is due to work performed on orders received in
1998 for a new remote imaging system and other satellite ground systems and
system upgrades.
Space and ground infrastructure revenues include sales to our noncontrolled
and unconsolidated affiliates of $26,717,000 for the three months ended
June 30, 1999 and $27,119,000 for the three months ended June 30, 1998.
Sales to affiliates decreased for the six months ended June 30, 1999 to
$63,044,000 from $70,545,000 for the six months ended June 30, 1998.
Satellite Access Products. Revenues from sales of satellite-based
navigation, positioning and communications products increased to
$26,775,000 for the three months ended June 30, 1999 from $25,016,000 for
the three months ended June 30, 1998. Satellite access products revenues
were $52,947,000 for the six months ended June 30, 1999 as compared to
$51,556,000 for the six months ended June 30, 1998.
Satellite Services. Revenues for this sector of $4,519,000 and $7,437,000
for the three and six months ended June 30, 1999, respectively, includes
those revenues generated by ORBCOMM USA, L.P. ("ORBCOMM USA"), ORBNAV and
RSI. We expect these revenues to increase throughout 1999.
GROSS MARGINS/COSTS OF GOODS SOLD. Costs of goods sold include the costs
of personnel, materials, subcontracts and overhead related to sales of
commercial products and under various development and production contracts.
Gross profit margin depends on a number of factors, including our mix of
contract types and costs incurred thereon in relation to estimated costs.
Our gross margins for the second quarter of 1999 were $49,254,000 (or 22%
of revenues) as compared to $43,547,000 (or 24% of revenues) in the second
quarter of 1998. Orbital's gross margins for the first half of 1999 were
$90,305,000 (or 21% of revenues) as compared to $94,517,000 (or 26% of
revenues) for the first half of 1998.
Space and Ground Infrastructure Systems. Gross margins from our space and
ground infrastructure systems sector were $37,385,000 (or 19% of sector
revenues) and $41,010,000 (or 26% of sector revenues) for the three months
ended June 30, 1999 and 1998, respectively. Gross margins for this sector
were $70,591,000 (or 19% of sector revenues) and $84,283,000 (or 27% of
sector revenues) for the six months ended June 30, 1999 and 1998,
respectively. Gross margins for the different infrastructure product lines
were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ---------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Launch vehicles 12% 25% 14% 26%
Satellites and related space systems 20% 29% 19% 28%
Electronics and sensor systems 25% 25% 26% 26%
Ground systems and software 18% 24% 21% 25%
</TABLE>
The decrease in launch vehicle gross margins in 1999 is primarily due to
launch delays caused by late deliveries of customer satellites and
payloads, low margins from advanced vehicle contracts and completing work
on certain less profitable space and suborbital launch vehicle contracts.
The decrease in gross margins for satellites and related space systems is
due to work performed on a large, commercial, geosynchronous satellite
contract won in late 1998 that contains a significant amount of lower
margin, external subcontract effort, and from lower margins from work
performed on contracts assumed in the Spar Acquisition. Gross margins for
ground systems and software decreased due to (i) an increase in the amount
of lower margin, subcontract work on several contracts, (ii) lower margins
on various new defense contracts and (iii) lower margins from sales
pursuant to the License Agreement.
Satellite Access Products. Gross margins for satellite access products
were higher in the first half of 1999 (37%) than in the first half of 1998
(24%) due to certain inventory obsolescence experienced in the second
quarter of 1998.
Satellite Services. This sector had gross margins (losses) of $894,000 and
($721,000) during the second quarter of 1999 and 1998, respectively, and
$13,000 and ($2,295,000) during the first half of 1999 and 1998,
respectively. The improvement in 1999 gross margins is primarily
attributable to higher margins on sales generated by RSI.
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, 1999 and 1998 were $10,622,000 (or 5% of
revenues) and $12,016,000 (or 7% of revenues), respectively. Research and
development expenses were $20,703,000 (or 5% of revenues) and $22,634,000
(or 6% of revenues) for the six months ended June 30, 1999 and 1998,
respectively. Research and development expenses relate primarily to the
development of new or improved satellite access products, improved launch
vehicles and new satellite initiatives.
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,
legal, administrative and general management functions of the company.
Selling, general and administrative expenses for the three months ended
June 30, 1999 and 1998 were $28,891,000 (or 13% of revenues) and
$27,930,000 (or 15% of revenues), respectively. Selling, general and
administrative expenses for the six months ended June 30, 1999 and 1998
were $57,434,000 (or 13% of revenues) and $55,170,000 (or 15% of revenues),
respectively.
Net Investment Income (Expense). Net investment income (expense) was
($5,409,000) and ($802,000) for the three months ended June 30, 1999 and
1998, respectively. Net investment income (expense) was ($8,707,000) and
($2,865,000) for the six months ended June 30, 1999 and 1998, respectively.
Investment income (expense) reflects interest earnings on short-term
investments and realized gains and losses on investments, reduced by
interest expense of $6,400,000 and $2,228,000 on outstanding debt for the
three months ended June 30, 1999 and 1998, respectively, and by $10,521,000
and $4,740,000 for the six months ended June 30, 1999 and 1998,
respectively. Interest expense has been reduced by capitalized interest of
$817,000 and $2,762,000 for the second quarter of 1999 and 1998,
respectively, and by $1,596,000 and $5,130,000 for the first half of 1999
and 1998, 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 ($25,142,000) and ($8,504,000) for
the three months ended June 30, 1999 and 1998, respectively, and were
($46,270,000) and ($35,253,000) for the six months ended June 30, 1999 and
1998, respectively. These amounts primarily represent (i) elimination of
proportionate profits or losses on sales of infrastructure systems to
ORBCOMM and ORBIMAGE, (ii) our proportionate share of ORBCOMM's, ORBCOMM
International Partners, L.P.'s, ORBIMAGE's and CCI's current period
earnings and losses, (iii) preferred dividends and beneficial conversion
rights to other investors in ORBIMAGE, and (iv) non-controlling
stockholders' proportionate share of ORBCOMM USA's and Magellan
Corporation's current period earnings and losses. The increase in losses
during the first half of 1999 is primarily due to ORBCOMM's (i) increased
operational expenses relating to the roll-out of global commercial
services, (ii) increased interest expense and (iii) increased system
depreciation expenses resulting from ORBCOMM's satellites being placed in
service in late 1998. We expect equity in losses of affiliates in 1999 to
be significantly higher than 1998, primarily due to increased losses at
ORBCOMM. Additionally, we are currently renegotiating the terms of our
investment with CCI. If CCI is unable to raise additional capital and make
operational progress, or if an adequate market for its products and
services does not develop, we may be required to write-off all, or a
portion, of our $9,206,000 investment.
Provision for Income Taxes. We recorded an income tax provision of
$2,028,000 and $1,390,000 for the three months ended June 30, 1999 and
1998, respectively, and of $3,326,000 and $2,760,000 for the six months
ended June 30, 1999 and 1998, respectively. The provision in both periods
was entirely due to foreign taxes attributable to our Canadian operations.
Our interim income tax provision is based on an estimate of our full-year
provision. Estimated provisions recorded during interim periods may be
periodically revised, if necessary, to reflect current estimates.
Net Loss. Our consolidated net loss for the three months ended June 30,
1999 and 1998 was ($26,071,000) and ($9,373,000), respectively, and
($52,234,000) and ($28,704,000) for the six months ended June 30, 1999 and
1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Our growth has required, and continues to require, substantial capital to
fund investments in affiliates, business acquisitions, expanding working
capital needs, new business initiatives, research and development and
capital expenditures. We have funded these requirements to date, and
expect to fund our 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. We
expect to continue to pursue potential acquisitions, new business
opportunities and equity investments that we believe would enhance our
businesses and to fund such transactions through existing cash and loan
facilities as well as through the issuance of new equity, debt and/or asset-
based financings along with cash from operations.
Cash and investments were $42,830,000, and total debt obligations were
$354,612,000 at June 30, 1999. The outstanding debt is comprised primarily
of our $100,000,000 5% convertible subordinated notes, advances under our
revolving credit facilities, secured and unsecured notes, and asset-based
financings. Cash and investments at June 30, 1999 included approximately
$7,585,000 restricted against outstanding letters of credit. Our current
ratio was 1.0 and 1.2 at June 30, 1999 and December 31, 1998, respectively.
Our primary revolving credit facility provides for total borrowings from a
syndicate of banks of up to $200,000,000. Borrowings of $152,000,000 were
outstanding under the facility at June 30, 1999 at a weighted average
interest rate of 7% and are secured by accounts receivable. The facility
prohibits the payment of cash dividends, contains certain covenants with
respect to our working capital levels, fixed charges ratio, leverage ratio
and net worth, and expires in December 2002. We also issued $45,200,000 of
new debt in the first half of 1999 related to various business
acquisitions. (See Recent Developments.)
During the first half of 1999, we provided $34,000,000 in capital to
ORBCOMM. In addition, during the first half of 1999, we deferred invoicing
ORBCOMM for approximately $7,000,000 of work performed under our ORBCOMM
satellite and launch procurement agreement and will defer additional
invoicing during the remainder of 1999. Approximately one-half of the
deferred invoice amounts has been, and is expected to continue to be,
advanced to Orbital by Teleglobe Inc. ORBCOMM will require additional
funding in 1999, and is analyzing different capital raising alternatives.
If ORBCOMM is unsuccessful at raising any outside capital, we estimate that
our portion of the remaining projected ORBCOMM funding requirements for
1999 may be up to $30,000,000.
In addition to our investment in ORBCOMM, for the six months ended June 30,
1999, we invested approximately $36,500,000 in business and other asset
acquisitions (see Recent Developments) and $24,914,000 in capital
expenditures for various satellite, launch vehicle and other infrastructure
production, manufacturing and test equipment, leasehold improvements and
office equipment. Our operations provided net cash of approximately
$22,236,000 in the first half of 1999.
During the first half of 1999, we amended our credit facility and our
$20,000,000 term loan to allow us to provide additional capital to ORBCOMM
and to complete certain transactions. In addition, we obtained a waiver on
a leverage ratio in our primary credit facility to provide full
availability under that facility. We expect to amend our facility prior to
the September 1999 expiration of the waiver and/or to pursue new equity and
debt financings that if successful, may not require any modification or
amendment to the facility. We expect that our capital needs for the
remainder of 1999 will be provided by potential new equity and/or debt
financings, as well as by working capital, cash flows from operations,
existing credit facilities, and operating lease arrangements. No assurance
can be given that we will be successful in completing any new equity or
debt financings or in modifying our credit facility.
We are expanding our offices and satellite-related engineering,
manufacturing and operations facilities adjacent to our Dulles, Virginia
headquarters in order to consolidate certain operational facilities and
office space and provide for future growth. Construction has commenced and
is expected to continue into 2001. To finance the majority of this
expansion, Orbital has negotiated a built-to-suit agreement with a
developer for the office expansion and expects to obtain third-party
financing for the engineering, manufacturing and operating facilities.
YEAR 2000 ISSUES
We have developed a plan to prepare for potential "Year 2000" issues with
respect to various operational, technical and financial computer-related
systems. The plan has been designed to minimize risk to the company and
its customers using a standard industry five-phase approach. The five
phases are awareness, assessment, renovation, validation and
implementation. We have substantially completed the awareness and
assessment phases, including a comprehensive inventory of potentially
affected systems. In many cases renovation work is well underway and
validation testing has been completed with respect to certain critical
systems.
We plan to achieve our overall goal of Year 2000 readiness by September
1999. The first half of 1999 was devoted to renovating, validating and
implementing our corrective action plan by reprogramming affected software
when appropriate and feasible, obtaining vendor-provided software upgrades
when available and completely replacing affected systems when necessary.
The total costs to implement the plan, which costs include the already
planned replacement of existing systems to support our overall growth, are
estimated to be less than 1% of 1998 revenues. Approximately 85% of the
estimated costs to implement the plan have been incurred to date and the
remaining costs are expected to be incurred during the remainder of 1999.
All costs, including the costs of internal personnel, outside consultants,
system replacements and other equipment, will be expensed as incurred,
except for long-lived assets, which will be capitalized in accordance with
our capitalization policies. We have not postponed the implementation or
upgrade of other systems as a result of focusing on the Year 2000 plan.
As part of the plan, we are surveying our customers, suppliers and other
service providers regarding their Year 2000 readiness. At this point we do
not believe that any "Year 2000" issues will negatively affect our
significant customers (including the U.S. government), key suppliers or
critical service providers and consequently, will not materially impact the
company's cash flows or operating results. A "reasonably likely worst
case" scenario of the Year 2000 issue for us could include isolated
performance problems with engineering, financial and administrative
systems; isolated interruption of deliveries from suppliers; product
liability or warranty issues; and the temporary inability of key customers
to pay amounts due us. Contingency plans are being prepared, and will be
implemented if necessary, including having sufficient liquidity available
to sustain a temporary interruption of cash receipts during early 2000 and
the identification of alternative suppliers for critical components. There
can be no assurance that we have identified, or will identify, all "Year
2000" affected systems, suppliers, customers and service providers, or that
our corrective action plan will be timely and successful.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The company does not have any material exposure to interest rate changes,
commodity price changes, foreign currency fluctuation, or similar market
risks, although we do enter into forward exchange contracts to hedge against
specific foreign currency fluctuations, principally with respect to the
Canadian dollar and Japanese yen. At June 30, 1999, the majority of the
company's long term debt consisted of its $100,000,000, 5% convertible
subordinated notes, due 2002. The fair market value of these convertible
securities fluctuates with the company's stock price, and was $93,000,000 at
June 30, 1999.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the first quarter of 1999, a number of class action lawsuits
were filed in the U.S. District Court for the Eastern District of
Virginia (the "District Court") against the company, an officer and
an officer/director alleging violations of the federal securities
laws, on behalf of purchasers of the company's stock during the
period from April 21, 1998 through February 16, 1999, and seeking
monetary damages. On May 21,1999, the cases were consolidated into
a single class action and, on May 28, 1999, an amended consolidated
class action complaint was filed with the District Court. An
additional class action complaint was filed on behalf of purchasers
of call options on July 1, 1999. The District Court consolidated
that case with the previous action on July 30, 1999. The District
Court also denied the company's motion to dismiss. While the
amounts to be claimed may be substantial, the company believes that
the allegations are without merit and intends to defend vigorously
against such allegations.
On July 15, 1999, a class action complaint was filed by Veston W.
Bush, Jr. on behalf of a class comprised of purchasers and lessees
of a high precision GPS product manufactured by the company (as a
successor to Ashtech Inc.) against Sokkia Corporation and certain
of its affiliates, the company and others in the Circuit Court of
Henry County, Alabama. The complaint alleges breach of contract
and warranty claims and seeks unspecified compensatory and punitive
damages.
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 May
14, 1999.
(b) Not applicable.
(c) - (i) Election of five directors, each serving for a three-year
term ending in 2002:
Kelly H. Burke
Votes: For : 30,139,420
Withheld: 2,187,515
Bruce W. Ferguson
Votes: For: 30,155,648
Withheld: 2,171,287
Daniel J. Fink
Votes: For: 30,117,288
Withheld: 2,209,648
Janice I. Obuchowski
Votes: For: 30,147,234
Withheld: 2,179,701
Frank L. Salizzoni
Votes: For: 30,139,794
Withheld: 2,187,141
(ii) Proposal to approve the adoption of the Orbital Sciences
Corporation 1999 Employee Stock Purchase Plan.
Votes: For: 31,370,971 Against: 763,260
Abstain: 192,704
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) Reports on Form 8-K.
(i) On April 29, 1999, the company filed a Current Report on
Form 8-K, dated April 22, 1990, disclosing a change in the
company's auditors.
(ii) On May 3, 1999, the company filed a Current Report on
Form 8-K, dated April 29, 1999, disclosing its financial
results for the quarter ended March 31, 1999.
(iii) On May 11, 1999, the company filed a Current Report on
Form 8-K, dated May 10, 1999, disclosing its engagement of
Pricewaterhouse Coopers LLP as its independent auditor to
audit the company's financial statements for the year ended
December 31, 1999.
(iv) On May 14, 1999, the company filed a Current Report on
Form 8-K/A, dated May 13, 1999, filing the response letter of
its former auditors to the company's Current Report on Form 8-
K filed on April 29, 1999.
(v) On May 24, 1999, the company filed a Current Report on
Form 8-K, dated May 7, 1999, disclosing its acquisition of
assets, including the stock of certain subsidiaries, and
assumption of certain liabilities, relating to the Spar
Acquisition (the "Spar 8-K").
(vi) On May 27, 1999, the company filed a Current Report on
Form 8-K/A, dated May 7, 1999, amending the Spar 8-K to
include exhibits, other than financial information.
<PAGE>
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 24, 2000 By: /s/ David W. Thompson
David W. Thompson, President
and Chief Executive Officer
DATED: May 24, 2000 By: /s/ Jeffrey V. Pirone
Jeffrey V. Pirone,
Executive Vice President
and Principal Financial Officer
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this report.
Exhibit No. Description
10.1.2 Amendment No. 2, dated as of May 26, 1999, to the Third
Amended and Restated Credit and Reimbursement Agreement,
dated as of December 21, 1998 among the company and Morgan
Guaranty Trust Company of New York, as Administrative Agent
(previously filed).
10.1.3 Amendment No. 3, dated July 26, 1999, to the Third
Amended and Restated Credit and Reimbursement Agreement,
dated as of December 21, 1998 among the company and Morgan
Guaranty Trust Company of New York, as Administrative Agent
(previously filed).
10.2.7 Seventh Amendment, dated as of May 27, 1999, to the Note
Agreement, dated as of June 14, 1995 between the company and
Northwestern Mutual Life Insurance Company (previously
filed).
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).
<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, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000820736
<NAME> ORBITAL SCIENCES CORPORATION
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 29,148
<SECURITIES> 13,682
<RECEIVABLES> 291,016
<ALLOWANCES> (20,570)
<INVENTORY> 59,531
<CURRENT-ASSETS> 385,062
<PP&E> 267,800
<DEPRECIATION> (111,685)
<TOTAL-ASSETS> 1,088,887
<CURRENT-LIABILITIES> 370,549
<BONDS> 302,452
0
0
<COMMON> 372
<OTHER-SE> 370,391
<TOTAL-LIABILITY-AND-EQUITY> 1,088,887
<SALES> 426,656
<TOTAL-REVENUES> 426,656
<CGS> 336,351
<TOTAL-COSTS> 336,351
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 241
<INTEREST-EXPENSE> 10,521
<INCOME-PRETAX> (48,908)
<INCOME-TAX> 3,326
<INCOME-CONTINUING> (52,234)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,234)
<EPS-BASIC> (1.41)
<EPS-DILUTED> (1.41)
</TABLE>
