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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>
<S> <C>
DELAWARE 06-1209561
(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)
DEFERRED SALARY AND PROFIT SHARING PLAN FOR EMPLOYEES OF ORBITAL SCIENCES
CORPORATION
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(Full Title of the Plans)
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of the
Deferred Salary and Profit Sharing Plan for
Employees of Orbital Sciences Corporation
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 Deferred Salary and Profit Sharing Plan for Employees of Orbital Sciences
Corporation (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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DEFERRED SALARY AND PROFIT SHARING PLAN
FOR EMPLOYEES OF
ORBITAL SCIENCES CORPORATION
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
------------
1999 1998
---- ----
<S> <C> <C>
Assets:
Investments (see note 4) $225,479,716 $189,312,085
Contributions receivable:
Participant 2,976 491,451
Company 1,836,289 2,050,049
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Total assets 227,318,981 191,853,585
Liabilities - forfeitures payable - 224,729
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Net assets available for benefits $227,318,981 $191,628,856
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</TABLE>
See accompanying notes to financial statements.
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DEFERRED SALARY AND PROFIT SHARING PLAN
FOR EMPLOYEES OF
ORBITAL SCIENCES CORPORATION
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 $ 21,134,905
Interest on participant loans 477,089
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Total investment income 21,611,994
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Contributions:
Participant 18,177,769
Company 7,873,429
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Total contributions 26,051,198
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Total additions 47,663,192
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Deductions from net assets attributable to:
Benefits paid to participants 11,853,636
Administrative expenses 43,879
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Total deductions 11,897,515
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Net increase prior to transfers 35,765,677
Transfers from the Plan (75,552)
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Net increase in net assets available for benefits 35,690,125
Net assets available for benefits, beginning of year 191,628,856
------------
Net assets available for benefits, end of year $227,318,981
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</TABLE>
See accompanying notes to financial statements.
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DEFERRED SALARY AND PROFIT SHARING PLAN
FOR EMPLOYEES OF
ORBITAL SCIENCES CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF THE PLAN
General
The following description of the Deferred Salary and Profit Sharing Plan for
Employees of Orbital Sciences Corporation (the "Plan") provides only general
information. Participants should refer to the Plan document for a more complete
description of the Plan's provisions.
The Plan is a defined contribution plan that is intended to constitute a
tax-qualified profit sharing plan under Section 401(a) of the Internal Revenue
Code (the "Code"). All U.S domestic employees of Orbital Sciences Corporation
(the "Plan Administrator" or the "company") other than employees of Magellan
Corporation, a majority-owned subsidiary of the company, who are scheduled to
work 1,000 hours during a 12-consecutive month period, or are not so scheduled
but in fact complete a year of service for participation (Plan Year), and have
attained the age of 21, are eligible to participate in the Plan. The Plan is
subject to the provisions of the Employment Retirement Income Security Act of
1974 ("ERISA").
Contributions
Participants may elect to make contributions to the Plan, ranging from 1 percent
to 15 percent of total eligible compensation, subject to certain annual
limitations under the Plan and the Code, by voluntarily reducing their pre-tax
salary. Effective January 1, 1999, participants are permitted to make employee
contributions to the Plan on an after-tax basis. For the Plan year ended
December 31, 1999, the company's Board of Directors (the "Board") determined, in
its sole discretion, to match 100 percent of participants' voluntary pre-tax
contributions at an amount not to exceed 4 percent of the participants' total
annual compensation. The Board approved discretionary profit-sharing
contributions, in the amount of 1 percent of the total eligible compensation for
the year ended December 31, 1999, which is allocated to all individuals who
were eligible to participate in the Plan on the last day of the year, based on
their respective total eligible compensation for the year.
The Plan also allows participants to make rollover contributions from other tax
qualified plans. Rollover contributions are included in the accompanying
financial statements as a component of employee contributions.
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Participants' Accounts
Each participant's account is credited with the participant's contributions,
transfers, and rollovers, as well as applicable company matching contributions,
and an allocation of discretionary contributions and investment income earnings.
Allocations are based on participants' contributions, earnings or account
balances, as applicable 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 five years at the
rate of 20 percent per year of service (1,000 hours) or immediately upon death
or long-term disability.
Forfeitures
Forfeitures by terminated employees of nonvested company contributions are held
in a separate account and are used to offset either future company contributions
or administrative expenses of the Plan. Used forfeitures are netted against
either company contributions or administrative expenses.
Payment of Benefits
Upon termination of service, death, long-term disability, attainment of age 59
1/2 or qualified financial hardship, a participant may elect to receive either a
lump-sum amount equal to the vested value of the participant's account or annual
installments over a determined period, as defined in the Plan document.
Participants may also withdraw their vested account balances while still in
service of the company, as defined in the Plan document.
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.
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Participant Loans
Participants may borrow up to the lesser of $50,000 or 50 percent of their
vested balance, minus their 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 commensurate with local
prevailing rates as determined by the Plan Administrator.
NOTE 2 - 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
Fixed-Income Fund, which is valued at contract 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 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.
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NOTE 3 - FEDERAL INCOME TAXES
The Plan received tax determination letters from the Internal Revenue Service,
dated September 14, 1995, indicating that the Plan and its underlying trust
qualify under the applicable provisions of the Code and therefore are exempt
from Federal income tax. The Plan has been amended since receiving the September
1995 determination letter. The Plan Administrator believes that the Plan design
and operations remain in compliance with the applicable requirements of the Code
and, therefore, believes that the Plan remains qualified and the related trust
remains tax-exempt. Therefore, no provision for income taxes has been included
in the Plan's financial statements.
NOTE 4 - INVESTMENTS
The following investments represent five percent or more of the Plan's total net
assets available for benefits as of December 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
CIGNA Fixed Income Fund Account $ 56,381,678 $ 54,518,399
Fidelity Equity Income II Fund Account 21,202,644 20,569,599
Vanguard Growth & Income Fund Account 40,681,144 28,654,772
Fidelity Advisor Growth Opportunities Fund Account 42,451,148 43,846,956
Orbital Sciences Corporation Common Stock 9,779,470 10,804,526
Janus Worldwide Fund Account 22,344,029 8,828,006
</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 $ 21,134,905 as follows:
<TABLE>
<S> <C>
Pooled separate accounts $ 28,535,280
Common stock (7,400,375)
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Total $ 21,134,905
============
</TABLE>
NOTE 5 - DEPOSIT WITH INSURANCE COMPANY
The Plan participates in a contract via an investment in the CIGNA Fixed Income
Account. For the Plan's investment in the CIGNA Fixed Income Account, the Plan
was credited with interest at the rate specified in the contract, which was
6.15% and 6.2% 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 5.9% and 6.2% for the sixth
month periods ended June 30, 1999 and 1998, respectively.
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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. Purchases of $8,187,543 and sales of $1,994,882 of
Orbital Sciences Corporation Common Stock were made during 1999. In 1998,
participants were allowed to invest in all investment options, with the
exception of employee contributions in Orbital Sciences Corporation Common
Stock. 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
DEFERRED SALARY AND PROFIT SHARING PLAN
FOR EMPLOYEES OF
ORBITAL SCIENCES CORPORATION
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Current
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Identity of Issue Asset Description Units Cost Value
----------------- ----------------- ----- ---- -----
<S> <C> <C> <C> <C>
Connecticut General Life Insurance Company
Retirement & Investment Services*
CIGNA Fixed Income Fund Account Investment Contract 1,710,393.22100 $56,381,678 $ 56,381,678
Vanguard Wellington Fund Account Pooled Separate Account 156,070.31228 6,130,053 6,803,811
Fidelity Equity - Income II Fund Account Pooled Separate Account 468,842.39999 15,971,608 21,202,644
Vanguard Growth and Income Fund Account Pooled Separate Account 738,678.78680 28,320,826 40,681,144
Fidelity Advisor Growth Opportunities Fund Account Pooled Separate Account 524,963.93499 30,543,612 42,451,148
PBHG Growth Fund Account Pooled Separate Account 121,148.72277 3,806,021 5,955,123
Warburg Pincus Advisor Emerging Growth Fund Account Pooled Separate Account 90,231.08005 4,065,211 6,176,915
Janus Worldwide Fund Account Pooled Separate Account 249,691.14290 14,027,905 22,344,029
Small Company Stock - Value I Fund Account Pooled Separate Account 119,407.20358 1,248,414 1,351,907
Warburg Pincus Advisor International Equity
Fund Account Pooled Separate Account 164,581.61471 4,065,048 6,031,075
Orbital Sciences Corporation* Common Stock 524,534.00858 12,206,687 9,779,470
Various Plan Participants * Participant Loans** - 6,320,772
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$225,479,716
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</TABLE>
* Denotes a party-in-interest
** Interest rates ranging from 5.99% to 16.01% and maturity dates ranging from
1/1/2000 to 10/07/2009.
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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
Deferred Salary and Profit Sharing Plan for Employees of
Orbital Sciences Corporation
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)
