UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 1-14279
 
 ORBITAL SCIENCES CORPORATION
  Delaware
(State of Incorporation of Registrant)
    
    06-1209561
(I.R.S. Employer Identification No.)
 21839 Atlantic Boulevard
Dulles, Virginia 20166
 (703) 406-5000
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



PART I
 FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands, except share data)
 September 30,
    
    
    December 31,2008
    
    
    2007(see Note 3)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    340,662
    
    
    $
    235,822Receivables, net
    
    
    200,638
    
    
    
    183,507Inventories, net
    
    
    26,063
    
    
    
    26,549Deferred income taxes, net
    
    
    45,405
    
    
    
    44,420Other current assets
    
    
    6,877
    
    
    
    5,508Total current assets
    
    
    619,645
    
    
    
    495,806Investments
    
    
    19,900
    
    
    
    28,000Property, plant and equipment,net
    
    
    105,579
    
    
    
    95,713Goodwill
    
    
    55,551
    
    
    
    55,551Deferred income taxes,net
    
    
    65,549
    
    
    
    90,942Other non-current assets
    
    
    6,352
    
    
    
    9,456Total assets
    
    $
    872,576
    
    
    $
    775,468LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable and accrued expenses
    
    $
    166,432
    
    
    $
    131,805Deferred revenues and customer advances
    
    
    82,188
    
    
    
    79,339Total current liabilities
    
    
    248,620
    
    
    
    211,144Long-term obligations
    
    
    143,750
    
    
    
    143,750Other non-current liabilities
    
    
    9,509
    
    
    
    325Total liabilities
    
    
    401,879
    
    
    
    355,219Commitments and contingenciesStockholders equity:Preferred Stock, par value $.01; 10,000,000 shares authorized,
none outstanding
    
    
    
    
    
    
    Common Stock, par value $.01; 200,000,000 shares authorized,
58,912,372 and
58,753,536 shares outstanding, respectively
    
    
    589
    
    
    
    587Additional paid-in capital
    
    
    550,474
    
    
    
    554,451Accumulated other comprehensive loss
    
    
    (3,904
    )
    
    
    (6,751
    )Accumulated deficit
    
    
    (76,462
    )
    
    
    (128,038
    )Total stockholders equity
    
    
    470,697
    
    
    
    420,249Total liabilities and stockholders equity
    
    $
    872,576
    
    
    $
    775,468
 See accompanying notes to condensed consolidated financial statements
 1




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##### 



ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited, in thousands, except share data)
 Quarters Ended September 30,2008
    
    
    2007Revenues
    
    $
    278,628
    
    
    $
    275,640Cost of revenues
    
    
    227,253
    
    
    
    231,111Research and development expenses
    
    
    11,676
    
    
    
    3,520Selling, general and administrative expenses
    
    
    18,699
    
    
    
    19,428Income from operations
    
    
    21,000
    
    
    
    21,581Investment impairment charge
    
    
    (1,000
    )
    
    
    Interest income and other
    
    
    1,763
    
    
    
    3,497Interest expense
    
    
    (1,107
    )
    
    
    (1,341
    )Income from continuing operations before income taxes
    
    
    20,656
    
    
    
    23,737Provision for income taxes
    
    
    (8,513
    )
    
    
    (9,033
    )Income from continuing operations
    
    
    12,143
    
    
    
    14,704Income from discontinued operations, net of taxes
    
    
    
    
    
    
    974Net income
    
    $
    12,143
    
    
    $
    15,678Basic income per share:Income from continuing operations
    
    $
    0.21
    
    
    $
    0.25Income from discontinued operations
    
    
    
    
    
    
    0.01Net income
    
    $
    0.21
    
    
    $
    0.26Diluted income per share:Income from continuing operations
    
    $
    0.20
    
    
    $
    0.24Income from discontinued operations
    
    
    
    
    
    
    0.02Net income
    
    $
    0.20
    
    
    $
    0.26
 See accompanying notes to condensed consolidated financial statements
 2




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##### 



ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED INCOME STATEMENTS
(Unaudited, in thousands, except share data)
 Nine Months Ended September 30,2008
    
    
    2007Revenues
    
    $
    863,396
    
    
    $
    754,802Cost of revenues
    
    
    704,724
    
    
    
    629,022Research and development expenses
    
    
    30,082
    
    
    
    9,690Selling, general and administrative expenses
    
    
    61,112
    
    
    
    57,083Income from operations
    
    
    67,478
    
    
    
    59,007Investment impairment charge
    
    
    (11,600
    )
    
    
    Interest income and other
    
    
    5,601
    
    
    
    9,563Interest expense
    
    
    (3,250
    )
    
    
    (3,606
    )Income from continuing operations before income taxes
    
    
    58,229
    
    
    
    64,964Provision for income taxes
    
    
    (22,571
    )
    
    
    (25,947
    )Income from continuing operations
    
    
    35,658
    
    
    
    39,017Discontinued operations, net of taxes:Income from operations
    
    
    1,118
    
    
    
    1,943Gain on sale of business
    
    
    14,800
    
    
    
    Income from discontinued operations, net of taxes
    
    
    15,918
    
    
    
    1,943Net income
    
    $
    51,576
    
    
    $
    40,960Basic income per share:Income from continuing operations
    
    $
    0.61
    
    
    $
    0.66Income from discontinued operations
    
    
    0.27
    
    
    
    0.03Net income
    
    $
    0.88
    
    
    $
    0.69Diluted income per share:Income from continuing operations
    
    $
    0.59
    
    
    $
    0.64Income from discontinued operations
    
    
    0.26
    
    
    
    0.03Net income
    
    $
    0.85
    
    
    $
    0.67
 See accompanying notes to condensed consolidated financial statements
 3




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##### 



ORBITAL SCIENCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 Nine Months Ended September 30,2008
    
    
    2007Cash Flows From Operating Activities:Net income
    
    $
    51,576
    
    
    $
    40,960Adjustments to reconcile net income to net cash provided by operating activities:Gain on sale of business, net of tax
    
    
    (14,800
    )
    
    
    Investment impairment charge
    
    
    11,600
    
    
    
    Depreciation expense
    
    
    13,877
    
    
    
    12,580Deferred income taxes
    
    
    16,839
    
    
    
    20,847Stock-based compensation and other
    
    
    3,847
    
    
    
    2,793Changes in assets and liabilities
    
    
    4,099
    
    
    
    (20,977
    )Net cash provided by operating activities
    
    
    87,038
    
    
    
    56,203Cash Flows From Investing Activities:Capital expenditures
    
    
    (18,865
    )
    
    
    (12,610
    )Net proceeds from sale of business
    
    
    41,612
    
    
    
    Net proceeds from sale of property
    
    
    2,193
    
    
    
    Purchases of investments
    
    
    
    
    
    
    (256,205
    )Sales of investments
    
    
    
    
    
    
    221,705Net cash provided by (used in) investing activities
    
    
    24,940
    
    
    
    (47,110
    )Cash Flows From Financing Activities:Repurchase of common stock
    
    
    (21,521
    )
    
    
    (25,000
    )Net proceeds from issuances of common stock
    
    
    10,495
    
    
    
    10,277Tax benefit of stock-based compensation
    
    
    3,888
    
    
    
    4,760Other
    
    
    
    
    
    
    (1,129
    )Net cash used in financing activities
    
    
    (7,138
    )
    
    
    (11,092
    )Net increase in cash and cash equivalents
    
    
    104,840
    
    
    
    (1,999
    )Cash and cash equivalents, beginning of period
    
    
    235,822
    
    
    
    199,751Cash and cash equivalents, end of period
    
    $
    340,662
    
    
    $
    197,752
 See accompanying notes to condensed consolidated financial statements.
 4




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##### 



ORBITAL SCIENCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2008 and 2007
(Unaudited)
 (1) Basis of Presentation
     (2) Preparation of Condensed Consolidated Financial Statements
   5




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##### 



(3) Restatement Related to Deferred Income Taxes
     Materiality Considering the Effects of Prior Year
Misstatements in Current Year Financial Statements
 6




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##### 



(in thousands)
 Previously Reported
    
    Adjustment
    
    As RestatedNon-current deferred income taxes, net
    
    $
    103,792
    
    
    $
    (12,850
    )
    
    $
    90,942Total assets
    
    
    788,318
    
    
    
    (12,850
    )
    
    
    775,468Accumulated deficit
    
    
    115,188
    
    
    
    12,850
    
    
    
    128,038Total stockholders equity
    
    
    433,099
    
    
    
    (12,850
    )
    
    
    420,249
 (4) Adoption of SFAS No. 157 and SFAS No. 159
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an Amendment of FASB Statement No. 115.
 (5) Discontinued Operations
  7




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##### 



(in thousands)
 Quarter Ended September 30,
    
    Nine Months Ended September 30,2007
    
    2008
    
    2007Revenues
    
    $
    13,817
    
    
    $
    21,351
    
    
    $
    36,149Income from operations, before taxes
    
    
    1,654
    
    
    
    1,842
    
    
    
    3,296Income from operations, after taxes
    
    
    974
    
    
    
    1,118
    
    
    
    1,943
 (6) Industry Segment Information
  
    
    Launch Vehicles.Rockets that are used as interceptor and target vehicles for missile
defense systems, small-class space launch vehicles that place satellites into Earth orbit,
and suborbital launch vehicles that place payloads into a variety of high-altitude
trajectories.
    
    Satellites and Space Systems.Small- and medium-class spacecraft that are used to
enable global and regional communications and broadcasting, to conduct space-related
scientific research, to carry out interplanetary and other deep-space exploration missions,
to demonstrate new space technologies, to collect imagery and other remotely-sensed data
about the Earth and to enable national security applications.
    
    Advanced Space Programs.Human-rated space systems for Earth-orbit and lunar
exploration, advanced launch systems for medium-class satellites, and small satellites and
satellite subsystems primarily used for national security space programs and to demonstrate
new space technologies.
  8




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##### 



(in thousands)
 Quarters Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007Launch Vehicles:Revenues
    
    $
    111,815
    
    
    $
    100,337
    
    
    $
    332,096
    
    
    $
    290,738Operating income
    
    
    8,416
    
    
    
    10,489
    
    
    
    29,430
    
    
    
    28,882Identifiable assets
    
    
    134,955
    
    
    
    115,646

(1)
    
    
    134,955
    
    
    
    115,646

(1)Capital expenditures
    
    
    2,792
    
    
    
    643
    
    
    
    7,749
    
    
    
    2,859Depreciation
    
    
    1,464
    
    
    
    1,508
    
    
    
    4,091
    
    
    
    4,147Satellites and Space Systems(2):Revenues(3)
    
    $
    100,006
    
    
    $
    122,765
    
    
    $
    314,486
    
    
    $
    345,526Operating income
    
    
    8,060
    
    
    
    7,837
    
    
    
    23,507
    
    
    
    22,274Identifiable assets
    
    
    159,061
    
    
    
    176,538

(1)
    
    
    159,061
    
    
    
    176,538

(1)Capital expenditures
    
    
    1,912
    
    
    
    2,386
    
    
    
    6,981
    
    
    
    5,332Depreciation
    
    
    2,241
    
    
    
    1,829
    
    
    
    6,604
    
    
    
    5,424Advanced Space Programs(2):Revenues
    
    $
    68,608
    
    
    $
    53,183
    
    
    $
    220,936
    
    
    $
    121,021Operating income
    
    
    4,524
    
    
    
    3,587
    
    
    
    15,096
    
    
    
    8,874Identifiable assets
    
    
    65,806
    
    
    
    23,767

(1)
    
    
    65,806
    
    
    
    23,767

(1)Capital expenditures
    
    
    698
    
    
    
    
    
    
    
    698
    
    
    
    328Depreciation
    
    
    3
    
    
    
    36
    
    
    
    9
    
    
    
    137Corporate and Other:Revenues(3)
    
    $
    (1,801
    )
    
    $
    (645
    )
    
    $
    (4,122
    )
    
    $
    (2,483
    )Operating income (4)
    
    
    
    
    
    
    (332
    )
    
    
    (555
    )
    
    
    (1,023
    )Identifiable assets(5)
    
    
    512,754
    
    
    
    459,517

(1)(7)
    
    
    512,754
    
    
    
    459,517

(1)(7)Capital expenditures (6)
    
    
    1,608
    
    
    
    1,460
    
    
    
    3,437
    
    
    
    4,091Depreciation (6)
    
    
    1,013
    
    
    
    1,099
    
    
    
    3,173
    
    
    
    2,872Consolidated:Revenues
    
    $
    278,628
    
    
    $
    275,640
    
    
    $
    863,396
    
    
    $
    754,802Operating income
    
    
    21,000
    
    
    
    21,581
    
    
    
    67,478
    
    
    
    59,007Identifiable assets
    
    
    872,576
    
    
    
    775,468

(1)(7)
    
    
    872,576
    
    
    
    775,468
    (1)(7)Capital expenditures
    
    
    7,010
    
    
    
    4,489
    
    
    
    18,865
    
    
    
    12,610Depreciation
    
    
    4,721
    
    
    
    4,472
    
    
    
    13,877
    
    
    
    12,580
 
 (1)
    
    As of December 31, 2007.(2)
    
    Effective December 31, 2007, the company disaggregated advanced space programs
from satellites and space systems. The presentation for the 2007 periods has been
reclassified to conform to the 2008 presentation.(3)
    
    Corporate and other revenues are comprised solely of the elimination of
intersegment sales. Satellites and space systems revenues include $1.3 million and $0.4
million of intersegment sales in the quarters ended September 30, 2008 and 2007,
respectively, and $3.0 million and $1.6 million of intersegment sales for the nine months
ended September 30, 2008 and 2007, respectively.(4)
    
    Corporate and other operating income consists solely of corporate general
and administrative expenses allocated to the TMS business unit (see Note 5).(5)
    
    Corporate and other identifiable assets at December 31, 2007 include assets of
$20.5 million attributable to the TMS business unit that was sold in the second quarter of
2008 (see Note 5).(6)
    
    Corporate and other capital expenditures and depreciation include amounts
attributable to the TMS business
unit that was sold in the second quarter of 2008 (see Note 5).(7)
    
    Restated (see Note 3). 
 9




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##### 



(7) Earnings Per Share
 (in thousands)
 Quarter Ended
    
    Quarter EndedSeptember 30, 2008
    
    September 30, 2007Weighted-average outstanding shares for basic EPS
    
    
    58,776
    
    
    
    59,176Dilutive effect of convertible notes
    
    
    163
    
    
    
    Dilutive effect of stock options and units
    
    
    1,578
    
    
    
    1,698Shares for diluted EPS
    
    
    60,517
    
    
    
    60,874Nine Months Ended
    
    Nine Months EndedSeptember 30, 2008
    
    September 30, 2007Weighted-average outstanding shares for basic EPS
    
    
    58,643
    
    
    
    59,249Dilutive effect of convertible notes
    
    
    55
    
    
    
    Dilutive effect of stock options and units
    
    
    1,649
    
    
    
    1,749Shares for diluted EPS
    
    
    60,347
    
    
    
    60,998
  (8) Receivables
 (in thousands)
 September 30, 2008
    
    
    December 31, 2007Billed
    
    $
    45,497
    
    
    $
    36,606Unbilled
    
    
    155,141
    
    
    
    146,901Total
    
    $
    200,638
    
    
    $
    183,507
  10




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##### 



(9) Inventories
 (in thousands)
 September 30, 2008
    
    
    December 31, 2007Inventories
    
    $
    26,980
    
    
    $
    27,659Allowance for inventory obsolescence
    
    
    (917
    )
    
    
    (1,110
    )Total
    
    $
    26,063
    
    
    $
    26,549
  (10) Investments
   11




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##### 



(in thousands)
 Quarter Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2008Fair value(1) at beginning of period
    
    $
    22,600
    
    
    $
    28,000Temporary impairment charges
    
    
    (1,700
    )
    
    
    (2,000
    )Other-than-temporary impairment charges
    
    
    (1,000
    )
    
    
    (11,600
    )Reversal of temporary charges
    
    
    
    
    
    
    5,500Net losses recorded
    
    
    (2,700
    )
    
    
    (8,100
    )Fair value(1) at end of period
    
    $
    19,900
    
    
    $
    19,900
 
 (1)
    
    As discussed above, the company estimated the fair value of its
auction-rate securities based upon discounted cash flow analysis using the best available
information. Under SFAS No. 157, such valuation assumptions are defined as level 3 inputs. 12




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##### 



(11) Debt
 Convertible Notes
     Credit Facility
  Debt Covenants
  13




---



##### 



(12) Comprehensive Income
 (in thousands)
 Quarter Ended
    
    
    Nine Months EndedSeptember 30, 2008
    
    
    September 30, 2008Net income
    
    $
    12,143
    
    
    $
    51,576Unrealized loss on investments, net of tax
    
    
    (539
    )
    
    
    (839
    )Reversal of previously recorded unrealized losses on investments
    
    
    
    
    
    
    5,500Defined benefit plans, net of tax
    
    
    (827
    )
    
    
    (1,814
    )Total comprehensive income
    
    $
    10,777
    
    
    $
    54,423
  (13) Stock-Based Compensation
 (dollars in millions, except per-option and per-unit average values)
 Restricted Stock Units
    
    Stock OptionsWeighted Average
    
    
    
    
    
    WeightedNumber of
    
    Measurement Date
    
    Number of
    
    AverageUnits
    
    Fair Value
    
    Options
    
    Exercise PriceOutstanding at December 31, 2007
    
    
    1,097,188
    
    
    $
    18.81
    
    
    
    3,535,512
    
    
    $
    11.77Granted(1)
    
    
    405,745
    
    
    
    25.35
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    (765,854
    )
    
    
    12.18Vested
    
    
    (358,523
    )
    
    
    20.37
    
    
    
    
    
    
    
    Forfeited
    
    
    (54,395
    )
    
    
    19.05
    
    
    
    (5,833
    )
    
    
    6.91Expired
    
    
    
    
    
    
    
    
    
    
    (228,520
    )
    
    
    41.16Outstanding at September 30, 2008
    
    
    1,090,015
    
    
    $
    20.72
    
    
    
    2,535,305
    (2)
    
    $
    9.00
 
 (1)
    
    The fair value of restricted stock unit grants is determined based on the
closing market price of Orbitals common stock on the date of grant. Such value is
recognized as expense over the service period, net of estimated forfeitures.(2)
    
    The weighted average remaining contractual term is 3.64 years. 14




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##### 



Quarter Ended
    
    Quarter EndedSeptember 30, 2008
    
    September 30, 2007Stock-based compensation expense
    
    $
    2.6
    
    
    $
    2.1Income tax benefit related to stock-based compensation expense
    
    
    0.8
    
    
    
    0.7Intrinsic value of options exercised computed as the market
price on the exercise date less the price paid to exercise the options
    
    
    3.3
    
    
    
    2.0Cash received from exercise of options
    
    
    4.0
    
    
    
    2.6Tax benefit recorded as credits to additional paid-in capital related
to stock-based compensation transactions
    
    
    1.5
    
    
    
    2.3
 Nine Months Ended
    
    Nine Months EndedSeptember 30, 2008
    
    September 30, 2007Stock-based compensation expense
    
    
    $6.6
    
    
    $
    5.6Income tax benefit related to stock-based compensation expense
    
    
    2.2
    
    
    
    1.9Intrinsic value of options exercised computed as the market
price on the exercise date less the price paid to exercise the options
    
    
    10.4
    
    
    
    8.4Cash received from exercise of options
    
    
    9.3
    
    
    
    9.0Tax benefit recorded as credits to additional paid-in capital related
to stock-based compensation transactions
    
    
    3.9
    
    
    
    4.8
 As ofSeptember 30, 2008Shares of common stock available for grant under the companys stock-based incentive plans
    
    
    1.4Aggregate intrinsic value of restricted stock units that are expected to vest
    
    $
    26.1Unrecognized compensation expense related to non-vested restricted stock units, expected to
be recognized over a weighted-average period of 1.64 years
    
    
    16.6Aggregate intrinsic value of stock options outstanding, all fully vested
    
    
    38.4
 (14) Research and Development
   15




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##### 



(15) Income Taxes
  (16) Commitments and Contingencies
 U.S. Government Contracts
   Litigation
  (17) Recent Accounting Pronouncements
 Business Combinations.
 16




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##### 



Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 51.
 Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement). Accounting for Convertible Debt and Debt Issued with Stock Purchase
Warrants,
 17




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   
    
    Launch Vehicles.Rockets that are used as interceptor and target vehicles for missile
defense systems, small-class space launch vehicles that place satellites into Earth orbit,
and suborbital launch vehicles that place payloads into a variety of high-altitude
trajectories.
    
    Satellites and Space Systems.Small- and medium-class spacecraft that are used to
enable global and regional communications and broadcasting, to conduct space-related
scientific research, to carry out interplanetary and other deep-space exploration missions,
to demonstrate new space technologies, to collect imagery and other remotely-sensed data
about the Earth and to enable national security applications.
    
    Advanced Space Programs.Human-rated space systems for Earth-orbit and lunar
exploration, advanced launch systems for medium-class satellites, and small satellites and
satellite subsystems primarily used for national security space programs and to demonstrate
new space technologies.
  18




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Restatement Related to Deferred Income Taxes
     Materiality Considering the Effects of Prior Year
Misstatements in Current Year Financial Statements
 19




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##### 



Consolidated Results of Operations for the Quarters and Nine Months Ended
September 30, 2008 and 2007
 Revenues
  Cost of Revenues
 20




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##### 



Research and Development Expenses
   Selling, General and Administrative Expenses
 21




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Investment Impairment Charge
 Interest Income and Other
 Interest Expense
 Provision for Income Taxes
 Discontinued Operations
 Net Income
 22




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##### 



Segment Results
  (in thousands)
 Quarters Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Revenues:Launch Vehicles
    
    $
    111,815
    
    
    $
    100,337
    
    
    $
    332,096
    
    
    $
    290,738Satellites and Space Systems(1)
    
    
    100,006
    
    
    
    122,765
    
    
    
    314,486
    
    
    
    345,526Advanced Space Programs
    
    
    68,608
    
    
    
    53,183
    
    
    
    220,936
    
    
    
    121,021Corporate and Other
    
    
    (1,801
    )
    
    
    (645
    )
    
    
    (4,122
    )
    
    
    (2,483
    )Total
    
    $
    278,628
    
    
    $
    275,640
    
    
    $
    863,396
    
    
    $
    754,802Income from Operations:Launch Vehicles
    
    $
    8,416
    
    
    $
    10,489
    
    
    $
    29,430
    
    
    $
    28,882Satellites and Space Systems(1)
    
    
    8,060
    
    
    
    7,837
    
    
    
    23,507
    
    
    
    22,274Advanced Space Programs
    
    
    4,524
    
    
    
    3,587
    
    
    
    15,096
    
    
    
    8,874Corporate and Other(2)
    
    
    
    
    
    
    (332
    )
    
    
    (555
    )
    
    
    (1,023
    )Total
    
    $
    21,000
    
    
    $
    21,581
    
    
    $
    67,478
    
    
    $
    59,007
 
 (1)
    
    Effective December 31, 2007, we disaggregated advanced space programs from
satellites and space systems.
The presentation of 2007 periods has been reclassified to conform to the 2008 presentation.(2)
    
    Corporate and other operating income consists solely of corporate general and
administrative expenses allocated to the TMS business unit. 23




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Third Quarter 2008 Compared with Third Quarter 2007
 Launch Vehicles
    Satellites and Space Systems
 24




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##### 



Advanced Space Programs
  Corporate and Other
 Nine Months Ended September 30, 2008 Compared with Nine Months Ended September 30, 2007
 Launch Vehicles
  25




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Satellites and Space Systems
  Advanced Space Programs
  Corporate and Other
 26




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##### 



Backlog
   Liquidity and Capital Resources
 Cash Flow from Operating Activities
  Cash Flow from Investing Activities
  Cash Flow from Financing Activities
 Equity
Transactions -
 Convertible Notes
 27




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##### 



Credit
Facility -
 Debt
Covenants -
 Available Cash and Future Funding
   28




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##### 



Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Business Combinations.
 Noncontrolling Interests in Consolidated
Financial Statements  An Amendment of ARB No. 51.
 29




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##### 



Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement). Accounting for Convertible Debt and Debt Issued with Stock Purchase
Warrants,
 30




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##### 



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Uncertainties in the Credit Markets
  Foreign Currency Exchange Rate Risk
   Interest Rate Risk
    31




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##### 



Deferred Compensation Plan
  ITEM 4. CONTROLS AND PROCEDURES
 Restatement Related to Deferred Income Taxes
  Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  32




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##### 



PART II
 OTHER INFORMATION
 ITEM 1. LEGAL PROCEEDINGS
  ITEM 1A. RISK FACTORS
  ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
   33




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##### 



Maximum Number(or ApproximateTotal Number of
    
    Dollar Value) ofShares Purchased as
    
    Shares That May YetPart of Publicly
    
    Be Purchased UnderTotal Number of
    
    Average Price Paid
    
    Announced Plans or
    
    the Plans orPeriod
    
    Shares Purchased
    
    Per Share
    
    Programs(1)
    
    Programs(1)July 1, 2008 to
July 31, 2008
    
    
    164,500
    
    
    $
    23.63
    
    
    
    164,500
    
    
    $
    42,762,713August 1, 2008 to
August 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    42,762,713September 1, 2008
to September 30,
2008
    
    
    107,800
    
    
    $
    23.24
    
    
    
    107,800
    
    
    $
    40,257,086TOTAL
    
    
    272,300
    
    
    $
    23.48
    
    
    
    272,300
    
    
    $
    40,257,086
 
 (1)
    
    On April 25, 2008, we announced a plan (2008 Plan), to repurchase
up to $50 million of outstanding common stock through April 24, 2009, subject
to certain conditions. During the quarter ended September 30, 2008, we
repurchased 272,300 shares under the 2008 Plan. The purchases were made in
open market transactions. ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  ITEM 5. OTHER INFORMATION
  ITEM 6. EXHIBITS
 (a)
    
    Exhibits - A complete listing of exhibits required is given in
the Exhibit Index.
 34




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##### 



SIGNATURES
  ORBITAL SCIENCES CORPORATIONDATED:  October 24, 2008
    By:
    /s/ David W. ThompsonDavid W. ThompsonChairman and Chief Executive OfficerDATED:  October 24, 2008
    By:
    /s/ Garrett E. PierceGarrett E. PierceVice Chairman and Chief Financial Officer 35




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##### 



EXHIBIT INDEX
  Exhibit No.
    
    Description3.1
    
    Restated Certificate of Incorporation (incorporated by
reference to Exhibit 4.1 to the companys Registration
Statement on Form S-3 (File Number 333-08769) filed and
effective on July 25, 1996).3.2
    
    Amended and Restated Bylaws (incorporated by reference to
Exhibit 3.2 to the companys Quarterly Report on Form 10-Q for
the quarter ended June 30, 2005).3.3
    
    Certificate of Amendment to Restated Certificate of
Incorporation, dated April 29, 1997 (incorporated by reference
to Exhibit 3.3 to the companys Annual Report on Form 10-K for
the fiscal year ended December 31, 1998).3.4
    
    Certificate of Amendment to Restated Certificate of
Incorporation, dated April 30, 2003 (incorporated by reference
to Exhibit 3.4 to the companys Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003).3.5
    
    Certificate of Designation, Preferences and Rights of Series B
Junior Participating Preferred Stock, dated November 2, 1998
(incorporated by reference to Exhibit 2 to the companys
Registration Statement on Form 8-A filed on November 2, 1998).4.1
    
    Form of Certificate of Common Stock (incorporated by reference
to Exhibit 4.1 to the companys Registration Statement on Form
S-1 (File Number 33-33453) filed on February 9, 1990 and
effective on April 24, 1990).4.2
    
    Indenture dated as of December 13, 2006, by and between
Orbital Sciences Corporation and The Bank of New York, as
Trustee (incorporated by reference to Exhibit 4.1 to the
companys Current Report on Form 8-K filed on December 13,
2006).4.3
    
    Form of 2.4375% Convertible Senior Subordinated Note due 2027
(incorporated by reference to Exhibit 4.2 to the companys
Current Report on Form 8-K filed on December 13, 2006).4.4
    
    Registration Rights Agreement dated as of December 13, 2006,
by and among Orbital Sciences Corporation, Wachovia Capital
Markets, LLC and Banc of America Securities LLC (incorporated
by reference to Exhibit 4.3 to the companys Current Report on
Form 8-K filed on December 13, 2006).
 36




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##### 



Exhibit No.
    
    Description31.1
    
    Certification of Chairman and Chief Executive Officer pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350) (transmitted herewith).31.2
    
    Certification of Vice Chairman and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350) (transmitted herewith).32.1
    
    Written Statement of Chairman and Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350) (transmitted herewith).32.2
    
    Written Statement of Vice Chairman and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18
U.S.C. Section 1350) (transmitted herewith).
 37