##### 



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, 2007
 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
    
    06-1209561(State of Incorporation of Registrant)
    
    (I.R.S. Employer Identification No.)
 21839 Atlantic Boulevard
Dulles, Virginia 20166
 (703) 406-5000
  þ o
  þ o 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 31,2007
    
    
    2006(As Adjusted)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    197,752
    
    
    $
    199,751Marketable securities
    
    
    34,500
    
    
    
    Restricted cash
    
    
    5,984
    
    
    
    5,984Receivables, net
    
    
    189,015
    
    
    
    165,235Inventories, net
    
    
    30,278
    
    
    
    30,053Deferred income taxes, net
    
    
    48,028
    
    
    
    42,880Other current assets
    
    
    4,813
    
    
    
    5,810Total current assets
    
    
    510,370
    
    
    
    449,713Property, plant and equipment,net
    
    
    93,327
    
    
    
    93,662Goodwill
    
    
    55,551
    
    
    
    55,551Deferred income taxes,net
    
    
    109,706
    
    
    
    135,701Other non-current assets
    
    
    9,908
    
    
    
    9,349Total assets
    
    $
    778,862
    
    
    $
    743,976LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term obligations
    
    $
    
    
    
    $
    551Accounts payable and accrued expenses
    
    
    148,591
    
    
    
    122,421Deferred revenues
    
    
    57,800
    
    
    
    81,704Total current liabilities
    
    
    206,391
    
    
    
    204,676Long-term obligations, net of current portion
    
    
    143,750
    
    
    
    143,750Total liabilities
    
    
    350,141
    
    
    
    348,426Commitments 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, 58,943,957 and
58,914,991 shares outstanding, respectively
    
    
    589
    
    
    
    589Additional paid-in capital
    
    
    559,098
    
    
    
    566,887Accumulated deficit
    
    
    (130,966
    )
    
    
    (171,926
    )Total stockholders equity
    
    
    428,721
    
    
    
    395,550Total liabilities and stockholders equity
    
    $
    778,862
    
    
    $
    743,976
 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 30,2007
    
    
    2006(As Adjusted)Revenues
    
    $
    289,456
    
    
    $
    197,840Cost of goods sold
    
    
    241,541
    
    
    
    159,991Gross profit
    
    
    47,915
    
    
    
    37,849Research and development expenses
    
    
    4,297
    
    
    
    2,559Selling, general and administrative expenses
    
    
    20,382
    
    
    
    20,177Income from operations
    
    
    23,236
    
    
    
    15,113Interest expense
    
    
    (1,341
    )
    
    
    (3,097
    )Interest income and other
    
    
    3,497
    
    
    
    2,703Income before income taxes
    
    
    25,392
    
    
    
    14,719Provision for income taxes
    
    
    (9,714
    )
    
    
    (6,189
    )Net income
    
    $
    15,678
    
    
    $
    8,530Basic net income per share
    
    $
    0.26
    
    
    $
    0.14Diluted net income per share
    
    $
    0.26
    
    
    $
    0.14
 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 30,2007
    
    
    2006(As Adjusted)Revenues
    
    $
    790,951
    
    
    $
    587,015Cost of goods sold
    
    
    656,835
    
    
    
    472,891Gross profit
    
    
    134,116
    
    
    
    114,124Research and development expenses
    
    
    11,723
    
    
    
    7,261Selling, general and administrative expenses
    
    
    60,092
    
    
    
    59,033Income from operations
    
    
    62,301
    
    
    
    47,830Interest expense
    
    
    (3,606
    )
    
    
    (9,287
    )Interest income and other
    
    
    9,563
    
    
    
    8,329Income before income taxes
    
    
    68,258
    
    
    
    46,872Provision for income taxes
    
    
    (27,298
    )
    
    
    (19,586
    )Net income
    
    $
    40,960
    
    
    $
    27,286Basic net income per share
    
    $
    0.69
    
    
    $
    0.48Diluted net income per share
    
    $
    0.67
    
    
    $
    0.44
 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 30,2007
    
    
    2006(As Adjusted)Cash Flows From Operating Activities:Net income
    
    $
    40,960
    
    
    $
    27,286Adjustments to reconcile net income to net cash provided by operating activities:Depreciation expense
    
    
    12,580
    
    
    
    11,055Deferred taxes
    
    
    20,847
    
    
    
    14,870Stock-based compensation and other
    
    
    2,793
    
    
    
    6,601Changes in assets and liabilities
    
    
    (20,977
    )
    
    
    30,245Net cash provided by operating activities
    
    
    56,203
    
    
    
    90,057Cash Flows From Investing Activities:Capital expenditures
    
    
    (12,610
    )
    
    
    (14,513
    )Purchases of marketable securities
    
    
    (256,205
    )
    
    
    (79,000
    )Sales of marketable securities
    
    
    221,705
    
    
    
    79,000Change in cash restricted for letters of credit, net
    
    
    
    
    
    
    313Net cash used in investing activities
    
    
    (47,110
    )
    
    
    (14,200
    )Cash Flows From Financing Activities:Payments on long-term obligations
    
    
    (551
    )
    
    
    (56
    )Repurchase of common stock
    
    
    (25,000
    )
    
    
    (16,208
    )Net proceeds from issuances of common stock
    
    
    10,277
    
    
    
    11,114Fees paid for new credit facility
    
    
    (578
    )
    
    
    Tax benefit of share-based compensation
    
    
    4,760
    
    
    
    3,473Net cash used in financing activities
    
    
    (11,092
    )
    
    
    (1,677
    )Net change in cash and cash equivalents
    
    
    (1,999
    )
    
    
    74,180Cash and cash equivalents, beginning of period
    
    
    199,751
    
    
    
    158,849Cash and cash equivalents, end of period
    
    $
    197,752
    
    
    $
    233,029
 See accompanying notes to condensed consolidated financial statements.
 4




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##### 



ORBITAL SCIENCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 (1) Basis of Presentation
    (2) Preparation of Condensed Consolidated Financial Statements
   5




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##### 



(3) Prior Period Adjustment For Adoption of New Accounting Standard
 Accounting for Planned Major
Maintenance Activities (in thousands)
 Quarter Ended
    
    Nine Months EndedSeptember 30, 2006
    
    September 30, 2006RevenuesAs previously reported
    
    $
    197,812
    
    
    $
    586,924As adjusted
    
    $
    197,840
    
    
    $
    587,015Cost of goods soldAs previously reported
    
    $
    159,989
    
    
    $
    473,111As adjusted
    
    $
    159,991
    
    
    $
    472,891Income before income taxesAs previously reported
    
    $
    14,693
    
    
    $
    46,560As adjusted
    
    $
    14,719
    
    
    $
    46,872Provision for income taxesAs previously reported
    
    $
    6,178
    
    
    $
    19,457As adjusted
    
    $
    6,189
    
    
    $
    19,586Net incomeAs previously reported
    
    $
    8,515
    
    
    $
    27,103As adjusted
    
    $
    8,530
    
    
    $
    27,286Basic net income per shareAs previously reported
    
    $
    0.14
    
    
    $
    0.47As adjusted
    
    $
    0.14
    
    
    $
    0.48Diluted net income per shareAs previously reported
    
    $
    0.14
    
    
    $
    0.43As adjusted
    
    $
    0.14
    
    
    $
    0.44
 As ofDecember 31, 2006Receivables, netAs previously reported
    
    $
    165,755As adjusted
    
    $
    165,235Property, plant and equipment, netAs previously reported
    
    $
    92,878As adjusted
    
    $
    93,662Deferred income taxes, netAs previously reported
    
    $
    136,484As adjusted
    
    $
    135,701Accounts payable and accrued expensesAs previously reported
    
    $
    124,170As adjusted
    
    $
    122,421Accumulated deficitAs previously reported
    
    $
    (173,157
    )As adjusted
    
    $
    (171,926
    )
 6




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##### 



(4) 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 low 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 for
communications or 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, and human-rated space systems for Earth orbit, lunar and other
missions.
    
    Transportation Management Systems.Software-based transportation management systems for
public transit agencies and private vehicle fleet operators.
  7




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##### 



(in thousands)
 Quarters Ended Sept. 30,
    
    Nine Months Ended Sept. 30,2007
    
    2006
    
    2007
    
    2006Launch Vehicles:Revenues
    
    $
    100,337
    
    
    $
    71,204
    (1)
    
    $
    290,738
    
    
    $
    230,335
    (1)Operating income
    
    
    10,489
    
    
    
    7,610
    (1)
    
    
    28,882
    
    
    
    25,496
    (1)Identifiable assets
    
    
    112,284
    
    
    
    116,779
    (1)(2)
    
    
    112,284
    
    
    
    116,779
    (1)(2)Capital expenditures
    
    
    643
    
    
    
    464
    
    
    
    2,859
    
    
    
    2,737Depreciation
    
    
    1,508
    
    
    
    1,318
    (1)
    
    
    4,147
    
    
    
    3,919
    (1)Satellites and Space Systems:Revenues(3)
    
    $
    175,947
    
    
    $
    117,917
    
    
    $
    466,547
    
    
    $
    333,415Operating income
    
    
    11,424
    
    
    
    7,110
    
    
    
    31,148
    
    
    
    21,030Identifiable assets
    
    
    208,501
    
    
    
    185,566
    (1)(2)
    
    
    208,501
    
    
    
    185,566
    (1)(2)Capital expenditures
    
    
    2,386
    
    
    
    3,272
    
    
    
    5,660
    
    
    
    9,752Depreciation
    
    
    1,865
    
    
    
    1,623
    
    
    
    5,561
    
    
    
    4,476Transportation Management Systems:Revenues
    
    $
    13,817
    
    
    $
    9,450
    
    
    $
    36,149
    
    
    $
    26,754Operating income
    
    
    1,323
    
    
    
    615
    
    
    
    2,271
    
    
    
    1,526Identifiable assets
    
    
    21,851
    
    
    
    18,107
    (1)(2)
    
    
    21,851
    
    
    
    18,107
    (1)(2)Capital expenditures
    
    
    316
    
    
    
    222
    
    
    
    555
    
    
    
    501Depreciation
    
    
    136
    
    
    
    140
    
    
    
    432
    
    
    
    436Corporate and Other:Revenues(3)
    
    $
    (645
    )
    
    $
    (731
    )
    
    $
    (2,483
    )
    
    $
    (3,489
    )Operating income
    
    
    
    
    
    
    (222
    )
    
    
    
    
    
    
    (222
    )Identifiable assets
    
    
    436,226
    
    
    
    423,524
    (1)(2)
    
    
    436,226
    
    
    
    423,524
    (1)(2)Capital expenditures
    
    
    1,144
    
    
    
    820
    
    
    
    3,536
    
    
    
    1,523Depreciation
    
    
    963
    
    
    
    714
    
    
    
    2,440
    
    
    
    2,224Consolidated:Revenues
    
    $
    289,456
    
    
    $
    197,840
    (1)
    
    $
    790,951
    
    
    $
    587,015
    (1)Operating income
    
    
    23,236
    
    
    
    15,113
    (1)
    
    
    62,301
    
    
    
    47,830
    (1)Identifiable assets
    
    
    778,862
    
    
    
    743,976
    (1)(2)
    
    
    778,862
    
    
    
    743,976
    (1)(2)Capital expenditures
    
    
    4,489
    
    
    
    4,778
    
    
    
    12,610
    
    
    
    14,513Depreciation
    
    
    4,472
    
    
    
    3,795
    (1)
    
    
    12,580
    
    
    
    11,055
    (1)
 
 (1)
    
    As adjusted.(2)
    
    As of December 31, 2006.(3)
    
    Corporate and other revenues are comprised solely of the elimination of
intersegment sales. Satellites and space systems revenues include $0.4 million of
intersegment revenues in both of the quarters ended September 30, 2007 and 2006, and
include $1.6 million and $2.2 million of intersegment revenues in the nine months ended
September 30, 2007 and 2006, respectively. 8




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##### 



(5) Marketable Securities
 Accounting for Certain Investments in Debt and Equity Securities
  (6) Receivables
 (in thousands)
 September 30, 2007
    
    
    December 31, 2006Billed
    
    $
    62,736
    
    
    $
    45,519Unbilled
    
    
    126,394
    
    
    
    119,831
    (1)Allowance for doubtful accounts
    
    
    (115
    )
    
    
    (115
    )Total
    
    $
    189,015
    
    
    $
    165,235
    (1)
 
 (1)
    
    As adjusted.  9




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##### 



(7) Inventories
 (in thousands)
 September 30, 2007
    
    
    December 31, 2006Inventories
    
    $
    31,246
    
    
    $
    30,871Allowance for inventory obsolescence
    
    
    (968
    )
    
    
    (818
    )Total
    
    $
    30,278
    
    
    $
    30,053
  (8) Earnings Per Share
 (in thousands)
 Quarter Ended
    
    Quarter EndedSeptember 30, 2007
    
    September 30, 2006Weighted average of outstanding shares for basic EPS
    
    
    59,176
    
    
    
    60,390Dilutive effect of outstanding stock options, units and warrants
    
    
    1,698
    
    
    
    2,471Shares for diluted EPS
    
    
    60,874
    
    
    
    62,861
 Nine Months Ended
    
    Nine Months EndedSeptember 30, 2007
    
    September 30, 2006Weighted average of outstanding shares for basic EPS
    
    
    59,249
    
    
    
    57,272Dilutive effect of outstanding stock options, units and warrants
    
    
    1,749
    
    
    
    5,346Shares for diluted EPS
    
    
    60,998
    
    
    
    62,618
  (9) Comprehensive Income
  10




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##### 



(10) Debt
  Convertible Notes
     Credit Facility
  11




---



##### 



Debt Covenants
  (11) Income Taxes
 Accounting for
Uncertainty in Income Taxes  An Interpretation of FASB Statement No. 109
    12




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##### 



(12) Stock-Based Compensation
 (dollars in millions, except per-option and per-unit average values)
 Restricted Stock Units
    
    Stock OptionsWeighted
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Weighted
    
    AverageMeasurement
    
    
    
    
    
    Average
    
    RemainingNumber of
    
    Date
    
    Number of
    
    Exercise
    
    ContractualUnits
    
    Fair Value
    
    Options
    
    Price
    
    Term (Years)Outstanding at December 31, 2006
    
    
    1,141,723
    
    
    $
    15.34
    
    
    
    4,579,513
    
    
    $
    10.81Granted(1)
    
    
    493,730
    
    
    
    23.15
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    (867,638
    )
    
    
    10.42Vested
    
    
    (462,539
    )
    
    
    14.83
    
    
    
    
    
    
    
    Forfeited
    
    
    (23,792
    )
    
    
    15.97
    
    
    
    (4,937
    )
    
    
    9.79Expired
    
    
    
    
    
    
    
    
    
    
    (28,035
    )
    
    
    19.43Outstanding at September 30, 2007
    
    
    1,149,122
    
    
    $
    18.89
    
    
    
    3,678,903
    
    
    $
    11.62
    
    
    
    4.17
 
 (1)
    
    The fair value of restricted stock unit grants is determined based on the quoted
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. Quarter Ended
    
    Quarter EndedSeptember 30, 2007
    
    September 30, 2006Total stock-based compensation expense recognized
    
    $
    2.1
    
    
    $
    1.8Income tax benefit related to stock-based compensation expense
recognized
    
    
    0.7
    
    
    
    0.6Total intrinsic value of options exercised, computed as the market
price on the exercise date less the price paid to exercise the
options
    
    
    2.0
    
    
    
    3.4Cash received from exercise of options
    
    
    2.6
    
    
    
    2.7Tax benefit recorded as credits to additional paid-in capital
related to
stock-based compensation transactions
    
    
    2.3
    
    
    
    1.5
 Nine Months Ended
    
    Nine Months EndedSeptember 30, 2007
    
    September 30, 2006Total stock-based compensation expense recognized
    
    $
    5.6
    
    
    $
    5.9Income tax benefit related to stock-based compensation expense
recognized
    
    
    1.9
    
    
    
    2.0Total intrinsic value of options exercised, computed as the market
price on the exercise date less the price paid to exercise the
options
    
    
    8.4
    
    
    
    10.0Cash received from exercise of options
    
    
    9.0
    
    
    
    9.8Tax benefit recorded as credits to additional paid-in capital
related to
stock-based compensation transactions
    
    
    4.8
    
    
    
    3.5
 As ofSeptember 30, 2007Shares of common stock available for grant under the companys stock-based incentive plans
    
    
    1,369,329Aggregate intrinsic value of restricted stock units that are expected to vest
    
    $
    25.6Unrecognized compensation cost related to non-vested restricted stock units, expected to be
recognized over a weighted-average period of 2.03 years
    
    
    16.9Aggregate intrinsic value of stock options outstanding, all fully vested
    
    
    39.1
 13




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##### 



(13) Commitments and Contingencies
 U.S. Government Contracts
   Litigation
  qui tam United States of America ex rel.W. Austin Sallade v. Orbital Sciences
Corporation
  14




---



##### 



qui tam
  (14) Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an Amendment of FASB Statement No. 115.
 15




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##### 



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Consolidated Results of Operations for the Quarters and Nine Months Ended
September 30, 2007 and 2006
 Prior
Period Adjustment For Adoption of New Accounting Standard
 Revenues
 16




---



##### 



Gross Profit
   17




---



##### 



Research and Development Expenses
 Selling, General and Administrative Expenses
  Interest Expense
 Interest Income and Other
 18




---



##### 



Income Taxes
 Accounting for Uncertainty in
Income Taxes  An Interpretation of FASB Statement No. 109
 Net Income
 Segment Results
  (in thousands)
 Quarters Ended Sept. 30,
    
    
    Nine Months Ended Sept. 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Launch Vehicles
    
    $
    100,337
    
    
    $
    71,204
    (1)
    
    $
    290,738
    
    
    $
    230,335
    (1)Satellites and Space Systems
    
    
    175,947
    
    
    
    117,917
    
    
    
    466,547
    
    
    
    333,415Transportation Management Systems
    
    
    13,817
    
    
    
    9,450
    
    
    
    36,149
    
    
    
    26,754Corporate and Other
    
    
    (645
    )
    
    
    (731
    )
    
    
    (2,483
    )
    
    
    (3,489
    )Total
    
    $
    289,456
    
    
    $
    197,840
    (1)
    
    $
    790,951
    
    
    $
    587,015
    (1)Income from Operations:Launch Vehicles
    
    $
    10,489
    
    
    $
    7,610
    (1)
    
    $
    28,882
    
    
    $
    25,496
    (1)Satellites and Space Systems
    
    
    11,424
    
    
    
    7,110
    
    
    
    31,148
    
    
    
    21,030Transportation Management Systems
    
    
    1,323
    
    
    
    615
    
    
    
    2,271
    
    
    
    1,526Corporate and Other
    
    
    
    
    
    
    (222
    )
    
    
    
    
    
    
    (222
    )Total
    
    $
    23,236
    
    
    $
    15,113
    (1)
    
    $
    62,301
    
    
    $
    47,830
    (1)
 
 (1)
    
    As adjusted. 19




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Third Quarter 2007 Compared with Third Quarter 2006
 Launch Vehicles
   20




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##### 



Satellites and Space Systems
   Transportation Management Systems
 Corporate and Other
 21




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##### 



Nine Months Ended September 30, 2007 Compared with Nine Months Ended September 30, 2006
 Launch Vehicles
   Satellites and Space Systems
 22




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Transportation Management Systems
 Corporate and Other
 Backlog
   23




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Liquidity and Capital Resources
 Cash Flow from Operating Activities
  Cash Flow from Investing Activities
  Cash Flow from Financing Activities
   Convertible Notes
  24




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Credit Facility
 Debt Covenants
 Available Cash and Future Funding
  25




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Off-Balance Sheet Arrangements
  Recent Accounting Pronouncements
 Fair Value Measurements
 The Fair Value Option for Financial Assets
and Financial Liabilities  Including an Amendment of FASB Statement No. 115.
 26




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency Exchange Rate Risk
   Interest Rate Risk
   Marketable Securities
  27




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Deferred Compensation Plan
  ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  28




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PART IIOTHER INFORMATIONITEM 1.
    
    LEGAL PROCEEDINGSIn May 2005, the United States Attorneys Office for the District of Arizona
informed us of an investigation involving suspected violations of government
contracting laws and regulations in connection with certain U.S. government launch
vehicle programs.Earlier this year, we were advised by the Civil Division of the Department of
Justice (DoJ) that we had been named as a defendant in a lawsuit brought by a
former employee and filed under seal on February 23, 2005, in the United States
District Court for the District of Arizona, under the qui tamprovisions of the
civil False Claims Act, which permit an individual to bring suit in the name of the
United States and share in any recovery. The Court subsequently unsealed the matter
and during the third quarter of 2007, the complaint was served on the company. The
matter is captioned United States of America ex rel.W. Austin Sallade v.
Orbital Sciences Corporation.The complaint alleges that our Launch Systems Group submitted false and fraudulent
claims for payment to the U.S. government allegedly by misclassifying and
mischarging costs and by engaging in defective pricing. These allegations also
underlie the ongoing government investigation. The complaint asserts that as a
result of the allegedly wrongful conduct, the United States suffered damages and
that we are liable to the United States for three times the amount of the alleged
damages, civil penalties of up to $10,000 for each false claim and punitive damages.
We have devoted significant time and resources to investigate the issues raised by
the complaint and, while we cannot predict the outcome of any litigation, we believe
we have strong substantive defenses to all of the claims. We are vigorously
defending this lawsuit.DoJ has not decided whether to intervene in the qui tammatter, and is continuing
its investigation. We strongly support and are committed to the U.S. governments
procurement integrity processes. We are cooperating fully with the U.S. government
authorities in connection with their investigation. We cannot predict whether the
government ultimately will conclude that there have been any violations by us of any
federal contracting laws, policies or procedures, or any other applicable laws, or
whether the plaintiff will prevail in the lawsuit. The outcome of the government
investigation could subject us to criminal, civil and/or administrative penalties
and up to treble damages depending on the nature of such violations, which could
have a material adverse effect on our financial condition and/or results of
operations.
 29




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In addition, from time to time we are party to certain litigation or other legal
proceedings arising in the ordinary course of business. In the opinion of
management, an adverse outcome to such legal matters would not have a material
adverse effect on our results of operations or financial condition.ITEM 1A.
    
    RISK FACTORSThere are no material changes to the risk factors disclosed in the companys Annual
Report on Form 10-K for the fiscal year ended December 31, 2006.ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS(a) None.(b) None.(c) Issuer Purchases of Equity Securities.The following table sets forth information regarding our repurchase of common stock
during the quarter ended September 30, 2007.
 Total Number of
    
    Maximum NumberShares
    
    (or ApproximatePurchased as
    
    Dollar Value) ofTotal
    
    
    
    
    
    Part of Publicly
    
    Shares That MayNumber of
    
    Average Price
    
    Announced
    
    Yet Be PurchasedShares
    
    Paid Per
    
    Plans or
    
    Under the Plans orPeriod
    
    Purchased
    
    Share
    
    Programs1
    
    Programs1July 1,
2007 to July 31, 2007
    
    
    161,900
    
    
    $
    21.59
    
    
    
    161,900
    
    
    $
    36,505,184August 1, 2007 to August 31, 2007
    
    
    345,100
    
    
    $
    20.61
    
    
    
    345,100
    
    
    $
    29,393,869September 1, 2007 to September 30, 2007
    
    
    205,282
    
    
    $
    21.40
    
    
    
    205,282
    
    
    $
    25,000,000TOTAL
    
    
    712,282
    
    
    $
    21.06
    
    
    
    712,282
    
    
    $
    25,000,000
 
 (1)
    
    On May 2, 2007, we announced the companys plan, subject to
certain conditions, to repurchase up to an aggregate of $50 million of
outstanding common stock. This plan expires on May 2, 2008. All purchases
made during the quarter ended September 30, 2007 were made under this plan in
open market transactions. 30




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ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIESNot applicable.ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSNot applicable.ITEM 5.
    
    OTHER INFORMATIONNot applicable.ITEM 6.
    
    EXHIBITS
 (a)
    
    Exhibits - A complete listing of exhibits required is
given in the Exhibit Index.
 31




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SIGNATURES
  ORBITAL SCIENCES CORPORATIONDATED: October 26, 2007
    
    By:
    
    /s/ David W. ThompsonDavid W. Thompson
Chairman and Chief Executive OfficerDATED: October 26, 2007
    
    By:
    
    /s/ Garrett E. PierceGarrett E. Pierce
Vice Chairman and Chief Financial Officer
 32




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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).
 33




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##### 



Exhibit No.
    
    Description4.5
    
    Rights Agreement dated as of October 22, 1998, by and between
Orbital Sciences Corporation and BankBoston N.A., as Rights
Agent (incorporated by reference to Exhibit 1 to the companys
Report on Form 8-A filed on November 2, 1998).4.6
    
    Form of Rights Certificate (incorporated by reference to
Exhibit 3 to the companys Report on Form 8-A filed on
November 2, 1998).10.1
    
    Credit Agreement, dated as of August 17, 2007, among Orbital
Sciences Corporation, as Borrower, the Lenders and Issuers
party thereto, Citibank, N.A., as Administrative Agent, Bank
of America, N.A. and Wachovia Bank, National Association, as
Co-Syndication Agents, PNC Bank, National Association and
Sovereign Bank, as Co-Documentation Agents, and Citigroup
Global Markets Inc., as Sole Lead Book-Running Manager and
Sole Lead Arranger (incorporated by reference to Exhibit 10.1
to the companys Current Report on Form 8-K filed on August
23, 2007).10.2
    
    Pledge and Security Agreement, dated as of August 17, 2007,
between Orbital Sciences Corporation and Citibank, N.A., as
Administrative Agent (incorporated by reference to Exhibit
10.2 to the companys Current Report on Form 8-K filed on
August 23, 2007).31.1
    
    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).
 34