##### 



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 June 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)
 June 30,
    
    
    December 31,2007
    
    
    2006(As Adjusted)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    219,449
    
    
    $
    199,751Restricted cash
    
    
    6,984
    
    
    
    5,984Receivables, net
    
    
    193,202
    
    
    
    165,235Inventories, net
    
    
    23,614
    
    
    
    30,053Deferred income taxes, net
    
    
    43,522
    
    
    
    42,880Other current assets
    
    
    3,195
    
    
    
    5,810Total current assets
    
    
    489,966
    
    
    
    449,713Property, plant and equipment,net
    
    
    93,589
    
    
    
    93,662Goodwill
    
    
    55,551
    
    
    
    55,551Deferred income taxes,net
    
    
    120,997
    
    
    
    135,701Other non-current assets
    
    
    9,511
    
    
    
    9,349Total assets
    
    $
    769,614
    
    
    $
    743,976LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current portion of long-term obligations
    
    $
    515
    
    
    $
    551Accounts payable and accrued expenses
    
    
    138,791
    
    
    
    122,421Deferred revenues
    
    
    64,411
    
    
    
    81,704Total current liabilities
    
    
    203,717
    
    
    
    204,676Long-term obligations, net of current portion
    
    
    143,750
    
    
    
    143,750Total liabilities
    
    
    347,467
    
    
    
    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, 59,251,136 and
58,914,991 shares outstanding, respectively
    
    
    593
    
    
    
    589Additional paid-in capital
    
    
    568,198
    
    
    
    566,887Accumulated deficit
    
    
    (146,644
    )
    
    
    (171,926
    )Total stockholders equity
    
    
    422,147
    
    
    
    395,550Total liabilities and stockholders equity
    
    $
    769,614
    
    
    $
    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 June 30,2007
    
    
    2006(As Adjusted)Revenues
    
    $
    273,273
    
    
    $
    196,979Cost of goods sold
    
    
    227,038
    
    
    
    158,632Gross profit
    
    
    46,235
    
    
    
    38,347Research and development expenses
    
    
    4,576
    
    
    
    2,531Selling, general and administrative expenses
    
    
    20,115
    
    
    
    19,056Income from operations
    
    
    21,544
    
    
    
    16,760Interest expense
    
    
    (1,114
    )
    
    
    (3,131
    )Interest income and other
    
    
    3,025
    
    
    
    3,269Income before income taxes
    
    
    23,455
    
    
    
    16,898Provision for income taxes
    
    
    (9,625
    )
    
    
    (6,991
    )Net income
    
    $
    13,830
    
    
    $
    9,907Basic net income per share
    
    $
    0.23
    
    
    $
    0.18Diluted net income per share
    
    $
    0.23
    
    
    $
    0.16
 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)
 Six Months Ended June 30,2007
    
    
    2006(As Adjusted)Revenues
    
    $
    501,495
    
    
    $
    389,175Cost of goods sold
    
    
    415,294
    
    
    
    312,900Gross profit
    
    
    86,201
    
    
    
    76,275Research and development expenses
    
    
    7,426
    
    
    
    4,702Selling, general and administrative expenses
    
    
    39,710
    
    
    
    38,857Income from operations
    
    
    39,065
    
    
    
    32,716Interest expense
    
    
    (2,262
    )
    
    
    (6,190
    )Interest income and other
    
    
    6,063
    
    
    
    5,626Income before income taxes
    
    
    42,866
    
    
    
    32,152Provision for income taxes
    
    
    (17,584
    )
    
    
    (13,398
    )Net income
    
    $
    25,282
    
    
    $
    18,754Basic net income per share
    
    $
    0.43
    
    
    $
    0.34Diluted net income per share
    
    $
    0.41
    
    
    $
    0.30
 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)
 Six Months Ended June 30,2007
    
    
    2006(As Adjusted)Cash Flows From Operating Activities:Net income
    
    $
    25,282
    
    
    $
    18,754Adjustments to reconcile net income to net cash provided by operating activities:Depreciation expense
    
    
    8,108
    
    
    
    7,259Deferred taxes
    
    
    14,062
    
    
    
    10,571Amortization of debt issuance costs
    
    
    294
    
    
    
    306Stock-based compensation and other
    
    
    3,486
    
    
    
    4,264Changes in assets and liabilities
    
    
    (21,939
    )
    
    
    22,793Net cash provided by operating activities
    
    
    29,293
    
    
    
    63,947Cash Flows From Investing Activities:Capital expenditures
    
    
    (8,121
    )
    
    
    (9,735
    )Change in cash restricted for letters of credit, net
    
    
    (1,000
    )
    
    
    313Net cash used in investing activities
    
    
    (9,121
    )
    
    
    (9,422
    )Cash Flows From Financing Activities:Payments on long-term obligations
    
    
    
    
    
    
    (34
    )Repurchase of common stock
    
    
    (10,000
    )
    
    
    (16,208
    )Net proceeds from issuances of common stock
    
    
    7,039
    
    
    
    7,587Tax benefit of share-based compensation
    
    
    2,487
    
    
    
    2,032Net cash used in financing activities
    
    
    (474
    )
    
    
    (6,623
    )Net increase in cash and cash equivalents
    
    
    19,698
    
    
    
    47,902Cash and cash equivalents, beginning of period
    
    
    199,751
    
    
    
    158,849Cash and cash equivalents, end of period
    
    $
    219,449
    
    
    $
    206,751
 See accompanying notes to condensed consolidated financial statements.
 4




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##### 



ORBITAL SCIENCES CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2007 and 2006
(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
    
    
    Six Months EndedJune 30, 2006
    
    
    June 30, 2006RevenuesAs previously reported
    
    $
    196,974
    
    
    $
    389,111As adjusted
    
    $
    196,979
    
    
    $
    389,175Cost of goods soldAs previously reported
    
    $
    158,813
    
    
    $
    313,121As adjusted
    
    $
    158,632
    
    
    $
    312,900Income before income taxesAs previously reported
    
    $
    16,712
    
    
    $
    31,867As adjusted
    
    $
    16,898
    
    
    $
    32,152Provision for income taxesAs previously reported
    
    $
    6,913
    
    
    $
    13,278As adjusted
    
    $
    6,991
    
    
    $
    13,398Net incomeAs previously reported
    
    $
    9,799
    
    
    $
    18,589As adjusted
    
    $
    9,907
    
    
    $
    18,754Basic net income per shareAs previously reported
    
    $
    0.17
    
    
    $
    0.33As adjusted
    
    $
    0.18
    
    
    $
    0.34Diluted net income per shareAs previously reported
    
    $
    0.16
    
    
    $
    0.30As adjusted
    
    $
    0.16
    
    
    $
    0.30
 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 June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Launch Vehicles:Revenues
    
    $
    102,150
    
    
    $
    80,361
    (1)
    
    $
    190,401
    
    
    $
    159,132
    (1)Operating income
    
    
    10,528
    
    
    
    8,777
    (1)
    
    
    18,391
    
    
    
    17,891
    (1)Identifiable assets
    
    
    127,098
    
    
    
    116,779

(1) (2)
    
    
    127,098
    
    
    
    116,779

(1) (2)Capital expenditures
    
    
    1,534
    
    
    
    990
    
    
    
    2,215
    
    
    
    2,273Depreciation
    
    
    1,292
    
    
    
    1,295
    (1)
    
    
    2,638
    
    
    
    2,600
    (1)Satellites and Space Systems:Revenues(3)
    
    $
    160,043
    
    
    $
    108,013
    
    
    $
    290,600
    
    
    $
    215,497Operating income
    
    
    10,748
    
    
    
    7,428
    
    
    
    19,726
    
    
    
    13,914Identifiable assets
    
    
    193,572
    
    
    
    185,566
    (2)
    
    
    193,572
    
    
    
    185,566
    (2)Capital expenditures
    
    
    1,703
    
    
    
    2,901
    
    
    
    3,275
    
    
    
    6,480Depreciation
    
    
    1,841
    
    
    
    1,486
    
    
    
    3,697
    
    
    
    2,853Transportation Management
Systems:Revenues
    
    $
    12,057
    
    
    $
    9,356
    
    
    $
    22,332
    
    
    $
    17,304Operating income
    
    
    268
    
    
    
    555
    
    
    
    948
    
    
    
    911Identifiable assets
    
    
    19,971
    
    
    
    18,107
    (2)
    
    
    19,971
    
    
    
    18,107
    (2)Capital expenditures
    
    
    211
    
    
    
    193
    
    
    
    239
    
    
    
    279Depreciation
    
    
    142
    
    
    
    144
    
    
    
    296
    
    
    
    296Corporate and Other:Revenues(3)
    
    $
    (977
    )
    
    $
    (751
    )
    
    $
    (1,838
    )
    
    $
    (2,758
    )Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Identifiable assets
    
    
    428,973
    
    
    
    423,524

(1) (2)
    
    
    428,973
    
    
    
    423,524

(1) (2)Capital expenditures
    
    
    966
    
    
    
    
    
    
    
    2,392
    
    
    
    703Depreciation
    
    
    725
    
    
    
    737
    
    
    
    1,477
    
    
    
    1,510Consolidated:Revenues
    
    $
    273,273
    
    
    $
    196,979
    (1)
    
    $
    501,495
    
    
    $
    389,175
    (1)Operating income
    
    
    21,544
    
    
    
    16,760
    (1)
    
    
    39,065
    
    
    
    32,716
    (1)Identifiable assets
    
    
    769,614
    
    
    
    743,976

(1) (2)
    
    
    769,614
    
    
    
    743,976

(1) (2)Capital expenditures
    
    
    4,414
    
    
    
    4,084
    
    
    
    8,121
    
    
    
    9,735Depreciation
    
    
    4,000
    
    
    
    3,662
    (1)
    
    
    8,108
    
    
    
    7,259
    (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 $0.6 million and $0.4
million of intersegment revenues in the quarters ended June 30, 2007 and 2006,
respectively, and include $1.2 million and $1.8 million of intersegment revenues in the six
months ended June 30, 2007 and 2006, respectively. (5) Receivables
 (in thousands)
 June 30, 2007
    
    
    December 31, 2006Billed
    
    $
    68,372
    
    
    $
    45,519Unbilled
    
    
    124,945
    
    
    
    119,831
    (1)Allowance for doubtful accounts
    
    
    (115
    )
    
    
    (115
    )Total
    
    $
    193,202
    
    
    $
    165,235
    (1)
 
 (1)
    
    As adjusted. 8




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##### 



(6) Inventories
 (in thousands)
 June 30, 2007
    
    
    December 31, 2006Inventories
    
    $
    24,559
    
    
    $
    30,871Allowance for inventory obsolescence
    
    
    (945
    )
    
    
    (818
    )Total
    
    $
    23,614
    
    
    $
    30,053
  (7) Earnings Per Share
 (in thousands)
 Quarter Ended
    
    
    Quarter EndedJune 30, 2007
    
    

June 30, 2006Weighted average of outstanding shares for basic EPS
    
    
    59,479
    
    
    
    56,285Dilutive effect of outstanding stock options, units and warrants
    
    
    1,817
    
    
    
    6,109Shares for diluted EPS
    
    
    61,296
    
    
    
    62,394
 Six Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    June 30, 2006Weighted average of outstanding shares for basic EPS
    
    
    59,286
    
    
    
    55,687Dilutive effect of outstanding stock options, units and warrants
    
    
    1,840
    
    
    
    6,685Shares for diluted EPS
    
    
    61,126
    
    
    
    62,372
  9




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##### 



(8) Comprehensive Income
  (9) Debt
  Convertible Notes
     10




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##### 



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




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##### 



(11) 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)
    
    
    24,530
    
    
    
    17.94
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    (661,364
    )
    
    
    9.70Vested
    
    
    (239,194
    )
    
    
    12.13
    
    
    
    
    
    
    
    Forfeited
    
    
    (15,424
    )
    
    
    15.62
    
    
    
    (4,937
    )
    
    
    9.79Expired
    
    
    
    
    
    
    
    
    
    
    (9,000
    )
    
    
    16.63Outstanding at June 30, 2007
    
    
    911,635
    
    
    $
    16.25
    
    
    
    3,904,212
    
    
    $
    11.72
    
    
    
    4.36
 
 (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 EndedJune 30, 2007
    
    
    June 30, 2006Total stock-based compensation expense recognized
    
    $
    1.6
    
    
    $
    1.5Income tax benefit related to stock-based compensation expense
recognized
    
    
    0.5
    
    
    
    0.5Total intrinsic value of options exercised, computed as the market
price on the exercise date less the price paid to exercise the
options
    
    
    3.0
    
    
    
    1.8Cash received from exercise of options
    
    
    3.1
    
    
    
    1.9Tax benefit recorded as credits to additional paid-in capital
related to
stock-based compensation transactions
    
    
    1.7
    
    
    
    0.5
 Six Months Ended
    
    
    Six Months EndedJune 30, 2007
    
    
    June 30, 2006Total stock-based compensation expense recognized
    
    $
    3.5
    
    
    $
    4.3Income tax benefit related to stock-based compensation expense
recognized
    
    
    1.2
    
    
    
    1.4Total intrinsic value of options exercised, computed as the market
price on the exercise date less the price paid to exercise the
options
    
    
    6.4
    
    
    
    6.5Cash received from exercise of options
    
    
    6.4
    
    
    
    7.1Tax benefit recorded as credits to additional paid-in capital
related to
stock-based compensation transactions
    
    
    2.5
    
    
    
    2.0
 As ofJune 30, 2007Shares of common stock available for grant under the companys stock-based incentive plans
    
    
    1,741,029Aggregate intrinsic value of restricted stock units that are expected to vest
    
    $
    19.2Unrecognized compensation cost related to non-vested restricted stock units, expected to be
recognized over a weighted-average period of 1.80 years
    
    
    8.9Aggregate intrinsic value of stock options outstanding, all fully vested
    
    
    36.3
 12




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##### 



(12) Commitments and Contingencies
 U.S. Government Contracts
   Litigation
  qui tam
  qui tam
  13




---



##### 



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




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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 Six Months Ended June 30, 2007 and 2006
 Prior Period Adjustment For Adoption of New Accounting Standard
 Revenues
 15




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##### 



Gross Profit
   Research and Development Expenses
 16




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##### 



Selling, General and Administrative Expenses
  Interest Expense
 Interest Income and Other
 Income Taxes
 Accounting for Uncertainty in
Income Taxes  An Interpretation of FASB Statement No. 109
 Net Income
 17




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##### 



Segment Results
  (in thousands)
 Quarters Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues:Launch Vehicles
    
    $
    102,150
    
    
    $
    80,361
    (1)
    
    $
    190,401
    
    
    $
    159,132
    (1)Satellites and Space Systems
    
    
    160,043
    
    
    
    108,013
    
    
    
    290,600
    
    
    
    215,497Transportation Management Systems
    
    
    12,057
    
    
    
    9,356
    
    
    
    22,332
    
    
    
    17,304Corporate and Other
    
    
    (977
    )
    
    
    (751
    )
    
    
    (1,838
    )
    
    
    (2,758
    )Total
    
    $
    273,273
    
    
    $
    196,979
    (1)
    
    $
    501,495
    
    
    $
    389,175
    (1)Income from Operations:Launch Vehicles
    
    $
    10,528
    
    
    $
    8,777
    (1)
    
    $
    18,391
    
    
    $
    17,891
    (1)Satellites and Space Systems
    
    
    10,748
    
    
    
    7,428
    
    
    
    19,726
    
    
    
    13,914Transportation Management Systems
    
    
    268
    
    
    
    555
    
    
    
    948
    
    
    
    911Corporate and Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    21,544
    
    
    $
    16,760
    (1)
    
    $
    39,065
    
    
    $
    32,716
    (1)
 
 (1)
 Second Quarter 2007 Compared with Second Quarter 2006
 Launch Vehicles
  18




---



##### 



Satellites and Space Systems
   Transportation Management Systems
 19




---



##### 



Corporate and Other
 Six Months Ended June 30, 2007 Compared with Six Months Ended June 30, 2006
 Launch Vehicles
   20




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Satellites and Space Systems
   Transportation Management Systems
 Corporate and Other
 Backlog
   21




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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
   22




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##### 



Senior Credit Facility
 Debt Covenants
 Available Cash and Future Funding
   23




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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.
 24




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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Foreign Currency Exchange Rate Risk
   Interest Rate Risk
    25




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ITEM 4. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Controls
  26




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PART II
 OTHER INFORMATION
 ITEM 1.
    
    LEGAL PROCEEDINGSOn May 26, 2005, the United States Attorneys Office for the District of Arizona informed the
us of an investigation involving suspected violations of government contracting laws and
regulations in connection with certain U.S. government launch vehicle programs.In March 2007, we were advised by the Civil Division of the Department of Justice (DoJ) that
we are named as a defendant in a lawsuit brought by a former employee and filed under seal in
February 2005, in the United States District Court for the District of Arizona, under the qui tam
provisions 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. Since then, the Court has unsealed the matter.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 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.DoJ has not decided whether to intervene in the qui tammatter, and is continuing its
investigation. The individual plaintiff has indicated that he intends to pursue the lawsuit, although we have not
been served with the complaint.We are cooperating fully with the U.S. government authorities in connection with their
investigation, and management strongly supports and is committed to the U.S. governments
procurement integrity processes. We cannot predict whether the government ultimately will conclude
that there have been violations by us of any federal contracting laws, policies or procedures, or
any other applicable laws, or whether the former employee will prevail in the lawsuit, if he
pursues it. The outcome of any such proceedings 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.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.
 27




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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 SecuritiesThe following table sets forth information regarding our repurchase of common stock
during the quarter ended June 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
    
    
    Programs1April 1, 2007 to
April 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    May 1, 2007 to May
31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    June 1, 2007 to
June 30, 2007
    
    
    499,254
    
    
    $
    20.03
    
    
    
    499,254
    
    
    $
    40,000,000TOTAL
    
    
    499,254
    
    
    $
    20.03
    
    
    
    499,254
    
    
    $
    40,000,000





(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 June 30, 2007 were made under this plan in open market
transactions.


ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIESNot applicable.


28



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ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS(a) The annual meeting of stockholders of the company was held on
April 26, 2007.(b) Election of five directors, each serving for a three-year term
ending in 2010:
 Edward F. CrawleyVotes: For:
    
    
    42,276,507Withheld:
    
    
    11,799,654Lennard A. FiskVotes: For:
    
    
    51,755,628Withheld:
    
    
    2,320,533Ronald T. KadishVotes: For:
    
    
    42,249,333Withheld:
    
    
    11,826,828Garrett E. PierceVotes: For:
    
    
    52,571,656Withheld:
    
    
    1,504,505David W. ThompsonVotes: For:
    
    
    51,737,293Withheld:
    
    
    2,338,868
 Directors whose terms expire in 2008:Daniel J. Fink
Robert J. Hermann
Janice I. Obuchowski
Frank L. SalizzoniDirectors whose terms expire in 2009:Robert M. Hanisee
James G. Roche
Harrison H. Schmitt
James R. Thompson
Scott L. Webster
 (c)
    
    The following is a brief description of the other matter voted
on at the meeting and the number of votes cast for, against or abstaining from
the matter:
 29




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##### 



Votes: For:
    
    
    53,561,496Against:
    
    
    488,243Abstain:
    
    
    26,421
 ITEM 5. OTHER INFORMATION
  ITEM 6. EXHIBITS
 (a)
    
    Exhibits  A complete listing of exhibits required is
given in the Exhibit Index.
 30




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##### 



SIGNATURES
  ORBITAL SCIENCES CORPORATIONDATED:  July 26, 2007
    By:
    /s/ David W. ThompsonDavid W. ThompsonChairman and Chief Executive Officer DATED: July 26, 2007
    By:
    /s/ Garrett E. PierceGarrett E. PierceVice Chairman and Chief Financial Officer 31




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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).
 32




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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).4.7
    
    Indenture, dated as of July 10, 2003, by and between Orbital
Sciences Corporation and U.S. Bank National Association, as
Trustee (Incorporated by reference to Exhibit 4.1 to the
companys Current Report on Form 8-K filed on July 18, 2003).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).
 33