SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 31, 1995
________________________
ORBITAL SCIENCES CORPORATION
Delaware 0-18287 06-1209561
(State of (Commission File (I.R.S. Employer
incorporation) Number) I.D. No.)
21700 Atlantic Boulevard
Dulles, Virginia 20166
(703) 406-5000
(Address and telephone number
of principal executive offices)
Item 5. Other Events
On August 31, 1995, Orbital Sciences Corporation ("Orbital"
or the "Company") executed an agreement to acquire MacDonald,
Dettwiler and Associates Ltd. ("MDA"), a high technology company
specializing in the design, manufacture and marketing of space
remote sensing ground stations capable of handling all major
optical and radar imaging for Earth observation satellites. MDA
is also a major provider of advanced space-qualified software,
air navigation systems, defense electronics systems and network
communications training and consulting. MDA's Common Shares are
publicly traded on the Vancouver Stock Exchange and The Toronto
Stock Exchange.
The acquisition is expected to be concluded by December 31, 1995.
Pursuant to the terms of the agreement, a newly established,
wholly owned Canadian subsidiary of Orbital will issue
Exchangeable Shares in exchange for all the issued and
outstanding MDA Common Shares. These Exchangeable Shares will
have voting and economic rights with respect to Orbital identical
to Orbital Common Stock, and will be exchangeable into Orbital
Common Stock at the option of the holders, subject to certain
regulatory restrictions.
The actual number of shares of Orbital Common Stock issuable
pursuant to the agreement is based on the average closing sales
price of Orbital's Common Stock for the 20 trading days ending on
the date four trading days prior to closing. Assuming an average
closing sales price of $17.25 per share for Orbital Common Stock
and an exchange ratio of .31 Orbital Common Stock to 1.00 MDA
Common Share, Orbital expects to issue approximately 3.9 million
shares of its Common Stock for all of MDA's issued and
outstanding voting common shares and employee share options.
Pursuant to the agreement, Orbital will assume all of MDA's
outstanding common share options, which vest in variable amounts
over the next four years.
The acquisition will be accounted for using the pooling of
interests method of accounting.
Item 7. Financial Statements and Exhibits
(a) (i) Consolidated Financial Statements of
MacDonald, Dettwiler and Associates Ltd., together with report of
the independent auditors, as of March 31, 1995, 1994 and 1993;
and
(ii) Unaudited Consolidated Financial Statements of
MacDonald, Dettwiler and Associates Ltd. as of June 30, 1995 and
for the three-month periods ended June 30, 1995 and 1994.
(b) Pro Forma Financial Information of Orbital Sciences
Corporation
(i) as of and for the six-month period ended June 30,
1995; and
(ii) for the years ended December 31, 1994, 1993 and
1992.
(c) Exhibits. The following exhibits are filed as part of
this report:
Exhibit
No.
2 Combination Agreement dated as of August
31, 1995 among Orbital Sciences Corporation,
3173623 Canada Inc. and MacDonald, Dettwiler
and Associates Ltd. (transmitted herewith)
2.1 Plan of Arrangement under Section 192 of
the Canada Business Corporations Act
(transmitted herewith)
2.2 Voting and Exchange Trust Agreement
between Orbital Sciences Corporation,
MacDonald Dettwiler Holdings Inc. And State
Street Bank and Trust Company (transmitted
herewith)
2.3 Support Agreement between Orbital
Sciences Corporation and MacDonald, Dettwiler
Holdings, Inc. (transmitted herewith)
2.4 Notice of Special Meeting of
Shareholders and Holders of the 1988 Employee
Share Options and the 1988 Key Employee Share
Options of MacDonald, Dettwiler and
Associates Ltd. and Management Information
Circular dated as of October 6, 1995
(transmitted herewith)
23 Consent of KPMG Peat Marwick Thorne
(transmitted herewith)
MACDONALD, DETTWILER AND ASSOCIATES LTD.
CONSOLIDATED FINANCIAL STATEMENTS
For the Years ended March 31, 1995, 1994 and 1993
(including Auditors' Report thereon)
For the Three Months ended June 30, 1995 and 1994
(Unaudited)
MDA FINANCIAL STATEMENTS
AUDITORS' REPORT TO THE DIRECTORS
We have audited the consolidated balance sheets of MacDonald,
Dettwiler and Associates Ltd. as at March 31, 1995 and 1994 and
the consolidated statements of earnings, retained earnings and
changes in financial position for each of the years in the three
year period ended March 31, 1995. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation.
In our opinion, these consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as at March 31, 1995 and 1994 and the results of its
operations and the changes in its financial position for each of
the years in the three year period ended March 31, 1995 in
accordance with generally accepted accounting principles.
Vancouver, Canada (signed) KPMG Peat Marwick Thorne
May 25, 1995, except as to Chartered Accountants
Note 8(d) which is as
at September 29, 1995
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Consolidated Balance Sheets
(In thousands of Canadian dollars)
June 30, March 31,
1995 1995 1994
(Unaudited) _____ _____
Assets
Current assets:
Cash and term deposits $16,845 $ 9,463 $12,008
Receivables 22,518 30,484 33,104
Recoverable income taxes 275 221 1,443
Inventories 817 486 488
Prepaid expenses 1,193 1,011 1,407
Total current assets 41,648 41,665 48,450
Lease receivable 1,171 1,186 1,415
Investment 586 586 586
Fixed assets (Note 2) 10,597 10,939 10,342
Goodwill 7,865 8,005 2,339
Deferred income taxes 191 184 -
$62,058 $62,565 $63,132
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued $11,803 $12,118 $14,655
liabilities
Deferred revenue 19,813 21,204 26,553
Current portion of long-term
debt and obligations under
capital leases (Note 3) 1,224 1,143 1,043
Deferred income taxes - - 297
Total current liabilities 32,840 34,465 42,548
Long-term debt and obligations under
capital leases (Note 3) 8,197 8,052 4,334
Shareholders' equity:
Capital stock (Note 4) 8,107 8,052 7,969
Contributed surplus 2,050 2,050 2,050
Retained earnings 10,549 9,539 6,065
Cumulative translation
adjustment 315 407 166
Total shareholders' equity 21,021 20,048 16,250
$62,058 $62,565 $63,132
Contingencies and commitments (Note 8)
On behalf of the Board:
(signed) John W. Pitts (signed) J. S. MacDonald
Director Director
See accompanying notes to consolidated financial statements.
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Consolidated Statements of Earnings
(In thousands of Canadian dollars, except per share data)
Three months Year ended March 31
ended June 30
1995 1994 1995 1994 1993
(Unaudited)
Revenues $23,611 $27,605 $109,955 $101,417 $85,156
Expenses (Note 7):
Cost of sales 15,769 20,459 80,063 75,294 59,705
General and administrative 2,253 1,941 7,761 6,673 6,689
Marketing 3,388 2,687 12,098 10,096 9,448
Research and development 438 656 2,381 3,421 4,378
Interest on long-term debt 85 102 387 524 488
and capital lease obligations
Goodwill amortization 109 107 435 127 136
22,042 25,952 103,125 96,135 80,844
Operating earnings 1,569 1,653 6,830 5,282 4,312
Other income 232 115 637 532
634
Earnings before income taxes 1,801 1,768 7,467 5,814 4,946
Income taxes (Note 6) 793 778 3,502 2,557 2,177
Net earnings $ 1,008 $ 990 $ 3,965 $ 3,257 $ 2,769
Net earnings per common share
(Note 5):
Basic $ .09 $ .09 $ .36 $ .29 $ .25
Fully diluted $ .09 $ .08 $ .34 $ .28 $ .24
See accompanying notes to consolidated financial statements
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Consolidated Statements of Retained Earnings
(In thousands of Canadian dollars)
Three months Year ended March 31,
ended June 30,
1995 1994 1995 1994 1993
(Unaudited)
Retained earnings, beginning $ 9,539 $ 6,065 $ 6,065 $ 3,624 $11,820
of period
Net earnings 1,008 990 3,965 3,257 2,769
Excess of cost of shares
purchased and cancelled over
average issuance price 2 - (491) (816) -
Dividends on common shares - - - - (10,965)
Retained earnings, end of $10,549 $ 7,055 $ 9,539 $ 6,065 $ 3,624
period
See accompanying notes to consolidated financial statements
MACDONALD, DETTWILER AND ASSOCIATES LTD.
Consolidated Statements of Changes in Financial Position
(In thousands of Canadian dollars)
Three months Year ended March 31,
ended June 30,
1995 1994 1995 1994 1993
(Unaudited)
Operating activities:
Net earnings $ 1,008 $ 990 $ 3,965 $ 3,257 $ 2,769
Items not affecting cash:
Depreciation and amortization 1,031 921 3,949 3,384 2,823
Deferred income taxes (7) (19) (481) (283) 155
Loss on disposal of fixed - - 5 7 7
assets
Net change in non-cash working
capital balances relating to 5,635 (2,294) (3,189) 9,909 (5,259)
operations
Cash provided by (applied to) 7,667 (402) 4,249 16,274 495
operations
Financing activities:
Net increase (decrease) in long-term 226 3,908 3,818 (296) 27
debt and obligations under capital
leases
Decrease in other receivables - - - 685 961
Decrease (increase) in lease 15 13 51 (1,470) -
receivable
Issue of capital stock 53 11 185 205 358
Purchase of capital stock - (468) (593) (967) -
Dividends paid on common shares - - - - (10,965)
Cash provided by (applied to) 294 3,464 3,461 (1,843) (9,619)
financing activities
Total cash generated for 7,961 3,062 7,710 14,431 (9,124)
investing activities
Investing activities:
Purchase of fixed assets (579) (904) (3,928) (3,631) (4,133)
Acquisition of subsidiary - (6,345) (6,327) - -
Investment, net - - - (221)
(66)
Cash applied to investing (579) (7,249) (10,255) (3,697) (4,354)
activities
Increase (decrease) in cash during the 7,382 (4,187) (2,545) 10,734 (13,478)
period
Cash, beginning of period 9,463 12,008 12,008 1,274 14,752
Cash, end of period $16,845 $ 7,821 $ 9,463 $12,008 $ 1,274
See accompanying notes to consolidated financial statements
1. Significant accounting policies:
(a) Consolidation:
The consolidated financial statements include the
accounts of the Company and its wholly-owned
subsidiaries. The Company accounts for its investment
in Radarsat International Inc. (RSI) on the equity
basis. The Company considers RSI to be in the
development stage and is capitalizing its share of start-
up expenditures until commencement of operations.
All intercompany balances and transactions are eliminated
on consolidation.
(b) Recognition of revenue:
Contract revenue is recognized on the percentage
of completion basis. A provision for loss is made when
estimated total costs are in excess of total contract
revenue.
(c) Fixed assets:
Fixed assets are stated at cost less accumulated
depreciation. Depreciation is applied on a
straight-line basis at the following rates:
Computers 20% - 33%
Equipment 20%
Furniture and fixtures 20%
Software 25%
Leasehold improvements Term of lease
(d) Research and development:
Research costs are expensed in the year incurred.
Development costs are expensed in the year incurred
unless the Company believes a development project meets
generally accepted accounting criteria for deferral and
amortization. The Company interprets the criteria for
deferral of development costs on a very stringent basis
under which interpretation, few, if any, development
costs qualify for deferral. In the current year no
development costs were deferred.
Research and development costs are reduced by
related government assistance.
(e) Investment tax credits:
Investment tax credits are accounted for using the
cost reduction method and are applied against cost of
sales.
(f) Foreign currency translation:
Foreign operations which are considered integrated
(financially and operationally dependent on the parent)
are translated to Canadian dollars using current rates
of exchange for monetary assets and liabilities.
Historical rates of exchange are used for non-monetary
assets and liabilities and average rates for the year
for revenues and expenses. Gains or losses resulting
from these translation adjustments are included in
income.
Foreign operations which are considered
self-sustaining (financially and operationally
independent of the parent) are translated to Canadian
dollars using the current rates of exchange for assets
and liabilities and using average rates for the year for
revenues and expenses. Gains or losses resulting from
these translation adjustments are deferred in a separate
component of shareholders' equity ("Cumulative
translation adjustment") until there is a realized
reduction in the parent's net investment in the foreign
operation.
The Company considers the operations of Earth
Observation Sciences Limited to be self-sustaining.
Operations of all other foreign subsidiaries are
integrated.
(g) Goodwill:
Goodwill represents the excess of the cost of
shares in subsidiaries over amounts assigned to their
net identifiable assets. The excess cost is amortized on
a straight-line basis over a period of twenty years.
2. Fixed assets:
June 30, 1995
Unaudited
Cost Accumulated Net
Depreciation
(000's) (000's) (000's)
Computers $13,507 $10,141 $ 3,366
Equipment 2,831 1,975 856
Furniture and fixtures 3,096 2,403 693
Leasehold improvements 7,630 2,828 4,802
Software 2,640 1,760 880
$29,704 $19,107 $10,597
March 31, 1995
Cost Accumulated Net
Depreciation
(000's) (000's) (000's)
Computers $13,124 $ 9,557 $ 3,567
Equipment 2,734 1,906 828
Furniture and fixtures 3,095 2,344 751
Leasehold improvements 7,632 2,678 4,954
Software 2,513 1,674 839
$29,098 $18,159 $10,939
March 31, 1994
Cost Accumulated Net
Depreciation
(000's) (000's) (000's)
Computers $10,408 $ 7,160 $ 3,248
Equipment 2,248 1,663 585
Furniture and fixtures 2,795 2,103 692
Leasehold improvements 7,343 2,128 5,215
Software 2,008 1,406 602
$24,802 $14,460 $10,342
Total assets under capital leases included above have a cost
of $2,400,000 at March 31, 1995 (March 31, 1994 -
$2,513,000) and a net book value of $1,721,000 at March 31,
1995 (March 31, 1994 - $1,785,000).
3. Long-term debt:
June 30, March 31,
1995 1995 1994
(Unaudited
(000's) (000's) (000's)
Promissory note payable, interest at
6.8%, principal and interest repayable
at $35,000 monthly $2,428 $2,490 $2,730
Western Economic Diversification
loan, non-interest bearing, repayable
in annual installments commencing June
30, 1996 and ending June 30, 2005 1,230 1,188 802
Term loan, interest at 10.5%, payable
monthly, principal repayable in full on
or before July 15, 1996 3,750 1,850 -
Obligations under capital leases. 2,013 1,667 1,845
9,421 9,195 5,377
Deduct current portion 1,224 1,143 1,043
$8,197 $8,052 $4,334
Long-term debt is secured by a fixed and floating charge on
all Company assets and by charges and chattel mortgages on
specific equipment.
(a) Future minimum lease payments due under capital
leases at March 31, 1995 are as follows:
(000's)
1996 $ 1,023
1997 588
1998 257
Total minimum lease payments 1,868
Less amount representing interest 201
$ 1,667
(b)Principal repayments on long-term debt at March 31,
1995 are as follows:
(000's)
1996 $ 1,143
1997 4,778
1998 657
1999 433
2000 455
Thereafter 1,729
$ 9,195
4. Capital stock:
(a) Common shares:
The authorized capital of the Company consists of an
unlimited number of common shares without par value,
205,000 Class A preference shares of no par value
(issued nil) and 27,000 Class B preference shares of no
par value (issued nil).
(Dollar amounts in thousands)
Common Shares Contributed
Surplus
Number of shares issued, and to be issued
April 1, 1992, net of 82,798 treasury
shares 11,089,843 -
Balance, April 1, 1992 $ 7,557 $ 2,050
Issuance of 181,844 shares for cash 358 -
Adjustment of 79,066 shares to be issued
in exchange for 49.9% interest in EOS - -
Balance, March 31, 1993 7,915 2,050
Issuance of 107,866 shares for cash 205 -
Repurchased 251,100 shares for cash (151) -
Balance, March 31, 1994 7,969 2,050
Issuance of 94,343 shares for cash 185 -
Repurchased 158,600 shares for cash (102) -
Balance, March 31, 1995 8,052 2,050
Issuance of 29,785 shares for cash
(unaudited) 55 -
Balance, June 30, 1995 (unaudited) $ 8,107 $ 2,050
Number of shares issued, and to be issued
June 30, 1995 (unaudited) 11,173,047 -
(b) Share option plans:
Under four share option plans, employees are entitled to acquire
common shares in quantities and prices as determined by the directors
of the Company. The number of common shares available for allocation is
as follows:
June 30, March 31,
1995 1995 1994
(Unaudited)
Reserved at beginning of the period 868,477 935,717 869,806
Exercised during the period (29,785) (33,605) (86,586)
Options allocated during the period 246,000 - 254,000
Options expired during the period (7,135) (33,635) (101,503)
Remainder reserved for future 1,077,557 868,477 935,717
periods
4. Capital stock, continued:
Under the plans, any share options granted must be
exercised and purchased within nine years of being
granted. The remaining 1,077,557 shares have been
allocated for issue at prices ranging from $.90 to $4.40
per common share.
(c) Shares to be issued:
The common shares to be issued are consideration for
the 1992 acquisition of the remaining 10.4% of Earth
Observation Sciences Limited (EOS). At June 30, 1995,
the shareholders of EOS have an option, exercisable at
any time to exchange their interest in EOS for 79,214
shares of the Company. In addition, the Company has the
right to require the exchange of these EOS shares. This
right may be exercised at any time, but will take place
no later than October 31, 2001. As the purchase
consideration is fixed, and the purchase will occur no
later than October 31, 2001, the transaction has been
treated for accounting purposes as an acquisition of
100% of the outstanding shares of EOS.
5. Net earnings per common share:
Basic earnings per common share is computed by dividing net
earnings by the weighted average number of common shares
outstanding during the year. Weighted average common shares
are as follows:
June 30, 1995 (unaudited) 11,148,378
June 30, 1994 (unaudited) 11,158,572
March 31, 1995 11,142,811
March 31, 1994 11,315,231
March 31, 1993 11,292,881
6. Income taxes:
(a) The income tax provision is comprised of the
following:
Three months Year ended,
ended June 30 March 31,
1995 1994 1995 1994 1993
(Unauditied)
(000's) (000's) (000's) (000's) (000's)
Current income tax expense $ 800 $ 797 $ 3,983 $ 2,840 $ 2,022
Deferred income tax expense (7) (19) (481) (283) 155
$ 793 $ 778 $ 3,502 $ 2,557 $ 2,177
6. Income taxes, continued:
(b) Investment tax credits:
At March 31, 1995, the Company had unused investment tax
credits expiring March 31:
(000's)
1996 $ 1,271
1997 1,895
1998 286
1999 865
2000 761
2001 975
2002 2,348
2003 2,000
2004 2,430
2005 2,500
$15,331
(c) A reconciliation of income taxes at statutory
rates to actual income taxes is:
Three months ended Year ended
June 30, March 31,
1995 1994 1995 1994 1993
Unaudited)
Combined basic income tax 45.3% 45.3% 45.3% 44.8% 44.5%
rate
(000's) (000's) (000's) (000's) (000's)
Income tax expense prior to $ 816 $ 801 $ 3,383 $ 2,605 $ 2,201
the following increases
(reductions)
Non-deductible expenditures 18 20 92 50 79
Reduction of deferred tax
credits at rates in excess
of the current period rate (1) (1) (3) (19) (3)
Differing statutory rates
in foreign jurisdictions 25 33 130 70 10
Net foreign losses not tax
effected 45 67 466 294 152
Manufacturing and
processing rate reduction (107) (138) (553) (338) (137)
Other (3) (4) (13) (105) (125)
$ 793 $ 778 $ 3,502 $ 2,557 $2,177
7. Supplementary information to the consolidated statements of
earnings:
(a) Research and development expenses have been
reduced by government assistance as follows:
Three months Year ended
ended June 30, March 31,
1995 1994 1995 1994 1993
(Unaudited)
(000's) (000's) (000's) (000's) (000's)
Research and development $ 1,136 $ 1,128 $ 4,747 $4,319 $ 6,701
expenses
Government assistance (698) (472) (2,366) (898) (2,323)
$ 438 $ 656 $ 2,381 $ 3,421 $ 4,378
The above expenditures represent internally funded
research and development. In addition, during the year
ended March 31, 1995, the Company incurred $29,320,000
(1994 - $29,281,000 1993 - $26,507,000) of research and
development which was performed as part of customer
contracts. Customer contractual research and development
expenditures have been included in cost of sales.
(b) Investment tax credits earned in the year ended
March 31, 1995 on scientific research expenditures have
been applied to reduce the cost of sales by $1,850,000
(1994 - $1,150,000 1993 - $1,050,000).
8. Contingencies and commitments:
(a) At March 31, 1995, the Company was committed under
operating leases for the following minimum annual
rentals:
(000's)
1996 $ 2,926
1997 3,134
1998 3,155
1999 3,159
2000 2,931
Subsequent years 12,440
$27,745
(b)The Company's bankers have issued letters of
guarantee to certain customers of the Company in the
amount of $9,459,000 (1994 - $15,378,000) of which
$2,438,000 (1994 - $6,791,000) is guaranteed by the
Federal Government of Canada. If the Company failed to
perform as agreed with these customers and if the
letters of guarantee were called, the $7,021,000 (1994
- $8,587,000) due the Company's bankers would be secured
by the existing general assignment of book debts and
assignment of inventories. Inventories relating to
contracts with the Government of Canada are excluded
from the assignment. The Federal Government of Canada
is secured under a general recourse agreement, which is
secondary to the Company's bankers.
8. Contingencies and commitments, continued:
(c)Certain government assistance may be repayable based
on future sales levels related to the projects funded.
At March 31, 1995 this amount approximated $12,109,000
(1994 - $10,716,000). Amounts, if any, that may be
repayable would be accounted for in the period in which
conditions that cause repayment arise.
(d)In April 1995, the Company signed a memorandum of
agreement to acquire 300,000 Series B Preferred Shares
of EarthWatch, Incorporated for cash consideration of
U.S. $3,000,000, payable by six equal quarterly
installments. Payments are to commence once a stock
purchase agreement between the parties is finalized.
Each Preferred Share may be converted at any time into a
fully-paid Common Share of EarthWatch, Incorporated on a
one-for-one basis. The Company is accounting for the
investment on the cost basis.
EarthWatch, Incorporated is developing high-resolution
commercial imaging satellites. The first satellite
launch is scheduled for 1996.
9. Segmented information:
The Company's principal business activity relates to the
design, development and integration of computer-based
systems. Sales to customers in foreign countries amounted
to:
(000's)
Three months ended:
June 30, 1995 (unaudited) $ 10,362
June 30, 1994 (unaudited) 12,158
Year ended: March 31, 1995 48,331
March 31, 1994 37,135
March 31, 1993 40,366
10. Acquisition:
On April 6, 1994, the Company acquired 100% of the
outstanding shares of The PSC Communications Group Inc.
(PSC), for cash consideration of $5,176,000 and a maximum of
250,000 common shares of the Company. The issue of shares
is contingent upon PSC achieving certain income levels in
the year ending March 31, 1996.
The total net assets acquired, accounted for using the
purchase method are as follows:
(000's)
Net non-cash assets acquired,
at assigned values:
Working capital $ 215
Fixed assets 188
Net non-cash assets acquired 403
Excess of cost of net assets
over assigned values (goodwill) 5,924
6,327
Bank indebtedness of
acquired operations (1,151)
Total cash consideration $ 5,176
11. Reconciliation of Accounting Principles
The Company historically reports its financial results using
generally accepted accounting principles in Canada ("GAAP-
C"). The major differences between GAAP-C and generally
accepted accounting principles in the United States ("GAAP-
US"), as applied to the Company, are as follows:
Year ended March 31,
1995 1994 1993
(000's) (000's) (000's)
Net Income, as reported $ 3,965 $ 3,257 $ 2,769
GAAP-US adjustments (869) (1,657) (1,088)
Net Income, as adjusted $ 3,096 $ 1,600 $ 1,681
(a) The Company has an approximate 25% equity
investment in RSI that is accounted for under GAAP-C
using the equity method of accounting for investments.
RSI is in its development stage and, pursuant to GAAP-C,
MDA is capitalizing its share of RSI's start-up
operating expenses until the commencement of RSI's
intended operations. Accordingly, the Company's
historical statements of operations do not report as a
current expense the Company's share of RSI's start-up
expenses. GAAP-US would require RSI to charge to
earnings all such operating expenses incurred during
RSI's development stage.
In converting to GAAP-US, the Company's method of
accounting for costs incurred by RSI during the
development stage would be adjusted, resulting in an
increase to research and development expenses of $66,000
and $221,000 for the years ended March 31, 1994 and
1993, respectively. No adjustment was required for the
year ended March 31, 1995.
(b) The Company has historically received Canadian
Government assistance for certain research and
development projects that may be repayable based on
future sales levels or other benefits achieved by MDA as
a result of the projects. In the event that such
projects do not result in future benefits to MDA, the
repayment obligation is relieved. Pursuant to GAAP-C,
the Company's historical financial statements have
recorded the receipt of such government assistance as a
current period reduction in research and development
expenses, disclosing a contingent liability for the
potential repayment obligation. GAAP-US would require
postponing the recognition of a gain contingency until
the contingency is resolved.
In converting to GAAP-US, the Company's method of
accounting for such government assistance would be
adjusted by recording a liability for the government
assistance received (as opposed to a reduction in
current period research and development expenses) in the
amounts (on a pre-tax basis) of $1,598,000, $2,839,000
and $1,549,000 for the years ended March 31, 1995, 1994
and 1993, respectively, reflecting the repayment
obligation.
(c) The Company has historically received investment
tax credits for Canadian tax purposes for certain
qualifying research and development projects. Pursuant
to GAAP-C, the Company's historical financial statements
have recorded the receipt of investment tax credits as a
current period reduction in costs of sales.
In converting to GAAP-US, the Company's method of
accounting for investment tax credits would be adjusted
by recording the credit as a reduction in current period
income tax expense (as opposed to a reduction in current
period costs of sales) of $1,850,000, $1,150,000 and
$1,050,000 for the years ended March 31, 1995, 1994 and
1993, respectively.
ORBITAL SCIENCES CORPORATION
Pro Forma Financial Information
All references to dollars in the following Pro Forma Statements
and the related notes thereto are to U.S. dollars, unless
otherwise noted.
On August 31, 1995, Orbital signed an agreement to acquire MDA
(the "MDA Acquisition"). MDA's Common Shares are publicly traded
on the Vancouver Stock Exchange and The Toronto Stock Exchange.
The MDA Acquisition is expected to be concluded by December 31,
1995.
Pursuant to the terms of the agreement, a newly established,
wholly owned Canadian subsidiary of Orbital will issue
Exchangeable Shares in exchange for all the issued and
outstanding MDA Common Shares. These Exchangeable Shares will
have voting and economic rights with respect to Orbital identical
to Orbital Common Stock, and will be exchangeable into Orbital
Common Stock at the option of the holders, subject to certain
regulatory restrictions. For purposes of the following pro forma
presentation, Orbital has assumed that conversion of the
Exchangeable Shares occurred contemporaneously with closing
(i.e., that Orbital issued Common Stock directly for MDA Common
Shares).
The actual number of shares of Orbital Common Stock issuable
pursuant to the agreement is based on the average closing sales
price of Orbital's Common Stock for the 20 trading days ending on
the date four trading days prior to closing. Assuming an average
closing sales price of $17.25 per share for Orbital Common Stock
and an exchange ratio of .31 Orbital Common Stock to 1.00 MDA
Common Share, Orbital expects to issue approximately 3.9 million
shares of its Common Stock for all of MDA's issued and
outstanding voting common shares and employee share options. As
part of the MDA Acquisition, Orbital will assume all of MDA's
outstanding common share options, which vest in variable amounts
over the next four years. The MDA Acquisition will be accounted
for using the pooling of interests method of accounting and,
accordingly, MDA's assets and liabilities will be carried forward
at their historical recorded amounts.
The following unaudited condensed consolidated pro forma
financial information consists of Unaudited Pro Forma Condensed
Consolidated Statements of Operations for the six months ended
June 30, 1995 and for the year ended December 31, 1994, 1993 and
1992, and the Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 1995 (collectively, the "Pro Forma
Statements"). The Unaudited Pro Forma Condensed Consolidated
Statement of Operations for the six months ended June 30, 1995
gives effect to the MDA Acquisition as if it had occurred on
January 1, 1995. The Unaudited Pro Forma Condensed Consolidated
Statements of Operations for the years ended December 31, 1994,
1993 and 1992 give effect to the MDA Acquisition as if it had
occurred on January 1, 1992. The Unaudited Pro Forma Condensed
Consolidated Balance Sheet gives effect to the MDA Acquisition as
if it had occurred on June 30, 1995.
ORBITAL SCIENCES CORPORATION
Pro Forma Financial Information
Management believes that, on the basis set forth herein, the Pro
Forma Statements reflect a reasonable estimate of the MDA
Acquisition based on currently available information. The pro
forma financial data do not purport to represent what the
Company's financial position or results of operations would
actually have been had the MDA Acquisition in fact occurred on
June 30, 1995, January 1, 1995 or January 1, 1992, or to project
the Company's financial position or results of operations for any
future date or period indicated. The Pro Forma Statements should
be read in conjunction with the consolidated financial statements
of each of the Company and MDA and related notes thereto.
ORBITAL SCIENCES
CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED
BALANCE SHEET
JUNE 30, 1995
(thousands)
Historical Historical Conversion Converted Pro Forma Pro Forma
Orbital MacDonald Adjustments Historical Adjustments Results
Sciences Dettwiler (B) Debit MacDonald (US$)
Corporation and (Credit) Dettwiler and
(US$) Associates Associates Ltd.
Ltd. (C) (C) (US$)
(C$)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,377 $ 16,845 $ (4,571) 1 $ 12,274 $ 30,651
Short-term investments 21,440 - - - 21,440
Receivables, net 83,376 22,518 (6,110) 1 16,408 99,784
Inventories, net 28,320 817 (222) 1 595 28,915
Other current assets 8,145 1,468 (399) 1 1,069 9,214
Total current assets 159,658 41,648 30,346 190,004
PROPERTY, PLANT AND 101,882 10,597 (2,875) 1 7,722 109,604
EQUIPMENT, net
INVESTMENTS IN AFFILIATES, 64,093 586 (586) 2(a) - 64,093
net
EXCESS OF PURCHASE PRICE 67,464 7,865 (2,134) 1 5,731 73,195
OVER NET ASSETS ACQUIRED,
net
DEPOSITS AND OTHER ASSETS 15,737 1,362 19 2(b) 1,006 16,743
TOTAL ASSETS $ 408,834 $ 62,058 $ 44,805 $ 453,639
ORBITAL SCIENCES
CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED
BALANCE SHEET
JUNE 30, 1995
(thousands)
Historical Historical Conversion Converted Pro Forma Pro Forma
Orbital MacDonald, Adjustments Historical Adjustments Results
Sciences Dettwiler (B) Debit MacDonald, (US$)
Corporation and (Credit) Dettwiler and
(US$) Associates Associates Ltd.
Ltd. (C) (C) (US$)
(C$)
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings and $ 11,752 $ 1,224 $ 332 1 $ 892 $ 12,644
current portion of long-
term obligations
Accounts payable and 43,463 11,803 3,203 1 8,600 52,063
accrued expenses
Deferred revenue and other 11,557 19,813 5,377 1 14,436 25,993
liabilities
Total current liabilities 66,772 32,840 23,928 90,700
LONG-TERM OBLIGATIONS, 95,203 8,197 (13,382) 2(b) 15,724 110,927
net of current portion 5,855 1
DEFERRED INCOME TAXES
AND OTHER LIABILITIES 11,245 - - 11,245
TOTAL LIABILITIES 173,220 41,037 39,652 212,872
STOCKHOLDERS' EQUITY
Preferred Stock - - - -
Common Stock 227 8,107 1,117 1 6,990 (6,990) A 266
39 A
Cumulative Translation - 315 3,886 1 (3,571) (3,571)
Adjustment (1)
Other equity accounts 235,387 12,599 586 2(a) 1,734 (1,734) A 244,072
(19) 2(b) 8,685 A
TOTAL STOCKHOLDERS EQUITY 235,614 21,021 5,153 240,767
TOTAL LIABILITIES AND $ 408,834 $ 62,058 $ 44,805 $ 453,639
STOCKHOLDERS' EQUITY
ORBITAL SCIENCES
CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30,
1995
(in thousands, except share data)
Historical Historical Conversion Converted Pro Forma Pro Forma
Orbital MacDonald, Adjustments Historical Adjustments Results
Sciences Dettwiler (B) Debit MacDonald, (US$)
Corporation and (Credit) Dettwiler and
(US$) Associates Associates Ltd.
Ltd. (C) (C) (US$)
(C$)
Revenues $ 132,930 $ 52,503 $ 14,692 1 $ 37,811 $ 170,741
Costs of Goods Sold 97,293 34,519 1,234 2(c) 25,750 123,043
Gross Profit 35,637 17,984 12,061 47,698
Research and Development 8,764 1,747 442 2(b) 1,570 10,334
Expenses
Selling, General & 22,707 11,099 (3,097) 1 8,002 30,709
Administrative Expenses
Amortization of Excess of 1,400 219 (61) 1 158 1,558
Purchase Price Over Net
Assets Acquired
Income (Loss) from Operations 2,766 4,919 2,331 5,097
Net Interest Income (1,887) 249 69 1 180 (1,707)
(Expense)
Equity in Earnings of 362 - - 362
Affiliate
Income Before Provision 1,241 5,168 2,511 3,752
for Income Taxes
Provision for Income Taxes - 2,491 (220) 2(b) 745 745
Net Income (F) $ 1,241 $ 2,677 $ 1,766 3,007
Net Income per Common and $ 0.06 $ 0.12 D
Common Equivalent Share:
Shares Used in Computing 20,954,359 3,920,290 A 24,874,649 D
Net Income per Common and
Common Equivalent Share
Net Income per Common
Share Assuming
Full Dilution: $ 0.06 $ 0.12 D
Shares Used in Computing 24,863,449 3,920,290 A 28,783,739 D
Net Income per Common
Share, Assuming Full
Dilution
ORBITAL SCIENCES
CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED
DECEMBER 31, 1994
(thousands, except share data)
Historical Historical Conversion Converted Pro Forma Pro Forma
Orbital MacDonald, Adjustments Historical Adjustments Results
Sciences Dettwiler (B) Debit MacDonald, (US$)
Corporation and (Credit) Dettwiler and
(US$) Associates Associates Ltd.
Ltd. (C) (C) (US$)
(C$)
Revenues $ 221,946 $ 109,955 $ 30,325 1 $ 79,630 $ 301,576
Costs of Goods Sold 157,066 80,063 1,850 2(c) 59,351 216,417
(22,562) 1
Gross Profit 64,880 29,892 20,279 85,159
Research and Development 14,389 2,381 1,598 2(b) 2,870 17,259
Expenses
(1,109) 1
Selling, General & 39,749 19,859 (5,478) 1 14,381 54,130
Administrative Expenses
Amortization of Excess of 2,045 435 (120) 1 315 2,360
Purchase Price Over Net
Assets Acquired
Income from Operations 8,697 7,217 2,713 11,410
Net Interest Income 37 250 69 1 181 218
(Expense)
Equity in Earnings (1,264) - - (1,264)
(Losses) of Affiliate
Income Before Provision 7,470 7,467 2,894 10,364
for Income Taxes
Provision for Income Taxes 2,081 3,502 (729) 2(b) 663 2,744
Net Income $ 5,389 $ 3,965 $ 2,231 $ 7,620
Net Income per Common and $ 0.28 $ 0.33 D
Common Equivalent Share:
Shares Used in Computing 19,104,427 3,920,290 A 23,024,717 D
Net Income per Common and
Common Equivalent Share
Net Income per Common $ 0.28
Share, Assuming Full
Dilution:
Shares Used in Computing 22,222,210 3,920,290 A 27,142,500 D
Net Income per Common
Share, Assuming Full
Dilution
ORBITAL SCIENCES
CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED
DECEMBER 31, 1993
(thousands, except share data)
Historical Historical Conversion Converted Pro Forma Pro Forma
Orbital MacDonald, Adjustments Historical Adjustments Results
Sciences Dettwiler (B) Debit MacDonald, (US$)
Corporation and (Credit) Dettwiler and
(US$) Associates Associates Ltd.
Ltd. (C) (C) (US$)
(C$)
Revenues $ 223,087 $ 101,417 $ 24,320 1 $ 77,097 $ 300,184
Costs of Goods Sold 170,204 75,294 1,150 2(c) 58,085 228,289
(18,359) 1
Gross Profit 52,883 26,123 19,012 71,895
Research and Development 14,885 3,421 66 2(a) 4,818 19,703
Expenses
2,839 2(b)
(1,508) 1
Selling, General & 25,897 16,769 (3,991) 1 12,778 38,675
Administrative Expenses
Amortization of Excess of 1,537 127 (30) 1 97 1,634
Purchase Price Over Net
Assets Acquired
Income from Operations 10,564 5,806 1,319 11,883
Net Interest Income 356 8 3 1 5 361
(Expense)
Equity in Earnings (2,436) - - (2,436)
(Losses) of Affiliate
Income Before Provision 8,484 5,814 1,324 9,808
for Income Taxes
Provision for Income Taxes 2,288 2,557 (1,248) 2(b) 115 2,403
(1,150) 2(c)
(44) 1
Net Income (F) $ 6,196 $ 3,257 $ 1,209 $ 7,405
Net Income per Common and $ 0.43 $ 0.40 D
Common Equivalent Share:
Shares Used in Computing 14,641,854 3,920,290 A 18,562,144 D
Net Income per Common and
Common Equivalent Share
Net Income per Common $ 0.38 $ 0.37 D
Share, Assuming Full
Dilution:
Shares Used in Computing 18,256,276 3,920,290 A 22,176,566 D
Net Income per Common
Share, Assuming Full
Dilution
ORBITAL SCIENCES
CORPORATION
UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED
DECEMBER 31, 1992
(thousands, except share data)
Historical Historical Conversion Converted Pro Forma Pro Forma
Orbital MacDonald, Adjustments Historical Adjustments Results
Sciences Dettwiler (B) Debit MacDonald, (US$)
Corporation and (Credit) Dettwiler and
(US$) Associates Associates Ltd.
Ltd. (C) (C) (US$)
(C$)
Revenues $ 204,190 $ 85,156 $ 16,175 1 $ 68,981 $ 273,171
Costs of Goods Sold 158,661 59,705 1,050 2(c) 49,173 207,834
(11,582) 1
Gross Profit 45,529 25,451 19,808 65,337
Research and Development 10,586 4,378 221 2(a) 4,979 15,565
Expenses
1,549 2(b)
(1,169) 1
Selling, General & 28,615 16,137 (3,029) 1 13,108 41,723
Administrative Expenses
Amortization of Excess of 1,495 136 (25) 1 111 1,606
Purchase Price Over Net
Assets Acquired
Income (Loss) from 4,833 4,800 1,610 6,443
Operations
Net Interest Income 738 146 24 1 122 860
(Expense)
Income (Loss) Before
Provision for Income 5,571 4,946 1,732 7,303
Taxes
Provision (Benefit) for 1,630 2,177 (682) 2(b) 367 1,997
Income Taxes
(1,050) 2(c)
(78) 1
Net Income $ 3,941 $ 2,769 $ 1,365 $ 5,306
Net Income per Common
and Common Equivalent $ 0.27 $ 0.29 D
Share:
Shares Used in Computing 14,404,933 3,920,290 A 18,325,223 D
Net Incomeper Common and
Common Equivalent Share
Net Income per Common $ 0.27 $ $0.29 D
Share, Assuming Full
Dilution:
Shares Used in Computing 14,404,933 3,920,290 A 18,325,223 D
Net Income per Common
Share, Assuming Full
Dilution
ORBITAL SCIENCES CORPORATION
Notes to Pro Forma Adjustments to the
Unaudited Pro Forma Condensed
Consolidated Financial Statements
(A) On August 31, 1995, the Company signed an agreement to
acquire MDA. The MDA Acquisition is expected to be
concluded by December 31, 1995. The Pro Forma Statements
assume Orbital issues approximately 3.9 million shares of
its Common Stock for all of MDA's issued and outstanding
voting Common Shares and employee share options. As part of
the MDA Acquisition, Orbital will assume all of MDA's
outstanding employee share options, which vest in variable
amounts over the next four years.
The MDA Acquisition will be accounted for using the pooling
of interests method of accounting and, accordingly, the
issuance of the Company's Common Stock was recorded in an
amount equal to MDA's historical net assets at June 30,
1995.
(B) The Pro Forma Statements convert MDA's historical
financial statements to conform to generally accepted
accounting standards in the United States and the provisions
of Regulation S-X promulgated under the Securities Exchange
Act of 1934. Certain reclassifications have been made to
the historical MDA financial statements to conform to the
historical Orbital financial statement presentation.
(C) The Company historically presented its consolidated
financial statements on a calendar year basis. MDA
historically presented its consolidated financial statements
on a fiscal year March 31 basis.
MDA's historical consolidated financial statements included
in the pro forma condensed consolidated financial statements
for the six months ended June 30, 1995 have been recast to
include the three-month period ended March 31, 1995 and the
three-month period ended June 30, 1995, to coincide with the
Company's calendar year basis of presentation.
The pro forma condensed consolidated financial statements
for the calendar years ended December 31, 1994, 1993 and
1992 include MDA's historical financial statements for its
fiscal years ended March 31, 1995, 1994 and 1993 and
Orbital's historical consolidated financial statements for
its calendar years ended December 31, 1994, 1993 and 1992.
The effect of recasting MDA's historical consolidated
financial statements as presented in the pro forma condensed
consolidated financial statements for the six months ended
June 30, 1995 has been charged to retained earnings as of
January 1, 1995 in the Pro Forma Financial Statements. The
charge to retained earnings eliminates the effect of
including MDA's results of operations for the three-month
period ending March 31, 1995 of $1,050,000 (after giving
effect to the conversions and translations described in
these notes) in both the pro forma condensed consolidated
statements of operations for the six months ending June 30,
1995 and for the year ending December 31, 1994. MDA's
revenues for the three-month period ended March 31, 1995
were approximately $20,634,000.
ORBITAL SCIENCES CORPORATION
Notes to Pro Forma Adjustments to the
Unaudited Pro Forma Condensed
Consolidated Financial Statements
(D) Pro forma income per common and common equivalent share
and pro forma income per common share assuming full dilution
are both calculated based on the aggregate of the weighted
average number of common and common equivalent shares of
both Orbital and MDA, adjusted to equivalent shares of the
combined company for all periods presented, assuming all MDA
outstanding stock options are outstanding and "in the money"
for all periods presented. Pro forma income per common
share assuming full dilution for the periods presented also
includes the effects of an assumed conversion of the
Company's convertible subordinated debentures (issued, and
assumed converted, on February 25, 1993), after giving
effect to all net income adjustments that would result from
the assumed conversion.
(E) Approximately $3,000,000 of nonrecurring charges
directly attributable to the MDA Acquisition, including
legal, accounting and investment banking fees, will be
included in Orbital's consolidated statement of operations
in the period the MDA Acquisition is consummated, currently
expected to be during the quarter ending December 31, 1995.
Such charges were not considered in the Unaudited Pro Forma
Condensed Consolidated Statements of Operations.
(F) The Company adopted SFAS 121 as of January 1, 1995.
The Company's adoption of SFAS 121 resulted in a cumulative
effect adjustment of $4,160,000 which decreased net income
for the six-month period ended June 30, 1995. The
cumulative effect of the change in accounting principle is
not included in the accompanying Unaudited Pro Forma
Condensed Consolidated Statement of Operations for the six
months ended June 30, 1995.
The Company adopted SFAS 109 as of January 1, 1993. The
Company's adoption of SFAS 109 resulted in a cumulative
effect adjustment of $200,000 which increased net income for
the year ended December 31, 1993. The cumulative effect of
the change in accounting principle is not included in the
accompanying Unaudited Pro Forma Condensed Consolidated
Statement of Operations for the twelve months ended December
31, 1993.
ORBITAL SCIENCES CORPORATION
Notes to Conversion Adjustments to the
Unaudited Pro Forma Condensed
Consolidated Financial Statements
(1) MDA operates with, and has historically reported its
financial results using, the Canadian dollar as its
functional currency. Orbital operates with, and reports its
financial results using, the U.S. dollar. Accordingly, the
Pro Forma Statements report the consolidated entity's
financial results using the U.S. dollar as its functional
currency, and MDA's historical financial results have
accordingly been translated to the U.S. dollar using the
appropriate exchange rates for the appropriate periods as
follows (Canadian dollars to U.S. dollars):
Date or Period Exchange Rate
at June 30, 1995 1.37 to 1.00
for the six months ended June 30, 1995 1.38 to 1.00
for the year ended December 31, 1994 1.38 to 1.00
for the year ended December 31, 1993 1.31 to 1.00
for the year ended December 31, 1992 1.23 to 1.00
The economic effects of an exchange rate change on an
operation that is relatively self-contained and integrated
within a foreign country relate to the net investment in
that operation. Translation adjustments that arise from
consolidating that foreign operation do not impact cash
flows and are not included in net income. Since MDA is a
self-contained entity integrated within Canada, the impacts
of cumulative translation adjustments that arise from
consolidating MDA with Orbital have been excluded from
determining net income and have been reported within
stockholders' equity.
(2) MDA has historically reported its financial results
using generally accepted accounting principles in Canada
("GAAP-C"). Orbital reports its financial results using
generally accepted accounting principles in the United
States ("GAAP-US"). The Pro Forma Statements report the
consolidated entity's financial results using GAAP-US.
Accordingly, MDA's historical financial results have been
converted to GAAP-US.
The major differences between GAAP-C and GAAP-US, as it
applies to MDA, are as follows:
(a) MDA has an approximate 25% equity investment in a
Canadian company ("Investee") that is accounted for under
GAAP-C using the equity method of accounting for
investments. Investee is in its development stage and,
pursuant to GAAP-C, MDA's historical statements of
operations do not report as a current expense MDA's share of
Investee's start-up expenses. GAAP-US would require MDA to
charge to earnings all such operating expenses incurred
during Investee's development stage. In converting to GAAP-
US, the Pro Forma Statements adjust MDA's method of
accounting for costs
ORBITAL SCIENCES CORPORATION
Notes to Conversion Adjustments to the
Unaudited Pro Forma Condensed
Consolidated Financial Statements
incurred by Investee during the development stage, resulting
in a cumulative reduction in the carrying amount of MDA's
investment.
(b) MDA has historically received Canadian Government
assistance for certain research and development projects
that may be repayable based on future sales levels or other
benefits achieved by MDA as a result of the projects. In
the event that such projects do not result in future
benefits to MDA, the repayment obligation is relieved.
Pursuant to GAAP-C, MDA's historical financial statements
have recorded the receipt of such government assistance as a
current period reduction in research and development
expenses, disclosing a contingent liability for the
potential repayment obligation. In converting to GAAP-US,
the Pro Forma Statements adjust MDA's method of accounting
for such government assistance by recording a liability for
the government assistance received (as opposed to a
reduction in current period research and development
expenses) reflecting the repayment obligation. The amount
of government assistance will be recorded as an adjustment
to research and development expenses in the period the
contingency is resolved.
(c) MDA has historically received investment tax credits
for Canadian tax purposes for certain qualifying research
and development projects. Pursuant to GAAP-C, MDA's
historical financial statements have recorded the receipt of
investment tax credits as a current period reduction in
costs of sales. In converting to GAAP-US, the Pro Forma
Statements adjust MDA's method of accounting for investment
tax credits by recording the credit as a reduction in
current period income tax expense (as opposed to a reduction
in current period costs of sales).
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
ORBITAL SCIENCES CORPORATION
DATED: November __, 1995 By /s/ David W. Thompson
David W. Thompson,
President and Chief Executive
Officer