-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B8nm4jXLvWemIbnI3yw0PrQ6gnZ6frVnEetIhYANO6SOHTTUIBzvA50EVXyW7laK VZYuD4Gi49Hi8ro07zVo/w== /in/edgar/work/20000629/0000950133-00-002756/0000950133-00-002756.txt : 20000920 0000950133-00-002756.hdr.sgml : 20000920 ACCESSION NUMBER: 0000950133-00-002756 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 20000629 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ORBITAL SCIENCES CORP /DE/ CENTRAL INDEX KEY: 0000820736 STANDARD INDUSTRIAL CLASSIFICATION: [3812 ] IRS NUMBER: 061209561 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-14279 FILM NUMBER: 665324 BUSINESS ADDRESS: STREET 1: 21700 ATLANTIC BLVD CITY: DULLES STATE: VA ZIP: 20166 BUSINESS PHONE: 7034065000 MAIL ADDRESS: STREET 1: 21700 ATLANTIC BLVD STREET 2: 21700 ATLANTIC BLVD CITY: DULLES STATE: VA ZIP: 20166 FORMER COMPANY: FORMER CONFORMED NAME: ORBITAL SCIENCES CORP II DATE OF NAME CHANGE: 19900212 10-Q/A 1 e10-qa.txt FORM 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q/A AMENDMENT NO. 1 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended SEPTEMBER 30, 1997 ORBITAL SCIENCES CORPORATION Commission file number 0-18287 DELAWARE 06-1209561 - ---------------------------------------------------------- ------------------------------------------------- (State of Incorporation) (IRS Identification number) 21700 ATLANTIC BOULEVARD DULLES, VIRGINIA 20166 (703) 406-5000 - ---------------------------------------------------------- ------------------------------------------------- (Address of principal executive offices) (Telephone number)
The registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. As of October 31, 1997, 32,334,230 shares of the registrant's common stock were outstanding. 2 EXPLANATORY NOTE Orbital Sciences Corporation ("Orbital") has determined to restate its annual consolidated financial statements and its condensed consolidated quarterly financial statements for 1997, 1996 and 1995. This amendment includes in Item 1 such restated condensed consolidated financial statements and related footnotes thereto for the three and nine months ended September 30, 1997, and other information relating to such restated condensed consolidated financial statements. Item 2 includes Orbital's amended and restated discussion and analysis of financial condition and results of operations. Except for Items 1 and 2 and Exhibits 11 and 27, no other information included in the original report on Form 10-Q is amended by this amendment. For current information regarding risks, uncertainties and other factors that may affect Orbital's future performance, please see "Outlook: Issues and Uncertainties" included in Item 7 of Orbital's Annual Report on Form 10-K for the year ended December 31, 1999. - -------------------------------------------------------------------------------- 2 3 PART 1 FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ORBITAL SCIENCES CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED; IN THOUSANDS, EXCEPT SHARE DATA)
SEPTEMBER 30, DECEMBER 31, 1997 1996 ---------------- --------------- (RESTATED) (RESTATED) ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 19,123 $ 27,923 Short-term investments, at market 19,888 5,827 Receivables, net 161,526 140,973 Inventories, net 44,089 27,159 Deferred income taxes and other assets 7,825 5,952 --------- --------- TOTAL CURRENT ASSETS 252,451 207,834 PROPERTY, PLANT AND EQUIPMENT, at cost, less accumulated depreciation and amortization of $76,468 and $70,907, respectively 116,521 126,888 INVESTMENTS IN AFFILIATES 151,765 88,394 GOODWILL, less accumulated amortization of $18,655 and $15,972, respectively 107,237 69,512 DEFERRED INCOME TAXES AND OTHER ASSETS 30,309 16,985 --------- --------- TOTAL ASSETS $ 658,283 $ 509,613 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Short-term borrowings and current portion of long-term obligations $ 26,914 $ 38,969 Accounts payable 38,369 26,611 Accrued expenses 66,785 40,019 Deferred revenues 32,206 31,180 --------- --------- TOTAL CURRENT LIABILITIES 164,274 136,779 LONG-TERM OBLIGATIONS, net of current portion 181,729 35,326 OTHER LIABILITIES 7,599 15,523 --------- --------- TOTAL LIABILITIES 353,602 187,628 NON-CONTROLLING INTERESTS IN NET ASSETS OF CONSOLIDATED SUBSIDIARIES (3,452) (1,810) COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred Stock, par value $.01; 10,000,000 shares authorized Series A Special Voting Preferred Stock, one share authorized and outstanding -- -- Class B Preferred Stock, 10,000 shares authorized and outstanding -- -- Common Stock, par value $.01; 80,000,000 shares authorized, 32,269,326 and 32,160,598 shares outstanding, after deducting 15,735 shares held in treasury 323 322 Additional paid-in capital 325,394 323,592 Unrealized gains on short-term investments 44 14 Cumulative translation adjustment (4,209) (3,681) Retained earnings (deficit) (13,419) 3,548 --------- --------- Total stockholders' equity 308,133 323,795 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 658,283 $ 509,613 ========= =========
See accompanying notes to condensed consolidated financial statements. - -------------------------------------------------------------------------------- 3 4 ORBITAL SCIENCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED; IN THOUSANDS, EXCEPT SHARE DATA)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, ------------------------------------- 1997 1996 ---------------- ---------------- (RESTATED) (RESTATED) REVENUES $ 163,310 $ 119,903 Costs of goods sold 117,669 89,535 ------------ ------------ GROSS PROFIT 45,641 30,368 Research and development expenses 7,968 4,053 Selling, general and administrative expenses 26,334 18,947 Amortization of goodwill 956 794 ------------ ------------ INCOME FROM OPERATIONS 10,383 6,574 Net investment income (expense) (878) 219 Equity in losses of affiliates (7,837) (2,653) Non-controlling interests in losses of consolidated subsidiaries 533 396 ------------ ------------ INCOME BEFORE PROVISION FOR INCOME TAXES 2,201 4,536 Provision for income taxes 1,200 454 ------------ ------------ NET INCOME $ 1,001 $ 4,082 ============ ============ NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE $ 0.03 $ 0.14 ============ ============ Shares used in computing net income per common and common equivalent share 33,347,734 29,803,856 ============ ============ NET INCOME PER COMMON SHARE, ASSUMING FULL DILUTION $ 0.03 $ 0.14 ============ ============ Shares used in computing net income per common share, assuming full dilution 34,492,637 31,663,151 ============ ============
See accompanying notes to condensed consolidated financial statements. - -------------------------------------------------------------------------------- 4 5 ORBITAL SCIENCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED; IN THOUSANDS, EXCEPT SHARE DATA)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, ------------------------------------- 1997 1996 ---------------- --------------- (RESTATED) (RESTATED) REVENUES $ 366,846 $ 339,767 Costs of goods sold 268,748 244,000 ------------ ------------ GROSS PROFIT 98,098 95,767 Research and development expenses 23,591 16,491 Selling, general and administrative expenses 67,899 58,678 Amortization of goodwill 2,439 2,374 ------------ ------------ INCOME FROM OPERATIONS 4,169 18,224 Net investment income (expense) (132) (402) Equity in losses of affiliates (9,905) (7,591) Non-controlling interests in losses of consolidated subsidiaries 1,717 994 ------------ ------------ INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (4,151) 11,225 Provision for income taxes 12,816 1,121 ------------ ------------ NET INCOME (LOSS) $ (16,967) $ 10,104 ============ ============ NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE $ (0.52) $ 0.36 ============ ============ Shares used in computing net income (loss) per common and common equivalent share 32,941,540 28,176,215 ============ ============ NET INCOME (LOSS) PER COMMON SHARE, ASSUMING FULL DILUTION $ (0.52) $ 0.36 ============ ============ Shares used in computing net income (loss) per common share, assuming full dilution 32,941,540 31,575,334 ============ ============
See accompanying notes to condensed consolidated financial statements. - -------------------------------------------------------------------------------- 5 6 ORBITAL SCIENCES CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED; IN THOUSANDS)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, ------------------------------ 1997 1996 ------------- ------------- (RESTATED) (RESTATED) CASH FLOWS FROM OPERATING ACTIVITIES: NET INCOME (LOSS) $ (16,967) $ 10,104 ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO NET CASH PROVIDED BY OPERATING ACTIVITIES: Depreciation and amortization expense 18,433 17,829 Equity in losses of affiliates 9,905 7,591 Non-controlling interests in losses of consolidated subsidiaries (1,717) (994) Deferred tax asset valuation adjustment 10,898 -- Gain on sale of fixed assets and investments -- (17) Foreign currency translation adjustment (528) (716) CHANGES IN ASSETS AND LIABILITIES: Increase in current and other non-current assets (5,636) (11,847) Decrease in current and other non-current liabilities (12,528) (21,776) --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,860 174 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (22,334) (20,781) Investments in satellite systems -- (8,704) Proceeds from sales of fixed assets 34,699 -- Payments for business combinations (44,116) -- Payments, purchases, sales of available for-sale maturities, net (14,028) 9,333 Investments in affiliates (88,507) (20,917) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (134,286) (41,069) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Short-term borrowings, net of (repayments) (14,710) 38,200 Principal payments on long-term obligations (22,690) (6,206) Net proceeds from issuances of long-term obligations 159,223 -- Fees associated with conversion of debentures -- (2,571) Net proceeds from issuances of common stock to employees 1,803 1,406 --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 123,626 30,829 --------- --------- NET DECREASE IN CASH AND CASH EQUIVALENTS (8,800) (10,066) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 27,923 15,317 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 19,123 $ 5,251 ========= =========
See accompanying notes to condensed consolidated financial statements. - -------------------------------------------------------------------------------- 6 7 ORBITAL SCIENCES CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited interim financial information reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation thereof. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the Securities and Exchange Commission (the "Commission"). Although the company believes that the disclosures provided are adequate to make the information presented not misleading, these unaudited interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the footnotes thereto included in the company's Annual Report on Form 10-K/A for the year ended December 31, 1996. Operating results for the three- and nine-month periods ended September 30, 1997 are not necessarily indicative of the results expected for the full year. Orbital Sciences Corporation is hereafter referred to as "Orbital" or the "company." (1) RESTATEMENT Management has determined to restate its previously issued consolidated financial statements for 1997 and 1996 with respect to its accounting treatment for certain matters, including among other things, its accounting for equity method investments, capitalized costs and certain other matters. Restatement matters for equity method accounting include adjustments related to: revenue recognized on sales to affiliates, preferred dividends paid to other affiliate investors, calculation of ownership interest and capitalized interest on equity method investments. For a full description of the restatement matters, refer to Notes 1A and 14 to the company's consolidated financial statements included in the company's 1997 Annual Report on Form 10-K/A previously filed with the Commission. The effect of the restatement matters on the company's previously reported revenues, gross profit, income (loss) from operations, net income (loss) and net income (loss) per common and dilutive share for the periods is as follows:
(in thousands, except share data) QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------- ------------------- 1997 RESTATED: Revenues $ 163,310 $ 366,846 Gross profit 45,641 98,098 Income from operations 10,383 4,169 Net income (loss) 1,001 (16,967) Net income (loss) per common share 0.03 (0.52)
- -------------------------------------------------------------------------------- 7 8
QUARTER ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ----------------- ------------------- Net income (loss) per common share, assuming dilution 0.03 (0.52) 1997 AS PREVIOUSLY REPORTED: Revenues $ 164,670 $ 429,008 Gross profit 46,015 119,366 Income from operations 12,249 29,301 Net income 6,130 16,827 Net income per common share 0.18 0.51 Net income per common share, assuming dilution 0.18 0.50 1996 RESTATED: Revenues $ 119,903 $ 339,767 Gross profit 30,368 95,767 Income from operations 6,574 18,224 Net income 4,082 10,104 Net income per common share 0.14 0.36 Net income per common share, assuming dilution 0.14 0.36 1996 AS PREVIOUSLY REPORTED: Revenues $ 119,571 $ 340,977 Gross profit 31,875 97,075 Income from operations 7,124 20,320 Net income 4,456 11,423 Net income per common share 0.15 0.41 Net income per common share, assuming dilution 0.15 0.41
(2) INVENTORIES Inventories consist of components inventory, work-in-process inventory and finished goods inventory and are generally stated at the lower of cost or net realizable value on a first-in, first-out, or specific identification basis. Components inventory consists primarily of components and raw materials purchased to support future production efforts. Work-in-process inventory consists primarily of (i) costs incurred under U.S. Government fixed-price contracts accounted for using the percentage of completion method of accounting applied on a units of delivery basis and (ii) partially assembled commercial products, and generally includes direct production costs and certain allocated indirect costs (including an allocation of general and administrative costs). Work-in-process inventory has been reduced by contractual progress payments received. Finished goods inventory consists of fully assembled commercial products awaiting shipment. - -------------------------------------------------------------------------------- 8 9 (3) COMMON STOCK AND INCOME PER SHARE Income per common and common equivalent share ("primary EPS") is calculated using the weighted average number of common and common equivalent shares, to the extent dilutive, outstanding during the periods. Income per common share assuming full dilution ("fully-diluted EPS") is calculated using the weighted average number of common and common equivalent shares outstanding during the periods plus the effects of an assumed conversion of the company's 5% convertible subordinated notes due October 2002, to the extent dilutive (see note 8). Any reduction of less than three percent in the aggregate has not been considered dilutive in the calculation and presentation of fully-diluted EPS. Subsidiary stock options that enable holders to obtain the subsidiary's common stock pursuant to stock option plans are included in computing the subsidiary's earnings per share, to the extent dilutive. Those earnings per share data are included in the company's consolidated per share computations based on the company's holdings of the subsidiary's stock (see note 9). (4) INCOME TAXES The company has recorded its interim income tax provision based on estimates of the company's effective tax rate expected to be applicable for the full fiscal year. Estimated effective rates recorded during interim periods may be periodically revised, if necessary, to reflect current estimates. (5) RECLASSIFICATIONS Certain reclassifications have been made to the 1996 condensed consolidated financial statements to conform to the 1997 condensed consolidated financial statement presentation. (6) INVESTMENTS IN AFFILIATES On May 8, 1997, the company's then-subsidiary, Orbital Imaging Corporation ("ORBIMAGE"), completed a private placement of 300,100 shares of 12% Series A Cumulative Convertible Preferred Stock (the "Preferred Stock"), raising gross proceeds of $30,010,000. Also on that date, Orbital purchased ORBIMAGE common stock, bringing its total equity invested to approximately $60,767,000. On July 3, 1997, ORBIMAGE sold an additional 72,605 shares of Preferred Stock, raising an additional $7,260,500. Each share of Preferred Stock entitles its holder to receive annual cumulative dividends of 12% per annum payable in cash or additional shares of Preferred Stock, at the discretion of ORBIMAGE's Board of Directors. Pursuant to the terms of this transaction, Orbital owns approximately 75% of the total voting interest in ORBIMAGE after giving effect to the conversion of ORBIMAGE's convertible preferred stock. Orbital no longer controls ORBIMAGE's financial and operational affairs as a result of certain rights provided to ORBIMAGE's preferred stockholders. Consequently, the company no longer consolidates ORBIMAGE's financial results, but rather uses the equity method of accounting for its investment in, and earnings or losses attributable to ORBIMAGE. Pursuant to a firm-fixed price contract with ORBIMAGE, Orbital is the primary supplier to ORBIMAGE of imaging satellites, launch services and ground systems. Additionally, Orbital provides certain administrative support to ORBIMAGE on a cost-reimbursable - -------------------------------------------------------------------------------- 9 10 basis. During the three- and nine-months ended September 30, 1997, Orbital recorded sales of approximately $18,806,000 pursuant to this contract. ORBIMAGE is capitalizing substantially all its purchases from Orbital. Orbital recorded no profits on sales to ORBIMAGE during the three- and nine-months ended September 30, 1997. (7) BUSINESS COMBINATIONS CTA INCORPORATED ACQUISITION. On August 15, 1997, Orbital acquired substantially all the assets, including all the stock of certain subsidiaries, and certain liabilities relating to the satellite manufacturing and communications services businesses of CTA INCORPORATED ("CTA"). The financial results of the acquired businesses have been included in the company's consolidated results from August 15, 1997 through September 30, 1997. As consideration, Orbital (i) paid approximately $13,000,000 in cash, including certain post-closing adjustments, and (ii) retired $27,000,000 of outstanding debt related to the acquired business. The company accounted for the acquisition using the purchase method of accounting. The purchase price exceeded fair value of the acquired net assets by approximately $40,533,000. This excess is being amortized on a straight-line basis over 30 years. During the five years following the closing, CTA will also be entitled to receive (i) royalties from $500,000 to $3,000,000 for sales by the company of certain geostationary satellites after five such satellites have been sold by the company, and (ii) 3% of cumulative revenues in excess of $50,000,000 accrued during such period from the terrestrial wireless cargo management system acquired from CTA. The following supplemental financial information presents the consolidated results of operations on a pro forma basis, as though the company had acquired CTA on January 1, 1996 (in thousands, except share data):
Nine Months Nine Months 9/30/97 9/30/96 ---------------- ---------------- (Restated) (Restated) Revenue $ 414,911 $ 404,408 Net income (loss) (15,643) 9,688 Earnings (loss) per share: Primary (0.49) 0.34 Fully diluted (0.50) 0.34
ROCKWELL INTERNATIONAL CORPORATION ACQUISITION. On July 31, 1997, Orbital acquired from Rockwell International Corporation ("Rockwell") the assets and certain liabilities associated with Rockwell's automotive navigation product line. Orbital paid approximately $3,550,000 in cash and issued Rockwell a $4,350,000 note, which bears interest at 6% and is repayable semi-annually over three years. The company accounted for the acquisition using the purchase method of accounting. The purchase price exceeded the fair value of the net assets acquired by approximately $2,262,000, and is being amortized on a straight-line basis over 10 years. The CTA and the Rockwell acquisitions may require further adjustments to excess of purchase price over the fair value of the net assets acquired. The purchase price was - -------------------------------------------------------------------------------- 10 11 allocated to the acquired assets and liabilities using preliminary estimates of fair values as of the date of acquisition. The final allocation of purchase price will be determined during the remainder of 1997 when additional information becomes known about certain business assumptions used to estimate fair value. (8) DEBT On September 16, 1997, Orbital sold $100 million of 5% convertible subordinated notes due October 2002. The notes, which are non-callable for three years, are convertible at the option of the holders, into Orbital common stock at a conversion price of $28.00 per share, subject to adjustment in certain events. The sale was made to initial purchasers in the United States ("U.S.") in reliance on an exemption under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and resold by the initial purchasers in the U.S. to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act and outside the U.S. to non-U.S. persons in reliance on Regulation S under the Securities Act. The company used a portion of the proceeds from the sale to pay down outstanding borrowings under its various lines of credit and $10,000,000 on its term loan described below. The balance was invested in short-term instruments. On August 6, 1997, Orbital amended and restated its existing revolving credit facility (the "facility") to provide for total borrowings from an international syndicate of six banks of up to $100,000,000. The new facility includes the company's subsidiary, Magellan Corporation ("Magellan"), as a borrower. The facility includes a $35,000,000 term loan, which matures July 2001, and a $65,000,000 revolving line of credit, borrowings under which are subject to a defined borrowing base composed of certain receivables of Orbital and Magellan. The principal amount of the term loan is payable in quarterly installments beginning December 31, 1997. In September 1997, the company reduced borrowings outstanding under the term loan from $35,000,000 to $25,000,000 with proceeds from the convertible notes offering pursuant to the terms of the facility. The interest rate charged under the facility is a variable rate based on the prime rate or LIBOR at the company's election. The weighted average interest rate on borrowings outstanding under this facility at September 30, 1997 was 7.2%. The facility restricts the payment of cash dividends and contains certain covenants with respect to the company's working capital levels, fixed charge ratio, leverage ratio and tangible net worth, and expires in August 2001. Proceeds from the facility were used to repay and retire (i) Magellan's $10,000,000 line of credit and (ii) a $25,000,000 six-month short-term bridge loan that the company obtained on May 7, 1997. On June 13, 1997, the company issued a $13,210,000 note to a financial institution. The note bears interest at 7.19%, subject to adjustment, principal and interest are payable monthly over sixty months, and the note is secured by certain equipment located at the company's Germantown, Maryland facility. In addition, on June 19, 1997, the company issued a $10,000,000 note to a financial institution. The note bears interest at 8.64%, principal and interest are payable monthly over sixty months, and the note is secured by - -------------------------------------------------------------------------------- 11 12 certain office, computer and test equipment related to the company's launch vehicle operations in Chandler, Arizona and Dulles, Virginia. Additionally, on June 27, 1997, the company terminated its L-1011 aircraft lease, and purchased the L-1011 aircraft for approximately $9,860,000. The company financed the purchase with a note for approximately $9,860,000, which is secured by the aircraft. The note bears interest at 8.4% and principal and interest are payable monthly over 94 months. (9) NEW ACCOUNTING PRONOUNCEMENTS In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 128 ("SFAS No. 128"), "Earnings Per Share." SFAS No. 128 establishes new procedures for the computation, presentation and disclosure of EPS, simplifying the calculations and making them more comparable with international accounting standards. Pursuant to SFAS No. 128, the company will adopt the new requirements in the fourth quarter of 1997, restating all prior periods. The company expects that the adoption of SFAS No. 128 will not materially impact previously reported primary or fully-diluted EPS. In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in the financial statements. Pursuant to SFAS No. 130, the Company will adopt the provisions of SFAS No. 130 in 1998. The disclosure of comprehensive income in accordance with the provisions of SFAS No. 130 will impact the manner of presentation of the company's financial statements as currently and previously reported. Upon adoption, the company will be required to reclassify previously reported annual and interim financial statements. In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131 establishes new procedures for the determination of business segments and for the presentation and disclosure of segment information and requires the disclosure of selected segment information in interim financial statements beginning in 1998. The company is currently assessing the impact of adopting SFAS No. 131. The company currently believes that it will not be required to change the composition of its segments, but that it will be required to report segment financial information more frequently. - -------------------------------------------------------------------------------- 12 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS FOR THE THREE- AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 In addition to the historical information contained herein, Management's Discussion and Analysis of Financial Condition and Results of Operations also includes forward-looking statements that involve known and unknown risks and uncertainties and other factors that may cause the actual results, performance or achievements of the company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These may include, but are not limited to, general and economic business conditions, launch success, product performance, availability of required capital, market acceptance of new products, services and technologies, the introduction of products and services by competitors, and performance of the company's affiliates, ORBCOMM Global, L.P. ("ORBCOMM") and Orbital Imaging Corporation ("ORBIMAGE"). The company's products and services are grouped into three business sectors: Space and Ground Infrastructure Systems, Satellite Access Products and Satellite-Delivered Services. Space and Ground Infrastructure Systems include Launch Systems, Satellites, Electronics and Sensor Systems, and Ground Systems. The company's Satellite Access Products sector consists of recreational and vehicle navigation products, communications products and transportation management systems. The company's Satellite-Delivered Services sector includes satellite-based two-way mobile data communications services and satellite-based imagery services. RECENT DEVELOPMENTS. On September 16, 1997, Orbital sold $100 million of 5% convertible subordinated notes due October 2002. The notes, which are non-callable for three years, are convertible, at the option of the holders, into Orbital common stock at a conversion price of $28.00 per share, subject to adjustment in certain events. The sale was made to initial purchasers in the United States ("U.S.") in reliance on an exemption under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"), and resold by the initial purchasers in the U.S. to "qualified institutional buyers" pursuant to Rule 144A under the Securities Act and outside the U.S. to non-U.S. persons in reliance on Regulation S under the Securities Act. On August 15, 1997, Orbital acquired substantially all the assets, including all the stock of certain subsidiaries, and certain liabilities relating to the satellite manufacturing and communications services businesses of CTA. The financial results of the acquired businesses have been included in the company's consolidated results from August 15, 1997 through September 30, 1997. As consideration, Orbital (i) paid approximately $13,000,000 in cash, including certain post-closing adjustments, and (ii) retired $27,000,000 of outstanding debt related to the acquired business. The company funded the acquisition utilizing its existing line of credit and cash flows from operations. - -------------------------------------------------------------------------------- 13 14 On July 31, 1997, Orbital acquired from Rockwell International Corporation ("Rockwell"), the assets and certain liabilities associated with Rockwell's automotive navigation product line. Orbital paid approximately $3,550,000 in cash and provided to Rockwell a $4,350,000 note, which bears interest at 6% and is repayable semi-annually over three years. Certain of the 1997 and 1996 financial information has been restated. See Note 1 to the condensed consolidated financial statements. REVENUES. Orbital's revenues for the three-month periods ended September 30, 1997 and 1996 were $163,310,000 and $119,903,000, respectively. Revenues for the nine-month periods ended September 30, 1997 and 1996 were $366,846,000 and $339,767,000, respectively. The increase in revenues during these periods is generally reflective of the significant amount of new orders received since 1995, and to a lesser extent, to the revenues generated by the newly acquired satellite manufacturing and communications services businesses of CTA. Revenues for the 1997 third quarter include sales to ORBCOMM, a partnership in which Orbital holds a 50% non-controlling interest, of $9,493,000 as compared to $4,883,000 for the 1996 third quarter. Sales to ORBCOMM for the nine-month periods ended September 30, 1997 and 1996 were $36,717,000 and $34,353,000, respectively. Revenues for the three-month and nine-month periods ended September 30, 1997 include sales of approximately $18,806,000 to ORBIMAGE. No such sales to ORBIMAGE were included in earlier years. See Note 6 to the Financial Statements. Space and Ground Infrastructure Systems Revenues from the company's Space and Ground Infrastructure Systems totaled $148,027,000 and $103,484,000 for the three months ended September 30, 1997 and 1996, respectively, and $315,947,000 and $281,102,000 for the nine months ended September 30, 1997 and 1996, respectively. Revenues from the company's launch systems of $28,546,000 in the third quarter of 1997 were consistent with the $28,577,000 in the third quarter of 1996. Launch systems revenues were $83,399,000 for the nine months ended September 30, 1997 as compared to $73,906,000 for the comparable 1996 period. The increase in year-to-date revenues is attributable to increased revenues from the company's Taurus launch vehicle program, and from the resumption of production and launch of the company's Pegasus launch vehicle in 1997. Additionally, the company was just beginning to perform work on a reusable launch vehicle in the first quarter of 1996, and did not generate significant revenues until the second quarter of 1996. Accordingly, year-to-date 1997 revenues attributable to the reusable launch vehicle are significantly higher than the comparable 1996 period, but on a third quarter-to-third quarter comparison, revenues attributable to the reusable launch vehicle were generally consistent. For the three months ended September 30, 1997, satellite revenues increased to $74,485,000 from $29,476,000 in the same quarter of 1996. Satellite revenues were $103,230,000 for the nine months ended September 30, 1997 as compared to $80,017,000 - -------------------------------------------------------------------------------- 14 15 for the comparable 1996 period. The significant increase in satellite sales in 1997 is primarily due to additional revenues generated from new satellite orders received in the second half of 1996 and from 1997 sales to ORBIMAGE. Additionally, current quarter revenues include approximately $22,000,000 of sales attributable to the satellite business unit acquired from CTA on August 15, 1997. Revenues from electronics and sensor systems were $26,914,000 for the three months ended September 30, 1997 as compared to $25,572,000 in the 1996 comparable period. Electronics and sensor systems revenues for the nine months ended September 30, 1997 and 1996 were $77,108,000 and $63,421,000, respectively. The increase in revenues is primarily a result of work performed on defense electronics and sensor system orders received during the second half of 1996 and first quarter of 1997. Revenues from the company's ground systems products were $18,082,000 in the third quarter of 1997 as compared to $19,859,000 for the comparable 1996 quarter. Ground systems product revenues were $52,210,000 for the nine months ended September 30, 1997 as compared to $63,758,000 for the comparable 1996 period. Ground systems revenues decreased on a quarter-to-quarter basis, and on a year-to-date basis. This business segment included revenues for the three- and nine-month periods ended September 30, 1996 of approximately $4,449,000 and $13,580,000, respectively, attributable to the company's former subsidiary, The PSC Communications Group Inc. ("PSC"). The company sold substantially all the assets of PSC during the fourth quarter of 1996. Satellite Access Products Revenues from sales of satellite access products decreased slightly to $15,261,000 for the 1997 third quarter as compared to $15,989,000 for the comparable 1996 period. Satellite access product revenues were $50,796,000 for the nine-months ended September 30, 1997 as compared to $57,445,000 for the comparable 1996 period. The significant decrease in year-to-year revenues is primarily attributable to increased competition and changing customer needs in certain markets for recreational global positioning system ("GPS") navigation products. Additionally, the entire GPS market has experienced a general down-turn over the past several quarters. In addition, as a result of the Rockwell acquisition in August 1997, the company added automotive navigation systems to its product line, although the company does not anticipate significant sales from this product line until the second half of 1998. Satellite-Delivered Services The company's ORBCOMM start-up business generated minimal U.S. service revenues in 1997 and 1996. As a result of the ORBIMAGE private placement transaction (see discussion in Liquidity and - -------------------------------------------------------------------------------- 15 16 Capital Resources section), Orbital no longer consolidates ORBIMAGE's service revenues. GROSS PROFIT. Gross profit depends on a number of factors, including the company's mix of contract types and costs incurred thereon in relation to estimated costs. The company's gross profit for the third quarter of 1997 was $45,641,000 as compared to $30,368,000 in the 1996 third quarter. Gross profit margin as a percentage of sales for those periods was approximately 28% and 25%, respectively. The company's gross profit for the first nine months of 1997 was $98,098,000 as compared to $95,767,000 for the first nine months of 1996. Gross profit margin as a percentage of sales for those periods decreased slightly to approximately 27% from 28%, respectively. During the third quarter of 1997, the company recognized an increase in gross profit of $2,647,000 related to the write-off or expiration of certain Canadian development loans no longer required or not expected to be repaid. This increase was offset by lower margins realized on satellite access products due to factors related to increased competition and changing customer needs. The company continues to realize favorable margin trends on certain space infrastructure contracts. These favorable margins helped to partially offset the company's year-to-date decrease in gross profit margin. RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses represent Orbital's self-funded product development activities, and exclude direct customer-funded development. Research and development expenses during the three-month periods ended September 30, 1997 and 1996 were $7,968,000 (or 5% of revenues) and $4,053,000 (or 3% of revenues), respectively. Research and development expenses during the nine-month periods ended September 30, 1997 and 1996 were $23,591,000 (or 6% of revenues) and $16,491,000 (or 5% of revenues), respectively. Research and development expenses in 1997 and 1996 relate primarily to the development of new or improved navigation and communications products, improved launch vehicles and new satellite initiatives. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses include the costs of marketing, advertising, promotional and other selling expenses as well as the costs of the finance, administrative and general management functions of the company. Selling, general and administrative expenses for the third quarters of 1997 and 1996 were $26,334,000 (or 16% of revenues) and $18,947,000 (or 16% of revenues), respectively. Selling, general and administrative expenses for the first nine months of 1997 and 1996 were $67,899,000 (or 19% of revenues) and $58,678,000 (or 17% of revenues), respectively. The increase in year-to-date selling, general and administrative expenses as a percentage of revenues in 1997 is due to increased merger and acquisition efforts during 1997. INVESTMENT INCOME AND INVESTMENT EXPENSE. Net investment expense was $878,000 for the three months ended September 30, 1997 as compared to net investment income of $219,000 in the 1996 third quarter. Net investment expense during the nine-months ended September 30, 1997 was $132,000 as compared to net investment - -------------------------------------------------------------------------------- 16 17 expense of $402,000 during the 1996 comparable period. Investment income reflects interest earnings on short-term investments. Interest expense in 1997 is primarily for outstanding amounts on Orbital's revolving credit facilities and on other secured and unsecured debt. In 1996, interest expense included interest on the company's 6-3/4% convertible debentures, which were converted to common stock in August 1996. Interest expense has been reduced by capitalized interest of $2,167,000 and $2,142,000, respectively, for the third quarter of 1997 and 1996, and by $5,575,000 and $6,198,000, respectively, for the first nine months of 1997 and 1996. EQUITY IN LOSSES OF AFFILIATES AND NON-CONTROLLING INTERESTS IN LOSSES OF CONSOLIDATED SUBSIDIARIES. Equity in losses of affiliates and non-controlling interests in losses of consolidated subsidiaries for the third quarter of 1997 and 1996 were $7,304,000 and $2,257,000, respectively, and $8,188,000 and $6,597,000 for the nine month periods ended September 30, 1997 and 1996, respectively. These amounts primarily represent (i) elimination of proportionate profits on sales of infrastructure products to ORBCOMM and ORBIMAGE (ii) preferred dividends and beneficial conversion rights to other investors at ORBIMAGE and (iii) the company's pro rata share of ORBCOMM's, ORBCOMM International Partners L.P.'s ("ORBCOMM International"), and ORBIMAGE's current period earnings and losses, and (iv) non-controlling shareholders' pro rata share of ORBCOMM USA L.P.'s ("ORBCOMM USA") current period earnings and losses. PROVISION FOR INCOME TAXES. The company recorded an income tax provision of $1,200,000 and $454,000 for the three-month periods ended September 30, 1997 and 1996, respectively. For the nine-month periods ended September 30, 1997 and 1996, the company recorded an income tax provision of $12,816,000 and $1,121,000, respectively. The 1997 tax provision includes a deferred tax provision of approximately $10,898,000 relating to the ORBIMAGE preferred stock transaction. The company records its interim income tax provisions based on estimates of the company's effective tax rate expected to be applicable for the full fiscal year. Estimated effective rates recorded during interim periods may be periodically revised, if necessary, to reflect current estimates. LIQUIDITY AND CAPITAL RESOURCES The company's growth has required substantial capital to fund an expanding business base, as well as significant research and development and capital expenditures. The company has funded these requirements to date, and expects to fund its requirements in the future, through cash generated by operations, working capital, loan facilities, asset-based financings, joint venture arrangements, and private and public equity and debt offerings. Additionally, the company has historically made strategic acquisitions of businesses and routinely evaluates potential acquisition candidates. The company expects to continue to pursue potential acquisitions that it believes would enhance its businesses. The company has historically financed its acquisitions, and expects to finance its future acquisitions, through cash on hand, cash generated by operations, the issuance of debt and/or equity securities, and/or asset-based financings. - -------------------------------------------------------------------------------- 17 18 At September 30, 1997, cash, cash equivalents and short-term investments were $39,011,000, and the company had short-term and long-term debt obligations outstanding of approximately $208,643,000. The outstanding debt consists primarily of $100,000,000 of 5% convertible notes, issued during the current quarter, and of secured and unsecured notes. On September 16, 1997, Orbital completed the sale of $100 million of 5% convertible subordinated notes due October 2002. The notes, which are non-callable for three years, are convertible, at the option of the holders, into Orbital common stock at a conversion price of $28.00 per share, subject to adjustment in certain events. The company used a portion of the proceeds from the sale to pay down outstanding borrowings under its various lines of credit and $10,000,000 on a long-term loan. The balance was invested in short-term instruments. On August 6, 1997, Orbital amended and restated its existing revolving credit facility (the "facility") to provide for total borrowings from an international syndicate of six banks of up to $100,000,000. The new facility includes Magellan as a borrower. The facility includes a $35,000,000 term loan, which matures July 2001, and a $65,000,000 revolving line of credit, borrowings under which are subject to a defined borrowing base composed of certain receivables of Orbital and Magellan. The principal amount of the term loan is payable in quarterly installments beginning December 31, 1997. In September 1997, the company reduced borrowings outstanding under the term loan from $35,000,000 to $25,000,000 with proceeds from the convertible notes offering pursuant to the terms of the facility. The interest rate charged under the facility is a variable rate based on the prime rate or LIBOR at the company's election. The weighted average interest rate on borrowings outstanding under this facility at September 30, 1997 was 7.2%. The facility restricts the payment of cash dividends and contains certain covenants with respect to the company's working capital levels, fixed charge ratio, leverage ratio and tangible net worth, and expires in August 2001. Proceeds from the facility were used to repay and retire (i) Magellan's $10,000,000 line of credit and (ii) a $25,000,000 six-month short-term bridge loan that the company obtained on May 7, 1997. The company's operations provided net cash of approximately $1,860,000 in the first nine months of 1997. The company incurred approximately $22,334,000 in capital expenditures for office equipment, capitalized software and various spacecraft, launch vehicle and other production and test equipment in the first nine months of 1997. On May 8, 1997, ORBIMAGE completed a private placement of 300,100 shares of Series A Cumulative Convertible Preferred Stock (the "Preferred Stock"), raising gross proceeds of $30,010,000. On that date, Orbital also purchased ORBIMAGE common stock, bringing its total equity invested to approximately $60,767,000. On July 3, 1997, ORBIMAGE placed an additional 72,605 shares of Preferred Stock, raising an additional $7,260,500. - -------------------------------------------------------------------------------- 18 19 ORBIMAGE currently expects that it will require additional financing to fully fund its current business plan. To the extent some or all of the additional funding can not be raised from third-party investors on specified terms, Orbital has agreed to purchase up to approximately $42,000,000 in preferred stock (up to $22,000,000 by December 31, 1997 and up to an additional $20,000,000 by June 30, 1998) on terms defined in the private placement. In connection with ORBCOMM's issuance in August 1996 of $170,000,000 of Senior Notes due 2004, Orbital and Teleglobe Inc. each agreed, under certain circumstances specified in the indenture governing the Senior Notes, to provide ORBCOMM an aggregate amount not to exceed $15,000,000 in capital contributions or debt financing expressly subordinated to the Senior Notes. ORBCOMM currently believes that it may require some or all of such funding in early 1998. Orbital expects that its capital needs for the remainder of 1997 will, in part, be provided by working capital, cash flows from operations, existing credit facilities, customer financings and operating lease arrangements. The company may also consider new debt and equity financings to further realign its capital structure and to fund potential capital requirements or acquisitions in 1998. In addition, the company is assessing various equity and financing strategies in certain of its subsidiaries. - -------------------------------------------------------------------------------- 19 20 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On October 31, 1997, the U.S. District Court for the Eastern District of Pennsylvania, pursuant to an agreement between the parties, dismissed with prejudice the action brought by BTG USA, Inc. ("BTG") against Magellan. Pursuant to the agreement, each party agreed to bear its own cost of the action, and BTG further agreed to certain restrictions on its right to litigate against Magellan in the future. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS Not applicable. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits - A complete listing of exhibits required is given in the Exhibit Index that precedes the exhibits filed with this report. (d) (b) (i) On July 28, 1997, the Company filed a Current Report on Form 8-K, dated July 11, 1997, disclosing that it had entered into an agreement to acquire certain assets, including all stock of certain subsidiaries, relating to the manufacturing and communications services businesses of CTA INCORPORATED (the "CTA Acquisition"). (ii) On September 2, 1997, the Company filed a Current Report on Form 8-K, dated August 15, 1997, disclosing that the Company had completed the CTA Acquisition. (iii) On September 9, 1997, the Company filed Amendment No. 1 on Form 8-K/A to its Current Report on Form 8-K, dated August 15, 1997, in order to - -------------------------------------------------------------------------------- 20 21 reflect the Company's determination that the CTA Acquisition was more appropriately reported pursuant to Item 5 rather than Item 2. (iv) On September 12, 1997, the Company filed a Current Report on Form 8-K, dated September 11, 1997, disclosing that it proposed to make an offering of convertible subordinated notes not registered or required to be registered under the Securities Act of 1933, as amended (the "Securities Act"). (v) On September 22, 1997, the Company filed a Current Report on Form 8-K, dated September 17, 1997, disclosing that it had completed its sale of $100 million convertible subordinated notes in an offering not registered or required to be registered under the Securities Act. (vi) On October 1, 1997, the Company filed a Current Report on Form 8-K, dated September 16, 1997, disclosing that its $100 million convertible subordinated notes were sold to initial purchasers in the United States in reliance on an exemption under Section 4(2) of the Securities Act, and resold by the initial purchasers in the United States to "qualified institutional buyers" pursuant to Rule 144A under the Act and outside the United States to non-U.S. persons in reliance on Regulation S under that Act. - -------------------------------------------------------------------------------- 21 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Form 10-Q/A to be signed on its behalf by the undersigned thereunto duly authorized. ORBITAL SCIENCES CORPORATION DATED: June 28, 2000 By: /s/ JEFFREY V. PIRONE ------------------------------------- Jeffrey V. Pirone, Executive Vice President and Chief Financial Officer - -------------------------------------------------------------------------------- 22 23 EXHIBIT INDEX The following exhibits are filed as part of this report.
-------------------------------------------------------------- Exhibit No Description - ---------- ----------- -------------------------------------------------------------- 4.1 Indenture dated as of September 16, 1997 between Orbital Sciences Corporation and Deutsche Bank AG, New York Branch (previously filed). 10.1 Second Amended and Restated Credit Agreement dated as of August 5, 1997 among Orbital Sciences Corporation, Magellan Corporation, the Banks listed therein and Morgan Guaranty Trust Company of New York as Agent (previously filed). 10.4 Amended and Restated Security Agreement dated as of June 30, 1992 and amended and restated as of August 5, 1997 among Orbital Sciences Corporation, Morgan Guaranty Trust Company of New York as Collateral Agent and NationsBank, N.A., as Designated Lockbox Bank (previously filed). 10.4.1 Security Agreement dated as of August 5, 1997 among Magellan Corporation, Morgan Guaranty Trust Company of New York as Collateral Agent and NationsBank, N.A., as Designated Lockbox Bank (previously filed). 11 Statement re: Computation of Earnings Per Share (transmitted herewith). 27 Financial Data Schedule (such schedule is furnished for the information of the Securities and Exchange Commission and is not to be deemed "filed" as part of the Form 10-Q, or otherwise subject to the liabilities of Section 18 of the Securities Exchange Act of 1934) (transmitted herewith).
- -------------------------------------------------------------------------------- 23 EX-11 2 ex11.txt COMPUTATION OF EARNINGS PER SHARE 1 Exhibit 11 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (Restated) ---------------------------------------------- ASSUMING PRIMARY FULL DILUTION ------------------- ------------------- Weighted average number of outstanding shares 32,309,409 32,309,409 Common equivalent shares: Outstanding stock options 1,038,325 1,587,990 Other potentially dilutive securities: convertible notes (1) N/A 595,238 ------------------- ------------------- Shares used in computing net income per share 33,347,734 34,492,637 =================== =================== Net income $ 1,001,000 $ 1,001,000 Adjustments assuming full dilution: N/A N/A =================== =================== Net income $ 1,001,000 $ 1,001,000 =================== =================== Net income per share $ 0.030 $ 0.029 Dilution percentage assuming full dilution (2) N/A 3.3% Net income per share $ 0.03 $ 0.03 =================== ===================
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (Restated) ----------------------------------------------- ASSUMING PRIMARY FULL DILUTION ------------------- ------------------- Weighted average number of outstanding shares 32,242,640 32,242,640 Common equivalent shares: Outstanding stock options 698,900 1,519,671 Other potentially dilutive securities: convertible notes (1): N/A 198,413 ------------------- ------------------- Shares used in computing net income per share 32,941,540 33,960,724 =================== =================== Net loss $ (16,967,000) $ (16,967,000) Adjustments assuming full dilution: N/A N/A =================== =================== Net loss $ (16,967,000) $ (16,967,000) =================== =================== Net loss per share $ (0.52) $ (0.52) Dilution percentage assuming full dilution (2) N/A N/A Net loss per share $ (0.52) $ (0.52) =================== ===================
- -------------------------------------------------------------------------------- 24 2 NOTES: (1) On September 16, 1997, the company sold $100 million of 5% convertible subordinated notes due October 2002. The notes are convertible at the option of the holders into Orbital common stock at a conversion price of $28.00 per share (2) Dilution caused by common stock equivalents and other potentially dilutive securities that is less than 3% is considered immaterial, and only primary earnings per share is presented in the accompanying condensed consolidated statement of changes. In periods of net loss, dilutive earnings per share equals primary earnings per share. (3) Subsidiary stock options that enable holders to obtain the subsidiary's common stock pursuant to stock option plans are included in computing the subsidiary's earnings per share, to the extent dilutive. These earnings per share data are included in the company's per share computations based on the company's holdings of the subsidiary's stock. For the three-and nine-months ended September 30, 1997, all such subsidiary stock options were anti-dilutive. - -------------------------------------------------------------------------------- 25 EX-27 3 ex27.txt FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF EARNINGS AT AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS DEC-31-1996 JAN-01-1997 SEP-30-1997 19,123 19,888 163,250 (1,724) 44,089 252,451 192,989 (76,468) 658,283 164,274 181,729 0 0 323 307,810 658,283 366,846 366,846 268,748 268,748 0 189 1,536 (4,151) 12,816 (16,967) 0 0 0 (16,967) (0.52) (0.52)
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