Balance Sheet Accounts and Supplemental Disclosures

12 Months Ended

Dec. 31, 2011

Balance Sheet Accounts and Supplemental Disclosures [Abstract]

Balance Sheet Accounts and Supplemental Disclosures

5.  Balance Sheet Accounts and Supplemental Disclosures

Receivables

The components of receivables were as follows (in thousands):

	December 31,
	2011		2010
Billed	$	77,505	$	56,035
Unbilled		255,209		268,836
Retainages due upon contract completion		753		1,672
Total	$	333,467	$	326,543

Approximately 95% of unbilled receivables and retainages at December 31, 2011 are due within one year and will be billed on the basis of contract terms and delivery schedules.  Approximately 90% and 87% of the company’s receivables at December 31, 2011 and 2010, respectively, were related to contracts with the U.S. Government and its agencies or under subcontracts with the U.S. Government’s prime contractors.  Receivables from non-U.S. customers totaled $29.7 million and $30.8 million at December 31, 2011 and 2010, respectively.

As of December 31, 2011 and 2010, unbilled receivables included $10.2 million and $14.9 million, respectively, of incentive fees on certain completed satellite contracts that become due incrementally over periods of up to 15 years, subject to the achievement of performance criteria.

Certain satellite contracts require the company to refund cash to the customer if performance criteria, which cover periods of up to 15 years, are not satisfied.  As of December 31, 2011, the company could be required to refund up to approximately $14.1 million to customers if certain completed satellites were to fail to satisfy performance criteria.  Orbital generally procures insurance policies under which the company believes it would recover satellite incentive fees that are not earned and performance refund obligations.

Inventory

As of December 31, 2011 and 2010, inventories were $64.3 million and $56.2 million, respectively.  Substantially all of the company’s inventory consisted of component parts, raw materials and milestone payments for future delivery of component parts.  The company had no significant allowances for obsolete inventory as of December 31, 2011 and 2010.

Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):

	December 31,
	2011			2010
Land	$	10,656		$	9,113
Buildings and leasehold improvements		80,885			78,534
Furniture, fixtures and equipment		262,906			215,623
Assets under construction		65,645			65,087
Software and other		27,063			23,791
		447,155			392,148
Accumulated depreciation and amortization		(187,183	)		(159,442	)
Total	$	259,972		$	232,706

Depreciation expense for the years ended December 31, 2011, 2010 and 2009 was $32.0 million, $25.7 million and $19.2 million, respectively.

Goodwill and Intangible Assets

Changes in the carrying amount of the company’s goodwill balances by reportable business segment are as follows (in thousands):

	Launch Vehicles		Satellites and Space Systems		Advanced Space Programs		Total
Balance at December 31, 2010	$	10,310	$	53,301	$	11,136	$	74,747
Goodwill resulting from business combination		-		216		298		514
Balance at December 31, 2011	$	10,310	$	53,517	$	11,434	$	75,261

Intangible assets consist of technology assets that were acquired in the 2010 spacecraft business acquisition.  As of December 31, 2011 and 2010, the balance of intangible assets was $5.9 million and $6.6 million, respectively, reported in “other non-current assets.”  Amortization expense for the years ended December 31, 2011 and 2010 was $0.7 million and $0.5 million, respectively.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	December 31,
	2011		2010
Contract related accruals	$	142,735	$	150,831
Payroll related accruals		64,321		60,997
Interest		1,946		1,627
Other		11,933		15,452
Total	$	220,935	$	228,907

Cash Flow

Cash payments for interest and income taxes were as follows (in thousands):

	Years Ended December 31,
	2011		2010		2009
Interest paid	$	4,158	$	3,735	$	3,741
Income taxes paid		2,242		2,531		1,309