10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________

FORM 10-K

 (Mark One)

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2012
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from ______ to ______

Commission file number 1-14279

_______________________

ORBITAL SCIENCES CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	06-1209561
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
45101 Warp Drive Dulles, Virginia  20166 (Address of principal executive offices) (703) 406-5000 (Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Common Stock, par value $.01 per share	Name of each exchange on which registered The New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:  None

_______________________

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes þ  No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o  No þ

Indicate by check mark whether the registrant (1) has 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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes þ  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

The aggregate market value of the registrant's Common Stock held by non-affiliates of the registrant based on the closing sales price of the registrant's Common Stock as reported on The New York Stock Exchange on June 29, 2012 was approximately $750,700,000.

As of February 19, 2013, 59,797,541 shares of the registrant's Common Stock were outstanding.

Portions of the registrant's definitive proxy statement to be filed on or about March 8, 2013 are incorporated by reference in Part III of this report.

TABLE OF CONTENTS
Item		Page
	PART I
Item 1.	Business	1
Item 1A.	Risk Factors	12
Item 1B.	Unresolved Staff Comments	21
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	22
	PART II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	25
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 8.	Financial Statements and Supplementary Data	45
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	75
Item 9A.	Controls and Procedures	75
Item 9B.	Other Information	75
	PART III
Item 10.	Directors, Executive Officers and Corporate Governance	76
Item 11.	Executive Compensation	76
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	76
Item 13.	Certain Relationships and Related Transactions, and Director Independence	76
Item 14.	Principal Accounting Fees and Services	76
	PART IV
Item 15.	Exhibits and Financial Statement Schedule	77
Pegasus is a registered trademark and service mark of Orbital Sciences Corporation; Taurus is a registered trademark of Orbital Sciences Corporation; Orbital, Minotaur, Antares and Cygnus are trademarks of Orbital Sciences Corporation.

PART I

Item 1.  Business

General

We develop and manufacture small- and medium-class rockets and space systems for commercial, military and civil government customers, including the U.S. Department of Defense ("DoD"), the National Aeronautics and Space Administration ("NASA") and other U.S. Government agencies.  Our products and services are grouped into three reportable business segments: launch vehicles, satellites and space systems, and advanced space programs, which are described below.

· Launch Vehicles - Rockets that are used as small- and medium-class space launch vehicles that place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems, and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories.

· Satellites and Space Systems - Small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research, collect imagery and other remotely-sensed data about the Earth, carry out interplanetary and other deep-space exploration missions, and demonstrate new space technologies.

· Advanced Space Programs - Human-rated space systems for Earth-orbit and deep-space exploration, and small- and medium-class satellites primarily used for national security space programs and to demonstrate new space technologies.

Our general strategy is to develop and expand a core integrated business of space and launch systems technologies and products, focusing on the design and manufacture of affordable rockets, satellites and other space systems in order to establish and expand positions in niche markets that have not typically been emphasized by our larger competitors.  Another part of our strategy is to seek customer contracts that will fund new product development and enhancements to our existing launch vehicle and space systems product lines.  As a result of our capabilities and experience in designing, developing, manufacturing and operating a broad range of small- and medium-class rockets and space systems, we believe we are well positioned to capitalize on the demand for more affordable space-technology systems in commercial satellite communications, space-based military and intelligence operations, and missile defense programs, and to take advantage of government-sponsored initiatives in human space exploration, space-based scientific research and interplanetary exploration.

Orbital was incorporated in Delaware in 1987 to consolidate the assets, liabilities and operations of two predecessor entities established in 1982 and 1983.  Our corporate headquarters are located at 45101 Warp Drive, Dulles, Virginia 20166, our telephone number is (703) 406-5000 and our website is www.orbital.com.

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Description of Orbital's Products and Services

Launch Vehicles

Our launch vehicles segment develops and produces space launch vehicles, interceptor launch vehicles and target launch vehicles.

Space Launch Vehicles - We develop and produce small-class launch vehicles that place satellites weighing up to 4,000 lbs. into low-Earth orbit, including the Pegasus, Taurus and Minotaur space launch vehicles that are used by commercial, civil government and military customers.  Our Pegasus launch vehicle is launched from our L-1011 carrier aircraft to deploy relatively lightweight satellites into low-Earth orbit.  The Taurus launch vehicle is a ground-launched derivative of the Pegasus vehicle that can carry heavier payloads into orbit.  The ground-launched Minotaur launch vehicle family combines Minuteman II and Peacekeeper ballistic missile rocket motors with our Pegasus and Taurus technology.  In 2012, we conducted one successful Pegasus launch, which deployed the Orbital-built Nuclear Spectroscopic Array Telescope satellite for NASA.

We are nearing completion of a major product development effort to create a medium-capacity rocket, Antares, that we expect will increase the payload capacity of our space launch vehicles to approximately 14,000 lbs. for launches to low-Earth orbit.  Antares will be used on our Commercial Orbital Transportation Services ("COTS") test flight and demonstration mission for NASA and under our Commercial Resupply Services ("CRS") contract with NASA to deliver cargo to the International Space Station ("ISS").  We also are marketing the vehicle to other U.S. Government and commercial customers.

Interceptor Launch Vehicles - We develop and produce rockets that are used as interceptor launch vehicles for missile defense systems, including interceptor boosters that carry "kill vehicles" designed to defend against ballistic missile attacks.  Pursuant to a contract with The Boeing Company ("Boeing"), we have been the sole supplier of operational and test interceptor boosters for the U.S. Missile Defense Agency's ("MDA") Ground-based Midcourse Defense ("GMD") program, for which our interceptor boost vehicle, a modified version of our Pegasus rocket, is being used as a major operational element in the U.S. national missile defense system.  There were two deliveries of this launch vehicle during 2012.  In January 2013, one of these vehicles was successfully launched as part of a test of the GMD program.  With the award of the follow-on GMD development and sustainment contract in 2011, Orbital will continue to provide booster vehicles in support of the GMD program through 2018.

Target Launch Vehicles - We design and produce target launch vehicles used in the development and testing of missile defense systems.  Our target launch vehicles include suborbital rockets and their principal subsystems, as well as payloads carried by such vehicles.  Various branches and agencies of the U.S. military, including MDA, use our target launch vehicles as targets for defense-related applications such as ballistic missile interceptor testing and related experiments.  These rockets are programmed to simulate incoming enemy missiles, offering an affordable and reliable means to test advanced missile defense systems.  Our family of target vehicles extends from long-range ballistic target launch vehicles, which include targets

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for testing MDA's GMD system, to medium- and short-range target vehicles designed to simulate threats to U.S. and allied military forces deployed in overseas theaters.  We have also developed a short-range supersonic sea-skimming target ("SSST") that flies just above the ocean's surface and is currently being used by the U.S. Navy.  In 2012, we performed a total of three successful target missions, including a medium-range target vehicle launched in support of the MDA Aegis Ballistic Missile Defense test program and a target mission for the U.S. Army's Patriot missile defense system.  We also delivered 15 SSST vehicles to the U.S. Navy in 2012.

Satellites and Space Systems

Our satellites and space systems segment is involved in developing and producing communications satellites, science and remote sensing satellites, and related subsystems, and we also provide space technical services primarily related to scientific satellite and suborbital research rocket missions.

Communications Satellites - We design and manufacture small geosynchronous-Earth orbit ("GEO") satellites that provide cable and direct-to-home television distribution, business data network connectivity, regional mobile telephony and other space-based communications services.

Science and Remote Sensing Satellites - Our small- and medium-class low-Earth orbit satellites and other spacecraft are used to conduct space-related scientific research, collect imagery and other remotely-sensed data about the Earth, carry out interplanetary and other deep-space exploration missions, and demonstrate new space technologies.

During 2012, we delivered five GEO communications satellites to commercial customers and two scientific satellites to NASA; five of these satellites were launched and placed into service in 2012, while the other two were launched in early 2013.

Space Technical Services - We provide advanced space systems and subsystems, including satellite command and data handling, attitude control and structural subsystems and a broad range of space-related technical services, including analytical, engineering and manufacturing services for space-related science and defense programs.  We also design, build and integrate a variety of small scientific research rockets and support field operations and launch activities for such vehicles.

Advanced Space Programs

Our advanced space programs segment is involved in developing and producing human-rated space systems and satellites and related systems primarily used for national security space programs.

Human-Rated Space Systems - We design and manufacture advanced human-rated spacecraft to be used in Earth orbit, planetary exploration and other space missions.  In 2008, under the COTS research and development program, we entered into an agreement with NASA to design, build and demonstrate a new space transportation system that has the capability to deliver cargo

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and other supplies to the ISS.  This system will include a new advanced maneuvering spacecraft called Cygnus that will be launched on our Antares launch vehicle and will autonomously rendezvous with the ISS to deliver cargo to the astronauts on board.  We expect the COTS demonstration mission will occur in mid-2013.  Also in 2008, under the CRS program, NASA entered into a contract with us to perform eight cargo transportation missions to the ISS using the Antares/Cygnus space transportation system we are developing under our COTS program.  We expect these missions to be carried out over the next four years.

National Security Space Systems -We develop and produce small- and medium-class satellites and related systems used primarily for national security space missions and related technology demonstration programs.

Customers

Customers that accounted for 10% or more of our consolidated revenues in 2012 were DoD and NASA.  Customers that accounted for 10% or more of our consolidated revenues in 2011 were DoD, NASA and Boeing.  Customers that accounted for 10% or more of our consolidated revenues in 2010 were DoD and NASA.

Competition

We believe that competition for sales of our products and services is based primarily on performance and technical features, reliability, price, delivery schedule and our ability to customize our products to meet particular customer needs, and we believe that we compete favorably on the basis of these factors.  The table below identifies the entities we believe to be our primary competitors for each major product line.

Product Line	Competitors
Space launch vehicles	United Launch Alliance (a joint venture between     Lockheed Martin Corporation and The Boeing     Company) Space Exploration Technologies Corp. Alliant Techsystems Inc. Lockheed Martin Corporation Russian, Indian and Chinese launch vehicles could     represent competition for commercial, as     opposed to U.S. Government, launches
Interceptor launch vehicles	Lockheed Martin Corporation Raytheon Company
Target launch vehicles	Lockheed Martin Corporation L-3 Communications, Inc. Alliant Techsystems Inc. Kratos Defense & Security Solutions, Inc.

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Product Line	Competitors
Communications satellites	EADS Astrium The Boeing Company Lockheed Martin Corporation Space Systems/Loral, Inc., a subsidiary of     MacDonald, Dettwiler and Associates Ltd.
	Reshetnev Company - Information Satellite     Systems Thales Alenia Space Mitsubishi Electric Corp.
Science and remote sensing satellites and national security space systems	Ball Aerospace and Technologies Corp. Lockheed Martin Corporation Northrop Grumman Corporation The Boeing Company Alliant Techsystems Inc. Sierra Nevada Corporation Surrey Satellite Technology Limited, a subsidiary     of EADS Astrium
Space technical services	Our space technical services compete with many companies, from large defense contractors to small niche competitors
Human-rated space systems	Space Exploration Technologies Corp. European Space Agency Japan Aerospace Exploration Agency Russian Federal Space Agency

Many of our competitors are larger and have substantially greater resources than we do.  Further, it is possible that other domestic or foreign companies or governments, some with greater experience in the space and defense industry and many with greater financial resources than we possess, will seek to provide products or services that compete with ours in the future.  Any such foreign competitor could benefit from subsidies from, or other protective measures by, its home country.

Research and Development

We invest in product-related research and development to conceive and develop new products and to enhance existing products.  Our research and development expenses totaled approximately $114.2 million, $102.8 million and $122.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.  We believe our research and development expenses will decline in 2013 as we are nearing completion of our Antares and COTS development programs.

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Under certain arrangements, such as the COTS program, our customers share in product development costs.  For a further discussion of the research and development expenses being funded by our government customer with respect to our COTS program, please see "Consolidated Results of Operations for the Years Ended December 31, 2012, 2011 and 2010 – Research and Development Expenses" in "Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations."

Patents and Proprietary Rights

We rely in part on patents, trade secrets and know-how to develop and maintain our competitive position and technological advantage, particularly with respect to our launch vehicle and satellite products.  While our intellectual property rights in the aggregate are important to the operation of our business, we do not believe that any single existing patent or other intellectual property right is of such importance that its loss or termination would have a material adverse effect on our business, taken as a whole.

Components and Raw Materials; Seasonality

We purchase a significant percentage of our subassemblies and instruments from domestic and foreign suppliers.  We also obtain from the U.S. Government parts and equipment that are used in the production of our products or in the provision of our services.  Generally, we have not experienced material difficulty in obtaining product components or necessary parts and equipment and we believe that alternatives to our existing sources of supply are available in most cases, although we could incur increased costs and possible delays in securing alternative sources of supply.

We rely upon sole-source suppliers for most solid-propellant rocket motors and liquid-propellant rocket engines used on our launch vehicles.   For example, our Antares launch vehicle uses liquid-propellant AJ-26 engines, which are modified Russian rocket engines, for its first stage that is available solely from one supplier.  These engines are no longer in production, and while there is sufficient quantity of these engines to complete the CRS and COTS programs, there is a limited supply available for other potential missions.  While we believe that alternative sources for rocket motors and engines would be available, the inability of our current suppliers to provide us with rocket motors and engines, such as the AJ-26, could result in significant contract delays, cost increases and loss of revenues due to the time, resources and effort that would be required to develop or adapt other engines or motors for use in our products.

Our business is not seasonal.

U.S. Government Contracts

During 2012, 2011 and 2010, approximately 79%, 71% and 74%, respectively, of our total annual revenues were derived from contracts with the U.S. Government and its agencies or from subcontracts with other U.S. Government contractors.  Most of our U.S. Government contracts are funded incrementally on a year-to-year basis.

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Our major contracts with the U.S. Government primarily fall into two categories: cost-reimbursable contracts and fixed-price contracts.  Approximately 58% and 42% of our revenues from U.S. Government contracts in 2012 were derived from cost-reimbursable contracts and fixed-price contracts, respectively.  Under cost-reimbursable contracts, we recover our actual allowable costs incurred, allocable indirect costs and a fee consisting of (i) a base amount that is fixed at the inception of the contract and/or (ii) an award amount that is based on the customer's evaluation of our performance in terms of the criteria stated in the contract.  Our fixed-price contracts include firm fixed-price and fixed-price incentive fee contracts.  Under firm fixed-price contracts, work performed and products shipped are paid for at a fixed price without adjustment for actual costs incurred in connection with the contract.  Therefore, we bear the risk of loss if costs increase, although some of this risk may be passed on to subcontractors.  Fixed-price incentive fee contracts provide for sharing by us and the customer of unexpected costs incurred or savings realized within specified limits, and may provide for adjustments in price depending on actual contract performance other than costs.  Costs in excess of the negotiated maximum (ceiling) price and the risk of loss by reason of such excess costs are borne by us, although some of this risk may be passed on to subcontractors.

As noted above, we derive a significant portion of our revenues from U.S. Government contracts, which are dependent on continued political support and funding.  All our U.S. Government contracts and, in general, our subcontracts with other U.S. Government prime contractors provide that such contracts may be terminated for convenience at any time by the U.S. Government or the prime contractor, respectively.  Furthermore, any of these contracts may become subject to a government-issued stop work order under which we would be required to suspend production.  In the event of a termination for convenience, contractors generally are entitled to receive the purchase price for delivered items, reimbursement for allowable costs for work in process and an allowance for reasonable profit thereon or adjustment for loss if completion of performance would have resulted in a loss.  For a more detailed description of risks relating to the U.S. Government contract industry, see "Item 1A – Risk Factors."

A portion of our business is classified for national security purposes by the U.S. Government and cannot be specifically described.  The operating results of these classified programs are included in our consolidated financial statements.  The business risks associated with classified programs, as a general matter, do not differ materially from those of our other U.S. Government contracts, and are subject to the same operational, compliance and financial reporting controls.

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Regulation

Our ability to pursue our business activities is regulated by various agencies and departments of the U.S. Government and, in certain circumstances, the governments of other countries.  Commercial space launches require licenses from the U.S. Department of Transportation ("DoT") and the reentry of our Cygnus maneuvering spacecraft during the COTS demonstration mission and the operation of our L-1011 aircraft require licenses from certain agencies of the DoT, including the Federal Aviation Administration ("FAA").  The use of the AJ-26 engine, which is a modified Russian rocket engine, on our Antares rocket requires a Russian government license, which we have obtained for our missions currently under contract.  The Federal Communications Commission ("FCC") also requires licenses for radio communications during our rocket launches.  Our classified programs require that we and certain of our employees maintain appropriate security clearances.  We also require export licenses from the U.S. Department of State ("DoS"), the U.S. Department of Commerce ("DoC") and, occasionally, the governments of other countries with respect to transactions we have with foreign customers or foreign subcontractors.

Contract Backlog

Our firm backlog was approximately $2.20 billion at December 31, 2012 and approximately $2.39billion at December 31, 2011.  While there can be no assurance, we expect to convert approximately $940 million of the 2012 year-end firm backlog into revenues during 2013.  Our firm backlog as of December 31, 2012 included approximately $2.0 billion of contracts with the U.S. Government and its agencies or from subcontracts with prime contractors of the U.S. Government.  Most of our U.S. Government contracts are funded incrementally on a year-to-year basis.  Firm backlog from U.S. Government contracts at December 31, 2012 included total funded orders of about $670million and orders not yet funded of about $1.33 billion.  Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect our financial condition and results of operations.  Furthermore, contracts with the U.S. Government may be terminated or suspended by the U.S. Government at any time, with or without cause, which could result in a reduction in backlog.

Total backlog was approximately $5.03 billion at December 31, 2012.  Total backlog includes firm backlog in addition to unexercised options, indefinite-quantity contracts and undefinitized orders and contract award selections.

Employees

As of February 19, 2013, Orbital had approximately 3,500 employees.  Our employees are not subject to collective bargaining agreements.  We believe our employee relations are good.

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Executive Officers of the Registrant

The following table sets forth the name, age and position of each of the executive officers of Orbital as of February 19, 2013.  All executive officers are appointed annually and serve at the discretion of the Board of Directors.

Name	Age	Position
David W. Thompson	58	Chairman of the Board, President and Chief Executive Officer
Garrett E. Pierce	68	Vice Chairman and Chief Financial Officer, Director
Antonio L. Elias	63	Executive Vice President and Chief Technical Officer
Ronald J. Grabe	67	Executive Vice President and General Manager, Launch Systems Group
Michael E. Larkin	57	Executive Vice President and General Manager, Space Systems Group
Frank L. Culbertson, Jr.	63	Executive Vice President and General Manager, Advanced Programs Group
Susan Herlick	48	Senior Vice President, General Counsel and Corporate Secretary

David W. Thompson is a co-founder of Orbital and has been Chairman of the Board and Chief Executive Officer of Orbital since 1982.  From 1982 until October 1999, he also served as our President, a role he resumed in 2011 following the retirement of James R. Thompson from this position.  Prior to founding Orbital, Mr. Thompson was employed by Hughes Electronics Corporation as special assistant to the President of its Missile Systems Group and by NASA at the Marshall Space Flight Center as a project manager and engineer, and also worked on the Space Shuttle's autopilot design at the Charles Stark Draper Laboratory.  Mr. Thompson is a Fellow of the American Institute of Aeronautics and Astronautics, the American Astronautical Society and the Royal Aeronautical Society, and is a member of the U.S. National Academy of Engineering.

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Garrett E. Pierce has been Vice Chairman and Chief Financial Officer since April 2002, and was Executive Vice President and Chief Financial Officer since August 2000.  He has been a director of the Company since August 2000.  From 1996 until August 2000, he was Executive Vice President and Chief Financial Officer of Sensormatic Electronics Corp., a supplier of electronic security systems, where he was also named Chief Administrative Officer in July 1998.  Prior to joining Sensormatic, Mr. Pierce was the Executive Vice President and Chief Financial Officer of California Microwave, Inc., a supplier of microwave, radio frequency and satellite systems and products for communications and wireless networks.  From 1980 to 1993, Mr. Pierce was with Materials Research Corporation, a provider of thin film equipment and high purity materials to the semiconductor, telecommunications and media storage industries, where he progressed from Chief Financial Officer to President and Chief Executive Officer.  Materials Research Corporation was acquired by Sony Corporation as a wholly owned subsidiary in 1989.  From 1972 to 1980, Mr. Pierce held various management positions with The Signal Companies. Mr. Pierce is a director of Kulicke and Soffa Industries, Inc.

Antonio L. Elias has been Executive Vice President and Chief Technical Officer since September 2012.  From October 2001 to September 2012, he served as Executive Vice President and General Manager, Advanced Programs Group, and was Senior Vice President and General Manager, Advanced Programs Group since August 1997.  From January 1996 until August 1997, Dr. Elias served as Senior Vice President and Chief Technical Officer of Orbital.  From May 1993 through December 1995, he was Senior Vice President for Advanced Projects, and was Senior Vice President, Space Systems Division from 1990 to April 1993.  He was Vice President, Engineering of Orbital from 1989 to 1990 and was Chief Engineer from 1986 to 1989.  From 1980 to 1986, Dr. Elias was an Assistant Professor of Aeronautics and Astronautics at Massachusetts Institute of Technology.  He was elected to the National Academy of Engineering in 2001.

Ronald J. Grabe has been Executive Vice President and General Manager, Launch Systems Group since 1999.  From 1996 to 1999, he was Senior Vice President and Assistant General Manager of the Launch Systems Group and Senior Vice President of the Launch Systems Group since 1995.  From 1994 to 1995, Mr. Grabe served as Vice President for Business Development in the Launch Systems Group.  From 1980 to 1993, Mr. Grabe was a NASA astronaut during which time he flew four Space Shuttle missions and was lead astronaut for development of the International Space Station.

Michael E. Larkin has been Executive Vice President and General Manager, Space Systems Group since February 2008 and was Senior Vice President and Deputy General Manager of the Space Systems Group since 2006.  From 2004 to 2006, he served as Senior Vice President of Finance of the Space Systems Group.  From 1996 to 2004, he was Vice President of the Space Systems Group, and was Director of Finance of the Space Systems Group from 1994 to 1996.  Prior to that, he held a variety of program and financial management positions at Fairchild Space and Defense Corporation, a space and military electronics company, until its acquisition by Orbital in 1994.

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Frank L. Culbertson, Jr. has been Executive Vice President and General Manager, Advanced Programs Group, since September 2012.  From 2008 to 2012, he served as Senior Vice President in the Advanced Program Group where he headed our human space systems efforts.   Prior to joining Orbital, Mr. Culbertson was a Senior Vice President at Science Applications International Corporation from 2002 to 2008.  Before entering the private sector, Mr. Culbertson served as a NASA astronaut for 18 years, flying three Space Shuttle missions, and began his career as a pilot in the United States Navy.

Susan Herlick has been Senior Vice President, General Counsel and Corporate Secretary since January 2006 and served as Vice President and Deputy General Counsel from 2003 to 2005.  From 1997 to 2002, she was Vice President and Assistant General Counsel.  She joined Orbital as Assistant General Counsel in 1995.  Prior to that, she was an attorney at the law firm of Hogan & Hartson LLP, now Hogan Lovells US LLP.

Available Information

We maintain an Internet website at www.orbital.com.  In addition to news and other information about our company, we make available on or through the Investor Relations section of our website our Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q, our current reports on Form 8-K and all amendments to these reports as soon as reasonably practicable after we electronically file this material with, or furnish it to, the U.S. Securities and Exchange Commission ("SEC").

At the Investor Relations section of our website, we have a Corporate Governance page that includes, among other things, copies of our Code of Business Conduct and Ethics, our Corporate Governance Guidelines and the charters for each standing committee of our Board of Directors, including the Audit and Finance Committee, the Corporate Governance and Nominating Committee and the Human Resources and Compensation Committee.

Printed copies of all of the above-referenced reports and documents may be requested by contacting our Investor Relations Department either by mail at our corporate headquarters, by telephone at (703) 406-5543 or by e-mail at investor.relations@orbital.com.  All of the above-referenced reports and documents are available from us free of charge.

* * *

Financial information about our products and services, business segments, domestic and foreign operations and export sales is included in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the notes to our consolidated financial statements, and is incorporated herein by reference.

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Special Note Regarding Forward-Looking Statements

Certain statements contained in this Annual Report on Form 10-K are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934.  These forward-looking statements include, but are not limited to, those related to our financial outlook, liquidity, goals, business strategy, projected plans and objectives of management for future operating results, and forecasts of future events.  These statements can be identified by the fact that they do not relate strictly to historical or current facts.  Forward-looking statements often include the words "anticipate," "forecast," "expect," "believe," "should," "will," "intend," "plan" and words of similar substance.  Such forward-looking statements are subject to risks, trends and uncertainties that could cause the actual results or performance of the company to be materially different from the forward-looking statement.  Uncertainty surrounding factors such as continued government support and funding for key space and defense programs, including the impact of potential sequestration under the Budget Control Act of 2011, new product development programs, the availability of key product components, product performance and market acceptance of products and technologies, achievement of contractual milestones, government contract procurement and termination risks, and income tax rates may materially impact Orbital's actual financial and operational results.  We are under no obligation to, and expressly disclaim any obligation or undertaking to update or alter any forward-looking statement, whether as a result of new information, subsequent events or otherwise, except as required by law.

Item 1A.  Risk Factors

Investors should carefully consider, among other factors, the risks listed below.

We derive a significant portion of our revenues from U.S. Government contracts, which are dependent on continued political support and funding and are subject to termination by the U.S. Government at any time.

The majority of our total annual revenues and our firm backlog at December 31, 2012 were derived from U.S. Government contracts.  Most of our U.S. Government contracts are funded incrementally on a year-to-year basis and are subject to uncertain future funding levels.  Our direct and indirect contracts with the U.S. Government may be terminated or suspended by the U.S. Government or its prime contractors at any time, with or without cause.  Termination or suspension of any of our significant U.S. Government contracts could result in the loss of future revenues and unreimbursable expenses or charges that could have a materially adverse effect on our financial condition and results of operations.  Furthermore, key human space initiatives, missile defense programs, and other space programs must compete with other programs for consideration during the federal budgeting and appropriation process, and support and funding for any U.S. Government program may be influenced by general economic conditions, political considerations and other factors.  A decline in U.S. Government support and funding for programs in which we participate could result in contract terminations, delays in contract awards, the failure to exercise contract options, the cancellation of planned procurements and fewer new

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business opportunities, any of which could have a material adverse effect on our financial condition and results of operations.

In particular, the Budget Control Act of 2011 commits the U.S. Government to significantly reduce the federal deficit over ten years through caps on discretionary spending and other measures, including automatic across-the-board spending cuts through the sequestration process, if necessary.  Such spending cuts would be split equally between defense and non-defense programs over a ten-year period.  Although the American Taxpayer Relief Act of 2012 has delayed sequestration temporarily, without further action, it will take effect on March 1, 2013.  It remains uncertain whether the contemplated sequester will take place or if it will be delayed, modified or averted.  Any automatic across-the-board cuts required by sequestration would affect Orbital's U.S. Government customers, in particular, DoD and NASA.  While the impact of sequestration on our individual U.S. Government programs is unclear, funding for programs in which we participate or new contract awards that we seek to win could be reduced, delayed or cancelled.  As a result, our business, financial condition and results of operations could be materially adversely affected.  Even if sequestration does not occur, our U.S. Government customers could face some level of spending cuts, which could adversely impact our business, financial condition and results of operation.

We are subject to a number of domestic and international laws, regulations and restrictions, the non-compliance with which may expose us to adverse consequences.

As a government contractor, we are subject to extensive and complex U.S. Government procurement laws and regulations, including the Procurement Integrity Act and the False Claims Act.  Failure to comply with these laws and regulations could result in contract termination, price or fee reductions, civil or criminal penalties, injunctions and/or administrative sanctions such as suspension or debarment from contracting with the U.S. Government.

In addition, our international business subjects us to numerous U.S. and foreign laws and regulations, including the Foreign Corrupt Practices Act and regulations relating to import-export control.  Our failure to comply with these laws and regulations could result in administrative, civil or criminal penalties and administrative sanctions such as suspension or debarment from contracting with the U.S. Government or suspension of our export privileges, which could result in the termination of existing U.S. Government contracts, affect our ability to win new U.S. Government contracts, and impair our ability to serve foreign customers.

Our business could be adversely affected by adverse audit findings by the U.S. Government.

U.S. Government agencies, including the Defense Contract Audit Agency and various agency Inspectors General, routinely audit and investigate government contractors.  These agencies review a contractor's performance under its contracts, cost structure and compliance with applicable laws, regulations and standards.  Charging practices relating to labor, research and development, and other costs that may be charged directly or indirectly to U.S. Government contracts are often scrutinized to determine that such costs are allowable under U.S. Government contracts and furthermore that such costs are reasonable.  Any costs determined to be unallowable or unreasonable may not be reimbursed, and such costs already reimbursed may be

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subject to repayment.  If the amount of such costs were significant, our results of operations and financial condition could be materially adversely affected.  For example, we expect to recover a significant portion of our research and development expenses, including those related to the Antares and COTS development programs, through billings under certain of our U.S. Government contracts in accordance with applicable regulations, but such billings could be reversed or rejected by the U.S. Goverment.  Our inability to recover a significant portion of such expenses could materially adversely affect our financial condition and results of operations.

The above-mentioned agencies also review the adequacy of, and a contractor's compliance with, its internal control systems and policies, including the contractor's purchasing, property, estimating, compensation, accounting and information systems.  Adverse findings relating to our systems could result in the U.S. Government customer withholding a percentage of payments and also could impact our ability to win new U.S. Government contract awards or option exercises.

Responding to government audits, inquiries or investigations may involve significant expense and divert management attention.  Also, if an audit or investigation were to uncover improper or illegal activities, we could be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U.S. Government.  In addition, we could suffer serious reputational harm if allegations of impropriety were to be made against us.

Termination of our contracts could materially adversely affect our backlog and our future financial results.

Approximately 79% of our 2012 revenues were derived from direct or indirect contracts with the U.S. Government.  All of our direct and indirect contracts with the U.S. Government or its prime contractors may be terminated or suspended at any time, with or without cause, for the convenience of the government.  U.S. Government contract awards also may be subject to bid protests, which may result in a contract award being rescinded or subject to reprocurement.  In addition, our commercial satellite contracts also give the customer the right to unilaterally terminate the contract.  For these reasons, we cannot assure you that all of our backlog will ultimately be recognized in revenues.  The loss of future revenues, incurrence of unreimbursed costs, or liability to the U.S. Government or our commercial customers in connection with other cancelled or rescinded contracts could have a material adverse effect on our financial condition and results of operations.  Furthermore, the termination of any contracts for default could also have a material adverse effect on our ability to obtain new business in the future.

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We are dependent on a single U.S. Government contract for a large percentage of our revenues and backlog.

Our CRS contract to deliver cargo to the ISS accounted for approximately 24% of our revenues in 2012, and we expect it to continue to account for a material percentage of our revenues in 2013.  Given the uncertainty surrounding future government spending and the right of U.S. Government customers to terminate our contracts for convenience, there can be no assurance that the current backlog for this contract ultimately will be recognized in revenues.  The cancellation of our CRS contract for any reason, including as a result of reductions in appropriations or our failure to achieve milestones due to technical issues or delays, would likely have a material adverse effect on our financial condition and results of operations.  In addition, our failure to achieve certain milestones related to the successful launch of our Antares rocket and the successful delivery of cargo to the ISS could result in a material reduction of future revenues and profit.

We use estimates in accounting for our contracts.  Changes in our estimates could materially adversely affect our financial results.

Contract accounting requires judgments in assessing risks, estimating contract revenues and costs and making assumptions related to schedule and technical issues.  Due to the nature of many of our contracts, the estimation of total revenues and costs at completion may be complex and is subject to many variables.  For example, we make assumptions regarding our performance under contracts, the labor hours, labor rates and costs of materials and subcontracts.  Our assumptions regarding the timing and amounts of incentives, penalties, award fees and milestones related to performance on contracts involve a high degree of judgment and estimates by our management.  These assumptions are important factors that impact the revenues and profits that we recognize.  In the event of a change in total estimated contract revenue, cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs.

Because of the significance of the judgments and estimates inherent in our accounting processes described above, it is possible that material adjustments to our financial results could be required if we determine, based on current facts and circumstances known to us, that our prior assumptions are no longer reasonable and need to be revised.

We may not receive full payment for our satellites or launch services and we could incur penalties in the event of a failure or malfunction or if our satellites are not delivered or our rockets are not launched on schedule.

Some of our satellite contracts provide for performance-based payments to be made to us after the satellite is in orbit over periods that may be as long as 15 years.  Additionally, some satellite contracts require us to refund a portion of the contract price to the customer if performance criteria, which cover periods of up to 15 years, are not satisfied.  Certain contracts include payment milestones that are contingent upon a successful launch.  For example, approximately 25% of the contract value of our CRS contract is billable and collectible only upon the completion of launch and delivery milestones for each of eight CRS contract missions.

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As of December 31, 2012, we have recognized a total of $974 million of revenues on this contract which has a total contract value of approximately $1.9 billion.  If we do not successfully complete these launch and delivery milestones, we may be required to record significant revenue and profit reductions.

While our practice is generally to procure insurance policies that we believe would indemnify us for satellite and launch success incentive fees or contract milestones that are not earned and for performance refund obligations, insurance may not be available on economical terms, if at all, for each of our satellite and launch programs.  Further, in some cases, we may elect not to procure insurance.  In addition, some of our satellite and launch contracts require us to pay penalties in the event that satellites are not delivered or a launch does not occur, on a timely basis, or to refund cash receipts to the customer if a contract is terminated for default.  Our failure to earn performance-based contract milestones, or a requirement that we refund cash to the customer or pay delay penalties, could materially adversely affect our financial condition and results of operations.

Contract cost overruns could materially adversely impact our financial results.

We provide our products and services primarily through cost-reimbursable and fixed-price contracts.  Cost overruns, if significant, could materially adversely impact our financial results:

· Under cost-reimbursable contracts, we are reimbursed for allowable incurred costs plus a fee, which may be fixed or variable (based, entirely or in part, on the customer's evaluation of our performance under the contract).  There is no guarantee as to the amount of fee, if any, that we will be awarded under a cost-reimbursable contract with a variable fee.  In addition, the price on a cost-reimbursable contract is based on allowable costs incurred, but generally is subject to customer funding limitations.  If we incur costs in excess of the amount funded, we may not be able to recover such costs.

· Under fixed-price contracts, our customers pay us for work performed and products shipped based on an agreed-upon price, without adjustment for any cost overruns.  Therefore, we generally bear all of the financial risk as a result of increased costs on these contracts, although some of this risk may be passed on to subcontractors.  Some of our fixed-price contracts provide for sharing of unexpected cost increases or savings realized within specified limits and may provide for adjustments in price depending on actual contract performance.  We bear the entire risk of cost overruns in excess of the negotiated maximum amount of unexpected costs to be shared.  Our commercial contracts are generally fixed-price agreements.  In addition, a significant percentage of our revenues from U.S. Government contracts over the last three years was derived from fixed-price agreements, and we believe this trend will continue in future years.

Our growth strategy depends on major new product development initiatives involving significant technical challenges.

The development of new or enhanced products is a complex and uncertain process that requires the accurate anticipation of technological and market trends and can require a significant

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amount of time and expense to complete.  New product development programs often experience schedule delays and cost overruns.  Our inability to successfully complete our new product development initiatives on schedule and within budget, or to obtain market acceptance, could have a material adverse effect on our financial condition and results of operations.

We are making a substantial investment in the design and development of the Antares launch vehicle and the Cygnus advanced maneuvering spacecraft, and we are considering other product enhancements.  As often occurs on major development programs, we have experienced delays in the Antares launch vehicle program due to technical challenges associated primarily with the launch site infrastructure and the AJ-26 engines used in the first stage of the Antares launch vehicle.  Continued delays or a launch failure could impact the achievement of performance milestones, result in the cancellation of existing contracts or affect our ability to win new business in the medium-class launch services market, any of which could have a material adverse effect on our financial condition and results of operation.

Our success depends on our ability to penetrate and retain markets for our existing products and to continue to conceive, design, manufacture and market new products on a cost-effective and timely basis.

We may experience design, manufacturing, marketing and other difficulties that could delay or prevent the development, introduction or acceptance of new products and enhancements.  There can be no assurance that we will be able to achieve the technological advances necessary to remain competitive and profitable, that new products will be developed and manufactured on schedule or on a cost-effective basis or that our existing products will not become technologically obsolete.  Our failure to predict accurately the needs of our customers and prospective customers and to develop products or product enhancements that address those needs, may result in the loss of current customers or the inability to secure new customers.

As a result of technical issues with the AJ-26 rocket engines and the limited inventory of such engines, which are no longer being manufactured, it is uncertain whether the AJ-26 engine is a viable long-term option for our Antares launch vehicle.  Therefore, while we believe we have an adequate supply of such engines to satisfy our current Antares contracts and a limited number of additional missions, we have been exploring the feasibility of alternative propulsion systems.  Any transition to such an alternative would entail a material investment of time and financial resources.  If we are unable to identify a viable alternative propulsion system and modify the Antares launch vehicle in a timely and economical manner, it could limit our long-term ability to compete in the medium-class launch services market.

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There can be no assurance that our products will be successfully developed or manufactured or that they will perform as intended.

Most of the products we develop and manufacture are technologically advanced and sometimes include novel systems that must function under highly demanding operating conditions.  From time to time, we experience product failures, cost overruns in developing and manufacturing our products, delays in delivery and other operational problems.  We have experienced product and service failures, schedule delays and other problems in connection with certain of our launch vehicles, satellites, advanced space systems and other products, and may have similar occurrences in the future.  Some of our satellite and launch services contracts impose monetary penalties on us for delays and for performance failures, which penalties could be significant.  In addition to any costs resulting from product warranties or required remedial action, product failures or significant delays may result in increased costs or loss of revenues due to the postponement or cancellation of subsequently scheduled operations or product deliveries and may have a material adverse effect on our financial condition and results of operations.  Negative publicity from a product failure could damage our reputation and impair our ability to win new contracts.

We rely on sole source suppliers for a number of key components.

We rely on sole source suppliers for a number of key components, including most of the rocket motors and engines we use on our launch vehicles.  If we were unable to obtain such components in the future, due to supplier's financial difficulties or a supplier's failure to perform as expected, we could have difficulty procuring such components in a timely or cost effective manner.  A disruption in the procurement of key components could result in substantial cost increases to us, significant delays in the execution of certain contracts or our inability to complete certain contracts, any of which could result in a materially adverse impact on our financial results.  Our inability to execute contracts in a timely manner could also result in the termination of our contracts for default and could impair or damage our customer relationships.  In addition, negative publicity from any failure of one of our products as a result of a failure by a key supplier could damage our reputation and could limit our ability to win new contracts.

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Our international business is subject to risks that may have a material adverse effect on our financial results.

We sell certain of our communications satellites and other products to non-U.S. customers.  We also procure certain key product components from non-U.S. vendors.  International contracts are subject to numerous risks, including:

· political and economic instability in foreign markets;

· restrictive trade policies of the U.S. Government and foreign governments;

· inconsistent product regulation by foreign agencies or governments;

· the imposition of product tariffs and burdens;

· the cost of complying with a variety of U.S. and international laws and regulations, including regulations relating to import-export control, and the risk of non-compliance;

· the complexity and necessity of using non-U.S. representatives and consultants;

· the inability to obtain required U.S. or foreign country export licenses; and

· foreign currency exposure.

Such risks could have a material adverse effect on our financial results by increasing our costs, causing material delays or subjecting us to penalties.

We operate in a regulated industry, and our inability to secure or maintain the licenses, clearances or approvals necessary to operate our business could have a material adverse effect on our financial results.

Our ability to pursue our business activities is regulated by various agencies and departments of the U.S. Government and, in certain circumstances, the governments of other countries. Commercial space launches, the reentry of our Cygnus maneuvering spacecraft during the COTS demonstration and CRS operational missions, and operation of our L-1011 aircraft require licenses from certain agencies of the DoT, including the FAA.  The use of modified Russian rocket engines on our Antares rocket requires a Russian government license, which we have obtained for our missions currently under contract.  The FCC also requires licenses for radio communications during our rocket launches.  Our classified programs require that certain of our facilities and certain of our employees maintain appropriate security clearances.

Exports of our products, services and technical information generally require licenses from the DoS or the DoC.  In addition, exports of products from our international suppliers may require export licenses from the governments of other countries.  We have a number of international customers and suppliers.  Our inability to secure or maintain any necessary licenses or approvals or significant delays in obtaining such licenses or approvals could negatively impact our ability to compete successfully in international markets, and could result in an event of default under certain of our international contracts.

There can be no assurance that we will be successful in our future efforts to secure and maintain necessary licenses, clearances or other U.S. or foreign government regulatory approvals.  Our failure to do so could prevent or delay the launch of our rockets or delivery of

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our other products, which could have a material adverse effect on our financial condition and results of operations.

We face significant competition in each of our lines of business and many of our competitors possess substantially more resources than we do.

Many of our competitors are larger and have substantially greater resources than we do. Furthermore, it is possible that other domestic or foreign companies or governments, some with greater experience in the space and defense industry and many with greater financial resources than we possess, could seek to produce products or services that compete with our products or services, including new launch vehicles using new technology which could render our launch vehicles less competitively viable.  Some of our domestic and foreign competitors currently benefit from, and others may benefit in the future from, subsidies from or other protective measures by their home countries.

Our financial covenants may restrict our operating activities.

Our credit facility contains certain financial and operating covenants, including, among other things, certain coverage ratios, as well as limitations on our ability to incur debt, make dividend payments, make investments, sell all or substantially all of our assets and engage in mergers and consolidations and certain acquisitions.  These covenants may restrict our ability to pursue certain business initiatives or certain acquisition transactions.  In addition, failure to meet any of the financial covenants in our credit facility could cause an event of default under and/or accelerate some or all of our indebtedness, which would have a material adverse effect on our financial condition and results of operations.

The loss of our executive officers or a failure to retain other key personnel could materially adversely affect our operations.

The departure of any of our executive officers or a failure to retain other key employees could have a material adverse effect on our operations.  We require experienced and highly skilled engineers and scientists, and personnel with security clearances to perform our contracts and further our business objectives.  The competition and demand for such skilled and experienced employees is great, and there can be no assurance that we will continue to attract and retain key personnel.  Our failure to do so could have a material adverse effect on our operations by hindering our ability to execute our contracts in a timely and satisfactory manner and to obtain new business.

The anticipated benefits of future acquisitions may not be realized.

From time to time we may evaluate potential acquisitions that we believe would enhance our business.  The anticipated benefits of completed business acquisitions may not be fully realized if we are unable to successfully integrate the acquired operations, technologies and personnel into our organization.

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We are subject to environmental regulation.

We are subject to various federal, state and local environmental laws and regulations relating to the operation of our business, including those governing pollution, the handling, storage, disposal and transportation of hazardous substances and the ownership and operation of real property.  Such laws and regulations may result in significant liabilities and costs and the loss of permits required to conduct certain operations.  There can be no assurance that a failure to comply with such laws and regulations would not have a material adverse effect on our business in the future.

Our restated certificate of incorporation, our amended and restated bylaws, and Delaware law contain anti-takeover provisions that may adversely affect the rights of our stockholders.

Our charter documents contain provisions which could have an anti-takeover effect, including:

· our charter provides for a staggered Board of Directors as a result of which only one of the three classes of directors is elected each year;

· any merger, acquisition or other business combination that is not approved by our Board of Directors must be approved by 66 2/3% of voting stockholders;

· stockholders holding less than 10% of our outstanding voting stock cannot call a special meeting of stockholders; and

· stockholders must give advance notice to nominate directors or submit proposals for consideration at stockholder meetings.

In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law, which restrict the ability of current stockholders holding more than 15% of our voting shares to acquire us without the approval of 66 2/3% of the other stockholders.  These provisions could discourage potential acquisition proposals and could delay or prevent a change in control transaction.  They could also have the effect of discouraging others from making tender offers for our common stock.  As a result, these provisions may prevent our stock price from increasing substantially in response to actual or rumored takeover attempts.  These provisions may also prevent changes in our management.

Item 1B.  Unresolved Staff Comments

Not applicable.

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Item 2.  Properties

 Our business operations use approximately 1.6 million square feet of office, engineering and manufacturing space in various locations in the United States, as summarized in the table below.

Business Unit	Principal Location(s)
Corporate Headquarters	Dulles, Virginia
Launch Vehicles	Chandler, Arizona; Dulles, Virginia; Vandenberg Air Force Base, California; Wallops Island, Virginia; Huntsville, Alabama
Satellites and Space Systems	Dulles, Virginia; Gilbert, Arizona; Greenbelt, Maryland; Wallops Island, Virginia
Advanced Space Programs	Dulles, Virginia; Gilbert, Arizona

Approximately 1.3 million square feet of our property, consisting primarily of office space, is leased and 270,000 square feet is owned.  Our owned property consists of our two 135,000 square foot state-of-the-art space systems manufacturing facilities that primarily house our satellite manufacturing, assembly and testing activities in Dulles, Virginia and Gilbert, Arizona.  Our manufacturing facility for our launch vehicles in Chandler, Arizona, consisting of approximately 370,000 square feet, is leased.

We believe that our existing facilities are adequate for our immediate requirements.

Item 3.  Legal Proceedings

From time to time we are party to certain litigation or other legal proceedings arising in the ordinary course of business.  Because of the uncertainties inherent in litigation, we cannot predict whether the outcome of such litigation or other legal proceedings will have a material adverse effect on our results of operations or financial condition; however, we do not believe that any of these matters will have a material adverse effect on our results of operations or financial condition.

Item 4.  Mine Safety Disclosures

Not applicable.

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PART II

Item 5.  Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

On February 19, 2013, there were 2,195 Orbital common stockholders of record.

Our common stock trades on The New York Stock Exchange ("NYSE") under the symbol ORB.  The range of high and low sales prices of Orbital common stock, as reported on the NYSE, was as follows:

2012	High		Low
4th Quarter	$	15.18	$	11.90
3rd Quarter		15.12		12.26
2nd Quarter		13.50		10.59
1st Quarter		15.23		12.96
2011	High		Low
4th Quarter	$	15.96	$	11.80
3rd Quarter		18.48		12.19
2nd Quarter		19.33		16.33
1st Quarter		19.38		16.62

We have never paid any cash dividends on our common stock, nor do we anticipate paying cash dividends on our common stock at any time in the foreseeable future.  Moreover, our credit facility contains covenants limiting our ability to pay cash dividends.  For a discussion of these limitations, see "Item 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources."

We did not repurchase any of our equity securities during the fourth quarter of 2012.  We did not issue any equity securities on an unregistered basis during 2012.

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The following graph compares the yearly cumulative total return on the company's common stock against the cumulative total return on the S&P 500 Index and the Dow-Jones Aerospace/Defense Index for the five-year period commencing on December 31, 2007 and ending on December 31, 2012.

Date	Dec-07	Dec-08	Dec-09	Dec-10	Dec-11	Dec-12
S&P 500 Index	100.000	61.514	75.942	85.649	85.647	97.128
Dow-Jones Aerospace/Defense Index	100.000	61.340	74.610	82.495	85.152	94.729
Orbital Stock $100 Value	100.000	79.649	62.235	69.861	59.258	56.158

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Item 6.  Selected Financial Data

Selected Consolidated Financial Data

The selected consolidated financial data presented below for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 are derived from our audited consolidated financial statements.  The selected consolidated financial data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and the related notes included elsewhere in this Form 10-K.

	Years Ended December 31,
	2012			2011			2010			2009			2008
	(In thousands, except per share data)
Operating Data:
Revenues	$	1,436,769		$	1,345,923		$	1,294,577		$	1,125,295		$	1,168,635
Cost of revenues		1,097,190			1,074,389			1,007,668			890,313			955,754
Operating expenses		227,008			191,740			213,895			182,689			128,599
Income from operations		112,571			79,794			73,014			52,293			84,282
Interest income and other		749			19,335			1,848			7,130			6,982
Interest expense		(11,275	)		(11,096	)		(9,778	)		(9,039	)		(8,770	)
Debt extinguishment expense		(10,261	)		—			—			—			—
Investment losses, net		—			—			—			(2,162	)		(17,800	)
Income from continuing operations before taxes		91,784			88,033			65,084			48,222			64,694
Income tax provision		(30,778	)		(20,639	)		(17,615	)		(11,615	)		(22,078	)
Income from continuing operations		61,006			67,394			47,469			36,607			42,616
Income from discontinued operations, net of taxes		—			—			—			—			15,918
Net income	$	61,006		$	67,394		$	47,469		$	36,607		$	58,534
Basic income per share:
Income from continuing operations	$	1.03		$	1.14		$	0.81		$	0.64		$	0.71
Income from discontinued operations		—			—			—			—			0.27
Net income		1.03			1.14			0.81			0.64			0.98
Diluted income per share:
Income from continuing operations	$	1.02		$	1.13		$	0.81		$	0.63		$	0.70
Income from discontinued operations		—			—			—			—			0.26
Net income		1.02			1.13			0.81			0.63			0.96
Basic weighted-average shares outstanding		59,165			58,531			57,683			56,787			58,569
Diluted weighted-average shares outstanding		59,457			59,127			58,335			57,496			59,725
Cash Flow Data:
Cash flow from operating activities	$	(7,666	)	$	65,136		$	(479	)	$	102,783		$	108,823
Cash flow from investing activities		(26,586	)		(59,815	)		(134,452	)		(44,105	)		17,253
Cash flow from financing activities		7,357			1,483			14,360			(13,999	)		(33,591	)
Balance Sheet Data:
Cash and cash equivalents	$	232,324		$	259,219		$	252,415		$	372,986		$	328,307
Net working capital		522,112			416,050			316,617			364,429			349,454
Total assets		1,211,454			1,130,800			1,062,536			929,481			853,895
Long-term obligations, net		143,236			131,182			125,535			120,274			115,372
Stockholders' equity		713,546			643,279			568,617			502,460			473,106

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Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

With the exception of historical information, the matters discussed within this Item 7 and elsewhere in this Form 10-K include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties, many of which are beyond our control.  Readers should be cautioned that a number of important factors, including those identified above in "Item 1 – Special Note Regarding Forward-Looking Statements" and "Item 1A – Risk Factors," may affect actual results and may cause our actual results to differ materially from those anticipated or expected in any forward-looking statement.  Our historical results of operations may not be indicative of our future operating results.

Overview

Introduction

Orbital Sciences Corporation develops and manufactures small- and medium-class rockets and space systems for commercial, military and civil government customers.  Our primary products and services include the following:

· Launch Vehicles - Rockets that are used as small- and medium-class space launch vehicles that place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories.

· Satellites and Space Systems - Small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research, collect imagery and other remotely-sensed data about the Earth, carry out interplanetary and other deep-space exploration missions, and demonstrate new space technologies.

· Advanced Space Programs - Human-rated space systems for Earth-orbit and deep-space exploration, and small- and medium-class satellites primarily used for national security space programs and to demonstrate new space technologies.

Our general strategy is to develop and expand a core integrated business of space and launch system technologies and products, focusing on the design and manufacture of affordable rockets, satellites and other space systems in order to establish and expand positions in niche markets that have not typically been emphasized by our larger competitors.  Another part of our strategy is to seek customer contracts that will fund new product development and enhancements to our existing launch vehicle and space systems product lines.  As a result of our capabilities and experience in designing, developing, manufacturing and operating a broad range of small- and medium-class rockets and space systems, we believe we are well positioned to capitalize on the demand for more affordable space-technology systems in commercial satellite communications, space-based military and intelligence operations and military defense programs, and to take

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advantage of government-sponsored initiatives in human space exploration, space-based scientific research and interplanetary exploration.

Business and Industry Considerations

U.S. Government Business - During 2012, 2011 and 2010, approximately 79%, 71% and 74%, respectively, of our consolidated revenues were derived from contracts with the U.S. Government and its agencies or from subcontracts with other U.S. Government contractors.  Most of our U.S. Government contracts are funded incrementally on a year-to-year basis.  As a result, our operations and our financial results in any period could be impacted substantially by trends in U.S. Government spending, shifting priorities in DoD (including MDA), NASA and other agency budgets, the types of contracts and payment terms mandated by the U.S. Government and changes in the Executive Branch and Congress.  These factors, which are largely beyond our control, could have a significant impact on our business.

The Budget Control Act of 2011 commits the U.S. Government to significantly reduce the federal deficit over ten years through caps on discretionary spending and other measures, including automatic across-the-board spending cuts through the sequestration process, if necessary.  Although Congress has delayed sequestration temporarily, without further action, it will take effect on March 1, 2013.  It remains uncertain whether the contemplated sequester will take place, or if it will be delayed, modified or averted.  In general, we expect that our U.S. Government customers will experience reductions in their budgets compared to recent levels.  Such reductions could occur even if a compromise is reached on U.S. Government spending and sequestration is averted.

NASA continues to prioritize funding for development of U.S. commercial cargo and crew services for the International Space Station.  Accordingly, funding for our COTS demonstration mission, including an Antares test launch, and our CRS contract currently remains unaffected by budget cuts.   Priorities with respect to Earth and space science investigations are less clear, but we believe the NASA budget for these programs could be reduced as a result of a focus on other programs, which could have a negative impact on certain of our current programs or potential future pursuits.

The majority of Orbital's missile defense interceptor and target launch vehicle revenues comes from programs sponsored by MDA.  The Budget Control Act of 2011 provides for a significant reduction in defense budgets over a ten-year period, with further reductions possible in the event of sequestration.   Consequently, we expect federal spending on space and missile defense programs to be lower compared to historical levels over the next couple of years.  Due to uncertainties regarding funding and federal budgets, we believe certain MDA programs could be delayed or reduced in scope.

We believe that federal budget constraints may impact national security space programs, possibly resulting in program delays, cancellations or scope reductions.  DoD and the intelligence community have for some missions historically relied on large multi-mission space systems that are very expensive and require a decade or longer to be built and deployed.  We believe that DOD and the intelligence community are considering ways to address their

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operational requirements on more limited budgets by considering smaller and more affordable space systems that we believe are within our addressable market; however, it is uncertain whether we will achieve any competitive advantages as a result.

Commercial Satellites Business - Our largest commercial business is the design and manufacture of small-class GEO communications satellites.  Commercial communications satellites accounted for 21%, 29% and 26% of our consolidated revenues in 2012, 2011 and 2010, respectively.

The commercial communications satellite market is driven by economic conditions that may affect satellite operators directly as well as their satellite replacement requirements.  In 2012, the total number of commercial GEO satellite orders was similar to the number ordered in 2011, as the largest satellite operators continued their trend of reduced capital spending, following greater expenditures in prior years.  We expect capital spending from the major satellite operators to remain at similarly low levels in the near future.  As a result, we expect that the total number of commercial GEO satellite orders placed in 2013, including the number of satellite orders in our addressable market, will be comparable to those of 2011 and 2012.

Critical Accounting Policies and Significant Estimates

The preparation of consolidated financial statements requires management to make judgments based upon estimates and assumptions that are inherently uncertain.  Such judgments affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  Management continuously evaluates its estimates and assumptions, including those related to long-term contracts and incentives, inventories, long-lived assets, income taxes, contingencies and litigation, and the carrying values of assets and liabilities.  Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions, and such differences may be material.

The following is a summary of the most critical accounting policies used in the preparation of our consolidated financial statements.

Revenue Recognition - Our revenues are derived primarily from long-term contracts.  Revenues on long-term contracts are recognized using the percentage-of-completion method of accounting.  Such revenues are recorded based on the percentage that costs incurred to date bear to the most recent estimates of total costs to complete each contract.  Estimating future revenues, costs and profit is a process requiring a high degree of management judgment, including management's assumptions regarding our future operational performance as well as general economic conditions.  In the event of a change in total estimated contract revenue, cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs.  Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be adversely affected to the extent that estimated costs to complete or incentive or award fee estimates are revised, delivery schedules are delayed, performance-based milestones are not achieved or

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progress under a contract is otherwise impeded.  Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly.  In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding general and administrative expense, is recorded in the period in which the loss is first estimated.

Many of our contracts include provisions that increase or decrease contract value based on performance in relation to established targets or customer evaluations.  Mission success milestones and incentive and award fees are included in estimated contract revenue when we are able to make reasonable predictions about whether the performance targets will be achieved and make dependable estimates of such amounts based upon our historical experience with similar types of activities and other objective criteria.  We include the estimated amount of mission success milestones and incentive and award fees in estimated contract revenue at the inception of each contract, with reassessments made each quarter throughout the period of contract performance.  If performance under such contracts were to differ from previous assumptions, or if we were to revise our estimates or assumptions, current period revenues and profit would be adjusted and could fluctuate significantly.  Our assessments are guided by the historical performance of our products and product families, the reliability record of the technology employed and assessments of technological considerations for each contract.

As part of our risk management strategy, we generally insure significant mission success milestone receipts.  Insurance recoveries are recorded as other income in the consolidated financial statements.

Mission success milestones relating to the launch of our Antares rocket with its Cygnus payload and the successful delivery of cargo to the ISS comprise approximately 25% of total CRS contract value.  If we do not achieve these mission success milestones, we may be required to record revenue and profit reductions.  Since the inception of the CRS contract in December 2008 through December 31, 2012, we have recognized $974 million of revenues on the contract, which has a total contract value of approximately $1.9 billion.

As of December 31, 2012, unbilled receivables included approximately $9 million 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 a portion of the contract price to the customer if performance criteria, which cover periods of up to 15 years, are not satisfied.  As of December 31, 2012, we could be required to refund up to approximately $12 million to customers if certain completed satellites were to fail to satisfy performance criteria.  We generally procure insurance policies under which we believe we would recover satellite incentive fees that are not earned and potential performance refund obligations.

Research and Development - Expenditures for company-sponsored research and development projects are expensed as incurred.  Research and development projects performed under contracts for customers are recorded as contract costs.  In 2008, we entered into the COTS agreement with NASA to design, build and demonstrate a new space transportation system for delivering cargo and supplies to the ISS.  The COTS agreement is accounted for as a best-efforts

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research and development cost-sharing arrangement.  As such, the amounts funded by NASA are recognized proportionally as an offset to our COTS program research and development expenses, including associated general and administrative expenses.

Income Taxes - We account for income taxes using the asset and liability method.  Under this method, deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.  We record valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized.  Changes in estimates of future taxable income can materially change the amount of such valuation allowances.

Consolidated Results of Operations for the Years Ended December 31, 2012, 2011 and 2010

Revenues - Our consolidated revenues were $1,436.8 million in 2012, an increase of $90.8 million, or 7%, compared to 2011 due to higher revenues in the launch vehicles segment and advanced space programs segment partially offset by lower revenues in the satellites and space systems segment.  Launch vehicles segment revenues increased $44.1 million, or 9%, in 2012 primarily due to increased activity on target launch vehicle contracts, partially offset by decreased activity on missile defense interceptors and lower space launch vehicle revenues.  In addition, 2011 revenues in the launch vehicles segment were reduced by an $11.3 million adjustment as a result of a Taurus XL launch failure in March 2011.  Advanced space programs segment revenues increased $36.1 million, or 8%, in 2012 primarily due to increased activity on the CRS contract partially offset by decreased activity on national security satellite contracts.  Satellites and space systems segment revenues decreased $57.6 million, or 10%, in 2012 due to lower activity on communications satellite contracts that were completed or substantially completed in 2012, partially offset by higher activity on space technical services contracts and science and remote sensing satellite contracts.

Eliminations of intersegment revenues decreased to $56.8 million in 2012 compared to $125.1 million in 2011.  Intersegment revenues included $47.6 million and $114.4 million in 2012 and 2011, respectively, pertaining to Antares launch vehicle production work reported in our launch vehicles segment as part of the COTS program that is reported in our advanced space programs segment.  Antares production work on the COTS program decreased significantly as the COTS program was nearing completion in late 2012.

The CRS contract accounted for 24% and 18% of consolidated revenues in 2012 and 2011, respectively.  The launch vehicle portion of the CRS contract is reported in our launch vehicles segment and the remainder of the CRS contract is reported in our advanced space programs segment.  CRS contract revenues totaled $345.9 million in 2012, an increase of $98.5 million, or 40%, compared to 2011, due to increased production activity.  Since the inception of the CRS contract through December 31, 2012, a total of $974 million of revenues have been recognized on the contract, which has a total contract value of approximately $1.9 billion.

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Our consolidated revenues were $1,345.9 million in 2011, an increase of $51.3 million, or 4%, compared to 2010 due to higher revenues in all business segments.  Satellites and space systems segment revenues increased $56.8 million, or 11%, in 2011 due to increased activity on communications satellite contracts and space technical services contracts, partly offset by lower activity on science and remote sensing satellite contracts.   Launch vehicles segment revenues increased $48.7 million, or 11%, in 2011 primarily due to increased activity on target launch vehicle and space launch vehicle contracts, partly offset by decreased activity on missile defense interceptor contracts.  Advanced space programs segment revenues increased $10.4 million, or 2%, in 2011 primarily due to increased activity on national security satellite contracts, partially offset by a decrease in activity on the Orion contract, which was terminated for convenience in the second quarter of 2010, and decreased activity on the CRS contract.

Eliminations of intersegment revenues increased to $125.1 million in 2011 compared to $60.6 million in 2010.  Intersegment revenues included $114.4 million and $51.8 million in 2011 and 2010, respectively, pertaining to Antares launch vehicle production work in our launch vehicles segment for the COTS program that is reported in our advanced space programs segment.

Cost of Revenues - Our cost of revenues was $1,097.2 million in 2012, an increase of $22.8 million, or 2%, compared to 2011.  Cost of revenues includes the cost of personnel, materials, subcontractors and overhead.   Cost of revenues in the advanced space programs segment increased $27.4 million, or 8%, primarily due to higher contract costs on the CRS program.  Cost of revenues in the launch vehicles segment increased $6.6 million, or 2%, which was lower than the revenue increase in this segment largely due to the effect of the 2011 revenue reduction resulting from the March 2011 launch failure mentioned above.  Cost of revenues in the satellites and space systems segment decreased $79.5 million, or 17%, primarily due to lower production activity and reduced materials and subcontract costs on communications satellite contracts.    Eliminations of intersegment cost of revenues decreased $68.3 million in 2012 attributable to the decrease in intersegment revenues discussed above.

Our cost of revenues was $1,074.4 million in 2011, an increase of $66.7 million, or 7%, compared to 2010.  The increase in cost of revenues was principally due to an increased level of subcontract activity and materials purchases that were generally consistent with the consolidated revenue increase discussed above.  Cost of revenues in the launch vehicles segment increased $73.4 million, or 22%, in 2011 compared to 2010, which exceeded the revenue increase in this segment largely due to the 2011 revenue reduction resulting from the 2011 launch failure mentioned above.  Cost of revenues in the satellites and space systems segment increased $48.5 million, or 11%, in 2011.  Cost of revenues in the advanced space programs segment increased $9.3 million, or 3%, in 2011.  Eliminations of intersegment cost of revenues increased $64.5 million in 2011 attributable to the increase in intersegment revenues discussed above.

Research and Development Expenses - Our research and development expenses totaled $114.2 million, or 8% of revenues, in 2012, an $11.4 million increase compared to $102.8 million, or 8% of revenues, in 2011.  The increase in research and development expenses was primarily attributable to product enhancements in the satellites and space systems segment and increased costs pertaining to the Antares launch vehicle development program.  These factors

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were partially offset by lower COTS program costs as this program was nearing completion in late 2012.  The large majority of our research and development expenses in 2012 and 2011 were attributable to the COTS and the Antares development programs.

The COTS program is accounted for as a best-efforts research and development cost-sharing arrangement.  As such, the amounts funded by NASA are recognized proportionally as an offset to the company's COTS program research and development expenses, including associated general and administrative expenses.  Under the COTS agreement, as amended, as of December 31, 2012, NASA has agreed to pay us $288 million in cash milestone payments, partially funding our program costs which are currently estimated to be approximately $513 million.  We expect to complete this program in the first half of 2013.  The following table summarizes the COTS program costs incurred and amounts funded by NASA recorded in research and development expenses (in millions):

	2012			2011			2010			Inception to December 31, 2012
Research and development costs incurred (1)	$	62.6		$	158.8		$	136.5		$	480.5
Less amounts funded by NASA		(21.9	)		(108.0	)		(69.1	)		(282.2	)	(2)
Net research and development expenses	$	40.7		$	50.8		$	67.4		$	198.3

^{_______________________}

⁽¹⁾ Includes associated general and administrative expenses.

⁽²⁾ Through December 31,2012, the company has received $276 million in cash from NASA and as of December 31, 2012, the company recorded an approximately $6 million receivable due from NASA.

Research and development expenses attributable to our Antares launch vehicle development program were $42.6 million, $34.3 million and $48.3 million in 2012, 2011 and 2010, respectively.

We believe that the majority of our research and development expenses are recoverable and billable under our contracts with the U.S. Government.  Charging practices relating to research and development and other costs that may be charged directly or indirectly to government contracts are subject to audit by U.S. Government agencies to determine if such costs are reasonable and allowable under government contracting regulations and accounting practices.  We believe that the research and development costs incurred in connection with our Antares development program are allowable, although the U.S. Government has not yet made a final determination.  During 2012, 2011 and 2010, we incurred $42.6 million, $34.3 million and $43.2 million, respectively, of such expenses that have been recorded as allowable costs.  Since the inception of the Antares program through December 31, 2012, we have incurred $196.1 million of such costs.  If such costs were determined to be unallowable, we could be required to record revenue and profit reductions in future periods.

In 2010, we established a self-imposed ceiling on the amount of research and development expenses that we would recover under our U.S. Government contracts.  Although we believe that such expenses would otherwise have been allowable and recoverable under government contracting regulations and accounting practices, in 2010, we incurred $5.1 million of research and development costs in excess of our self-imposed ceiling for which we did not seek recovery under our U.S. Government contracts.

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Selling, General and Administrative Expenses - Selling, general and administrative expenses were $112.8 million, $89.0 million and $91.6 million in 2012, 2011 and 2010, respectively, or 8%, 7% and 7% of revenues, respectively.  Selling, general and administrative expenses include the cost of our finance, legal, administrative and general management functions, as well as bid, proposal and marketing costs.

Selling, general and administrative expenses increased $23.8 million, or 27%, in 2012 compared to 2011 primarily due to an increase in bid, proposal and marketing costs pertaining to new business pursuits in the advanced space programs segment and launch vehicles segment, and due to an increase in certain corporate-level professional fees and expenses.  In addition, selling, general and administrative expenses in 2012 included $2.1 million of professional fees and other costs related to a potential acquisition that was not consummated.

Selling, general and administrative expenses decreased $2.6 million, or 3%, in 2011 compared to 2010 primarily due to a decrease in bid, proposal and marketing costs in all of our business segments and the absence of $1.6 million of transaction expenses incurred in 2010 in connection with a business acquisition.

Operating Income - Our consolidated operating income was $112.6 million in 2012, an increase of $32.8 million, or 41%, compared to 2011 due to higher operating income in all three operating business segments.  Launch vehicles segment operating income increased $22.0 million, or 155%, largely due to an adjustment that reduced 2011 operating income by $11.3 million in connection with the March 2011 rocket launch failure mentioned above and increased operating income from the CRS and target launch vehicle contracts.  Satellites and space systems segment operating income increased $8.6 million, or 23%, primarily due to profit improvements on certain communications satellite contracts that were substantially completed in 2012 and a $6.5 million contract settlement charge that reduced operating income in 2011.  Advanced space programs segment operating income increased $4.3 million, or 15%, primarily due to a favorable contract closeout adjustment in 2012 in addition to increased activity on the CRS contract, partially offset by decreased activity on national security satellite contracts.  Operating income in 2012 was reduced by $2.1 million of unallocated professional fees and other costs, recorded in corporate and other, related to a potential acquisition that was not consummated.

Total operating income from the CRS contract was $16.7 million in 2012, an increase of $4.2 million, or 34%.  Since the inception of the CRS program through December 31, 2012, a total of $48 million of operating income has been recognized on the program.

Our consolidated operating income was $79.8 million in 2011, an increase of $6.8 million, or 9%, compared to 2010 due to higher operating income in the advanced space programs segment and the satellites and space systems segment partially offset by lower operating income in the launch vehicles segment.  Advanced space programs segment operating income increased $7.0 million, or 33%, primarily due to increased activity on national security satellite contracts.  Satellites and space systems segment operating income increased $3.8 million, or 11%, primarily due to increased activity on communications satellite contracts partially offset by decreased activity on science and remote sensing satellite contracts.  Launch vehicles segment operating income decreased $7.0 million, or 33%, primarily due to the effect of the 2011 launch failure,

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partially offset by the absence of unrecovered research and development expenses that were recognized in 2010.

Interest Income and Other - Interest income and other was $0.7 million, $19.3 million and $1.8 million in 2012, 2011 and 2010, respectively.  In 2012, 2011 and 2010, we earned interest income of $1.0 million, $1.0 million and $1.2 million, respectively, on short-term invested cash balances.  Interest income and other in 2011 included the recognition of $17.8 million of insurance recoveries that was comprised of $11.3 million pertaining to the March 2011 Taurus XL launch failure and the $6.5 million contract settlement charge, discussed above.

Interest Expense - Interest expense was $11.3 million, $11.1 million and $9.8 million in 2012, 2011 and 2010, respectively.  These amounts were primarily attributable to our long-term convertible debt which was repaid in December 2012.

Debt Extinguishment Expense - During 2012, we recorded $10.3 million of debt extinguishment expenses associated with a debt refinancing transaction, described below in "Liquidity and Capital Resources."  The debt extinguishment expenses consisted of $6.8 million of accelerated amortization of debt discount, $2.8 million in prepayment of premiums and other expenses, and $0.7 million in accelerated amortization of debt issuance costs.

Income Tax Provision - Our income tax provision was $30.8 million, $20.6 million and $17.6 million in 2012, 2011 and 2010, respectively.  The effective tax rate for 2012, 2011 and 2010 was 34%, 23% and 27%, respectively.  We recorded favorable income tax adjustments of $2.8 million and $7.7 million in 2012 and 2011, respectively, pertaining to our election to claim extraterritorial income exclusions related to export activities in prior years.  In addition, our income tax provisions in 2011 and 2010 included the effect of federal research and development tax credits of $5.1 million and $7.4 million, respectively.

We utilized net operating loss carryforwards that substantially offset taxable income in 2010 through 2012.  As a result, our cash payments for income taxes, which primarily related to alternative minimum taxes, were equal to approximately 3%, 3% and 4% of pretax income in 2012, 2011 and 2010, respectively.

Net Income - Net income was $61.0 million, $67.4 million and $47.5 million, or $1.02, $1.13 and $0.81 diluted earnings per share, in 2012, 2011 and 2010, respectively.

Segment Results

Our products and services are grouped into three reportable segments:  launch vehicles, satellites and space systems and advanced space programs.  Corporate office transactions that have not been attributed to a particular segment, as well as consolidating eliminations and adjustments, are reported in corporate and other.

The following tables of financial information and related discussion of the results of operations of our business segments are consistent with the presentation of segment information in Note 2 to the consolidated financial statements in this Form 10-K.

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Launch Vehicles

Launch vehicles segment operating results were as follows (in thousands, except percentages):

	2012			2011			% Change			2011			2010			% Change
Revenues	$	527,287		$	483,177			9	%	$	483,177		$	434,511			11	%
Operating income		36,131			14,147			155	%		14,147			21,188			(33	%)
Operating margin		6.9	%		2.9	%					2.9	%		4.9	%

Segment Revenues - Launch vehicles segment revenues increased $44.1 million, or 9%, in 2012 compared to 2011 primarily due to increased activity on target launch vehicle contracts partially offset by decreased activity on missile defense interceptors and space launch vehicle contracts.  Target launch vehicle revenues increased $60.2 million, or 43%, primarily due to activity on recently awarded contracts.  Missile defense interceptor revenues decreased $9.7 million, or 11%, primarily due to decreased activity on the GMD contract.  Missile defense interceptor revenues accounted for 15% and 18% of total launch vehicles segment revenues in 2012 and 2011, respectively.  Space launch vehicle revenues decreased $5.2 million, or 2%, primarily due to decreased production work on Antares launch vehicles combined with lower Taurus and Pegasus revenues, partially offset by increased activity on Minotaur launch vehicles.  In addition, 2011 revenues were reduced by an $11.3 million adjustment as a result of the 2011 Taurus XL launch failure discussed above.  Antares launch vehicle revenues were $190.6 million and $199.7 million in 2012 and 2011, respectively, reflecting a decrease in Antares activity for the COTS program that was largely offset by increased Antares activity for the CRS contract.  Antares revenues in 2012 and 2011 were $143.0 million and $85.3 million, respectively, for the CRS contract and $47.6 million and $114.4 million, respectively, for the COTS program.  Antares launch vehicle revenues accounted for 36% and 41% of total launch vehicles segment revenues in 2012 and 2011, respectively.

Launch vehicles segment revenues increased $48.7 million, or 11%, in 2011 compared to 2010 primarily due to increased activity on target launch vehicle and space launch vehicle contracts, partially offset by decreased activity on missile defense interceptor contracts.  Target launch vehicle revenues increased $53.4 million, or 63%, primarily due to activity on new contracts awarded in 2011.  Space launch vehicle revenues increased $19.3 million, or 8%, due to increased production work on Antares launch vehicles, partially offset by decreased activity on Taurus and Minotaur space launch vehicles and an $11.3 million revenue reduction related to the Taurus XL rocket launch failure discussed above.  Antares launch vehicle revenues were $199.7 million and $148.8 million in 2011 and 2010, respectively, which included $85.3 million and $97.0 million, respectively, related to the CRS contract and $114.4 million and $51.8 million, respectively, related to the COTS program.  Antares launch vehicle revenues accounted for 41% and 35% of total launch vehicles segment revenues in 2011 and 2010, respectively.  Missile defense interceptor revenues decreased $25.8 million, or 23%, due primarily to decreased activity on the GMD contract in 2011.  Missile defense interceptor revenues accounted for 18% and 26% of total launch vehicles segment revenues in 2011 and 2010, respectively.

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Segment Operating Income - Operating income in the launch vehicles segment increased $22.0 million, or 155%, in 2012 compared to 2011 primarily due to higher space launch vehicle and target launch vehicle operating income partially offset by decreased operating income from interceptor launch vehicles.  Operating income from space launch vehicle contracts increased $18.6 million primarily due to an adjustment that reduced 2011 operating income by $11.3 million in connection with the rocket launch failure mentioned above and increased Antares operating income in 2012.  Operating income from Antares launch vehicle production work for the CRS contract was $6.7 million and $4.4 million in 2012 and 2011, respectively.  This segment does not recognize any profit pertaining to the Antares rockets that are being built for the COTS research and development program that is reported in our advanced space programs segment.  Operating income from target launch vehicle contracts increased $6.4 million primarily due to activity from recently awarded contracts.  Operating income from interceptor launch vehicles decreased $3.9 million primarily due to decreased activity on the GMD contract.

Operating income in the launch vehicles segment decreased $7.0 million, or 33%, in 2011 compared to 2010 primarily due to lower space launch vehicle contract operating income partially offset by increased operating income from target launch vehicle contracts and the absence of $5.1 million of unrecovered research and development expenses that were recognized in 2010.  Operating income from space launch vehicle contracts decreased $12.8 million primarily due to the $11.3 million reduction in 2011 operating income resulting from the launch failure discussed above.  Operating income from Antares launch vehicle production work for the CRS contract was $4.4 million and $4.7 million in 2011 and 2010, respectively.  Operating income from interceptor launch vehicle contracts was approximately $12.0 million in both 2011 and 2010.  Operating income from target launch vehicle contracts increased $4.2 million primarily due to activity from recently awarded contracts.  In addition, there was a decrease in operating income in this segment of $2.7 million largely attributable to the absence of a favorable cost adjustment which was recorded in 2010.

Launch vehicles segment operating margins (as a percentage of revenues) were 6.9%, 2.9% and 4.9% in 2012, 2011 and 2010, respectively.  The increase in operating margin in 2012 as compared to 2011 was primarily due to the adjustment pertaining to the 2011 launch failure discussed above and lower Antares intersegment revenues (which do not generate profit), and profit improvements on certain space launch vehicle contracts.  The decrease in operating margin in 2011 as compared to 2010 was primarily due to the effect of the launch failure in 2011 and higher Antares intersegment revenues, partially offset by the absence of unrecovered research and development expenses recorded in 2010 discussed above.

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Satellites and Space Systems

Satellites and space systems segment operating results were as follows (in thousands, except percentages):

	2012			2011			% Change			2011			2010			% Change
Revenues	$	496,152		$	553,797			(10	%)	$	553,797		$	497,015			11	%
Operating income		46,222			37,623			23	%		37,623			33,775			11	%
Operating margin		9.3	%		6.8	%					6.8	%		6.8	%

Segment Revenues - Satellites and space systems segment revenues decreased $57.6 million, or 10%, in 2012 compared to 2011 primarily due to lower activity on communications satellite contracts partially offset by higher activity on space technical services contracts and science and remote sensing satellite contracts.  Communications satellite revenues decreased $73.5 million, or 20%, principally attributable to a reduction in activity on contracts that were completed or nearing completion in 2012.  Communications satellite contract revenues accounted for 60% and 67%, respectively, of total segment revenues in 2012 and 2011.  Space technical services revenues increased $9.9 million, or 11%, primarily due to increased contract activity.  Revenues from science and remote sensing satellite contracts increased $6.0 million, or 7%, primarily due to activity on a contract that was awarded in 2011, partially offset by lower revenues on contracts that were completed or nearing completion.

Satellites and space systems segment revenues increased $56.8 million, or 11%, in 2011 compared to 2010 primarily due to increased revenues on communications satellite contracts and space technical services contracts, partially offset by decreased revenues on science and remote sensing satellite contracts.  Communications satellite revenues increased $40.7 million, or 12%, principally attributable to activity on contracts that were awarded in late 2010 and early 2011.  Communications satellite contract revenues accounted for 67% of total segment revenues in both 2011 and 2010.  Space technical services revenues increased $25.6 million, or 39%, primarily due to production work on a contract that was awarded in the third quarter of 2010.  Revenues from science and remote sensing satellite contracts decreased $9.0 million, or 10%, primarily due to decreased activity on certain contracts.

Segment Operating Income - Operating income in the satellites and space systems segment increased $8.6 million, or 23%, in 2012 compared to 2011 due to higher operating income on communications satellite contracts.  Communications satellite contracts operating income increased $8.5 million despite lower communications satellite revenues primarily due to profit improvements on certain communications satellite contracts that were substantially completed in 2012 and a $6.5 million contract settlement charge that reduced operating income in 2011.  Communications satellite operating income accounted for 72% and 64% of total segment operating income in 2012 and 2011, respectively.  Science and remote sensing satellite operating income decreased $1.2 million.  Space technical services operating income increased marginally due to an increase in contract activity and related revenues.

Operating income in the satellites and space systems segment increased $3.8 million, or 11%, in 2011 compared to 2010 primarily due to increased activity and improved performance on communications satellite contracts and increased activity on space technical services contracts partially offset by decreased activity on science and remote sensing satellite contracts.  

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Communications satellite operating income increased $5.1 million primarily due to new activity on contracts that were awarded in late 2010 and early 2011.  In 2011, communications satellite operating income reflected a $6.5 million charge pertaining to the contract settlement discussed above.  In 2010, communications satellite operating income reflected charges totaling $5.0 million pertaining to the resolution of a satellite anomaly.  Communications satellite operating income accounted for 64% and 56% of total segment operating income in 2011 and 2010, respectively.  Space technical services operating income increased $1.4 million primarily due to production work on a contract awarded in the third quarter of 2010.  Science and remote sensing satellite operating income decreased $1.3 million primarily due to decreased activity.

Satellites and space systems segment operating margins (as a percentage of revenues) were 9.3%, 6.8% and 6.8% in 2012, 2011 and 2010, respectively.  The operating margin increase in 2012 compared to 2011 was driven by profit improvements on certain communications satellite contracts and the effect of the $6.5 million reduction to operating income in 2011 from the contract settlement discussed above.  Operating margins in 2011 and 2010 remained constant, reflecting slight profit margin improvements on communications satellite contracts offset by slightly lower profit margins on all other contracts.

Advanced Space Programs

Advanced space programs segment operating results were as follows (in thousands, except percentages):

	2012			2011			% Change			2011			2010			% Change
Revenues	$	470,102		$	434,036			8	%	$	434,036		$	423,614			2	%
Operating income		32,309			28,024			15	%		28,024			20,999			33	%
Operating margin		6.9	%		6.5	%					6.5	%		5.0	%

Segment Revenues - Advanced space programs segment revenues increased $36.1 million, or 8%, in 2012 compared to 2011 primarily due to increased activity on the CRS contract, partially offset by decreased activity on national security satellite revenues.  CRS contract revenue increased $40.9 million, or 25%, partially offset by lower national security satellite revenues of $8.6 million, or 3%, due to decreased activity.  In 2012, national security satellite contracts and the CRS contract accounted for 54% and 43%, respectively, of total segment revenues, compared to 61% and 37%, respectively, in 2011.

Advanced space programs segment revenues increased $10.4 million, or 2%, in 2011 compared to 2010 primarily due to increased revenues on national security satellite contracts, offset by a reduction in activity on the Orion contract and the CRS contract.  National security satellite revenues increased $70.0 million, or 36%, attributable to increased activity.  This increase in revenues was partially offset by a reduction in Orion contract revenues of $40.9 million, or 87%, due to the termination of the contract for convenience by the customer in 2010 and a reduction in revenue on the CRS contract of $18.6 million, or 10%, attributable to decreased activity.  In 2011, national security satellite contracts, the CRS contract and the Orion contract accounted for 61%, 37% and 1%, respectively, of total segment revenues, compared to 46%, 43% and 11%, respectively, of total segment revenues in 2010.

38

Segment Operating Income -Operating income in the advanced space programs segment increased $4.3 million, or 15%, in 2012 compared to 2011 primarily due to a favorable contract closeout adjustment in 2012, in addition to increased activity on the CRS contract, partially offset by decreased activity on national security satellite contracts.

Operating income in the advanced space programs segment increased $7.0 million, or 33%, in 2011 compared to 2010 primarily due to an increase in national security satellite operating income partially offset by a decrease in operating income on the CRS contract.  National security satellite operating income increased $7.3 million attributable to increased activity.  This increase in operating income was partially offset by a $0.9 million decrease in operating income on the CRS contract attributable to decreased activity.

Advanced space programs segment operating margins (as a percentage of revenues) were 6.9%, 6.5% and 5.0% in 2012, 2011 and 2010, respectively.  The increase in operating margin in 2012 compared to 2011 was principally due to the favorable closeout adjustment discussed above.  The increase in operating margin in 2011 compared to 2010 was primarily due to operational improvements and increased activity on in national security satellite contracts.

Corporate and Other

Corporate and other revenues were comprised solely of the elimination of intersegment revenues of $56.8 million, $125.1 million and $60.6 million in 2012, 2011 and 2010, respectively.  The intersegment revenue eliminations were primarily comprised of $47.6 million, $114.4 million and $51.8 million in 2012, 2011 and 2010, respectively, of Antares revenues recorded in the launch vehicles segment in connection with the COTS program that is being reported as a research and development program in our advanced space programs segment.

The operating losses in corporate and other of $2.1 million and $2.9 million in 2012 and 2010, respectively, consisted of professional fees and other costs related to a potential acquisition that was not consummated in 2012, and unallocated corporate-level costs including $1.6 million of transaction expenses incurred in connection with an acquisition we completed in 2010.

Liquidity and Capital Resources

Cash Flow from Operating Activities

Cash used in operating activities in 2012 was $7.7 million, compared to cash provided by operating activities of $65.1 million in 2011.  The decrease in operating cash flow resulted primarily from the net effect of changes in working capital and other assets and liabilities.  During 2012, changes in working capital and other assets and liabilities used $154.4 million of cash, compared to $64.9 million of cash used in 2011.  Changes in working capital in 2012 included an increase in receivables of $165.7 million principally due to an increase in unbilled receivables pertaining to the CRS contract.   Under the terms of the CRS contract, approximately 25% of the contract value is billable to the customer and collectible only upon the completion of launch and delivery milestones for each of eight CRS contract missions.  The first CRS mission is scheduled to be completed in 2013.  Partially offsetting the increase in receivables was the net

39

effect of a $42.9 million decrease in deferred revenues and customer advances, a $30.6 million decrease in other assets and a $20.3 million increase in accounts payable and accrued expenses.

Cash provided by operating activities in 2011 was $65.1 million, as compared to cash used in operating activities of $0.5 million in 2010.  The increase in operating cash flows resulted primarily from a $35.9 million increase in cash provided by favorable changes in working capital and certain other assets and liabilities, in addition to a $19.9 million increase in net income.  During 2011, net changes in working capital and certain other assets and liabilities used $64.9 million of cash, compared to a net use of $100.8 million of cash in 2010.  In 2011, other assets increased $37.3 million primarily due to prepayments to vendors related to certain contracts entered into at the end of 2011.   In addition, accounts payable and accrued expenses decreased $14.9 million attributable to reductions in contract-related liabilities, and receivables increased $7.0 million primarily related to the CRS contract.

Cash Flow from Investing Activities

Cash used in investing activities in 2012 was $26.6 million, compared to $59.8 million in 2011.  We spent $52.2 million on capital expenditures in 2012, compared to $59.8 million in 2011, largely to support our Antares and COTS programs and our CRS contract.  In 2012, we also received proceeds of $25.6 million in connection with the sale of certain property and equipment at the NASA Wallops Facility to the Commonwealth of Virginia.

Cash used in investing activities in 2011 was $59.8 million, as compared to $134.5 million in 2010.  We spent $59.8 million for capital expenditures in 2011, as compared to $83.7 million in 2010.  The decrease in capital expenditures was primarily due to decreased spending for equipment to support our Antares and COTS programs and our CRS contract.  In addion, in 2010 we paid $55 million to acquire a spacecraft business and sold an auction-rate debt security for $4.3 million.

Cash Flow from Financing Activities

Cash provided by financing activities was $7.4 million, $1.5 million and $14.4 million in 2012, 2011 and 2010, respectively.  In December 2012, we refinanced our long-term debt, discussed in more detail below.  In connection with the refinancing, we received net proceeds of $148.5 million under a new term loan arrangement, and we paid $145.2 million to purchase and retire substantially all of our convertible notes.  During 2012, 2011 and 2010, we issued 0.7 million, 0.7 million and 1.4 million shares of common stock and received $3.5 million, $2.9 million and $12.1 million, respectively, in connection with stock option exercises and employee stock plan purchases.

Term Loan and Credit Facility - On December 12, 2012, we entered into an amendment (the "Amendment") to our existing revolving secured credit facility (the "Credit Facility") discussed below.  The Amendment provided for a new $150 million senior secured term loan facility (the "Term Loan") and extended the scheduled maturity date of the Credit Facility to December 12, 2017.

40

The Term Loan has a five-year term, is secured on the same basis as the revolving credit facility and bears interest, at our option, at the London Interbank Offered Rate ("LIBOR") plus 1.75% per annum or a base rate plus 0.75% per annum.  We are required to make quarterly principal payments of approximately $1.9 million.  The remaining principal amount of $114.4 million will be due at maturity.  The term loan is otherwise subject to terms and conditions substantially similar to those in the Credit Facility regarding guarantees, covenants and events of default.

The net proceeds received under the Term Loan were used to repay substantially all of our outstanding 2.4375% convertible senior subordinated notes due 2027 (the "Convertible Notes").  Debt issuance costs incurred in connection with the Amendment and issuance of the Term Loan amounted to $1.5 million, which will be amortized to interest expense over the five-year term.

Our Credit Facility provides for capacity for up to $300 million of revolving loans and permits us to utilize up to $125 million of such capacity for the issuance of standby letters of credit.  Our obligations under the Credit Facility are secured by substantially all our assets except for real property.  We have the option to increase the amount of the Credit Facility by up to $150 million, subject to obtaining additional loan commitments and the satisfaction of other specified conditions.  Loans under the Credit Facility bear interest at LIBOR plus an applicable margin ranging from 1.75% to 2.50%, with the applicable margin varying according to the company's total leverage ratio, or, at the election of the company, at a base rate plus 0.75% to 1.50%.  Letters of credit issued under the Credit Facility accrue fees at a rate equal to the applicable margin for LIBOR loans.  In addition, we are required to pay a quarterly commitment fee for the unused portion of the Credit Facility, if any, at a rate ranging from 0.30% to 0.50%.

As of December 31, 2012, there were no borrowings under the Credit Facility, although $15.4 million of letters of credit were issued under the Credit Facility.  Furthermore, borrowing capacity under the Credit Facility is limited by certain financial covenants, discussed below.  Accordingly, as of December 31, 2012, approximately $230 million of the Credit Facility was available for borrowings.

Debt Covenants - Our Credit Facility contains covenants limiting our ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase company stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets.  In addition, the Credit Facility contains financial covenants with respect to leverage and interest coverage.  As of December 31, 2012, we were in compliance with all of these covenants.

Debt Extinguishment - During 2012, we recorded $10.3 million of debt extinguishment expenses associated with the repayment of the Convertible Notes, described above, consisting of $6.8 million of accelerated amortization of debt discount, $2.8 million in prepayment premiums and other expenses, and $0.7 million in accelerated amortization of debt issuance costs.

41

Available Cash and Future Funding

At December 31, 2012, we had $232.3 million of unrestricted cash and cash equivalents.  Management currently believes that available cash, cash expected to be generated from operations and the borrowing capacity under our Credit Facility will be sufficient to fund our operating and capital expenditure requirements, including research and development expenditures, over the next 12 months and for the foreseeable future.  However, there can be no assurance that this will be the case.  We believe that we will continue to incur costs in 2013 related to the Antares and COTS research and development programs.  Additionally, significant unforeseen events such as termination of major orders or late delivery or failure of launch vehicle or satellite products could adversely affect our liquidity and results of operations.  If market opportunities exist, we may choose to undertake additional financing actions to further enhance our liquidity, which could include obtaining new bank debt or raising funds through capital market transactions; however, our ability to borrow additional funds is limited by the terms of our Credit Facility.

As discussed in Note 7 to the consolidated financial statements in this Form 10-K, we currently hold investments in auction-rate securities and preferred stock that have experienced a decline in fair value.  Given the sufficiency of our available cash and other funding sources as discussed above, we believe that we will not need, nor do we intend, to liquidate these investments in the foreseeable future.  Accordingly, we do not believe that any fluctuations in the fair values of these securities will have a significant impact on our liquidity.

Aggregate Contractual Obligations

The following summarizes our contractual obligations at December 31, 2012, and the effect such obligations are expected to have on our liquidity and cash flow in future periods (in millions):

	Payments Due by Period
			Less than		1 to 3		3 to 5		More than
	Total		1 Year		Years		Years		5 Years
Long-term debt	$	150.7	$	7.5	$	15.0	$	127.5	$	0.7
Interest on long-term debt (1)		13.0		2.9		5.4		4.7		—
Operating leases (2)		140.0		18.1		32.8		31.3		57.8
Purchase obligations (3)		467.1		288.1		178.8		0.2		—
Total	$	770.8	$	316.6	$	232.0	$	163.7	$	58.5

––––––––––––––––––

(1) Interest on our variable-rate $150 million Term Loan assumes 1.96%, or one-month LIBOR plus 1.75%, in this presentation.

(2) Our obligations under operating leases consist of minimum rental commitments under non-cancelable operating leases primarily for office space and equipment.

(3) Purchase obligations consist of open purchase orders that we issued to acquire materials, parts or services in future periods.

Occasionally, certain contracts require us to post letters of credit supporting our performance obligations under the contracts.  We had $15.4 million of letters of credit outstanding at December 31, 2012, all of which were issued under the Credit Facility.

42

As of December 31, 2012 and 2011, our total amount of unrecognized tax benefits was $18.2 million and $16.7 million, respectively.  We are unable to make a reasonably reliable estimate of when a cash settlement, if any, will occur with the taxing authorities.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Item 7A.   Quantitative and Qualitative Disclosures About Market Risk

We believe that our market risk exposure is primarily related to the market value of certain investments that we hold as of December 31, 2012, changes in foreign currency exchange rates and interest rate risk.  We manage these market risks through our normal financing and operating activities and, when appropriate, through the use of derivative financial instruments.  We do not enter into derivatives for trading or other speculative purposes, nor do we use leveraged financial instruments.

Investments

As discussed in Note 7 to the consolidated financial statements in this Form 10-K, we currently hold investments in certain auction-rate and preferred stock securities that experienced a decline in fair value that resulted in our recording certain other-than-temporary impairment charges in periods prior to 2010.  We may be required to record additional impairment charges if there are further reductions in the fair value of these investments in future periods.

Foreign Currency Exchange Rate Risk

We believe that the potential change in foreign currency exchange rates is not a substantial risk to us because the large majority of our business transactions are denominated in U.S. dollars.  At December 31, 2012, we had $24.0 million of receivables denominated in euros and $0.5 million of receivables denominated in Japanese yen.

As discussed in Note 1 to the accompanying financial statements, in 2012 we entered into a series of foreign exchange contracts to sell euros and purchase U.S. dollars in order to hedge the company's exposure to fluctuating rates of exchange in connection with a customer contract denominated in euros.  As of December 31, 2012, we had ten foreign exchange contracts with a total contract value of €56.0 million, or $72.9 million, that have various expiration dates through March 2014.  As of December 31, 2012, the fair market value of these foreign exchange contracts was a liability of $1.2 million.

Interest Rate Risk

We are exposed to changes in interest rates in the normal course of our business operations as a result of our ongoing investing and financing activities, which include debt as well as cash and

43

cash equivalents.  As of December 31, 2012, we had a $150 million bank term loan with a variable interest rate of LIBOR plus 1.75%, or 1.96%, as of December 31, 2012.  Generally, the fair market value of our variable interest rate debt will increase or decrease based on general market conditions for bank loans, Orbital's credit rating and the remaining term of the loan.  The carrying value and estimated fair value at December 31, 2012 of our term loan was $150 million.

We believe that our exposure to market risk related to interest rate fluctuations for cash and cash equivalents is not significant.  As of December 31, 2012, a hypothetical 100 basis point change in interest rates would result in an annual change of approximately $2.5 million in interest income earned.

We assess our interest rate risks on a regular basis and do not currently use financial instruments to mitigate these risks.

Deferred Compensation Plan

We have an unfunded deferred compensation plan for senior managers and executive officers with a total liability balance of $11.7 million at December 31, 2012.  This liability is subject to fluctuation based upon the market value of the investment options selected by participants.

44

Item 8.  Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS AND SCHEDULE

	Page
Report of Independent Registered Public Accounting Firm	46
Consolidated Statements of Comprehensive Income	48
Consolidated Balance Sheets	49
Consolidated Statements of Stockholders' Equity	50
Consolidated Statements of Cash Flows	51
Notes to Consolidated Financial Statements	52
Schedule II – Valuation and Qualifying Accounts	74

45

Report of Independent Registered Public Accounting Firm

TotheBoard of Directors and Stockholders of

Orbital Sciences Corporation:

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Orbital Sciences Corporation and its subsidiaries at December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with accounting principles generally accepted in the United States of America.  In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.  Also in our opinion, the Company and its subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing under Item 9A.  Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.  We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.  Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.  Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company's internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely

46

detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

McLean, Virginia

February 22, 2013

47

ORBITAL SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

	Years Ended December 31,
	2012			2011			2010
Revenues	$	1,436,769		$	1,345,923		$	1,294,577
Cost of revenues		1,097,190			1,074,389			1,007,668
Research and development expenses		114,205			102,751			122,270
Selling, general and administrative expenses		112,803			88,989			91,625
Income from operations		112,571			79,794			73,014
Interest income and other		749			19,335			1,848
Interest expense		(11,275	)		(11,096	)		(9,778	)
Debt extinguishment expense		(10,261	)		—			—
Income before income taxes		91,784			88,033			65,084
Income tax provision		(30,778	)		(20,639	)		(17,615	)
Net income	$	61,006		$	67,394		$	47,469
Basic income per share:	$	1.03		$	1.14		$	0.81
Diluted income per share:	$	1.02		$	1.13		$	0.81
Net income (from above)	$	61,006		$	67,394		$	47,469
Other comprehensive income (loss):
Defined benefit plans, net of tax of $263, ($773) and
$90, respectively		418			(1,248	)		145
Unrealized gain (loss) on investments		700			(100	)		(250	)
Unrealized loss on foreign exchange derivative
instruments, net of tax of $339		(540	)		—			—
Total other comprehensive income (loss)		578			(1,348	)		(105	)
Comprehensive income	$	61,584		$	66,046		$	47,364

See accompanying notes to consolidated financial statements.

48

ORBITAL SCIENCES CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	December 31,
	2012			2011
ASSETS
Current assets:
Cash and cash equivalents	$	232,324		$	259,219
Receivables		499,222			333,467
Inventories		61,251			64,335
Deferred income taxes, net		38,216			51,413
Other current assets		17,810			46,965
Total current assets		848,823			755,399
Investments		9,200			8,500
Property, plant and equipment, net		251,360			259,972
Goodwill		75,261			75,261
Deferred income taxes, net		-			2,731
Other non-current assets		26,810			28,937
Total assets	$	1,211,454		$	1,130,800
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	4,037		$	13,444
Accrued expenses		253,076			220,935
Deferred revenues and customer advances		62,098			104,970
Current portion of long-term obligations		7,500			-
Total current liabilities		326,711			339,349
Long-term obligations		143,236			131,182
Deferred income taxes, net		10,879			-
Other non-current liabilities		17,082			16,990
Total liabilities		497,908			487,521
Commitments and contingencies
Stockholders' equity:
Preferred Stock, par value $.01; 10,000,000 shares authorized, none outstanding		-			-
Common Stock, par value $.01; 200,000,000 shares authorized, 59,616,736 and
58,914,802 shares outstanding, respectively		596			589
Additional paid-in capital		575,300			566,624
Accumulated other comprehensive loss		(2,781	)		(3,359	)
Retained earnings		140,431			79,425
Total stockholders' equity		713,546			643,279
Total liabilities and stockholders' equity	$	1,211,454		$	1,130,800

See accompanying notes to consolidated financial statements.

49

ORBITAL SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

							Accumulated
					Additional		Other
	Common Stock				Paid-In		Comprehensive			Retained
	Shares		Amount		Capital		Loss			Earnings			Total
Balance, December 31, 2009		56,880	$	569	$	539,235	$	(1,906	)	$	(35,438	)	$	502,460
Shares issued to employees,
officers and directors		1,360		13		12,113								12,126
Stock-based compensation, net						5,589								5,589
Tax effect of stock-based
compensation, net						1,078								1,078
Comprehensive income (loss)								(105	)		47,469			47,364
Balance, December 31, 2010		58,240		582		558,015		(2,011	)		12,031			568,617
Shares issued to employees,
officers and directors		675		7		2,884								2,891
Stock-based compensation, net						4,490								4,490
Tax effect of stock-based
compensation, net						1,235								1,235
Comprehensive income (loss)								(1,348	)		67,394			66,046
Balance, December 31, 2011		58,915		589		566,624		(3,359	)		79,425			643,279
Shares issued to employees,
officers and directors		702		7		3,500								3,507
Stock-based compensation, net						4,960								4,960
Tax effect of stock-based
compensation, net						216								216
Comprehensive income (loss)								578			61,006			61,584
Balance, December 31, 2012		59,617	$	596	$	575,300	$	(2,781	)	$	140,431		$	713,546

See accompanying notes to consolidated financial statements.

50

ORBITAL SCIENCES CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Years Ended December 31,
	2012			2011			2010
Operating Activities:
Net income	$	61,006		$	67,394		$	47,469
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization expense		37,339			32,739			26,186
Deferred income taxes		26,886			18,788			15,985
Debt extinguishment expense		10,261			—			—
Stock-based compensation		6,402			6,222			7,022
Amortization of debt costs		6,751			6,590			5,768
Other		(1,876	)		(1,703	)		(2,113	)
Changes in assets and liabilities, net of business acquisition:
Receivables		(165,670	)		(6,969	)		(117,083	)
Inventories		3,084			(8,118	)		(17,555	)
Other assets		30,609			(37,346	)		(4,585	)
Accounts payable and accrued expenses		20,260			(14,915	)		53,830
Deferred revenue and customer advances		(42,872	)		(7,212	)		(14,874	)
Other liabilities		154			9,666			(529	)
Net cash (used in) provided by operating activities		(7,666	)		65,136			(479	)
Investing Activities:
Capital expenditures		(52,175	)		(59,815	)		(83,702	)
Proceeds from sale of property		25,589			—			—
Acquisition of business		—			—			(55,000	)
Net proceeds from sales of investments		—			—			4,250
Net cash used in investing activities		(26,586	)		(59,815	)		(134,452	)
Financing Activities:
Proceeds from issuance of long-term obligations		150,000			—			—
Repayment of long-term obligations		(145,179	)		—			—
Net proceeds from issuance of common stock		3,507			2,891			12,126
Tax benefit of stock-based compensation		495			1,676			2,234
Debt issuance costs		(1,466	)		(3,084	)		—
Net cash provided by financing activities		7,357			1,483			14,360
Net (decrease) increase in cash and cash equivalents		(26,895	)		6,804			(120,571	)
Cash and cash equivalents, beginning of year		259,219			252,415			372,986
Cash and cash equivalents, end of year	$	232,324		$	259,219		$	252,415

See accompanying notes to consolidated financial statements.

51

ORBITAL SCIENCES CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Business and Summary of Significant Accounting Policies

Business Operations

Orbital Sciences Corporation (together with its subsidiaries, "Orbital" or the "company"), a Delaware corporation, develops and manufactures small- and medium-class rockets and space systems for commercial, military and civil government customers.

Principles of Consolidation

The consolidated financial statements include the accounts of Orbital and its wholly owned subsidiaries.  All significant intersegment balances and transactions have been eliminated.

Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions, including estimates of future contract costs and earnings.  Such estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and earnings during the current reporting period.  Management periodically assesses and evaluates the adequacy and/or deficiency of estimated liabilities recorded for various reserves, liabilities, contract risks and uncertainties.  Actual results could differ from these estimates.

Certain reclassifications have been made to prior year amounts to conform to current year presentation.  All financial  amounts are stated in U.S. dollars unless otherwise indicated.

Revenue Recognition

     Orbital's revenues are derived primarily from long-term contracts.  Revenues on long-term contracts are recognized using the percentage-of-completion method of accounting.   Such revenues are recorded based on the percentage that costs incurred to date bear to the most recent estimates of total costs to complete each contract.  Estimating future revenues, costs and profit, is a process requiring a high degree of management judgment, including management's assumptions regarding the company's operational performance as well as general economic conditions.  In the event of a change in total estimated contract revenue, cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs.  Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and the company's profitability from a particular contract may be adversely affected to the extent that estimated costs to complete or incentive or award fee estimates are revised, delivery schedules are delayed, performance-based milestones are not achieved or progress under a contract is otherwise impeded.  Accordingly, the company's

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recorded revenues and operating profit from period to period can fluctuate significantly.  In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding general and administrative expenses, is recorded in the period in which the loss is first estimated.

Many of the company's contracts include provisions that increase or decrease contract value based on performance in relation to established targets or customer evaluations.  Mission success milestones and incentive and award fees are included in estimated contract revenue when the company is able to make reasonable predictions about whether the performance targets will be achieved and make dependable estimates of such amounts based upon the company's historical experience with similar types of activities and other objective criteria.  The company includes the estimated amount of mission success milestones and incentive and award fees in estimated contract revenue at the inception of each contract, with reassessments made each quarter throughout the period of contract performance.  If performance under such contracts were to differ from previous assumptions, or if the company were to revise its estimates or assumptions, current period revenues and profit would be adjusted and could fluctuate significantly.  The company's assessments are guided by the historical performance of the company's products and product families, the reliability record of the technology employed and assessments of technological considerations for each contract.

As part of the company's risk management strategy, the company generally insures significant mission success milestones.  Insurance recoveries are recorded as other income in the consolidated financial statements.  The company recognized insurance recoveries of $17.8 million for the year ended December 31, 2011.  There were no such insurance recoveries during 2012 and 2010.

Research and Development Expenses

Expenditures for company-sponsored research and development projects are expensed as incurred.  Research and development projects performed under contracts for customers are recorded as contract costs.

In 2008, the company entered into an agreement with the National Aeronautics and Space Administration ("NASA") to design, build and demonstrate a new space transportation system under a program called Commercial Orbital Transportation Services ("COTS"), for delivering cargo and supplies to the International Space Station.  Under the agreement, as amended, as of December 31, 2012, NASA has agreed to pay the company $288 million in cash milestone payments, partially funding Orbital's project costs which are currently estimated to be approximately $513 million.  The company expects to complete this project in 2013.

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       The COTS agreement is accounted for as a best-efforts research and development cost-sharing arrangement.  As such, the amounts funded by NASA are recognized proportionally as an offset to the company's COTS program research and development expenses, including associated general and administrative expenses.  

The following table summarizes the COTS program research and development expenses incurred and amounts funded by NASA (in millions):

	2012			2011			2010			Inception to December 31, 2012
Research and development costs incurred (1)	$	62.6		$	158.8		$	136.5		$	480.5
Less amounts funded by NASA		(21.9	)		(108.0	)		(69.1	)		(282.2	)	(2)
Net research and development expenses	$	40.7		$	50.8		$	67.4		$	198.3

^{_______________________}

⁽¹⁾ Includes associated general and administrative expenses.

⁽²⁾ Through December 31, 2012, the company has received $276 million in cash from NASA and as of December 31, 2012, the company recorded an approximately $6 million receivable due from NASA.

The company is also engaged in a major product development program of a medium capacity rocket named Antares.  Approximately $42.6 million, $34.3 million and $48.3 million of the company's research and development expenses in 2012, 2011 and 2010, respectively, were attributable to the Antares program.  Since the inception of the Antares program through December 31, 2012, the company has incurred $234.8 million of such costs.

Stock-Based Compensation

The company determines the fair value of its restricted stock unit grants based on the closing price of Orbital's common stock on the date of grant.  The fair value of stock options granted is determined using the Black-Scholes valuation model, although the company has not granted stock options since 2006.  Compensation expense pertaining to stock-based awards is recognized as expense over the service period, net of estimated forfeitures.  The company uses the tax law ordering method to determine intra-period tax allocation related to the tax attributes of stock-based compensation.

Income Taxes

Orbital accounts for income taxes using the asset and liability method.  Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.  The company records valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized.  Changes in estimates of future taxable income can materially change the amount of such valuation allowances.

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Earnings per Share

Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the periods.  Diluted earnings per share includes the weighted-average effect of all potentially dilutive securities outstanding during the periods.

The computation of basic and diluted earnings per share is as follows (dollars in thousands, except per share amounts):

			Years Ended December 31,
Numerator			2012			2011			2010
		Net Income	$	61,006		$	67,394		$	47,469
		Percentage allocated to shareholders (1)		99.6	%		99.1	%		99.0	%
		Numerator for basic and diluted earnings per share	$	60,762		$	66,787		$	46,994
Denominator
		Denominator for basic earnings per share -
		weighted-average shares outstanding		59,165			58,531			57,683
		Dilutive effect of stock options and restricted stock units		292			596			652
		Denominator for diluted earnings per share		59,457			59,127			58,335
Per share income
		Basic	$	1.03		$	1.14		$	0.81
		Diluted		1.02			1.13			0.81
_________________________
	(1)	Basic weighted-average shares outstanding		59,165			58,531			57,683
		Basic weighted-average shares outstanding and
		unvested restricted stock units expected to vest		59,428			59,078			58,254
		Percentage allocated to shareholders		99.6	%		99.1	%		99.0	%

In accordance with GAAP, the company accounts for unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share.  Certain of the company's unvested restricted stock units ("RSUs") contain rights to receive non-forfeitable dividends, and thus are participating securities requiring the two-class method to be used for computing earnings per share.  The calculation of earnings per share shown above excludes the income attributable to the unvested RSUs that include rights to receive non-forfeitable dividends from the numerator and excludes the impact of those units from the denominator.

In 2012, 2011 and 2010, diluted weighted-average shares outstanding excluded the effect of the company's convertible notes that were anti-dilutive.

Fair Value Measurements

The company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements.

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The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions.

These two types of inputs create the following fair value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 - Significant inputs to the valuation model are unobservable.

Fair value disclosures pertaining to financial instruments of the company that are included in these notes to the consolidated financial statements include money market funds (see Note 1, subsection "Cash and Cash Equivalents"), foreign exchange derivative instruments (see Note 1, subsection "Derivative Financial Instruments"), investments in auction-rate securities (see Note 7) and debt instruments recorded in long-term obligations (see Note 6).

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term, highly liquid investments with maturities of 90 days or less.  The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value.  At December 31, 2012 and 2011, the company had invested approximately $215 million and $259 million, respectively, in cash equivalents in the form of money market funds with three financial institutions.  The company considers these money market funds to be Level 1 financial instruments.

Inventories

Inventories are stated at the lower of cost or estimated market value.  Cost is determined on an average cost or specific identification basis.  Estimated market value is determined based on assumptions about future demand and market conditions.  If actual market conditions were less favorable than those previously projected by management, inventory write-downs could be required.

Derivative Financial Instruments

Orbital occasionally uses foreign exchange derivative instruments to manage certain foreign currency rate exposures.  Derivative instruments are viewed as risk management tools by Orbital and are not used for trading or speculative purposes.  Derivatives used for hedging purposes are generally designated as effective hedges.  Accordingly, changes in the fair value of a derivative contract are highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.  Derivative instruments are

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recorded on the balance sheet at fair value.  The ineffective portion of all hedges, if any, is recognized currently in earnings.

In 2012, Orbital entered into a series of foreign exchange contracts to sell euros and purchase U.S. dollars in order to hedge the company's exposure to fluctuating foreign exchange rates in connection with a customer contract denominated in euros.  As of December 31, 2012, the company had ten foreign exchange contracts with a total contract value of €56.0 million, or $72.9 million, that have various expiration dates through March 2014.  As of December 31, 2012, the fair value of these foreign exchange contracts was a liability of $1.2 million.  The company considers these to be Level 2 financial instruments.

Investments

The company's investments in securities are reported at fair value.  These investments are classified as available-for-sale securities at the time of purchase and the company re-evaluates such designation as of each balance sheet date.  The company evaluates its investments periodically for possible other-than-temporary impairment by reviewing factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the company's ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery of market value, and the credit values of debt securities.  The company records an impairment expense to the extent that the amortized cost exceeds the estimated fair market value of the securities held and the decline in value is determined to be other-than-temporary.  Temporary changes in fair value are included in accumulated other comprehensive income (loss), a component of stockholders' equity.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Major improvements are capitalized while expenditures for maintenance, repairs and minor improvements are charged to expense.  When assets are retired or otherwise disposed of, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is recognized.  Depreciation expense is determined using the straight-line method based on the following useful lives:

Buildings	20 years
Machinery, equipment and software	3 to 12 years
Leasehold improvements	Shorter of estimated useful life or lease term

The company self-constructs some of its ground and airborne support and special test equipment utilized in the manufacture, production and delivery of some of its products.  Orbital capitalizes direct costs incurred in constructing such equipment and certain allocated indirect costs.  The company also capitalizes certain costs incurred in connection with internally developed software.  These capitalized costs generally include direct software coding costs and certain allocated indirect costs.

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Recoverability of Long-Lived Assets

Orbital's policy is to evaluate its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.  When an evaluation indicates that an impairment has occurred, a loss is recognized and the asset or asset group is adjusted to its estimated fair value.  Given the inherent technical and commercial risks within the aerospace industry and the special purpose use of certain of the company's assets, future impairment charges could be required if the company were to change its current expectation that it will recover the carrying amount of its long-lived assets from future operations.

Goodwill

Goodwill is comprised of acquisition costs in excess of the fair values assigned to the underlying net assets of acquired businesses.  Goodwill is evaluated for potential impairment at least annually or whenever events or circumstances indicate that the carrying value of goodwill may not be recoverable.  The evaluation includes comparing the fair value of a reporting unit to its carrying value including goodwill.  If the carrying value exceeds the fair value, impairment is measured by comparing the implied value of goodwill to its carrying value and recorded in the current period.  Goodwill balances are included in the identifiable assets of the business segment to which they have been assigned.  There was no impairment of goodwill recorded during the three years ending December 31, 2012.

Deferred Revenue and Customer Advances

The company accounts for cash receipts from customers in excess of amounts recognized on certain contracts as "deferred revenues and customer advances."  These amounts are recorded as current liabilities since the associated services are performed within one year.

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2.  Segment Information

Orbital's products and services are grouped into three reportable business segments:  launch vehicles, satellites and space systems and advanced space programs.  Reportable segments are generally organized based upon product lines.  Corporate office transactions that have not been attributed to a particular segment, as well as consolidating eliminations and adjustments, are reported in corporate and other.  The primary products and services from which the company's reportable segments derive revenues are:

· Launch Vehicles - Rockets that are used as small- and medium-class space launch vehicles that place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories.

· Satellites and Space Systems - Small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research, collect imagery and other remotely-sensed data about the Earth, carry out interplanetary and other deep-space exploration missions and demonstrate new space technologies.

· Advanced Space Programs - Human-rated space systems for Earth-orbit and deep-space exploration, and small- and medium-class satellites primarily used for national security space programs and to demonstrate new space technologies.

Intersegment sales are generally negotiated and accounted for under terms and conditions that are similar to other commercial and government contracts.  Substantially all of the company's assets and operations are located within the United States.

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The following table presents operating information and identifiable assets by reportable segment (in thousands):

	Years Ended December 31,
	2012			2011			2010
Launch Vehicles:
Revenues	$	527,287		$	483,177		$	434,511
Operating income		36,131			14,147			21,188
Identifiable assets		206,194			210,642			212,360
Capital expenditures		26,066			27,999			50,001
Depreciation and amortization		15,891			14,293			9,412
Satellites and Space Systems:
Revenues	$	496,152		$	553,797		$	497,015
Operating income		46,222			37,623			33,775
Identifiable assets		278,008			282,344			268,804
Capital expenditures		16,345			12,433			10,675
Depreciation and amortization		8,563			6,841			5,917
Advanced Space Programs:
Revenues	$	470,102		$	434,036		$	423,614
Operating income		32,309			28,024			20,999
Identifiable assets		390,059			254,769			188,184
Capital expenditures		5,781			13,515			19,586
Depreciation and amortization		6,575			5,033			4,522
Corporate and Other:
Revenues (1)	$	(56,772	)	$	(125,087	)	$	(60,563	)
Operating loss (2)		(2,091	)		—			(2,948	)
Identifiable assets		337,193			383,045			393,188
Capital expenditures		3,983			5,868			3,440
Depreciation and amortization		6,310			6,572			6,335
Consolidated:
Revenues	$	1,436,769		$	1,345,923		$	1,294,577
Operating income		112,571			79,794			73,014
Identifiable assets		1,211,454			1,130,800			1,062,536
Capital expenditures		52,175			59,815			83,702
Depreciation and amortization		37,339			32,739			26,186

________________

(1) Corporate and other revenues are comprised solely of the elimination of intersegment revenues.  Intersegment revenues are summarized as follows (in millions):

	Years Ended December 31,
	2012		2011		2010
Launch Vehicles	$	50.2	$	118.3	$	53.4
Satellites and Space Systems		5.7		5.6		5.9
Advanced Space Programs		0.9		1.2		1.3
Total intersegment revenues	$	56.8	$	125.1	$	60.6

(2) The corporate and other operating loss in 2012 is comprised solely of unallocated professional fees and other costs related to a potential acquisition that was not consummated.  The corporate and other operating loss in 2010 is comprised of unallocated corporate-level costs and includes $1.6 million of transaction expenses incurred in connection with a business acquisition (see Note 3).

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3. Business Acquisitions

On April 2, 2010, the company acquired certain assets and liabilities of the spacecraft development and manufacturing business of General Dynamics Advanced Information Systems, a subsidiary of General Dynamics Corporation (the "Seller"), for $55 million in cash, subject to a potential working capital adjustment.  The company's consolidated financial statements reflect the operations of the acquired business since the date of acquisition.  Revenues and operating income of the acquired business were $69.8 million and $7.3 million, respectively, for the period from April 2, 2010 to December 31, 2010.

The acquisition was accounted for under the acquisition method in accordance with Accounting Standards Codification ("ASC") Topic 805, "Business Combinations."  The allocation of the purchase price for the tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values at the date of acquisition using established valuation techniques.  The company may recognize changes to the acquired assets or liabilities as a result of a working capital adjustment.  In 2011, the company recorded an additional $0.5 million of goodwill related to the update of purchase accounting associated with the acquisition.  The company and the Seller are each disputing the other party's claim for a purchase price adjustment based on the calculation of working capital as of the closing date.

4.  Export Sales and Major Customers

Orbital's revenues by geographic area, as determined by customer location, were as follows (in thousands):

	Years Ended December 31,
	2012		2011		2010
United States	$	1,155,003	$	1,035,090	$	1,084,131
Europe and Eurasia		150,746		146,623		102,106
Mexico and South America		96,147		131,240		93,855
East Asia		34,873		32,970		14,485
Total	$	1,436,769	$	1,345,923	$	1,294,577

Approximately 79%, 71% and 74% of the company's revenues in 2012, 2011 and 2010, respectively, were generated under contracts with the U.S. Government and its agencies or under subcontracts with the U.S. Government's prime contractors.  All such revenues were recorded in the launch vehicles, satellites and space systems or advanced space programs segments.

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5.  Balance Sheet Accounts and Supplemental Disclosures

Receivables

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

	December 31,
	2012		2011
Billed	$	59,496	$	77,505
Unbilled		439,372		255,209
Retainages due upon contract completion		354		753
Total	$	499,222	$	333,467

Under the terms of the company's Commercial Resupply Services ("CRS") contract with NASA, approximately 25% of the contract value is billable to the customer and collectible only upon the completion of launch and delivery milestones for each of eight CRS contract missions.  Unbilled receivables at December 31, 2012 and 2011 included $277 million and $130 million, respectively, pertaining to the CRS contract.  Since the inception of the CRS contract in December 2008 through December 31, 2012, a total of $974 million of revenues have been recognized on the contract, which has a total contract value of approximately $1.9 billion.

As of December 31, 2012 and 2011, unbilled receivables also included $8.7 million and $10.2 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 a portion of the contract price to the customer if performance criteria, which cover periods of up to 15 years, are not satisfied.  As of December 31, 2012, the company could be required to refund up to approximately $12.4 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.

Excluding the portion of unbilled receivables pertaining to the CRS contract discussed separately above, approximately 93% of unbilled receivables and retainages at December 31, 2012 are due within one year and will be billed on the basis of contract terms and delivery schedules.  Approximately 91% and 90% of the company's receivables at December 31, 2012 and 2011, 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 $34.1 million and $29.7 million at December 31, 2012 and 2011, respectively.

Inventories

As of December 31, 2012 and 2011, inventories were $61.3 million and $64.3 million, respectively.  The company's inventory consisted of component parts, raw materials and milestone payments for future delivery of component parts.

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Property, Plant and Equipment

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

	December 31,
	2012			2011
Land	$	10,656		$	10,656
Buildings and leasehold improvements		85,803			80,885
Furniture, fixtures and equipment		298,082			262,906
Assets under construction		45,928			65,645
Software and other		33,310			27,063
		473,779			447,155
Accumulated depreciation and amortization		(222,419	)		(187,183	)
Total	$	251,360		$	259,972

The company received proceeds of $25.6 million in 2012 in connection with the sale of property and equipment at the Wallops Island Flight Facility to the Commonwealth of Virginia.  Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was $36.6 million, $32.0 million and $25.7 million, respectively.

Goodwill and Intangible Assets

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, 2012	$	10,310	$	53,517	$	11,434	$	75,261

      Intangible assets consist of technology assets that were acquired in the 2010 spacecraft business acquisition (see Note 3).  As of December 31, 2012 and 2011, the balance of intangible assets was $5.2 million and $5.9 million, respectively, reported in "other non-current assets."  Amortization expense for the years ended December 31, 2012, 2011 and 2010 was $0.7 million, $0.7 million and $0.5 million, respectively.

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Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	December 31,
	2012		2011
Contract related accruals	$	169,146	$	145,352
Employee compensation and benefits		77,241		70,096
Interest		145		1,946
Other		6,544		3,541
Total	$	253,076	$	220,935

Cash Flow

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

	Years Ended December 31,
	2012		2011		2010
Interest paid	$	6,733	$	4,158	$	3,735
Income taxes paid		2,699		2,242		2,531

    The entire amount of cash disbursed in 2012 in connection with the repayment of certain of the company's long-term notes payable (see Note 6) was classified as repayment of long-term obligations in financing activities in the accompanying consolidated statement of cash flows.

6.  Debt Obligations

Long-term obligations consisted of the following (in thousands):

	December 31,
	2012		2011
Senior secured term loan	$	150,000	$	—
Convertible senior subordinated notes		736		131,182
	$	150,736	$	131,182
Less current portion		(7,500)		—
Long-term portion	$	143,236	$	131,182

 The fair value of the senior secured term loan at December 31, 2012 was $150 million based on current market rates for debt of the same risk and maturity.  The fair value of the convertible senior subordinated notes at December 31, 2011 was estimated at approximately $145.2 million based on market pricing quoted by a broker dealer.  The company considers these to be Level 2 measures.

Term Loan and Credit Facility

On December 12, 2012, the company entered into an amendment (the "Amendment") to its existing revolving secured credit facility (the "Credit Facility"), discussed below.  The Amendment provided for a new $150 million senior secured term loan facility (the "Term Loan") and extended the scheduled maturity date on the Credit Facility to December 12, 2017.

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The Term Loan has a five-year term, is secured on the same basis as the revolving credit facility and bears interest, at the company's option, at the London Interbank Offered Rate ("LIBOR") plus 1.75% per annum or a base rate plus 0.75% per annum.  The company is required to make quarterly principal payments of approximately $1.9 million.  The remaining principal amount of $114.4 million will be due at maturity.  The term loan is otherwise subject to terms and conditions substantially similar to those in the Credit Facility regarding guarantees, covenants and events of default.

The net proceeds received under the Term Loan were used to repay substantially all of the company's outstanding 2.4375% convertible senior subordinated notes due 2027 (the "Convertible Notes").  Debt issuance costs incurred in connection with the Amendment and issuance of the Term Loan amounted to $1.5 million, which will be amortized to interest expense over the five-year term.

The Credit Facility provides capacity for up to $300 million of revolving loans and permits the company to utilize up to $125 million of such capacity for the issuance of standby letters of credit.  The company's obligations under the Credit Facility are secured by substantially all of the company's assets except for real property.  The company has the option to increase the amount of the Credit Facility by up to $150 million, subject to obtaining additional loan commitments and the satisfaction of other specified conditions. Loans under the Credit Facility bear interest at LIBOR plus an applicable margin ranging from 1.75% to 2.50%, with the applicable margin varying according to the company's total leverage ratio, or, at the election of the company, at a base rate plus 0.75% to 1.50%.  Letters of credit issued under the Credit Facility accrue fees at a rate equal to the applicable margin for LIBOR loans.  In addition, the company is required to pay a quarterly commitment fee for the unused portion of the Credit Facility, if any, at a rate ranging from 0.30% to 0.50%.

As of December 31, 2012, there were no borrowings under the Credit Facility, although $15.4 million of letters of credit were issued under the Credit Facility.  Furtermore, borrowing capacity under the Credit Facility is limited by certain financial covenants, discussed below.  Accordingly, as of December 31, 2012, approximately $230 million of the Credit Facility was available for borrowings.

Debt Covenants

Orbital's Credit Facility contains covenants limiting the company's ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase company stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets.  In addition, the Credit Facility contains financial covenants with respect to leverage and interest coverage.  As of December 31, 2012, the company was in compliance with all of these covenants.

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Debt Extinguishment Expenses

During 2012, the company recorded $10.3 million of debt extinguishment expenses associated with the repurchase of the Convertible Notes, described above, consisting of $6.8 million of accelerated amortization of debt discount, $2.8 million in prepayment premiums and other expenses, and $0.7 million in accelerated amortization of debt issuance costs.

7.  Investments

As of December 31, 2012 and 2011, the company held investments consisting of three auction-rate debt securities (life insurance company capital reserve funds), an auction-rate equity security (financial guarantee company capital reserve fund) and two preferred stock investments.  These investments are classified as available for sale securities and as non-current assets on the company's balance sheet.  Contractual maturities for the debt securities are 12 years or greater and the remaining securities have no fixed maturity.  The amortized cost and fair value of these investments were as follows (in thousands):

	December 31, 2012							December 31, 2011
	Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value		Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value
Debt	$	7,150	$	(250	)	$	6,900	$	7,150	$	(1,050	)	$	6,100
Equity(1)		2,000		300			2,300		2,000		400			2,400
Total	$	9,150	$	50		$	9,200	$	9,150	$	(650	)	$	8,500

^{_______________________}

⁽¹⁾  As of December 31, 2012 and 2011, the amortized cost and fair values of the two preferred stock investments were $0.

The changes in fair value of the investments were as follows (in thousands):

	Years Ended December 31,
	2012			2011
Debt Securities
Fair value at beginning of period	$	6,100		$	6,700
Temporary impairment credits (charges), net		800			(600	)
Fair value at end of period	$	6,900		$	6,100
Equity Securities
Fair value at beginning of period	$	2,400		$	1,900
Temporary impairment (charges) credits, net		(100	)		500
Fair value at end of period	$	2,300		$	2,400
Total
Fair value at beginning of period	$	8,500		$	8,600
Temporary impairment credits (charges), net		700			(100	)
Fair value at end of period	$	9,200		$	8,500

The fair values of these securities are based on discounted cash flow analyses which consider the following Level 3 observable and unobservable inputs: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates

66

considered to reflect current market conditions and the relevant risk associated with each security; and (iii) the time horizon until each security will be sold.  The discount rates used in the present value calculations are based on yields on U.S. Treasury securities with similar time horizons (0.72% - 1.7% as of December 31, 2012) plus interest rate risk premiums (4.0% - 20.4% as of December 31, 2012) that are intended to compensate for general market risk and the risk specific to each security.  The risk premiums are based upon current credit default swap pricing market data for similar or related securities or credit spreads for corporate bonds with similar credit ratings and similar maturities.  The time horizons used in the present value calculations have a range of 3.5 - 8 .3 years as of December 31, 2012.

8.  Income Taxes

 The significant components of the company's deferred tax assets and liabilities as of December 31, 2012 and 2011 were (in thousands):

	December 31,
	2012			2011
Current Deferred Tax Assets:
U.S. federal and state net operating loss carryforwards	$	8,909		$	36,028
Capitalized research and development costs		8,921			—
Accruals, reserves and other		25,374			20,322
Valuation allowance		(4,988	)		(4,937	)
Current deferred tax assets, net		38,216			51,413
Noncurrent Deferred Tax Assets (Liabilities):
State net operating loss carryforwards		1,136			8,448
Capitalized research and development costs		15,847			25,374
Tax credit/capital loss carryforwards and other		18,296			17,044
Debt costs		—			(4,710	)
Excess tax depreciation and other		(42,602	)		(38,969	)
		(7,323	)		7,187
Valuation allowance		(3,556	)		(4,456	)
Noncurrent deferred tax (liabilities) assets, net		(10,879	)		2,731
Total deferred tax assets, net	$	27,337		$	54,144

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The company's income tax provisions for the years ended December 31, 2012, 2011 and 2010 were comprised of the following (in thousands):

	Years Ended December 31,
	2012			2011			2010
Current:
Federal	$	1,889		$	384		$	960
State		1,862			841			816
Foreign		102			115			—
Total current		3,853			1,340			1,776
Deferred:
Federal		29,264			29,558			21,247
State		(2,339	)		(10,259	)		(5,408	)
Total deferred		26,925			19,299			15,839
Total income tax provision	$	30,778		$	20,639		$	17,615

The company's income before income taxes included foreign income of $0.3 million and $0.4 million in 2012 and 2011, respectively.

A reconciliation of the statutory federal income tax rate to the company's effective tax rate for the years ended December 31, 2012, 2011 and 2010 is as follows:

		2012	2011	2010
U.S. federal statutory rate		35.0%	35.0%	35.0%
State taxes		3.6	3.3	3.4
Extraterritorial income exclusion		(3.1)	(8.7)	—
Research and development credits		(1.7)	(4.5)	(11.4)
Other, net		(0.3)	(1.7)	0.1
	Effective rate	33.5%	23.4%	27.1%

The company recognized research and development tax credits in all periods presented that were primarily attributable to the company's Antares and COTS research and development programs that are further discussed in Note 1.  In addition, the company recorded favorable income tax adjustments of $2.8 million and $7.7 million in 2012 and 2011, respectively, pertaining to the company's election to claim extraterritorial income exclusions related to prior year export activity.

At December 31, 2012, the company had U.S. federal net operating loss carryforwards of $24.9 million, portions of which expire beginning in 2022 through 2031, and U.S. capital loss carryforwards of $0.8 million, which expire in 2015.  The deferred tax assets related to capital losses have been fully offset with a valuation allowance due to the uncertainty of realization.  These net operating loss and capital loss carryforwards are subject to certain limitations and other restrictions.

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Changes in the company's unrecognized tax benefits were as follows (in thousands):

	2012			2011			2010
Unrecognized tax benefits at beginning of year	$	16,732		$	12,386		$	7,508
Additions based on tax positions related to the current year		—			2,325			4,372
Additions for tax positions of prior years		1,548			2,351			562
Settlements with taxing authorities and other		—			—			(56	)
Reduction resulting from lapse of statute of limitation		(80	)		(330	)		—
Unrecognized tax benefits at end of year	$	18,200		$	16,732		$	12,386

All unrecognized tax benefits, if recognized, would lower the effective tax rate.

The company is subject to U.S. federal income tax and income tax in multiple state jurisdictions.  The company has substantially concluded all income tax matters for years through 1989.  In addition, the IRS completed an audit of the company's 2005 federal income tax return in 2008.

The company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.  No interest or penalties are recorded in the accompanying consolidated financial statements.

9.  Commitments and Contingencies

Leases

Aggregate minimum commitments under non-cancelable operating leases, primarily for office space and equipment rentals, at December 31, 2012 were as follows (in thousands):

2013	$	18,136
2014		16,442
2015		16,404
2016		16,629
2017		14,624
Thereafter		57,848
	$	140,083

Rent expense for 2012, 2011 and 2010 was $19.7 million, $19.3 million and $21.4 million, respectively.

U.S. Government Contracts

The accuracy and appropriateness of costs charged to U.S. Government contracts are subject to regulation, audit and possible disallowance by the Defense Contract Audit Agency or other government agencies.  Accordingly, costs billed or billable to U.S. Government customers are subject to potential adjustment upon audit by such agencies.

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Most of the company's U.S. Government contracts are funded incrementally on a year-to-year basis.  Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect the company's financial condition or results of operations.  Furthermore, contracts with the U.S. Government may be terminated or suspended by the U.S. Government at any time, with or without cause.  Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect the company's financial condition and/or results of operations.

Research and Development Expenses

The company believes that a majority of the company's research and development expenses are recoverable and billable under contracts with the U.S. Government, from which the majority of the company's revenues are derived.  Charging practices relating to research and development and other costs that may be charged directly or indirectly to government contracts are subject to audit by U.S. Government agencies to determine if such costs are reasonable and allowable under government contracting regulations and accounting practices.  The company believes that research and development costs incurred in connection with the company's Antares development program (see Note 1) are allowable, although the U.S. Government has not yet made a final determination.  During 2012, 2011 and 2010, the company incurred $42.6 million, $34.3 million and $43.2 million, respectively, of such expenses that have been recorded as allowable costs.  Since the inception of the Antares program through December 31, 2012, the company has incurred $196.1 million of such costs.  If such costs were determined to be unallowable, the company could be required to record revenue and profit reductions in future periods.

Litigation

From time to time the company is party to certain litigation or other legal proceedings arising in the ordinary course of business.  Because of the uncertainties inherent in litigation, the company cannot predict the outcome of such litigation or other legal proceedings; however, the company believes that none of these matters will have a material adverse effect on the company's results of operations or financial condition.

10.  Stock Plans and Equity Transactions

Stock Plans

The company's share-based incentive plans permit the company to grant restricted stock units, restricted stock, incentive or non-qualified stock options, and certain other instruments to employees, directors, consultants and advisers of the company.  Restricted stock units and stock options generally vest over three years and are not subject to any performance criteria.  Options expire no more than ten years following the grant date.  Shares issued under the plans upon option exercise or stock unit conversion are generally issued from authorized but previously unissued shares.

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The company also has an Employee Stock Purchase Plan ("ESPP") whereby employees may purchase shares of stock at the lesser of 85% of the fair market value of shares at the beginning or the end of quarterly offering periods.  As of December 31, 2012, approximately 419,000 shares of common stock were available for purchase under the ESPP.  Compensation expense associated with the ESPP was $0.3 million, $0.4 million and $0.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Equity Transactions

The following tables summarize information related to stock-based compensation transactions and plans:

	Restricted Stock Units					Stock Options
				Weighted Average						Weighted Average
	Number of			Measurement		Number of				Exercise
	Units			Date Fair Value		Options				Price
Outstanding at December 31, 2009		473,615		$	22.88		2,301,305			$	8.29
Granted (1)		520,470			14.47		—				—
Exercised		—			—		(1,038,624	)			10.21
Vested		(300,969	)		23.17		—				—
Forfeited		(8,442	)		19.98		(2,599	)			6.29
Expired		—			—		(33,500	)			16.24
Outstanding at December 31, 2010		684,674			16.38		1,226,582				6.46
Granted (1)		442,110			17.39		—				—
Exercised		—			—		(317,647	)			4.26
Vested		(330,356	)		18.47		—				—
Forfeited		(14,316	)		16.57		(448	)			5.79
Expired		—			—		(6,200	)			3.91
Outstanding at December 31, 2011		782,112			16.07		902,287				7.25
Granted (1)		529,446			12.90		—				—
Exercised		—			—		(343,734	)			6.28
Vested		(345,945	)		15.77		—				—
Forfeited		(29,980	)		14.85		—				—
Expired		—			—		(599	)			5.79
Outstanding at December 31, 2012		935,633		$	14.42		557,954		(2)	$	7.84

  ^____________

(1) The fair value of restricted stock unit grants is determined based on the closing market price of Orbital's common stock on the date of grant.  Such value is recognized as expense over the service period, net of estimated forfeitures.

(2) The weighted average remaining contractual term is 0.72 years.

		Options Outstanding (1)
				Weighted Average		Weighted
Range of		Number		Remaining Contractual		Average
Exercise Prices		Outstanding		Term (Years)		Exercise Price
	$5.65-$9.71		452,954		0.40		$	6.82
	10.93-12.98		105,000		2.10			12.26
	$5.65-$12.98		557,954		0.72		$	7.84

(1) All outstanding options were exercisable as of December 31, 2012.

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	Years Ended December 31,
(in millions)	2012		2011		2010
Stock-based compensation expense recognized	$	6.4	$	6.2	$	7.0
Income tax benefit related to stock-based compensation expense		2.5		2.0		2.3
Intrinsic value of options exercised, computed as the market price
on the exercise date less the price paid to exercise the options		2.6		3.8		8.1
Cash received from exercise of options		2.1		1.4		10.6
Grant date fair value of vested restricted stock units		5.5		6.1		7.0
Tax benefit recorded as an increase to additional
paid-in capital related to stock-based compensation transactions		0.2		1.2		1.1

	As of
(in millions)	December 31, 2012
Shares of common stock available for grant under the company's stock-based incentive plans		2.9
Aggregate intrinsic value of restricted stock units that are expected to vest	$	12.9
Unrecognized compensation expense related to non-vested restricted stock units, expected to
be recognized over a weighted-average period of 1.96 years		10.4
Aggregate intrinsic value of stock options outstanding, all fully vested		3.3

11.  Employee Benefit Plans

The company has a defined contribution plan (the "Plan") generally covering all full-time employees.  Company contributions to the Plan are made based on plan provisions and at the discretion of the Board of Directors.  The company made contributions of $19.9 million, $18.6 million and $17.5 million during 2012, 2011 and 2010, respectively.

The company also has two overfunded defined benefit plans that were frozen upon acquisition in a 1994 business combination.  As of December 31, 2012 and 2011, the company had recorded a $2.7 million and $2.1 million asset, respectively, in other non-current assets related to the pension plans.  The plans are not significant to the accompanying consolidated financial statements taken as a whole; accordingly, additional related disclosures are omitted from these notes to the consolidated financial statements.

The company has a deferred compensation plan for senior managers and executive officers.  At December 31, 2012 and 2011, liabilities related to this plan totaling $11.7 million and $10.3 million, respectively, were included in accrued expenses.

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12.  Summary of Selected Quarterly Financial Data (Unaudited)

The following is a summary of selected quarterly financial data for the previous two years (in thousands, except per share data):

	Quarters Ended
	March 31		June 30		Sept. 30		Dec. 31
2012
Revenues	$	338,030	$	371,268	$	372,882	$	354,589
Income from operations		23,846		26,092		31,313		31,320
Net income		12,993		14,614		19,452		13,947	(1)
Basic income per share		0.22		0.25		0.33		0.29
Diluted income per share		0.22		0.25		0.33		0.29
2011
Revenues	$	317,703	$	350,599	$	342,170	$	335,451
Income from operations		10,116		22,807		24,668		22,203
Net income		12,335		21,217		16,473		17,369
Basic income per share		0.21		0.36		0.28		0.29
Diluted income per share		0.21		0.36		0.28		0.29

______________________

(1) In December 2012 the company recorded a $10.3 million pretax debt extinguishment charge ($6.3 million after tax) related to the repayment of convertible notes in connection with the financing transaction described in Note 6.

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ORBITAL SCIENCES CORPORATION

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

FORM 10-K FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

(In thousands)

			Additions
					Charged/
	Balance at		Charged to		Credited to						Balance
	Start of		Costs and		Other						at End of
Description	Period		Expenses		Accounts			Deductions			Period
YEAR ENDED DECEMBER 31, 2010
Deferred income tax valuation allowance	$	12,654	$	350	$	96		$	(307	)	$	12,793
YEAR ENDED DECEMBER 31, 2011
Deferred income tax valuation allowance		12,793		75		38			(3,513	)		9,393
YEAR ENDED DECEMBER 31, 2012
Deferred income tax valuation allowance		9,393		2		(210	)		(641	)		8,544

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Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.  Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Changes in Internal Control Over Financial Reporting

An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures were effective.  There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended.  Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Based on our evaluation under the framework in Internal Control - Integrated Framework, management concluded that our internal control over financial reporting was effective as of December 31, 2012.  The effectiveness of the company's internal control over financial reporting as of December 31, 2012 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which is included herein.

Item 9B.  Other Information

None.

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PART III

Item 10.  Directors, Executive Officers and Corporate Governance

The information required by this Item is included under the captions "Executive Officers of the Registrant" in Part I above and under the captions "Proposal 1 - Election of Directors - Directors to be Elected at the 2013 Annual Meeting, - Directors Whose Terms Expire in 2014, - Directors Whose Terms Expire in 2015," "Corporate Governance - Code of Business Conduct and Ethics," "Information Concerning the Board of Directors and Its Committees - Board Committees" and "Other Matters - Section 16(a) Beneficial Ownership Reporting Compliance" in our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 8, 2013 and is incorporated herein by reference.

Item 11.  Executive Compensation

The information required by this Item is included under the captions "Executive Compensation - Compensation Discussion and Analysis, - Human Resources and Compensation Committee Report, - Summary Compensation Table, - Grants of Plan-Based Awards, - Outstanding Equity Awards at Fiscal Year-End, - Option Exercises and Stock Vested, - Pension Benefits, - Nonqualified Deferred Compensation, - Potential Payments Upon Termination or Change in Control," "Compensation Committee Interlocks and Insider Participation" and "Information Concerning the Board of Directors and Its Committees - Director Compensation" in our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 8, 2013 and is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is included under the captions "Ownership of Common Stock" in our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 8, 2013 and is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is included under the caption "Information Concerning the Board of Directors and Its Committees - Related Person Transactions Policy, - Director Independence" in our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 8, 2013 and is incorporated herein by reference.

Item 14.  Principal Accounting Fees and Services

The information required by this Item is included under the caption "Other Matters - Fees of Independent Registered Public Accounting Firm, - Pre-Approval of Audit and Non-Audit Services" in our definitive proxy statement to be filed pursuant to Regulation 14A on or about March 8, 2013 and is incorporated herein by reference.

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PART IV

Item 15.  Exhibits and Financial Statement Schedule

(a)	Documents filed as part of this Report:
	1.	Financial Statements.
		The following financial statements, together with the report of independent registered public accounting firm, are filed as a part of this report:
			A.	Report of Independent Registered Public Accounting Firm
			B.	Consolidated Statements of Comprehensive Income
			C.	Consolidated Balance Sheets
			D.	Consolidated Statements of Stockholders' Equity
			E.	Consolidated Statements of Cash Flows
			F.	Notes to Consolidated Financial Statements
	2.	Financial Statement Schedule.
		The following additional financial data are transmitted with this report and should be read in conjunction with the consolidated financial statements contained herein.  Schedules other than those listed below have been omitted because they are inapplicable or are not required.
			Schedule II — Valuation and Qualifying Accounts
	3.	Exhibits.
		A complete listing of exhibits required is given in the Exhibit Index that precedes the exhibits filed with this report.
(b)	See Item 15(a)(3) of this report.
(c)	See Item 15(a)(2) of this report.

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Pursuant to the requirements of Section 13 or 15(d) 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.

Dated:  February 22, 2013	ORBITAL SCIENCES CORPORATION
	By:	/s/ David W. Thompson
		David W. Thompson Chairman of the Board, President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Dated:  February 22, 2013

Signature:	Title:
/s/ David W. Thompson David W. Thompson	Chairman of the Board, President and Chief Executive Officer, Director (Principal Executive Officer)
/s/ Garrett E. Pierce Garrett E. Pierce	Vice Chairman and Chief Financial Officer, Director (Principal Financial Officer)
/s/ Hollis M. Thompson Hollis M. Thompson	Senior Vice President and Controller  (Principal Accounting Officer)

78

/s/ Kevin P. Chilton Kevin P. Chilton	Director
/s/ Lennard A. Fisk                                     Lennard A. Fisk	Director
/s/ Robert M. Hanisee Robert M. Hanisee	Director
/s/ Robert J. Hermann Robert J. Hermann	Director
/s/ Ronald T. Kadish Ronald T. Kadish	Director
/s/ Janice I. Obuchowski Janice I. Obuchowski	Director
/s/ James G. Roche James G. Roche	Director
/s/ Frank L. Salizzoni Frank L. Salizzoni	Director
/s/ Harrison H. Schmitt Harrison H. Schmitt	Director
/s/ James R. Thompson James R. Thompson	Director
/s/ Scott L. Webster Scott L. Webster	Director

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EXHIBIT INDEX

The following exhibits are filed as part of this report.  Where such filing is made by incorporation by reference to a previously filed statement or report, such statement or report is identified in parentheses.

Exhibit Number	Description of Exhibit
3.1	Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to the company's Registration Statement on Form S-3 (File Number 333-08769) filed and effective on July 25, 1996).
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 to the company's Current Report on Form 8-K filed on October 31, 2011).
3.3	Certificate of Amendment to Restated Certificate of Incorporation, dated April 29, 1997 (incorporated by reference to Exhibit 3.3 to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
3.4	Certificate of Amendment to Restated Certificate of Incorporation, dated April 30, 2003 (incorporated by reference to Exhibit 3.4 to the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2003).
4.1	Form of Certificate of Common Stock (incorporated by reference to Exhibit 4.1 to the company's Registration Statement on Form S-1 (File Number 33-33453) filed on February 9, 1990 and effective on April 24, 1990).
4.2	Indenture dated as of December 13, 2006, by and between Orbital Sciences Corporation and The Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1 to the company's Current Report on Form 8-K filed on December 13, 2006).
4.3	Form of 2.4375% Convertible Senior Subordinated Note due 2027 (incorporated by reference to Exhibit 4.2 to the company's Current Report on Form 8-K filed on December 13, 2006).
10.1	Credit Agreement, dated as of June 7, 2011, by and among Orbital Sciences Corporation, as Borrower, the subsidiaries of the Borrower party thereto as Guarantors (the "Guarantors"), the Lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent, Swingline Lender and Issuing Lender, Wells Fargo Securities LLC, Citigroup Global

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Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Joint Lead Arrangers and Joint Bookrunners, Citibank, N.A. and Bank of America, N.A. as Co-Syndication Agents and PNC Bank, N.A. and Sovereign Bank as Co-Documentation Agents (incorporated by reference to Exhibit 10.1 to the company's Current Report on Form 8-K filed on June 10, 2011).

10.2 First Amendment to Credit Agreement, dated as of October 31, 2012, by and among Orbital Sciences Corporation, the Guarantors, and the lenders and agents party thereto (filed herewith).  

10.3 Second Amendment to Credit Agreement, dated as of December 12, 2012, among Orbital Sciences Corporation, the Guarantors, and the lenders and agents party thereto (incorporated by reference to Exhibit 10.1 to the company's Current Report on Form 8-K filed on December 13, 2012).  

10.4	Security and Pledge Agreement, dated as of June 7, 2011, between Orbital Sciences Corporation, the other obligors party thereto, and Wells Fargo Bank, National Association, as Administrative Agent (incorporated by reference to Exhibit 10.2 to the company's Current Report on Form 8-K filed on June 10, 2011).
10.5	Lease Agreement dated as of September 29, 1989, by and among Corporate Property Associates 8, L.P., Corporate Property Associates 9, L.P. and Space Data Corporation (incorporated by reference to Exhibit 10.2 to the company's Registration Statement on Form S-1 (File Number 33-33453) filed on February 9, 1990).
10.6	First Amendment to Lease Agreement dated as of December 27, 1990, by and among Corporate Property Associates 8, L.P., Corporate Property Associates 9, L.P. and Space Data Corporation (incorporated by reference to Exhibit 10.2.1 to the company's Annual Report on Form 10-K for the year ended December 31, 1991).
10.7	Fourth Amendment to Lease Agreement dated as of November 5, 2008, by and between Corporate Property Associates 9, L.P. and Orbital Sciences Corporation (incorporated by reference to Exhibit 10.1 to the company's Current Report on Form 8-K filed on November 12, 2008).
10.8	Orbital Sciences Corporation 1997 Stock Option and Incentive Plan, amended as of November 1, 2007 (incorporated by reference to Exhibit 10.8 to the company's Annual Report on Form 10-K for the year ended December 31, 2007).*

81

10.9	Orbital Sciences Corporation Amended and Restated 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 to the company's Current Report on Form 8-K filed on May 1, 2002).*
10.10	Orbital Sciences Corporation Nonqualified Management Deferred Compensation Plan, amended and restated as of January 1, 2005 (incorporated by reference to Exhibit 10.13 to the company's Annual Report on Form10-K for the year ended December 31, 2006).*
10.11	Executive Relocation Agreement dated as of August 7, 2003, by and between Orbital Sciences Corporation and Ronald J. Grabe, Executive Vice President and General Manager, Launch Systems Group (incorporated by reference to Exhibit 10.1 to the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003).*
10.12	First Amendment to Executive Relocation Agreement dated as of April 28, 2005, by and between Orbital Sciences Corporation and Ronald J. Grabe, Executive Vice President and General Manager, Launch Systems Group (incorporated by reference to Exhibit 10.4 to the company's Current Report on Form 8-K filed on May 2, 2005).*
10.13	Amended and Restated Executive Severance Agreement dated as of November 30, 2007, by and between Orbital Sciences Corporation and Garrett E. Pierce (incorporated by reference to Exhibit 10.2 to the company's Current Report on Form 8-K filed on December 4, 2007).*
10.14	Form of Director and Executive Officer Indemnification Agreement (incorporated by reference to Exhibit 10.23 to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998).*
10.15	Form of Amended and Restated Executive Change in Control Severance Agreement (filed herewith).*
10.16	Contract No. NNJ09GA02B for ISS Commercial Resupply Services dated December 23, 2008, by and between Orbital Sciences Corporation and the National Aeronautics and Space Administration (incorporated by reference to Exhibit 10.24 to the company's Annual Report on Form 10-K for the year ended December 31, 2008).**

82

10.17	Task Order No.1 for Contract NNJ09GA02B for ISS Commercial Resupply Services dated December 23, 2008, by and between  Orbital Sciences Corporation and the National Aeronautics and Space Administration (incorporated by reference to Exhibit 10.25 to the company's Annual Report on Form 10-K for the year ended December 31, 2008).**
10.18	Form of Executive Nonstatutory Stock Option Agreement under the 1997 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.23 to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004).*
10.19	Form of Non-Employee Director Nonstatutory Stock Option Agreement under the 1997 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.24 to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2004).*
10.20	Form of Non-Employee Director Stock Unit Agreement under the 1997 Stock Option and Incentive Plan (incorporated by reference to Exhibit 10.20 to the company's Annual Report on Form 10-K filed on February 29, 2012).*
10.21	Form of Stock Unit Agreement under the 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the company's Current Report on Form 8-K filed on May 2, 2005).*
10.22	Form of Stock Unit Agreement under the 2005 Stock Incentive Plan (version 2) (incorporated by reference to Exhibit 10.20 to the company's Annual Report on Form 10-K filed on February 29, 2012).*
10.23	Form of Stock Unit Agreement under the Amended and Restated 2005 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the company's Current Report on Form 8-K filed on May 1, 2012).*
21	Subsidiaries of the Registrant (filed herewith)
23	Consent of PricewaterhouseCoopers LLP (filed herewith).
31.1	Certification of Chairman and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith).

83

31.2	Certification of Vice Chairman and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith).
32.1	Written Statement of Chairman and Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith).
32.2	Written Statement of Vice Chairman and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350) (filed herewith).
101.INS†	XBRL Instance Document
101.SCH†	XBRL Taxonomy Extension Schema
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase
101.LAB†	XBRL Taxonomy Extension Labels Linkbase
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase
101.DEF†	XBRL Taxonomy Extension Definition Linkbase

__________

*Management Contract or Compensatory Plan or Arrangement.

** Certain portions of this Exhibit were omitted by means of redacting a portion of the text in accordance with Rule 0-6 or Rule 24b-2 of the Securities Exchange Act of 1934, as amended.

† Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

84

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (Nos. 333-88260, 333-88258, 333-53585, 333-69887, 333-69885, 333-27999, 333-59470, 333-59474, 333-105341, 333-124807 and 333-181083) of Orbital Sciences Corporation of our report dated February 22, 2013, relating to the financial statements, financial statement schedule and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

McLean, Virginia

February 22, 2013

EX-31.1

Exhibit 31.1

Certification

I, David W. Thompson, certify that:

1.	I have reviewed this annual  report on Form 10-K of Orbital Sciences Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 22, 2013			/s/ David W. Thompson
			David W. Thompson
			Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification

I, Garrett E. Pierce, certify that:

1.	I have reviewed this annual  report on Form 10-K of Orbital Sciences Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: February 22, 2013			/s/ Garrett E. Pierce
			Garrett E. Pierce
			Vice Chairman and Chief Financial Officer

EX-32.1

Exhibit 32.1

Written Statement of Chairman, President and Chief Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

     The undersigned, the Chairman, President and Chief Executive Officer of Orbital Sciences Corporation (the "Company"), hereby certifies that, to his knowledge, on the date hereof:

(a)	the Annual Report on Form 10-K of the Company for the year ended December 31, 2012 filed on the date hereof with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
		/s/ David W. Thompson
		David W. Thompson
		Chairman, President and Chief Executive Officer
		February 22, 2013

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Written Statement of Vice Chairman and Chief Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)

     The undersigned, the Vice Chairman and Chief Financial Officer of Orbital Sciences Corporation (the "Company"), hereby certifies that, to his knowledge, on the date hereof:

(a)	the Annual Report on Form 10-K of the Company for the year ended December 31, 2012 filed on the date hereof with the Securities and Exchange Commission (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(b)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
		/s/ Garrett E. Pierce
		Garrett E. Pierce
		Vice Chairman and Chief Financial Officer
		February 22, 2013

     A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-10.2

Exhibit 10.2

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as of October 31, 2012, is by and among ORBITAL SCIENCES CORPORATION, a Delaware corporation (the "Borrower"), the Guarantors party hereto (the "Guarantors"), WELLS FARGO BANK, NATIONAL ASSOCIATION, as administrative agent on behalf of the Lenders under the Credit Agreement (as hereinafter defined) (in such capacity, the "Administrative Agent") and each Lender party hereto.  Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed thereto in the Credit Agreement.

W I T N E S S E T H

WHEREAS, the Borrower, the Guarantors from time to time party thereto, certain banks and financial institutions from time to time party thereto (the "Lenders") and the Administrative Agent are parties to that certain Credit Agreement dated as of June 7, 2011 (as amended, modified, extended, restated, replaced, or supplemented from time to time, the "Credit Agreement");

WHEREAS, the Credit Parties have requested that the Administrative Agent and the Required Lenders amend the Credit Agreement as provided herein; and

WHEREAS, the Administrative Agent and the Required Lenders are willing to make such amendments to the Credit Agreement in accordance with and subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements hereinafter set forth, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I AMENDMENTS TO CREDIT AGREEMENT

As of the Amendment Effective Date (as hereinafter defined), the Credit Agreement is hereby amended in the following respects:

1.1Amendments to Section 1.1.

(a)The definition of "Convertible Notes" in Section 1.1 of the Credit Agreement is hereby amended and restated to read as follows:

"Convertible Notes" mean, collectively, the Existing Convertible Notes and the Additional Convertible Notes.

(b)The definition of "Convertible Note Documents" in Section 1.1 of the Credit Agreement is hereby amended and restated to read as follows:

"Convertible Note Documents" means, collectively, the Existing Convertible Note Documents and the Additional Convertible Note Documents.

(c)The definition of "Springing Maturity Date" in Section 1.1 of the Credit Agreement is hereby amended by (i) deleting all references to "Convertible Notes" therein and replacing such references with "Existing Convertible Notes", (ii) deleting all references to "October 11, 2013" therein and replacing such references with "October 15, 2013", (iii) deleting the reference to "Exhibit I" therein and replacing such reference with "Exhibit J"; and (iv) adding the following provision to the end of such definition:

For the avoidance of doubt, in the event that the amount outstanding under the Existing Convertible Notes has been reduced to less than $25,000,000 this Springing Maturity Date will be of no further force and effect for all purposes of this Agreement.   Notwithstanding the terms of this definition to the contrary, for the purposes of determining the amount of Convertible Notes outstanding as of a certain date as required by clauses (a) and (b) above and the immediately preceding sentence, the amount of outstanding Existing Convertible Notes as of such date will be reduced on a dollar for dollar basis by the amount on deposit in the Convertible Notes Escrow Account as of such date.

(d)The following new definitions are hereby added to Section 1.1 of the Credit Agreement in the appropriate alphabetical order:

"Additional Convertible Notes" means any debt securities issued by the Borrower in accordance with Section 9.3(j)(II) hereof the terms of which provide for conversion into Capital Stock, cash or a combination thereof so long as the conditions to conversion thereof are reasonably satisfactory to the Administrative Agent (provided that it is acknowledged that conditions to conversion that are substantially similar to the those conditions to conversion applicable to the Existing Convertible Notes are satisfactory to the Administrative Agent), as amended, modified or supplemented from time to time.

"Additional Convertible Note Documents" means the Additional Convertible Notes, the indenture(s) governing the Additional Convertible Notes and all other definitive documents, instruments and agreements relating thereto, in each case as amended, modified and supplemented from time to time.

"Convertible Notes Escrow Account" means any deposit account of the Borrower holding funds in escrow solely for the repayment, repurchase or redemption of amounts outstanding under any Convertible Notes to the extent (i) the escrow terms and documentation are reasonably satisfactory to the Administrative Agent and (ii) the Administrative Agent shall be reasonably satisfied with the arrangements pursuant to which such Convertible Notes will be repaid, repurchased or redeemed with the amounts held in such deposit account.

"Excluded Debt" has the meaning set forth in Section 1.10.

"Existing Convertible Notes" means those certain convertible senior subordinated notes due 2027, issued by the Borrower, as amended, modified, and supplemented, from time to time.

"Existing Convertible Note Documents" means the Existing Convertible Notes, the indenture governing the Existing Convertible Notes and all other definitive documents, instruments and agreements relating thereto, in each case as amended, modified and supplemented from time to time.

1.2Amendment to Section 1.10.  Section 1.10 of the Credit Agreement is hereby amended by inserting the following new paragraph at the end thereof:

With respect to any Convertible Notes outstanding on any determination date, for purposes of calculating the Consolidated Total Leverage Ratio, the Consolidated Interest Coverage Ratio and the Consolidated Senior Secured Leverage Ratio and for purposes of Section 9.15, the amount of any such Convertible Notes outstanding on such date shall be disregarded on a dollar for dollar basis up to the amount of cash deposits in any Convertible Notes Escrow Account (the "Excluded Debt"), and for purposes of calculating the Consolidated Interest Coverage Ratio, the amount of any Consolidated Cash Interest Expense associated with such Excluded Debt shall be disregarded.

1.3Amendment to Section 9.3(j).  Section 9.3(j) of the Credit Agreement is hereby amended by (i) deleting the phrase "other unsecured Indebtedness (including unsecured Indebtedness incurred in a refinancing or replacement of any Indebtedness)" at the beginning of such clause and replacing it with "(I) other unsecured Indebtedness (including unsecured Indebtedness incurred in a refinancing or replacement of any Indebtedness)" and (II) the Additional Convertible Notes, in each case" and (ii) deleting the phrase "the maturity date" at the beginning of clause (C) of Section 9.3(j) and replacing it with "the scheduled maturity date".

1.4Amendment to Section 9.6(d)(iii).  Section 9.6(d)(iii) of the Credit Agreement is hereby amended and restated to read as follows:

(iii)payments made (whether in cash, Capital Stock or any combination thereof) in connection with the exercise of any conversion rights by the holders of the Convertible Notes in accordance with the terms of the Convertible Note Documents.

1.5Amendment to Section 9.11(a).  Section 9.11(a) of the Credit Agreement is hereby amended and restated to read as follows:

(a)(I) Amend or modify any of the terms of any of the Existing Convertible Note Documents if such amendment or modification would add or change any terms in a manner that, taken as a whole, is materially adverse to the Borrower or any of its Subsidiaries (including, without limitation, any amendment or modification that would (i) shorten the final maturity or average life to maturity, (ii) require any payment to be made sooner than originally scheduled (including in connection with a conversion) or increase the interest rate applicable thereto or (iii) modify the method of calculating the amount payable upon the optional or mandatory redemption of, or the conversion of, the Existing Convertible Notes from the method contained in the Existing Convertible Note Documents); or (II) amend or modify any terms of any of the Additional Convertible Note Documents if such amendment or modification would add or change any terms related to the amount or timing of any cash payment to be made by the Borrower with respect thereto in a manner that, taken as a whole, is materially adverse to the Borrower or any of its Subsidiaries (including, without limitation, any amendment or modification that would (i) shorten the final maturity or average life to maturity, (ii) require any payment to be made sooner than originally scheduled (including in connection with a conversion) or increase the interest rate applicable thereto or (iii) modify the method of calculating the amount payable upon the optional or mandatory redemption of, or the conversion of, the Additional Convertible Notes from the method contained in the Additional Convertible Note Documents);but excluding in each case for clauses (I) and (II) above any amendment or modification required by the Convertible Note Documents that would not require the consent of any holder of Convertible Notes under the Convertible Note Documents;

1.6Amendment to Sections 9.11(b) and (c).  Sections 9.11(b) and (c) of the Credit Agreement are hereby amended by (i) deleting all references to "Convertible Notes" therein and replacing such references with "Existing Convertible Notes" and (ii) deleting all references to "Convertible Note Documents" therein and replacing such references with "Existing Convertible Note Documents"

1.7Amendment to Section 10.1(e)(i).  Section 10.1(e)(i) of the Credit Agreement is hereby amended to insert the following proviso at the end of subclause (B) thereof:

; provided that the occurrence of any scheduled repurchase date for the Convertible Notes or any event allowing holders of the Convertible Notes to exercise their right to convert, in each case in accordance with the terms of the Convertible Note Documents, shall not constitute an Event of Default under this clause (i).

1.8Amendment to Section 10.1(l).  Section 10.1(l) of the Credit Agreement is hereby amended by (i) deleting all references to "Convertible Notes" therein and replacing such references with "Existing Convertible Notes" and (ii) deleting all references to "Convertible Note Documents" therein and replacing such references with "Existing Convertible Note Documents".

1.9Amendment to Exhibit J.  Exhibit J [Form of Springing Maturity Date Certificate] to the Credit Agreement is hereby amended and restated by deleting such Exhibit J attached thereto and replacing it with Exhibit J attached hereto as Annex I.

ARTICLE II CONDITIONS TO EFFECTIVENESS

2.1Closing Conditions.  This Amendment shall be deemed effective upon the date (the "Amendment Effective Date") when the Administrative Agent shall have received a copy of this Amendment duly executed by each of the Credit Parties, the Administrative Agent and the Required Lenders.

ARTICLE III MISCELLANEOUS

3.1Amended Terms.  On and after the Amendment Effective Date, all references to the Credit Agreement in each of the Loan Documents shall hereafter mean the Credit Agreement as amended by this Amendment.  Except as specifically amended hereby or otherwise agreed, the Credit Agreement is hereby ratified and confirmed and shall remain in full force and effect according to its terms.

3.2Representations and Warranties of Credit Parties.  Each of the Credit Parties represents and warrants as follows:

(a)It has taken all necessary action to authorize the execution, delivery and performance of this Amendment.

(b)This Amendment has been duly executed and delivered by such Person and constitutes such Person's legal, valid and binding obligations, enforceable in accordance with its terms, except as such enforceability may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or similar laws affecting creditors' rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

(c)No material consent, approval, authorization or order of, or filing, registration or qualification with, any court or governmental authority or third party is required in connection with the execution, delivery or performance by such Person of this Amendment, other than (i) those that have already been obtained and are in full force and effect and (ii) filings with the United States Securities and Exchange Commission pursuant to applicable Requirements of Law.

(d)The representations and warranties set forth in the Loan Documents are true and correct as of the date hereof (except for those which expressly relate to an earlier date).

(e)After giving effect to this Amendment, no event has occurred and is continuing which constitutes a Default or an Event of Default.

(f)The Security Documents continue to create a valid security interest in, and Lien upon, the Collateral, in favor of the Administrative Agent, for the benefit of the Lenders, which security interests and Liens are perfected in accordance with the terms of the Security Documents and prior to all Liens other than Permitted Liens.

(g)Except as specifically provided in this Amendment, the Credit Party Obligations are not reduced or modified by this Amendment and are not subject to any offsets, defenses or counterclaims.

3.3Reaffirmation of Credit Party Obligations.  Each Credit Party hereby ratifies the Credit Agreement and each other Loan Document to which it is a party and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement and each other Loan Document to which it is a party applicable to it and (b) that it is responsible for the observance and full performance of its respective Credit Party Obligations.

3.4Loan Document.  This Amendment shall constitute a Loan Document under the terms of the Credit Agreement.

3.5Expenses.  The Borrower agrees to pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent in connection with the preparation, execution and delivery of this Amendment in accordance with Section 12.3 of the Credit Agreement.

3.6Further Assurances.  The Credit Parties agree to promptly take such action, upon the reasonable request of the Administrative Agent, as is necessary to carry out the intent of this Amendment.

3.7Entirety.  This Amendment and the other Loan Documents embody the entire agreement among the parties hereto and supersede all prior agreements and understandings, oral or written, if any, relating to the subject matter hereof.

3.8Counterparts; Telecopy.  This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, but all of which shall constitute one and the same instrument.  Delivery of an executed counterpart to this Amendment by telecopy or other electronic means shall be effective as an original and shall constitute a representation that an original will be delivered.

3.9No Actions, Claims, Etc.  As of the date hereof, each of the Credit Parties hereby acknowledges and confirms that it has no knowledge of any actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in law or in equity, against the Administrative Agent, the Lenders, or the Administrative Agent's or the Lenders' respective officers, employees, representatives, agents, counsel or directors arising from any action by such Persons, or failure of such Persons to act under the Credit Agreement on or prior to the date hereof.

3.10GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

3.11Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

3.12General Release.  In consideration of the willingness of the Administrative Agent and certain of the Lenders to enter into this Amendment, each Credit Party hereby releases and forever discharges the Administrative Agent, the Issuing Lender, the Swingline Lender, the Lenders and the Administrative Agent's, the Issuing Lender's, the Swingline Lender's, and the Lenders' respective predecessors, successors, assigns, officers, managers, directors, employees, agents, attorneys, representatives, and affiliates (hereinafter all of the above collectively referred to as the "Bank Group"), from any and all claims, counterclaims, demands, damages, debts, suits, liabilities, actions and causes of action of any nature whatsoever, including, without limitation, all claims, demands, and causes of action for contribution and indemnity, whether arising at law or in equity, whether known or unknown, whether liability be direct or indirect, liquidated or unliquidated, whether absolute or contingent, foreseen or unforeseen, and whether or not heretofore asserted, which any Credit Party may have or claim to have against any of the Bank Group arising out of the Loan Documents on or prior to the date hereof.

3.13Consent to Jurisdiction; Service of Process; Waiver of Jury Trial.  The jurisdiction, services of process and waiver of jury trial provisions set forth in Sections 12.5 and 12.6 of the Credit Agreement are hereby incorporated by reference, mutatis mutandis.

CHAR1\1284331v7

ORBITAL SCIENCES CORPORATION

FIRST AMENDMENT TO CREDIT AGREEMENT

IN WITNESS WHEREOF the parties hereto have caused this Amendment to be duly executed on the date first above written.

BORROWER:ORBITAL SCIENCES CORPORATION

By:/s/ Michael R. Williams

Name: Michael R. Williams

Title:   Senior Vice President and Treasurer

GUARANTOR:ORBITAL INTERNATIONAL LLC

By:/s/ Michael R. Williams

Name: Michael R. Williams

Title:   Senior Vice President and Treasurer

ORBITAL SCIENCES CORPORATION

FIRST AMENDMENT TO CREDIT AGREEMENT

ADMINISTRATIVE AGENT

AND LENDER: WELLS FARGO BANK, NATIONAL ASSOCIATION as Administrative Agent, Swingline Lender, Issuing Lender and Lender

By:/s/ Scott Santa Cruz

Name: Scott Santa Cruz

Title:   Managing Director

ORBITAL SCIENCES CORPORATION

FIRST AMENDMENT TO CREDIT AGREEMENT

LENDER:CITIBANK, N.A.

By:_/s/ Paul Burroughs__________________

Name: Paul Burroughs

Title: Managing Director

ORBITAL SCIENCES CORPORATION

FIRST AMENDMENT TO CREDIT AGREEMENT

LENDER:BANK OF AMERICA, N.A.

By:/s/ Monica Sevila

Name: Monica Sevila

Title: Senior Vice President

LENDER:PNC BANK, NATIONAL ASSOCIATION

By:/s/ Douglas T. Brown

Name:Douglas T. Brown

Title:Senior Vice President

LENDER:SOVEREIGN BANK

By:/s/ James R. Riley

Name:James R. Riley

Title:Senior Vice President

LENDER:BRANCH BANKING AND TRUST COMPANY

By:/s/ Bradley B. Sands

Name:Bradley B. Sands

Title:Assistant Vice President

LENDER:COMERICA BANK

By:/s/ Blake Arnett

Name:Blake Arnett

Title:Vice President

LENDER:ROYAL BANK OF CANADA

By:/s/ Richard Smith

Name:Richard Smith

Title:Authorized Signatory

LENDER:U.S. BANK NATIONAL ASSOCIATION

By:/s/ Patrick McGraw

Name:Patrick McGraw

Title:Vice President

LENDER:THE NORTHERN TRUST COMPANY

By:/s/ Louise Anderson

Name:Louise Anderson

Title:Officer

EX-10.15

Exhibit 10.15

Form of Amended and Restated

Executive Change in Control Severance Agreement

_____________, 2012

Mr./Ms. [Home address]

Dear ____:

Orbital Sciences Corporation and its subsidiaries (together, the "Company") consider the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of the Company and its stockholders.  In this connection, the Company recognizes that the possibility of a change in control may exist and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders.  Accordingly, the Company's Board of Directors (the "Board") has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company's management, including yourself, to their assigned duties without distraction in the face of the potentially disturbing circumstances arising from the possibility of a change in control of the Company.

This letter agreement (the "Agreement") sets forth the severance benefits that the Company agrees will be provided to you in the event your employment with the Company terminates following a "Change in Control" (as defined in Section 2 hereof) under the circumstances described below.  This Agreement is not an employment contract nor does it alter your status as an at-will employee of the Company.  No benefit shall be payable under this Agreement except on Termination of your Employment (as defined below) with the Company as a result of a Change in Control (as defined below).

1.Term.  This Agreement commences as of the date written above, and shall remain in effect so long as you are employed as an executive officer of the Company, provided, however, that in the event of a Change in Control, this Agreement shall remain in full force and effect for a 24-month period commencing on the date of the Change in Control regardless of whether you remain an executive officer of the Company during such 24-month period.

2.Change in Control.  For purposes of this Agreement, a Change in Control shall mean:

(a)The acquisition by any individual, entity or group (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of 30% or more of either (i) the then outstanding shares of common stock of the Company or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors;

(b)Within any 24-month period, the persons who were directors of the Company immediately prior thereto (the "Incumbent Board") shall cease to constitute a majority of the Board of Directors of the Company or of its successor by merger, consolidation or sale of assets.  For this purpose, the Incumbent Board includes any new director whose (i) election to the Board resulted from a vacancy caused by the retirement, death or disability of a director and was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of the period, or (ii) nomination to the Board was approved by a committee of the Board whose majority consisted of directors who were directors in office at the beginning of the period; or

(c)The consummation by the Company of (i) a reorganization, merger, consolidation or similar extraordinary event (each, a "Business Combination"), the result of which is that (A) the stockholders of the Company immediately prior to the execution of the agreement to effect the Business Combination will not beneficially own, immediately after the reorganization, merger, consolidation or other similar extraordinary event, securities entitling such stockholders to vote more than 60% of the total equity of the surviving or resulting entity entitled to vote generally in the election of directors, (B) a Person (excluding any corporation resulting from the Business Combination) becomes the beneficial owner of 30% or more of the then outstanding shares of common stock of the corporation resulting from such Business Combination or (C) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were not members of the Board of Directors of the Company at the time of execution of the initial agreement or other action of the Board that provided for such Business Combination, or (ii) a sale or disposition of all or substantially all of the assets of the Company..

Notwithstanding the above, a Change in Control shall not be deemed to occur as a result of a transaction where either you, individually or as an officer, director or 5% stockholder or partner of any entity, or any employee benefit plan (or related trust) of the Company (a) becomes the beneficial owner of securities representing 30% or more of the combined voting power of the Company's then outstanding securities, or (b) enters into an agreement with the Company providing for the merger, consolidation, or sale or transfer of all or substantially all the assets of the Company.  In addition, a Change in Control shall not be deemed to occur where you enter into an employment agreement with the Company, any Person whose acquisition of the Company's securities resulted in the Change in Control or any entity resulting from a Business Combination.

3.Termination; Notice Requirements   

(i)Disability.  If, as a result of your incapacity due to physical or mental illness, you shall have been absent from your duties with the Company on a full-time basis for nine (9) consecutive months, and within 30 days after written notice of termination is given you shall not have returned to the full-time performance of your duties, the Company may terminate your employment for "Disability."

(ii)Cause.  Termination by the Company of your employment for "Cause" shall mean termination on (A) the willful and continued failure by you to substantially perform your duties with the Company in accordance with the instructions of the Board or the executive officers to whom you report (other than any such failure resulting from your incapacity due to physical or mental illness), after a demand for substantial performance is delivered to you by the Board which specifically identifies the manner in which the Board believes that you have not substantially performed your duties, (B) the willful engaging by you in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise, (C) your embezzlement or misappropriation of funds or property of the Company, (D) your conviction of a felony or the entrance of a plea of guilty or nolo contendere to a felony, or (E) your conviction of any crime involving fraud, dishonesty, moral turpitude or breach of trust or your entrance of a plea of guilty or nolo contendere to such a crime.  For purposes of this Subsection, no act, or failure to act, on your part shall be considered "willful" unless done, or omitted to be done, by you not in good faith and without reasonable belief that your action or omission was in the best interest of the Company.  Notwithstanding the foregoing, you shall not be deemed to have been terminated for Cause pursuant to clause (A), (B) or (C) of the first sentence of this Subsection unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than two-thirds of the entire membership of the Board at a meeting of the Board called and held for the purpose (after reasonable notice to you and an opportunity for you, together with your counsel, to be heard before the Board), finding that in the good faith opinion of the Board you were guilty of conduct set forth above in clause (A), (B)  or (C) of the first sentence of this Subsection and specifying the particulars thereof in detail.

(iii)Good Reason.  You shall be entitled to terminate your employment for Good Reason in connection with a Change in Control.  For purposes of this Agreement, "Good Reason" shall mean:

(A)without your written consent, the assignment to you of any position (including status, offices, titles and reporting requirements), authorities, duties and responsibilities, that are a material adverse change from the most significant of those held or exercised by you or assigned to you at any time during the 180-day period immediately preceding a Change in Control, or any other action by the Company that results in a material diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and that is remedied by the Company promptly after receipt of notice thereof given by you;

(B)a material reduction by the Company in your annual base salary, which for the purposes of this Subsection shall mean an amount at least equal to 12 times the highest monthly base salary paid or payable, including any base salary that has been earned but deferred, to you by the Company in respect of the 12-month period immediately preceding the month in which the Change in Control occurs;

(C)the Company's requiring you to be based anywhere other than the office of the Company in which you are based prior to the Change in Control or any office or location within a 50 mile radius of such office, except for required travel on the Company's business to an extent substantially consistent with your present business travel obligations;

(D)a material adverse change in the value of any material compensation plan or plans in which you participate, including any compensation plans after the date of this Agreement; including but not limited to any stock purchase plan, stock option plan, stock incentive plan, incentive compensation, bonus, and other plan in which you were participating at the time of the Change in Control, or the failure by the Company to continue your participation therein;

(E)a material adverse change in the benefits enjoyed by you under any of the Company's retirement, pension, 401(k), deferred compensation, life insurance, medical, health, accident, disability or other material benefit plans in which you were participating at the time of a Change in Control, the taking of any action by the Company which would directly or indirectly materially reduce any of such benefits enjoyed by you at the time of the Change in Control, or with a material reduction in the number of paid vacation days to which you are entitled in accordance with the Company's normal vacation policy in effect at the time of the Change in Control; or

(F)the failure of the Company to obtain a satisfactory agreement from any successor to assume and agree to perform this Agreement as contemplated in Section 5 hereof.

In order to constitute Good Reason, (i) you must provide notice to the Company of the existence of the condition within ninety (90) days of the initial existence, (ii) the Company must fail to remedy the condition within thirty (30) days of such notice, and (iii) you must actually terminate your employment within 90 days of the expiration of the Company's thirty (30) days cure period if the Company has not cured the condition constituting Good Reason.

(iv)Notice of Termination.  Any termination by the Company or by you shall be communicated by written Notice of Termination to the other party hereto in accordance with Section 6 hereof, and if by the Company for Cause, shall not be effective unless such notice includes the information set forth in Section 3(ii) hereof.

(v)Date of Termination.  "Date of Termination" shall mean (A) if your employment is terminated by reason of death or Disability, the date of your death or 30 days after Notice of Termination is given (provided that you shall not have returned to the performance of your duties on a full-time basis during such 30 day period), as the case may be, (B) if your employment is terminated by the Company for Cause, immediately upon delivery of the Notice of Termination that complies with the requirements of Section 3(ii), (C) if your employment is terminated by the Company for any other reason, the date specified in the Notice of Termination which shall not be less than 30 days from the date such Notice of Termination is given, and (D) if you terminate your employment for "Good Reason," the date such Notice of Termination is given or any later date specified therein.

(vi)Termination of Employment.  "Termination of Employment" shall mean that you and the Company anticipate that no further services would be performed after a certain date (as an employee) or that the level of bona fide services that you would perform after such date (as an employee) would permanently decrease to no more than 20 percent of the level of bona fide service performed over the immediately preceding 36-month period of employment (or such lesser time as you have been employed.)

4.Benefits Upon Termination or During Disability.  If a Change in Control is contemplated or has occurred and your employment is terminated, you shall be entitled to the benefits provided in this Section 4 as described below:

(i)During any period that you fail to perform your duties as a result of incapacity due to physical or mental illness, and in the event your employment is terminated pursuant to Section 3(i) hereof, your benefits shall be determined in accordance with the Company's insurance and benefit programs then in effect.

(ii)If your employment shall be terminated for Cause, the Company shall pay you your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given, and the Company shall have no further obligations to you under this Agreement.

(iii)If your employment shall be terminated in contemplation of, or any time after, a Change in Control (a) by the Company for any reason other than for Cause or Disability or (b) by you for Good Reason, then you shall be entitled to all the benefits provided below:

(A)The Company shall pay you on the Date of Termination your full base salary and accrued leave through the Date of Termination at the rate in effect at the time Notice of Termination is given.

(B)The Company will pay you a pro rata bonus equal to your target bonus for the year of your Termination of Employment multiplied by a fraction the numerator of which is the number of days you were employed in the year of termination and the denominator of which is 365.

(C)In lieu of any further salary payments to you for periods subsequent to the Date of Termination, the Company shall pay to you, provided you comply with the terms of Section 4(v) below, a lump sum payment equal to two times the sum of (a) the greater of (1) your annual base salary in effect on the Date of Termination, or (2) your annual base salary in effect on the date of the Change in Control and (b) the greater of (1) your target bonus for the year of the Termination of Employment or (2) the average of the two highest actual cash bonuses earned by you for two of the three years immediately prior to the year of your Date of Termination.

(D)The Company shall also immediately fully vest you in all your account balances under the Company's retirement, deferred compensation and pension plans (the "Plans"); provided, however, that should the Company be unable to provide for such vesting under the terms of any such Plans, the Company shall pay to you in the manner and as directed by you, an amount that equals on an after-tax basis the value of any amounts that were not vested or would otherwise be forfeited by you under the Plans upon your Termination of Employment with the Company.

(E)The Company shall also allow you the opportunity to surrender to the Company any then outstanding vested and unvested equity awards in respect of Common Stock of the Company and any of its subsidiaries and affiliates that you own (whether exercisable or not) and that you did not previously surrender or convert in the transaction that resulted in the Change in Control, and the Company shall promptly pay to you in consideration therefor a cash payment equal to the higher of (a) the highest price paid in connection with the transaction that resulted in the Change in Control or (b) the then current fair-market value on the Date of Termination if the equity award has been assumed, less, in each case if applicable, the exercise price for any such equity award.

(F)The Company shall also pay to you all reasonable legal fees and expenses incurred by you as a result of such termination (including all such fees and expenses, if any, incurred in contesting or disputing any such termination or in seeking to obtain or enforce any right or benefit provided by this Agreement) upon presentation to the Company of a reasonably detailed invoice for such expenses, whether or not you have already made payment for such expenses.

(G)For a 24-month period after such termination, the Company shall arrange to provide you with life, disability, accident and health insurance substantially similar to those you were receiving immediately prior to the Notice of Termination, provided, however, that should the Company be unable to provide for any such benefits under the terms of the benefit plans, or by law, the Company shall pay you an amount equal to the premiums the Company would have paid for such benefits under such plans.  The coverage period for purposes of the group health continuation requirements of Section 4980B of the Code shall commence at Termination of Employment.

(H)You shall not be required to mitigate the amount of any payment provided for in this Section 4 by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided for in this Section 4 be reduced by any compensation earned by you as the result of employment by another employer or by retirement benefits after the Date of Termination, or otherwise.

(I)In addition to all other amounts payable to you under this Section 4, you shall be entitled to receive all benefits payable to you under any of the Company's plans or agreements relating to retirement benefits.

(iv)If you become entitled to receive compensation or benefits under the terms of Section 4(iii), such compensation or benefits will be reduced by other severance benefits payable to you under any other plan, program, policy or practice of or agreement or other arrangement of the Company.

(v)You will be provided a written release of claims at the time of, or within 10 days following, your Date of Termination.  You will not be eligible to receive any payments provided for in Section 4(iii) (other than payments under Section 4(iii)(A)) unless you first execute the written release of claims within 45 days following the Date of Termination or Change in Control, if later, and you do not revoke such release within the time permitted therein for such revocation.  As to payments and benefits which are subject to Section 409A of the Code if the end of the forty-five (45) day review period plus revocation period occurs in a year subsequent to the year in which the Termination of Employment occurs, the payments will be made in the subsequent year.  Any payments delayed pursuant to this Section 4(v) shall be paid to you in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein.

(vi)Anything in this Agreement to the contrary notwithstanding, if (A) on the date of Termination of Employment with the Company or a subsidiary, any of the Company's stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Code), (B) if you are determined to be a "specified employee" within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations Section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code, as a result of such termination, you would receive any payment that, absent the application of this section, would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) six months after your termination date, (2) your death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment).

It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code.  To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving you the economic benefits described herein in a manner that does not result in such tax being imposed.

(vii)All payments required to be made by the Company hereunder to you shall be subject to the withholding of such amounts relating to Federal, state, local or foreign taxes as the Company reasonably may determine it should withhold pursuant to any applicable law or regulation.

(viii)Notwithstanding any other provision of this Agreement or of any other agreement, contract, or understanding entered into by you with the Company, except an agreement, contract, or understanding hereafter entered into that expressly addresses Section 280G or Section 4999 of the Code (an "Other Agreement"), and notwithstanding any formal or informal employment agreement or other arrangement for the direct or indirect provision of compensation to you (including groups or classes of participants or beneficiaries of which you are a member), whether or not such compensation is deferred, is in cash, or is in the form of a benefit to or for you (a "Benefit Arrangement"), if you are a "disqualified individual," as defined in Section 280G(c) of the Code (or any successor provision thereto), any right to receive any payment or other benefit under this Agreement shall not become exercisable or vested (A) to the extent that such right to exercise, vesting, payment, or benefit, taking into account all other rights, payments, or benefits to or for you under this Agreement, all Other Agreements, and all Benefit Arrangements, would cause any payment or benefit to you under this Agreement to be considered a "parachute payment" within the meaning of Code Section 280G(b)(2) as then in effect (a "Parachute Payment") and(B) if, as a result of receiving a Parachute Payment, the aggregate after-tax amounts received by you from the Company under this Agreement, all Other Agreements, and all Benefit Arrangements would be less than the maximum after-tax amount that could be received by you without causing any such payment or benefit to be considered a Parachute Payment.  In the event that the receipt of any such right to exercise, vesting, payment, or benefit under this Agreement, in conjunction with all other rights, payments, or benefits to or for you under any Other Agreement or any Benefit Arrangement would cause you to be considered to have received a Parachute Payment under this Agreement that would have the effect of decreasing the after-tax amount received by you as described in clause (B) of the preceding sentence, then you shall have the right, in your sole discretion, to designate those rights, payments, or benefits under this Agreement, any Other Agreements, and any Benefit Arrangements that should be reduced or eliminated so as to avoid having the payment or benefit to you under this Agreement be deemed to be a Parachute Payment; provided, however, that to the extent any payment or benefit constitutes deferred compensation under Section 409A, in order to comply with Section 409A, the reduction or elimination will be performed in the following order: (A) reduction of cash payments, (B) reduction of benefits and (C) reduction of payments for equity awards.

5.Successors; Binding Agreement.

(i)The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all its business and/or assets to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. Failure of the Company to obtain such assumption and agreement no later than ten days prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle you to compensation from the Company in the same amount and on the same terms as you would be entitled under Section 4(iii), except that for purposes of implementing the foregoing, a date ten days prior to the date on which any such succession becomes effective shall be deemed the Date of Termination.  As used in this Agreement, "the Company" shall mean the Company, as hereinbefore defined and any successor to its business and/or assets that assumes and agrees to perform this Agreement by executing and delivering the agreement provided for in this paragraph 5, by operation of law, or otherwise.

(ii)This Agreement shall inure to the benefit of and be enforceable by your personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amount would still be payable to you hereunder, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to your devisee, legatee or other designee or if there is no such designee, to your estate.

6.Notice.  For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered mail, return receipt requested, postage prepaid, addressed (i) if to the Company, to Orbital Sciences Corporation, 45101 Warp Drive, Dulles, Virginia 20166, Attn: Secretary of the Company, and (ii) if to you, to the address set forth on the first page of this Agreement, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon receipt.

7.Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by you and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement, and this Agreement supersedes all prior agreements between the Company and you with respect to the subject matter herein.  The validity, interpretation, construction and performance of this Agreement shall be governed by the local laws of the Commonwealth of Virginia (regardless of the laws that might otherwise govern under principles of conflicts of law).

8.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

9.Arbitration.  Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Washington, D.C. in accordance with the domestic rules of the American Arbitration Association then in effect.  Pending the resolution of such dispute or controversy, the Company will continue to pay you your full base salary in effect when the notice giving rise to the dispute was given and you will continue as a participant in all incentive compensation, stock option, retirement, deferred compensation, pension, life, disability, health and accident plans in which you were participating when the notice giving rise to dispute was given, unless you have already received all benefits payable under Section 4(iii) of this Agreement.  Judgment may be entered on the arbitrator's award in any court having jurisdiction; provided, however, that you shall be entitled to seek specific performance of your right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

10.Severability.  If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Agreement shall be construed and enforced as if such provisions had not been included.

This Agreement is intended to supersede and replace your Executive Employment Agreement dated ________, as amended.  Upon execution of this Agreement by both parties hereto, the Executive Employment Agreement shall be terminated and shall cease to be in effect in all respects.

If this Agreement correctly sets forth our agreement on the subject matter hereof, kindly sign and return to the Company.

Sincerely,

ORBITAL SCIENCES CORPORATION

___________________________________

By: 

Agreed to:

___________________________________

Name:

EX-21

Exhibit 21

SUBSIDIARIES OF THE REGISTRANT

Orbital International LLC, a Delaware limited liability company

XML

Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Current Deferred Tax Assets:
U.S. federal and state net operating loss carryforwards	$ 8,909,000	$ 36,028,000
Deferred Tax Assets Deferred Expense Capitalized Research And Develop Current	8,921,000	0
Accruals, reserves and other	25,374,000	20,322,000
Valuation allowance	(4,988,000)	(4,937,000)
Current deferred tax assets, net	38,216,000	51,413,000
Noncurrent Deferred Tax Assets (Liabilities):
State net operating loss carryforwards	1,136,000	8,448,000
Capitalized research and development costs	15,847,000	25,374,000
Tax credit/capital loss carryforwards and other	18,296,000	17,044,000
Debt costs	0	(4,710,000)
Excess tax depreciation and other	(42,602,000)	(38,969,000)
Noncurrent deferred tax assets, gross	(7,323,000)	7,187,000
Valuation allowance	(3,556,000)	(4,456,000)
Noncurrent deferred tax (liabilities) assets, net	(10,879,000)	2,731,000
Total deferred tax assets, net	27,337,000	54,144,000
Current:
Federal	1,889,000	384,000	960,000
State	1,862,000	841,000	816,000
Foreign	102,000	115,000	0
Total current	3,853,000	1,340,000	1,776,000
Deferred:
Federal	29,264,000	29,558,000	21,247,000
State	(2,339,000)	(10,259,000)	(5,408,000)
Total deferred	26,925,000	19,299,000	15,839,000
Total income tax provision	30,778,000	20,639,000	17,615,000
Effective income tax rate reconciliation [Abstract]
U.S. federal statutory rate (in hundredths)	35.00%	35.00%	35.00%
State taxes (in hundredths)	3.60%	3.30%	3.40%
Extraterritorial income exclusion (in hundredths)	(3.10%)	(8.70%)	0.00%
Research and development credits (in hundredths)	(1.70%)	(4.50%)	(11.40%)
Other, net (in hundredths)	(0.30%)	(1.70%)	0.10%
Effective rate (in hundredths)	33.50%	23.40%	27.10%
Operating Loss Carryforwards [Line Items]
Net operating loss carryforwards	24,900,000
Expiration of net operating loss carryforwards	beginning in 2022 through 2031
Capital Loss Carryforwards [Line Items]
Capital loss carryforwards	800,000
Expiration of capital loss carryforwards	2015
Reconciliation of unrecognized tax benefits [Roll Forward]
Unrecognized tax benefits at beginning of year	16,732,000	12,386,000	7,508,000
Additions based on tax positions related to the current year	0	2,325,000	4,372,000
Additions for tax positions of prior years	1,548,000	2,351,000	562,000
Settlements with taxing authorities and other	0	0	(56,000)
Reduction resulting from lapse of statute of limitation	(80,000)	(330,000)	0
Unrecognized tax benefits at end of year	18,200,000	16,732,000	12,386,000
Extraterritorial income exclusion	2,800,000	7,700,000
Income before income taxes from foreign income	$ 300,000	$ 400,000

XML

Segment Information (Details) (USD $)	3 Months Ended								9 Months Ended	12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Segment Reporting Information [Line Items]
Revenues	$ 354,589,000	$ 372,882,000	$ 371,268,000	$ 338,030,000	$ 335,451,000	$ 342,170,000	$ 350,599,000	$ 317,703,000	$ 69,800,000	$ 1,436,769,000		$ 1,345,923,000		$ 1,294,577,000
Operating income	31,320,000	31,313,000	26,092,000	23,846,000	22,203,000	24,668,000	22,807,000	10,116,000	7,300,000	112,571,000		79,794,000		73,014,000
Identifiable assets	1,211,454,000				1,130,800,000				1,062,536,000	1,211,454,000		1,130,800,000		1,062,536,000
Capital expenditures										52,175,000		59,815,000		83,702,000
Depreciation and amortization										37,339,000		32,739,000		26,186,000
Intersegment revenues										56,800,000		125,100,000		60,600,000
Launch Vehicles [Member]
Segment Reporting Information [Line Items]
Revenues										527,287,000		483,177,000		434,511,000
Operating income										36,131,000		14,147,000		21,188,000
Identifiable assets	206,194,000				210,642,000				212,360,000	206,194,000		210,642,000		212,360,000
Capital expenditures										26,066,000		27,999,000		50,001,000
Depreciation and amortization										15,891,000		14,293,000		9,412,000
Intersegment revenues										50,200,000		118,300,000		53,400,000
Satelites and Space Systems [Member]
Segment Reporting Information [Line Items]
Revenues										496,152,000		553,797,000		497,015,000
Operating income										46,222,000		37,623,000		33,775,000
Identifiable assets	278,008,000				282,344,000				268,804,000	278,008,000		282,344,000		268,804,000
Capital expenditures										16,345,000		12,433,000		10,675,000
Depreciation and amortization										8,563,000		6,841,000		5,917,000
Intersegment revenues										5,700,000		5,600,000		5,900,000
Advanced Space Programs [Member]
Segment Reporting Information [Line Items]
Revenues										470,102,000		434,036,000		423,614,000
Operating income										32,309,000		28,024,000		20,999,000
Identifiable assets	390,059,000				254,769,000				188,184,000	390,059,000		254,769,000		188,184,000
Capital expenditures										5,781,000		13,515,000		19,586,000
Depreciation and amortization										6,575,000		5,033,000		4,522,000
Intersegment revenues										900,000		1,200,000		1,300,000
Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenues										(56,772,000)	[1]	(125,087,000)	[1]	(60,563,000)	[1]
Operating income										(2,091,000)	[2]	0		(2,948,000)	[2]
Identifiable assets	337,193,000				383,045,000				393,188,000	337,193,000		383,045,000		393,188,000
Capital expenditures										3,983,000		5,868,000		3,440,000
Depreciation and amortization										6,310,000		6,572,000		6,335,000
Transaction expenses incurred in connection with a business acquisition														$ 1,600,000

[1] (1)Corporate and other revenues are comprised solely of the elimination of intersegment revenues. Intersegment revenues are summarized as follows (in millions): Years Ended December 31, 2012 2011 2010 Launch Vehicles $50.2 $118.3 $53.4 Satellites and Space Systems 5.7 5.6 5.9 Advanced Space Programs 0.9 1.2 1.3 Total intersegment revenues $56.8 $125.1 $60.6

[2] (2)The corporate and other operating loss in 2012 is comprised solely of unallocated professional fees and other costs related to a potential acquisition that was not consummated. The corporate and other operating loss in 2010 is comprised of unallocated corporate-level costs and includes $1.6 million of transaction expenses incurred in connection with a business acquisition (see Note 3).

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Balance Sheet Accounts and Supplemental Disclosures (Tables)

12 Months Ended

Dec. 31, 2012

Balance Sheet Accounts and Supplemental Disclosures [Abstract]

Receivables

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

	December 31,
	2012		2011
Billed	$	59,496	$	77,505
Unbilled		439,372		255,209
Retainages due upon contract completion		354		753
Total	$	499,222	$	333,467

Property, Plant and Equipment

Property, Plant and Equipment

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

	December 31,
	2012			2011
Land	$	10,656		$	10,656
Buildings and leasehold improvements		85,803			80,885
Furniture, fixtures and equipment		298,082			262,906
Assets under construction		45,928			65,645
Software and other		33,310			27,063
		473,779			447,155
Accumulated depreciation and amortization		(222,419	)		(187,183	)
Total	$	251,360		$	259,972

Goodwill by Segment

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, 2012	$	10,310	$	53,517	$	11,434	$	75,261

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	December 31,
	2012		2011
Contract related accruals	$	169,146	$	145,352
Employee compensation and benefits		77,241		70,096
Interest		145		1,946
Other		6,544		3,541
Total	$	253,076	$	220,935

Cash Flow Supplemental Disclosures

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

	Years Ended December 31,
	2012		2011		2010
Interest paid	$	6,733	$	4,158	$	3,735
Income taxes paid		2,699		2,242		2,531

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Employee Benefit Plans (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Employee Benefit Plans [Abstract]
Contributions to the defined contribution plan	$ 19.9	$ 18.6	$ 17.5
Senior Managers and Executive Officers [Member]
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items]
Liabilities related to deferred compensation plan included in accrued expenses	11.7	10.3
Defined Benefit Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Plan assets recorded in other non-current assets	$ 2.7	$ 2.1

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Debt Obligations (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Debt Instrument [Line Items]
Long-term obligations	$ 143,236,000	$ 131,182,000
Debt issuance costs	1,500,000
Debt extinguishment expense	10,261,000	0	0
Long-term Debt	150,736,000	131,182,000
Current portion of long-term obligations	7,500,000	0
Long-term Debt, Excluding Current Maturities	143,236,000	131,182,000
Convertible Senior Subordinated Notes [Member]
Debt Instrument [Line Items]
Long-term obligations	736,000	131,182,000
Fair value of debt		145,200,000
Accelerated amortization of debt discount	6,800,000
Prepayment premiums and other expenses	2,800,000
Accelerated amortization of debt issuance costs	700,000
Long-term Debt, Excluding Current Maturities	736,000	131,182,000
Credit Facility [Member]
Debt Instrument [Line Items]
Maturity date	Dec. 12, 2017
Maximum borrowing capacity	300,000,000
Expiration date of credit facility	December 12, 2017
Capacity for the issuance of standby letters of credit	125,000,000
Maximum increase in borrowing capacity	150,000,000
Interest rate description	Loans under the Credit Facility bear interest at LIBOR plus an applicable margin ranging from 1.75% to 2.50%, with the applicable margin varying according to the company's total leverage ratio, or, at the election of the company, at a base rate plus 0.75% to 1.50%. Letters of credit issued under the Credit Facility accrue fees at a rate equal to the applicable margin for LIBOR loans. In addition, the company is required to pay a quarterly commitment fee for the unused portion of the Credit Facility, if any, at a rate ranging from 0.30% to 0.50%.
Variable rate basis of loans under the credit facility	LIBOR
Basis spread on variable rate, minimum (in hundredths)	1.75%
Basis spread on variable rate, maximum (in hundredths)	2.50%
Basis spread on prime base rate, at the company's election, minimum (in hundredths)	0.75%
Basis spread on prime base rate, at the company's election, maximum (in hundredths)	1.50%
Unused capacity, commitment fee description	In addition, the company is required to pay a quarterly commitment fee for the unused portion of the Credit Facility, if any, at a rate ranging from 0.30% to 0.50%
Commitment fee for the unused portion of the credit facility, minimum (in hundredths)	0.30%
Commitment fee for the unused portion of the credit facility, maximum (in hundredths)	0.50%
Letters of credit issued	15,400,000
Amount available for borrowings	230,000,000
Senior Secured Term Loan [Member]
Debt Instrument [Line Items]
Long-term obligations	150,000,000	0
Face amount	150,000,000
Fair value of debt	150,000,000
Term of credit facility (in years)	five-year
Interest rate description	("LIBOR") plus 1.75% per annum or a base rate plus 0.75% per annum
Quarterly principal payment amount	1,900,000
Remaining principal amount	114,400,000
Debt issuance cost amortization period	5 years
Variable rate basis of loans under the credit facility	LIBOR
Basis spread on variable rate, minimum (in hundredths)	0.75%
Long-term Debt, Excluding Current Maturities	$ 150,000,000	$ 0

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Segment Information

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Segment Information

2.  Segment Information

Orbital's products and services are grouped into three reportable business segments:  launch vehicles, satellites and space systems and advanced space programs.  Reportable segments are generally organized based upon product lines.  Corporate office transactions that have not been attributed to a particular segment, as well as consolidating eliminations and adjustments, are reported in corporate and other.  The primary products and services from which the company's reportable segments derive revenues are:

· Launch Vehicles - Rockets that are used as small- and medium-class space launch vehicles that place satellites into Earth orbit and escape trajectories, interceptor and target vehicles for missile defense systems and suborbital launch vehicles that place payloads into a variety of high-altitude trajectories.

· Satellites and Space Systems - Small- and medium-class satellites that are used to enable global and regional communications and broadcasting, conduct space-related scientific research, collect imagery and other remotely-sensed data about the Earth, carry out interplanetary and other deep-space exploration missions and demonstrate new space technologies.

· Advanced Space Programs - Human-rated space systems for Earth-orbit and deep-space exploration, and small- and medium-class satellites primarily used for national security space programs and to demonstrate new space technologies.

Intersegment sales are generally negotiated and accounted for under terms and conditions that are similar to other commercial and government contracts.  Substantially all of the company's assets and operations are located within the United States.

The following table presents operating information and identifiable assets by reportable segment (in thousands):

	Years Ended December 31,
	2012			2011			2010
Launch Vehicles:
Revenues	$	527,287		$	483,177		$	434,511
Operating income		36,131			14,147			21,188
Identifiable assets		206,194			210,642			212,360
Capital expenditures		26,066			27,999			50,001
Depreciation and amortization		15,891			14,293			9,412
Satellites and Space Systems:
Revenues	$	496,152		$	553,797		$	497,015
Operating income		46,222			37,623			33,775
Identifiable assets		278,008			282,344			268,804
Capital expenditures		16,345			12,433			10,675
Depreciation and amortization		8,563			6,841			5,917
Advanced Space Programs:
Revenues	$	470,102		$	434,036		$	423,614
Operating income		32,309			28,024			20,999
Identifiable assets		390,059			254,769			188,184
Capital expenditures		5,781			13,515			19,586
Depreciation and amortization		6,575			5,033			4,522
Corporate and Other:
Revenues (1)	$	(56,772	)	$	(125,087	)	$	(60,563	)
Operating loss (2)		(2,091	)		—			(2,948	)
Identifiable assets		337,193			383,045			393,188
Capital expenditures		3,983			5,868			3,440
Depreciation and amortization		6,310			6,572			6,335
Consolidated:
Revenues	$	1,436,769		$	1,345,923		$	1,294,577
Operating income		112,571			79,794			73,014
Identifiable assets		1,211,454			1,130,800			1,062,536
Capital expenditures		52,175			59,815			83,702
Depreciation and amortization		37,339			32,739			26,186

________________

(1) Corporate and other revenues are comprised solely of the elimination of intersegment revenues.  Intersegment revenues are summarized as follows (in millions):

	Years Ended December 31,
	2012		2011		2010
Launch Vehicles	$	50.2	$	118.3	$	53.4
Satellites and Space Systems		5.7		5.6		5.9
Advanced Space Programs		0.9		1.2		1.3
Total intersegment revenues	$	56.8	$	125.1	$	60.6

(2) The corporate and other operating loss in 2012 is comprised solely of unallocated professional fees and other costs related to a potential acquisition that was not consummated.  The corporate and other operating loss in 2010 is comprised of unallocated corporate-level costs and includes $1.6 million of transaction expenses incurred in connection with a business acquisition (see Note 3).

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Summary of Selected Quarterly Financial Data (Unaudited) (Details) (USD $)	3 Months Ended									9 Months Ended	12 Months Ended
	Dec. 31, 2012		Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Summary of Selected Quarterly Financial Data (Unaudited) [Abstract]
Revenues	$ 354,589,000		$ 372,882,000	$ 371,268,000	$ 338,030,000	$ 335,451,000	$ 342,170,000	$ 350,599,000	$ 317,703,000	$ 69,800,000	$ 1,436,769,000	$ 1,345,923,000	$ 1,294,577,000
Income from operations	31,320,000		31,313,000	26,092,000	23,846,000	22,203,000	24,668,000	22,807,000	10,116,000	7,300,000	112,571,000	79,794,000	73,014,000
Net income	13,947,000	[1]	19,452,000	14,614,000	12,993,000	17,369,000	16,473,000	21,217,000	12,335,000		61,006,000	67,394,000	47,469,000
Basic income per share:	$ 0.29		$ 0.33	$ 0.25	$ 0.22	$ 0.29	$ 0.28	$ 0.36	$ 0.21		$ 1.03	$ 1.14	$ 0.81
Diluted income per share (in dollars per share)	$ 0.29		$ 0.33	$ 0.25	$ 0.22	$ 0.29	$ 0.28	$ 0.36	$ 0.21		$ 1.02	$ 1.13	$ 0.81
Debt extinguishment net of tax	$ 6,300,000

[1] (1)In December 2012 the company recorded a $10.3 million pretax debt extinguishment charge ($6.3 million after tax) related to the repurchases of convertible notes in connection with the financing transaction described in Note 6.

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Aggregate Minimum Commitments Under Non-Cancelable Operating Leases

Aggregate minimum commitments under non-cancelable operating leases, primarily for office space and equipment rentals, at December 31, 2012 were as follows (in thousands):

2013	$	18,136
2014		16,442
2015		16,404
2016		16,629
2017		14,624
Thereafter		57,848
	$	140,083

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Deferred Tax Assets and Liabilities

 The significant components of the company's deferred tax assets and liabilities as of December 31, 2012 and 2011 were (in thousands):

	December 31,
	2012			2011
Current Deferred Tax Assets:
U.S. federal and state net operating loss carryforwards	$	8,909		$	36,028
Capitalized research and development costs		8,921			—
Accruals, reserves and other		25,374			20,322
Valuation allowance		(4,988	)		(4,937	)
Current deferred tax assets, net		38,216			51,413
Noncurrent Deferred Tax Assets (Liabilities):
State net operating loss carryforwards		1,136			8,448
Capitalized research and development costs		15,847			25,374
Tax credit/capital loss carryforwards and other		18,296			17,044
Debt costs		—			(4,710	)
Excess tax depreciation and other		(42,602	)		(38,969	)
		(7,323	)		7,187
Valuation allowance		(3,556	)		(4,456	)
Noncurrent deferred tax (liabilities) assets, net		(10,879	)		2,731
Total deferred tax assets, net	$	27,337		$	54,144

Income Tax Provisions from Continuing Operations

The company's income tax provisions for the years ended December 31, 2012, 2011 and 2010 were comprised of the following (in thousands):

	Years Ended December 31,
	2012			2011			2010
Current:
Federal	$	1,889		$	384		$	960
State		1,862			841			816
Foreign		102			115			—
Total current		3,853			1,340			1,776
Deferred:
Federal		29,264			29,558			21,247
State		(2,339	)		(10,259	)		(5,408	)
Total deferred		26,925			19,299			15,839
Total income tax provision	$	30,778		$	20,639		$	17,615

Effective Income Tax Rate Reconciliation

A reconciliation of the statutory federal income tax rate to the company's effective tax rate for the years ended December 31, 2012, 2011 and 2010 is as follows:

		2012	2011	2010
U.S. federal statutory rate		35.0%	35.0%	35.0%
State taxes		3.6	3.3	3.4
Extraterritorial income exclusion		(3.1)	(8.7)	—
Research and development credits		(1.7)	(4.5)	(11.4)
Other, net		(0.3)	(1.7)	0.1
	Effective rate	33.5%	23.4%	27.1%

Changes in Unrecognized Tax Benefits

Changes in the company's unrecognized tax benefits were as follows (in thousands):

	2012			2011			2010
Unrecognized tax benefits at beginning of year	$	16,732		$	12,386		$	7,508
Additions based on tax positions related to the current year		—			2,325			4,372
Additions for tax positions of prior years		1,548			2,351			562
Settlements with taxing authorities and other		—			—			(56	)
Reduction resulting from lapse of statute of limitation		(80	)		(330	)		—
Unrecognized tax benefits at end of year	$	18,200		$	16,732		$	12,386

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Schedule II VALUATION AND QUALIFYING ACCOUNTS (Details) (Deferred income tax valuation allowance [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Deferred income tax valuation allowance [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance at Start of Period	$ 9,393	$ 12,793	$ 12,654
Charged to Costs and Expenses	2	75	350
Charged/Credited to Other Accounts	(210)	38	96
Deductions	(641)	(3,513)	(307)
Balance at End of Period	$ 8,544	$ 9,393	$ 12,793

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Stock Plans and Equity Transactions (Tables)

12 Months Ended

Dec. 31, 2012

Stock Plans and Equity Transactions [Abstract]

Information Related to Stock-Based Compensation Transactions

The following tables summarize information related to stock-based compensation transactions and plans:

	Restricted Stock Units					Stock Options
				Weighted Average						Weighted Average
	Number of			Measurement		Number of				Exercise
	Units			Date Fair Value		Options				Price
Outstanding at December 31, 2009		473,615		$	22.88		2,301,305			$	8.29
Granted (1)		520,470			14.47		—				—
Exercised		—			—		(1,038,624	)			10.21
Vested		(300,969	)		23.17		—				—
Forfeited		(8,442	)		19.98		(2,599	)			6.29
Expired		—			—		(33,500	)			16.24
Outstanding at December 31, 2010		684,674			16.38		1,226,582				6.46
Granted (1)		442,110			17.39		—				—
Exercised		—			—		(317,647	)			4.26
Vested		(330,356	)		18.47		—				—
Forfeited		(14,316	)		16.57		(448	)			5.79
Expired		—			—		(6,200	)			3.91
Outstanding at December 31, 2011		782,112			16.07		902,287				7.25
Granted (1)		529,446			12.90		—				—
Exercised		—			—		(343,734	)			6.28
Vested		(345,945	)		15.77		—				—
Forfeited		(29,980	)		14.85		—				—
Expired		—			—		(599	)			5.79
Outstanding at December 31, 2012		935,633		$	14.42		557,954		(2)	$	7.84

  ^____________

(1) The fair value of restricted stock unit grants is determined based on the closing market price of Orbital's common stock on the date of grant.  Such value is recognized as expense over the service period, net of estimated forfeitures.

(2) The weighted average remaining contractual term is 0.72 years.

Information by Exercise Price Range

		Options Outstanding (1)
				Weighted Average		Weighted
Range of		Number		Remaining Contractual		Average
Exercise Prices		Outstanding		Term (Years)		Exercise Price
	$5.65-$9.71		452,954		0.40		$	6.82
	10.93-12.98		105,000		2.10			12.26
	$5.65-$12.98		557,954		0.72		$	7.84

(1) All outstanding options were exercisable as of December 31, 2012.

Equity Transactions, Additional Disclosures

	Years Ended December 31,
(in millions)	2012		2011		2010
Stock-based compensation expense recognized	$	6.4	$	6.2	$	7.0
Income tax benefit related to stock-based compensation expense		2.5		2.0		2.3
Intrinsic value of options exercised, computed as the market price
on the exercise date less the price paid to exercise the options		2.6		3.8		8.1
Cash received from exercise of options		2.1		1.4		10.6
Grant date fair value of vested restricted stock units		5.5		6.1		7.0
Tax benefit recorded as an increase to additional
paid-in capital related to stock-based compensation transactions		0.2		1.2		1.1

	As of
(in millions)	December 31, 2012
Shares of common stock available for grant under the company's stock-based incentive plans		2.9
Aggregate intrinsic value of restricted stock units that are expected to vest	$	12.9
Unrecognized compensation expense related to non-vested restricted stock units, expected to
be recognized over a weighted-average period of 1.96 years		10.4
Aggregate intrinsic value of stock options outstanding, all fully vested		3.3

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Summary of Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2012

Summary of Selected Quarterly Financial Data (Unaudited) [Abstract]

Selected Quarterly Financial Data

The following is a summary of selected quarterly financial data for the previous two years (in thousands, except per share data):

	Quarters Ended
	March 31		June 30		Sept. 30		Dec. 31
2012
Revenues	$	338,030	$	371,268	$	372,882	$	354,589
Income from operations		23,846		26,092		31,313		31,320
Net income		12,993		14,614		19,452		13,947	(1)
Basic income per share		0.22		0.25		0.33		0.29
Diluted income per share		0.22		0.25		0.33		0.29
2011
Revenues	$	317,703	$	350,599	$	342,170	$	335,451
Income from operations		10,116		22,807		24,668		22,203
Net income		12,335		21,217		16,473		17,369
Basic income per share		0.21		0.36		0.28		0.29
Diluted income per share		0.21		0.36		0.28		0.29

______________________

(1) In December 2012 the company recorded a $10.3 million pretax debt extinguishment charge ($6.3 million after tax) related to the repayment of convertible notes in connection with the financing transaction described in Note 6.

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Business and Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Business and Summary of Significant Accounting Policies [Abstract]

Business and Summary of Significant Accounting Policies

1.  Business and Summary of Significant Accounting Policies

Business Operations

Orbital Sciences Corporation (together with its subsidiaries, "Orbital" or the "company"), a Delaware corporation, develops and manufactures small- and medium-class rockets and space systems for commercial, military and civil government customers.

Principles of Consolidation

The consolidated financial statements include the accounts of Orbital and its wholly owned subsidiaries.  All significant intersegment balances and transactions have been eliminated.

Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions, including estimates of future contract costs and earnings.  Such estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and earnings during the current reporting period.  Management periodically assesses and evaluates the adequacy and/or deficiency of estimated liabilities recorded for various reserves, liabilities, contract risks and uncertainties.  Actual results could differ from these estimates.

Certain reclassifications have been made to prior year amounts to conform to current year presentation.  All financial  amounts are stated in U.S. dollars unless otherwise indicated.

Revenue Recognition

     Orbital's revenues are derived primarily from long-term contracts.  Revenues on long-term contracts are recognized using the percentage-of-completion method of accounting.   Such revenues are recorded based on the percentage that costs incurred to date bear to the most recent estimates of total costs to complete each contract.  Estimating future revenues, costs and profit, is a process requiring a high degree of management judgment, including management's assumptions regarding the company's operational performance as well as general economic conditions.  In the event of a change in total estimated contract revenue, cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs.  Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and the company's profitability from a particular contract may be adversely affected to the extent that estimated costs to complete or incentive or award fee estimates are revised, delivery schedules are delayed, performance-based milestones are not achieved or progress under a contract is otherwise impeded.  Accordingly, the company's

recorded revenues and operating profit from period to period can fluctuate significantly.  In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding general and administrative expenses, is recorded in the period in which the loss is first estimated.

Many of the company's contracts include provisions that increase or decrease contract value based on performance in relation to established targets or customer evaluations.  Mission success milestones and incentive and award fees are included in estimated contract revenue when the company is able to make reasonable predictions about whether the performance targets will be achieved and make dependable estimates of such amounts based upon the company's historical experience with similar types of activities and other objective criteria.  The company includes the estimated amount of mission success milestones and incentive and award fees in estimated contract revenue at the inception of each contract, with reassessments made each quarter throughout the period of contract performance.  If performance under such contracts were to differ from previous assumptions, or if the company were to revise its estimates or assumptions, current period revenues and profit would be adjusted and could fluctuate significantly.  The company's assessments are guided by the historical performance of the company's products and product families, the reliability record of the technology employed and assessments of technological considerations for each contract.

As part of the company's risk management strategy, the company generally insures significant mission success milestones.  Insurance recoveries are recorded as other income in the consolidated financial statements.  The company recognized insurance recoveries of $17.8 million for the year ended December 31, 2011.  There were no such insurance recoveries during 2012 and 2010.

Research and Development Expenses

Expenditures for company-sponsored research and development projects are expensed as incurred.  Research and development projects performed under contracts for customers are recorded as contract costs.

In 2008, the company entered into an agreement with the National Aeronautics and Space Administration ("NASA") to design, build and demonstrate a new space transportation system under a program called Commercial Orbital Transportation Services ("COTS"), for delivering cargo and supplies to the International Space Station.  Under the agreement, as amended, as of December 31, 2012, NASA has agreed to pay the company $288 million in cash milestone payments, partially funding Orbital's project costs which are currently estimated to be approximately $513 million.  The company expects to complete this project in 2013.

       The COTS agreement is accounted for as a best-efforts research and development cost-sharing arrangement.  As such, the amounts funded by NASA are recognized proportionally as an offset to the company's COTS program research and development expenses, including associated general and administrative expenses.  The following table summarizes the COTS program research and development expenses incurred and amounts funded by NASA (in millions):

	2012			2011			2010			Inception to December 31, 2012
Research and development costs incurred (1)	$	62.6		$	158.8		$	136.5		$	480.5
Less amounts funded by NASA		(21.9	)		(108.0	)		(69.1	)		(282.2	)	(2)
Net research and development expenses	$	40.7		$	50.8		$	67.4		$	198.3

^{_______________________}

⁽¹⁾ Includes associated general and administrative expenses.

⁽²⁾ Through December 31, 2012, the company has received $276 million in cash from NASA and as of December 31, 2012, the company recorded an approximately $6 million receivable due from NASA.

The company is also engaged in a major product development program of a medium capacity rocket named Antares.  Approximately $42.6 million, $34.3 million and $48.3 million of the company's research and development expenses in 2012, 2011 and 2010, respectively, were attributable to the Antares program.  Since the inception of the Antares program through December 31, 2012, the company has incurred $234.8 million of such costs.

Stock-Based Compensation

The company determines the fair value of its restricted stock unit grants based on the closing price of Orbital's common stock on the date of grant.  The fair value of stock options granted is determined using the Black-Scholes valuation model, although the company has not granted stock options since 2006.  Compensation expense pertaining to stock-based awards is recognized as expense over the service period, net of estimated forfeitures.  The company uses the tax law ordering method to determine intra-period tax allocation related to the tax attributes of stock-based compensation.

Income Taxes

Orbital accounts for income taxes using the asset and liability method.  Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.  The company records valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized.  Changes in estimates of future taxable income can materially change the amount of such valuation allowances.

Earnings per Share

Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the periods.  Diluted earnings per share includes the weighted-average effect of all potentially dilutive securities outstanding during the periods.

The computation of basic and diluted earnings per share is as follows (dollars in thousands, except per share amounts):

			Years Ended December 31,
Numerator			2012			2011			2010
		Net Income	$	61,006		$	67,394		$	47,469
		Percentage allocated to shareholders (1)		99.6	%		99.1	%		99.0	%
		Numerator for basic and diluted earnings per share	$	60,762		$	66,787		$	46,994
Denominator
		Denominator for basic earnings per share -
		weighted-average shares outstanding		59,165			58,531			57,683
		Dilutive effect of stock options and restricted stock units		292			596			652
		Denominator for diluted earnings per share		59,457			59,127			58,335
Per share income
		Basic	$	1.03		$	1.14		$	0.81
		Diluted		1.02			1.13			0.81
_________________________
	(1)	Basic weighted-average shares outstanding		59,165			58,531			57,683
		Basic weighted-average shares outstanding and
		unvested restricted stock units expected to vest		59,428			59,078			58,254
		Percentage allocated to shareholders		99.6	%		99.1	%		99.0	%

In accordance with GAAP, the company accounts for unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share.  Certain of the company's unvested restricted stock units ("RSUs") contain rights to receive non-forfeitable dividends, and thus are participating securities requiring the two-class method to be used for computing earnings per share.  The calculation of earnings per share shown above excludes the income attributable to the unvested RSUs that include rights to receive non-forfeitable dividends from the numerator and excludes the impact of those units from the denominator.

In 2012, 2011 and 2010, diluted weighted-average shares outstanding excluded the effect of the company's convertible notes that were anti-dilutive.

Fair Value Measurements

The company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements.

The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions.

These two types of inputs create the following fair value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 - Significant inputs to the valuation model are unobservable.

Fair value disclosures pertaining to financial instruments of the company that are included in these notes to the consolidated financial statements include money market funds (see Note 1, subsection "Cash and Cash Equivalents"), foreign exchange derivative instruments (see Note 1, subsection "Derivative Financial Instruments"), investments in auction-rate securities (see Note 7) and debt instruments recorded in long-term obligations (see Note 6).

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term, highly liquid investments with maturities of 90 days or less.  The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value.  At December 31, 2012 and 2011, the company had invested approximately $215 million and $259 million, respectively, in cash equivalents in the form of money market funds with three financial institutions.  The company considers these money market funds to be Level 1 financial instruments.

Inventories

Inventories are stated at the lower of cost or estimated market value.  Cost is determined on an average cost or specific identification basis.  Estimated market value is determined based on assumptions about future demand and market conditions.  If actual market conditions were less favorable than those previously projected by management, inventory write-downs could be required.

Derivative Financial Instruments

Orbital occasionally uses foreign exchange derivative instruments to manage certain foreign currency rate exposures.  Derivative instruments are viewed as risk management tools by Orbital and are not used for trading or speculative purposes.  Derivatives used for hedging purposes are generally designated as effective hedges.  Accordingly, changes in the fair value of a derivative contract are highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.  Derivative instruments are

recorded on the balance sheet at fair value.  The ineffective portion of all hedges, if any, is recognized currently in earnings.

In 2012, Orbital entered into a series of foreign exchange contracts to sell euros and purchase U.S. dollars in order to hedge the company's exposure to fluctuating foreign exchange rates in connection with a customer contract denominated in euros.  As of December 31, 2012, the company had ten foreign exchange contracts with a total contract value of €56.0 million, or $72.9 million, that have various expiration dates through March 2014.  As of December 31, 2012, the fair value of these foreign exchange contracts was a liability of $1.2 million.  The company considers these to be Level 2 financial instruments.

Investments

The company's investments in securities are reported at fair value.  These investments are classified as available-for-sale securities at the time of purchase and the company re-evaluates such designation as of each balance sheet date.  The company evaluates its investments periodically for possible other-than-temporary impairment by reviewing factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the company's ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery of market value, and the credit values of debt securities.  The company records an impairment expense to the extent that the amortized cost exceeds the estimated fair market value of the securities held and the decline in value is determined to be other-than-temporary.  Temporary changes in fair value are included in accumulated other comprehensive income (loss), a component of stockholders' equity.

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Major improvements are capitalized while expenditures for maintenance, repairs and minor improvements are charged to expense.  When assets are retired or otherwise disposed of, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is recognized.  Depreciation expense is determined using the straight-line method based on the following useful lives:

Buildings	20 years
Machinery, equipment and software	3 to 12 years
Leasehold improvements	Shorter of estimated useful life or lease term

The company self-constructs some of its ground and airborne support and special test equipment utilized in the manufacture, production and delivery of some of its products.  Orbital capitalizes direct costs incurred in constructing such equipment and certain allocated indirect costs.  The company also capitalizes certain costs incurred in connection with internally developed software.  These capitalized costs generally include direct software coding costs and certain allocated indirect costs.

Recoverability of Long-Lived Assets

Orbital's policy is to evaluate its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.  When an evaluation indicates that an impairment has occurred, a loss is recognized and the asset or asset group is adjusted to its estimated fair value.  Given the inherent technical and commercial risks within the aerospace industry and the special purpose use of certain of the company's assets, future impairment charges could be required if the company were to change its current expectation that it will recover the carrying amount of its long-lived assets from future operations.

Goodwill

Goodwill is comprised of acquisition costs in excess of the fair values assigned to the underlying net assets of acquired businesses.  Goodwill is evaluated for potential impairment at least annually or whenever events or circumstances indicate that the carrying value of goodwill may not be recoverable.  The evaluation includes comparing the fair value of a reporting unit to its carrying value including goodwill.  If the carrying value exceeds the fair value, impairment is measured by comparing the implied value of goodwill to its carrying value and recorded in the current period.  Goodwill balances are included in the identifiable assets of the business segment to which they have been assigned.  There was no impairment of goodwill recorded during the three years ending December 31, 2012.

Deferred Revenue and Customer Advances

The company accounts for cash receipts from customers in excess of amounts recognized on certain contracts as "deferred revenues and customer advances."  These amounts are recorded as current liabilities since the associated services are performed within one year.

XML

Business and Summary of Significant Accounting Policies (Details) Share data in Thousands, except Per Share data, unless otherwise specified	3 Months Ended									12 Months Ended								12 Months Ended
	Dec. 31, 2012 USD ($)		Sep. 30, 2012 USD ($)	Jun. 30, 2012 USD ($)	Mar. 31, 2012 USD ($)	Dec. 31, 2011 USD ($)	Sep. 30, 2011 USD ($)	Jun. 30, 2011 USD ($)	Mar. 31, 2011 USD ($)	Dec. 31, 2012 USD ($)		Dec. 31, 2011 USD ($)		Dec. 31, 2010 USD ($)		Dec. 31, 2012 Forward Contracts [Member] USD ($)	Dec. 31, 2012 Forward Contracts [Member] EUR (€)	Dec. 31, 2012 COTS Agreement - Cost-Sharing Arrangement Terms with NASA [Member] USD ($)		Dec. 31, 2011 COTS Agreement - Cost-Sharing Arrangement Terms with NASA [Member] USD ($)		Dec. 31, 2010 COTS Agreement - Cost-Sharing Arrangement Terms with NASA [Member] USD ($)		Dec. 31, 2012 Antares Development Program [Member] USD ($)	Dec. 31, 2011 Antares Development Program [Member] USD ($)	Dec. 31, 2010 Antares Development Program [Member] USD ($)	Dec. 31, 2012 Buildings [Member]	Dec. 31, 2012 Machinery, Equipment and Software [Member]	Dec. 31, 2012 Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Useful life (in years)																											20
Useful life, minimum (in years)																												3
Useful life, maximum (in years)																												12
Useful life, description																													Shorter of estimated useful life or lease term
Numerator
Net income	$ 13,947,000	[1]	$ 19,452,000	$ 14,614,000	$ 12,993,000	$ 17,369,000	$ 16,473,000	$ 21,217,000	$ 12,335,000	$ 61,006,000		$ 67,394,000		$ 47,469,000
Percentage allocated to shareholders (in hundredths)										99.60%	[2]	99.10%	[2]	99.00%	[2]
Numerator for basic and diluted earnings per share										60,762,000		66,787,000		46,994,000
Denominator
Denominator for basic earnings per share - weighted-average shares outstanding (in shares)										59,165		58,531		57,683
Dilutive effect of stock options and restricted stock units (in shares)										292		596		652
Denominator for diluted earnings per share (in shares)										59,457		59,127		58,335
Per share income
Basic (in dollars per share)	$ 0.29		$ 0.33	$ 0.25	$ 0.22	$ 0.29	$ 0.28	$ 0.36	$ 0.21	$ 1.03		$ 1.14		$ 0.81
Diluted (in dollars per share)	$ 0.29		$ 0.33	$ 0.25	$ 0.22	$ 0.29	$ 0.28	$ 0.36	$ 0.21	$ 1.02		$ 1.13		$ 0.81
Basic weighted-average shares outstanding (in shares)										59,165		58,531		57,683
Basic weighted-average shares outstanding and unvested restricted stock units expected to vest (in shares)										59,428		59,078		58,254
Percentage allocated to shareholders (in hundredths)										99.60%	[2]	99.10%	[2]	99.00%	[2]
Research and development [Abstract]
Aggregate cash milestone payments to partially fund project costs																		288,000,000
Estimated total project costs																		513,000,000
Deferred revenue and customer advances	62,098,000					104,970,000				62,098,000		104,970,000
Research and development costs incurred																		62,600,000	[3]	158,800,000	[3]	136,500,000	[3]
Less amounts funded by NASA																		(21,900,000)		(108,000,000)		(69,100,000)
Net research and development expenses																		40,700,000		50,800,000		67,400,000
Research and development costs incurred, inception to date																		480,500,000	[3]					234,800,000
Less amounts funded by NASA, inception to date																		(282,200,000)	[4]
Net research and development expenses, inception to date																		198,300,000
Research and development expenses										114,205,000		102,751,000		122,270,000										42,600,000	34,300,000	48,300,000
Cash Received from NASA																		276,000,000
Receivable from NASA																		6,000,000
Insurance Recoveries												17,800,000
Cash equivalents	215,000,000					259,000,000				215,000,000		259,000,000
Derivative [Line Items]
Total face value of forward exchange contracts																72,900,000	56,000,000
Final expiration date of forward exchange contracts										Mar. 30, 2014
Fair value of forward exchange contracts	$ 1,200,000									$ 1,200,000

[1] (1)In December 2012 the company recorded a $10.3 million pretax debt extinguishment charge ($6.3 million after tax) related to the repurchases of convertible notes in connection with the financing transaction described in Note 6.

[2] (1) Basic weighted-average shares outstanding 59,165 58,531 57,683 Basic weighted-average shares outstanding and unvested restricted stock units expected to vest 59,428 59,078 58,254 Percentage allocated to shareholders 99.6% 99.1% 99.0%

[3] (1) Includes associated general and administrative expenses.

[4] (2) Through 12/31/12, the company has received $276 million cash from NASA and as of 12/31/12 the company recorded a $5.7 million receivable for amount due from NASA.

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Commitments and Contingencies (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Aggregate minimum commitments under non-cancelable operating leases [Abstract]
2013	$ 18,136,000
2014	16,442,000
2015	16,404,000
2016	16,629,000
2017	14,624,000
Thereafter	57,848,000
Total minimum commitments due	140,083,000
Rent expense	19,700,000	19,300,000	21,400,000
Research and development costs reported as allowable expenses	42,600,000	34,300,000	43,200,000
Research and development allowable costs reported as allowable expenses inception to date.	196,100,000
Revenue Of Commercial Resupply Svsitd	$ 974,000,000
Percentage of Commercial and Resupply Services Contract that is launch and delivery milestones	25.00%

XML

CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 232,324	$ 259,219
Receivables	499,222	333,467
Inventories	61,251	64,335
Deferred income taxes, net	38,216	51,413
Other current assets	17,810	46,965
Total current assets	848,823	755,399
Investments	9,200	8,500
Property, plant and equipment, net	251,360	259,972
Goodwill	75,261	75,261
Deferred income taxes, net	(10,879)	2,731
Other non-current assets	26,810	28,937
Total assets	1,211,454	1,130,800
Current liabilities:
Accounts payable	4,037	13,444
Accrued expenses	253,076	220,935
Deferred revenues and customer advances	62,098	104,970
Current portion of long-term obligations	7,500	0
Total current liabilities	326,711	339,349
Long-term obligations	143,236	131,182
Deferred income taxes, net	10,879	0
Other non-current liabilities	17,082	16,990
Total liabilities	497,908	487,521
Commitments and contingencies
Stockholders' equity:
Preferred Stock, par value $.01; 10,000,000 shares authorized, none outstanding	0	0
Common Stock, par value $.01; 200,000,000 shares authorized, 59,616,736 and 58,914,802 shares outstanding, respectively	596	589
Additional paid-in capital	575,300	566,624
Accumulated other comprehensive loss	(2,781)	(3,359)
Retained earnings	140,431	79,425
Total stockholders' equity	713,546	643,279
Total liabilities and stockholders' equity	$ 1,211,454	$ 1,130,800

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Activities:
Net income	$ 61,006	$ 67,394	$ 47,469
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization expense	37,339	32,739	26,186
Deferred income taxes	26,886	18,788	15,985
Debt extinguishment expense	10,261	0	0
Stock-based compensation	6,402	6,222	7,022
Amortization of debt costs	6,751	6,590	5,768
Other	(1,876)	(1,703)	(2,113)
Changes in assets and liabilities, net of business acquisition:
Receivables	(165,670)	(6,969)	(117,083)
Inventories	3,084	(8,118)	(17,555)
Other assets	30,609	(37,346)	(4,585)
Accounts payable and accrued expenses	20,260	(14,915)	53,830
Deferred revenue and customer advances	(42,872)	(7,212)	(14,874)
Other liabilities	154	9,666	(529)
Net cash (used in) provided by operating activities	(7,666)	65,136	(479)
Investing Activities:
Capital expenditures	(52,175)	(59,815)	(83,702)
Proceeds from sale of property	25,589	0	0
Acquisition of business	0	0	(55,000)
Net proceeds from sales of investments	0	0	4,250
Net cash used in investing activities	(26,586)	(59,815)	(134,452)
Financing Activities:
Proceeds from issuance of long-term obligations	150,000	0	0
Repayment of long-term obligations	(145,179)	0	0
Net proceeds from issuance of common stock	3,507	2,891	12,126
Tax benefit of stock-based compensation	495	1,676	2,234
Debt issuance costs	(1,466)	(3,084)	0
Net cash provided by financing activities	7,357	1,483	14,360
Net (decrease) increase in cash and cash equivalents	(26,895)	6,804	(120,571)
Cash and cash equivalents, beginning of year	259,219	252,415	372,986
Cash and cash equivalents, end of year	$ 232,324	$ 259,219	$ 252,415

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Export Sales and Major Customers (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								9 Months Ended	12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 354,589	$ 372,882	$ 371,268	$ 338,030	$ 335,451	$ 342,170	$ 350,599	$ 317,703	$ 69,800	$ 1,436,769	$ 1,345,923	$ 1,294,577
U.S. Government and its agencies and subcontracts with the U.S. Government's prime contractors [Member]
Revenue, Major Customer [Line Items]
Revenue from major customer, percentage (in hundredths)										79.00%	71.00%	74.00%
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues										1,155,003	1,035,090	1,084,131
Europe and Eurasia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues										150,746	146,623	102,106
Mexico and South America [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues										96,147	131,240	93,855
East Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues										$ 34,873	$ 32,970	$ 14,485

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Business and Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Business and Summary of Significant Accounting Policies [Abstract]

Useful Lives of Property, Plant and Equipment

Buildings	20 years
Machinery, equipment and software	3 to 12 years
Leasehold improvements	Shorter of estimated useful life or lease term

Computation of Basic and Diluted Earnings Per Share

The computation of basic and diluted earnings per share is as follows (dollars in thousands, except per share amounts):

			Years Ended December 31,
Numerator			2012			2011			2010
		Net Income	$	61,006		$	67,394		$	47,469
		Percentage allocated to shareholders (1)		99.6	%		99.1	%		99.0	%
		Numerator for basic and diluted earnings per share	$	60,762		$	66,787		$	46,994
Denominator
		Denominator for basic earnings per share -
		weighted-average shares outstanding		59,165			58,531			57,683
		Dilutive effect of stock options and restricted stock units		292			596			652
		Denominator for diluted earnings per share		59,457			59,127			58,335
Per share income
		Basic	$	1.03		$	1.14		$	0.81
		Diluted		1.02			1.13			0.81
_________________________
	(1)	Basic weighted-average shares outstanding		59,165			58,531			57,683
		Basic weighted-average shares outstanding and
		unvested restricted stock units expected to vest		59,428			59,078			58,254
		Percentage allocated to shareholders		99.6	%		99.1	%		99.0	%

Project Research and Development Expenses Incurred and Amounts Funded

The following table summarizes the COTS program research and development expenses incurred and amounts funded by NASA (in millions):

	2012			2011			2010			Inception to December 31, 2012
Research and development costs incurred (1)	$	62.6		$	158.8		$	136.5		$	480.5
Less amounts funded by NASA		(21.9	)		(108.0	)		(69.1	)		(282.2	)	(2)
Net research and development expenses	$	40.7		$	50.8		$	67.4		$	198.3

^{_______________________}

⁽¹⁾ Includes associated general and administrative expenses.

⁽²⁾ Through December 31, 2012, the company has received $276 million in cash from NASA and as of December 31, 2012, the company recorded an approximately $6 million receivable due from NASA.

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Balance Sheet Accounts and Supplemental Disclosures (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Receivables [Abstract]
Receivables, net	$ 499,222,000	$ 333,467,000
Percentage of Commercial Resupply Svcs Contract Launch Delivery	25.00%
Revenue from Commercial Resupply Svcs contract inception to date	974,000,000
Contract value of Commercial Resupply Svcs contract	1,900,000,000
Percentage of receivables related to contracts with the U.S. Government (in hundredths)	91.00%	90.00%
Receivables from non-U.S. customers	34,100,000	29,700,000
Period of performance criteria (in years)	15
Potential refund if performance criteria are not met	12,400,000
Inventory [Abstract]
Inventories	61,251,000	64,335,000
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	473,779,000	447,155,000
Accumulated depreciation and amortization	(222,419,000)	(187,183,000)
Property, plant and equipment, net	251,360,000	259,972,000
Proceeds from disposition of property and equipment	25,600,000
Depreciation expense	36,600,000	32,000,000	25,700,000
Goodwill [Roll Forward]
Balance at beginning of period	75,261,000
Balance at end of period	75,261,000	75,261,000
Intangible assets [Abstract]
Intangible assets, net	5,200,000	5,900,000
Amortization expense	700,000	700,000	500,000
Accrued expenses [Abstract]
Contract related accruals	169,146,000	145,352,000
Employee compensation and benefits	77,241,000	70,096,000
Interest	145,000	1,946,000
Other	6,544,000	3,541,000
Total	253,076,000	220,935,000
Cash flow supplemental financial information [Abstract]
Interest paid	6,733,000	4,158,000	3,735,000
Income taxes paid	2,699,000	2,242,000	2,531,000
Launch Vehicles [Member]
Goodwill [Roll Forward]
Balance at end of period	10,310,000
Satellites and Space Systems [Member]
Goodwill [Roll Forward]
Balance at end of period	53,517,000
Advanced Space Programs [Member]
Goodwill [Roll Forward]
Balance at end of period	11,434,000
Land [Member]
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	10,656,000	10,656,000
Buildings and Leasehold Improvements [Member]
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	85,803,000	80,885,000
Furniture, Fixtures and Equipment [Member]
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	298,082,000	262,906,000
Assets under Construction [Member]
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	45,928,000	65,645,000
Software and Other [Member]
Property, plant and equipment [Abstract]
Property, plant and equipment, gross	33,310,000	27,063,000
Billed [Member]
Receivables [Abstract]
Receivables, net	59,496,000	77,505,000
Unbilled [Member]
Receivables [Abstract]
Retainages due upon contract completion	354,000	753,000
Receivables, net	439,372,000	255,209,000
Receivables pertaining to the commercial resupply services contract	277,000,000	130,000,000
Unbilled receivables and retainages excluding CRS contract	93.00%
Incentive fees due incrementally	$ 8,700,000	$ 10,200,000
Period of incentive fees due (in years)	15

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Export Sales and Major Customers (Tables)

12 Months Ended

Dec. 31, 2012

Export Sales and Major Customers [Abstract]

Revenues by Geographic Area

Orbital's revenues by geographic area, as determined by customer location, were as follows (in thousands):

	Years Ended December 31,
	2012		2011		2010
United States	$	1,155,003	$	1,035,090	$	1,084,131
Europe and Eurasia		150,746		146,623		102,106
Mexico and South America		96,147		131,240		93,855
East Asia		34,873		32,970		14,485
Total	$	1,436,769	$	1,345,923	$	1,294,577

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (USD $) In Thousands, except Share data, unless otherwise specified	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Retained Earnings [Member]	Total
Balance at Dec. 31, 2009	$ 569	$ 539,235	$ (1,906)	$ (35,438)	$ 502,460
Balance (in shares) at Dec. 31, 2009	56,880,000
Increase (decrease) in stockholders' equity [Roll Forward]
Shares issued to employees, officers and directors	13	12,113			12,126
Shares issued to employees, officers and directors (in shares)	1,360,000
Stock-based compensation, net		5,589			5,589
Tax effect of stock-based compensation, net		1,078			1,078
Comprehensive Income (loss)			(105)	47,469	47,364
Balance at Dec. 31, 2010	582	558,015	(2,011)	12,031	568,617
Balance (in shares) at Dec. 31, 2010	58,240,000
Increase (decrease) in stockholders' equity [Roll Forward]
Shares issued to employees, officers and directors	7	2,884			2,891
Shares issued to employees, officers and directors (in shares)	675,000
Stock-based compensation, net		4,490			4,490
Tax effect of stock-based compensation, net		1,235			1,235
Comprehensive Income (loss)			(1,348)	67,394	66,046
Balance at Dec. 31, 2011	589	566,624	(3,359)	79,425	643,279
Balance (in shares) at Dec. 31, 2011	58,915,000				58,914,802
Increase (decrease) in stockholders' equity [Roll Forward]
Shares issued to employees, officers and directors	7	3,500			3,507
Shares issued to employees, officers and directors (in shares)	702,000
Stock-based compensation, net		4,960			4,960
Tax effect of stock-based compensation, net		216			216
Comprehensive Income (loss)			578	61,006	61,584
Balance at Dec. 31, 2012	$ 596	$ 575,300	$ (2,781)	$ 140,431	$ 713,546
Balance (in shares) at Dec. 31, 2012	59,617,000				59,616,736

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Stockholders' equity:
Preferred Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred Stock, authorized (in shares)	10,000,000	10,000,000
Preferred Stock, outstanding (in shares)	0	0
Common Stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common Stock, authorized (in shares)	200,000,000	200,000,000
Common Stock, outstanding (in shares)	59,616,736	58,914,802

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Stock Plans and Equity Transactions

12 Months Ended

Dec. 31, 2012

Stock Plans and Equity Transactions [Abstract]

Stock Plans and Equity Transactions

10.  Stock Plans and Equity Transactions

Stock Plans

The company's share-based incentive plans permit the company to grant restricted stock units, restricted stock, incentive or non-qualified stock options, and certain other instruments to employees, directors, consultants and advisers of the company.  Restricted stock units and stock options generally vest over three years and are not subject to any performance criteria.  Options expire no more than ten years following the grant date.  Shares issued under the plans upon option exercise or stock unit conversion are generally issued from authorized but previously unissued shares.

The company also has an Employee Stock Purchase Plan ("ESPP") whereby employees may purchase shares of stock at the lesser of 85% of the fair market value of shares at the beginning or the end of quarterly offering periods.  As of December 31, 2012, approximately 419,000 shares of common stock were available for purchase under the ESPP.  Compensation expense associated with the ESPP was $0.3 million, $0.4 million and $0.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Equity Transactions

The following tables summarize information related to stock-based compensation transactions and plans:

	Restricted Stock Units					Stock Options
				Weighted Average						Weighted Average
	Number of			Measurement		Number of				Exercise
	Units			Date Fair Value		Options				Price
Outstanding at December 31, 2009		473,615		$	22.88		2,301,305			$	8.29
Granted (1)		520,470			14.47		—				—
Exercised		—			—		(1,038,624	)			10.21
Vested		(300,969	)		23.17		—				—
Forfeited		(8,442	)		19.98		(2,599	)			6.29
Expired		—			—		(33,500	)			16.24
Outstanding at December 31, 2010		684,674			16.38		1,226,582				6.46
Granted (1)		442,110			17.39		—				—
Exercised		—			—		(317,647	)			4.26
Vested		(330,356	)		18.47		—				—
Forfeited		(14,316	)		16.57		(448	)			5.79
Expired		—			—		(6,200	)			3.91
Outstanding at December 31, 2011		782,112			16.07		902,287				7.25
Granted (1)		529,446			12.90		—				—
Exercised		—			—		(343,734	)			6.28
Vested		(345,945	)		15.77		—				—
Forfeited		(29,980	)		14.85		—				—
Expired		—			—		(599	)			5.79
Outstanding at December 31, 2012		935,633		$	14.42		557,954		(2)	$	7.84

  ^____________

(1) The fair value of restricted stock unit grants is determined based on the closing market price of Orbital's common stock on the date of grant.  Such value is recognized as expense over the service period, net of estimated forfeitures.

(2) The weighted average remaining contractual term is 0.72 years.

		Options Outstanding (1)
				Weighted Average		Weighted
Range of		Number		Remaining Contractual		Average
Exercise Prices		Outstanding		Term (Years)		Exercise Price
	$5.65-$9.71		452,954		0.40		$	6.82
	10.93-12.98		105,000		2.10			12.26
	$5.65-$12.98		557,954		0.72		$	7.84

(1) All outstanding options were exercisable as of December 31, 2012.

	Years Ended December 31,
(in millions)	2012		2011		2010
Stock-based compensation expense recognized	$	6.4	$	6.2	$	7.0
Income tax benefit related to stock-based compensation expense		2.5		2.0		2.3
Intrinsic value of options exercised, computed as the market price
on the exercise date less the price paid to exercise the options		2.6		3.8		8.1
Cash received from exercise of options		2.1		1.4		10.6
Grant date fair value of vested restricted stock units		5.5		6.1		7.0
Tax benefit recorded as an increase to additional
paid-in capital related to stock-based compensation transactions		0.2		1.2		1.1

	As of
(in millions)	December 31, 2012
Shares of common stock available for grant under the company's stock-based incentive plans		2.9
Aggregate intrinsic value of restricted stock units that are expected to vest	$	12.9
Unrecognized compensation expense related to non-vested restricted stock units, expected to
be recognized over a weighted-average period of 1.96 years		10.4
Aggregate intrinsic value of stock options outstanding, all fully vested		3.3

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 19, 2013	Jun. 29, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	ORBITAL SCIENCES CORP /DE/
Entity Central Index Key	0000820736
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 750,700,000
Entity Common Stock, Shares Outstanding		59,797,541
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2012

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Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Employee Benefit Plans [Abstract]

Employee Benefit Plans

11.  Employee Benefit Plans

The company has a defined contribution plan (the "Plan") generally covering all full-time employees.  Company contributions to the Plan are made based on plan provisions and at the discretion of the Board of Directors.  The company made contributions of $19.9 million, $18.6 million and $17.5 million during 2012, 2011 and 2010, respectively.

The company also has two overfunded defined benefit plans that were frozen upon acquisition in a 1994 business combination.  As of December 31, 2012 and 2011, the company had recorded a $2.7 million and $2.1 million asset, respectively, in other non-current assets related to the pension plans.  The plans are not significant to the accompanying consolidated financial statements taken as a whole; accordingly, additional related disclosures are omitted from these notes to the consolidated financial statements.

The company has a deferred compensation plan for senior managers and executive officers.  At December 31, 2012 and 2011, liabilities related to this plan totaling $11.7 million and $10.3 million, respectively, were included in accrued expenses.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Revenues	$ 1,436,769	$ 1,345,923	$ 1,294,577
Cost of revenues	1,097,190	1,074,389	1,007,668
Research and development expenses	114,205	102,751	122,270
Selling, general and administrative expenses	112,803	88,989	91,625
Income from operations	112,571	79,794	73,014
Interest income and other	749	19,335	1,848
Interest expense	(11,275)	(11,096)	(9,778)
Debt extinguishment expense	(10,261)	0	0
Income before income taxes	91,784	88,033	65,084
Income tax provision	(30,778)	(20,639)	(17,615)
Net income	61,006	67,394	47,469
Basic income per share:	$ 1.03	$ 1.14	$ 0.81
Diluted income per share:	$ 1.02	$ 1.13	$ 0.81
Net income	61,006	67,394	47,469
Other comprehensive income (loss):
Defined benefit plans, net of tax of $263, ($773) and $90, respectively	418	(1,248)	145
Unrealized gain (loss) on investments	700	(100)	(250)
Unrealized loss on foreign exchange derivative instruments, net of tax of $339	(540)	0	0
Total other comprehensive income (loss)	578	(1,348)	(105)
Comprehensive Income (loss)	$ 61,584	$ 66,046	$ 47,364

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Balance Sheet Accounts and Supplemental Disclosures

12 Months Ended

Dec. 31, 2012

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,
	2012		2011
Billed	$	59,496	$	77,505
Unbilled		439,372		255,209
Retainages due upon contract completion		354		753
Total	$	499,222	$	333,467

Under the terms of the company's Commercial Resupply Services ("CRS") contract with NASA, approximately 25% of the contract value is billable to the customer and collectible only upon the completion of launch and delivery milestones for each of eight CRS contract missions.  Unbilled receivables at December 31, 2012 and 2011 included $277 million and $130 million, respectively, pertaining to the CRS contract.  Since the inception of the CRS contract in December 2008 through December 31, 2012, a total of $974 million of revenues have been recognized on the contract, which has a total contract value of approximately $1.9 billion.

As of December 31, 2012 and 2011, unbilled receivables also included $8.7 million and $10.2 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 a portion of the contract price to the customer if performance criteria, which cover periods of up to 15 years, are not satisfied.  As of December 31, 2012, the company could be required to refund up to approximately $12.4 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.

Excluding the portion of unbilled receivables pertaining to the CRS contract discussed separately above, approximately 93% of unbilled receivables and retainages at December 31, 2012 are due within one year and will be billed on the basis of contract terms and delivery schedules.  Approximately 91% and 90% of the company's receivables at December 31, 2012 and 2011, 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 $34.1 million and $29.7 million at December 31, 2012 and 2011, respectively.

Inventories

As of December 31, 2012 and 2011, inventories were $61.3 million and $64.3 million, respectively.  The company's inventory consisted of component parts, raw materials and milestone payments for future delivery of component parts.

Property, Plant and Equipment

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

	December 31,
	2012			2011
Land	$	10,656		$	10,656
Buildings and leasehold improvements		85,803			80,885
Furniture, fixtures and equipment		298,082			262,906
Assets under construction		45,928			65,645
Software and other		33,310			27,063
		473,779			447,155
Accumulated depreciation and amortization		(222,419	)		(187,183	)
Total	$	251,360		$	259,972

The company received proceeds of $25.6 million in 2012 in connection with the sale of property and equipment at the Wallops Island Flight Facility to the Commonwealth of Virginia.  Depreciation expense for the years ended December 31, 2012, 2011 and 2010 was $36.6 million, $32.0 million and $25.7 million, respectively.

Goodwill and Intangible Assets

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, 2012	$	10,310	$	53,517	$	11,434	$	75,261

      Intangible assets consist of technology assets that were acquired in the 2010 spacecraft business acquisition (see Note 3).  As of December 31, 2012 and 2011, the balance of intangible assets was $5.2 million and $5.9 million, respectively, reported in "other non-current assets."  Amortization expense for the years ended December 31, 2012, 2011 and 2010 was $0.7 million, $0.7 million and $0.5 million, respectively.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	December 31,
	2012		2011
Contract related accruals	$	169,146	$	145,352
Employee compensation and benefits		77,241		70,096
Interest		145		1,946
Other		6,544		3,541
Total	$	253,076	$	220,935

Cash Flow

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

	Years Ended December 31,
	2012		2011		2010
Interest paid	$	6,733	$	4,158	$	3,735
Income taxes paid		2,699		2,242		2,531

    The entire amount of cash disbursed in 2012 in connection with the repayment of certain of the company's long-term notes payable (see Note 6) was classified as repayment of long-term obligations in financing activities in the accompanying consolidated statement of cash flows.

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Export Sales and Major Customers

12 Months Ended

Dec. 31, 2012

Export Sales and Major Customers [Abstract]

Export Sales and Major Customers

4.  Export Sales and Major Customers

Orbital's revenues by geographic area, as determined by customer location, were as follows (in thousands):

	Years Ended December 31,
	2012		2011		2010
United States	$	1,155,003	$	1,035,090	$	1,084,131
Europe and Eurasia		150,746		146,623		102,106
Mexico and South America		96,147		131,240		93,855
East Asia		34,873		32,970		14,485
Total	$	1,436,769	$	1,345,923	$	1,294,577

Approximately 79%, 71% and 74% of the company's revenues in 2012, 2011 and 2010, respectively, were generated under contracts with the U.S. Government and its agencies or under subcontracts with the U.S. Government's prime contractors.  All such revenues were recorded in the launch vehicles, satellites and space systems or advanced space programs segments.

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2012

Segment Information [Abstract]

Segment Information

The following table presents operating information and identifiable assets by reportable segment (in thousands):

	Years Ended December 31,
	2012			2011			2010
Launch Vehicles:
Revenues	$	527,287		$	483,177		$	434,511
Operating income		36,131			14,147			21,188
Identifiable assets		206,194			210,642			212,360
Capital expenditures		26,066			27,999			50,001
Depreciation and amortization		15,891			14,293			9,412
Satellites and Space Systems:
Revenues	$	496,152		$	553,797		$	497,015
Operating income		46,222			37,623			33,775
Identifiable assets		278,008			282,344			268,804
Capital expenditures		16,345			12,433			10,675
Depreciation and amortization		8,563			6,841			5,917
Advanced Space Programs:
Revenues	$	470,102		$	434,036		$	423,614
Operating income		32,309			28,024			20,999
Identifiable assets		390,059			254,769			188,184
Capital expenditures		5,781			13,515			19,586
Depreciation and amortization		6,575			5,033			4,522
Corporate and Other:
Revenues (1)	$	(56,772	)	$	(125,087	)	$	(60,563	)
Operating loss (2)		(2,091	)		—			(2,948	)
Identifiable assets		337,193			383,045			393,188
Capital expenditures		3,983			5,868			3,440
Depreciation and amortization		6,310			6,572			6,335
Consolidated:
Revenues	$	1,436,769		$	1,345,923		$	1,294,577
Operating income		112,571			79,794			73,014
Identifiable assets		1,211,454			1,130,800			1,062,536
Capital expenditures		52,175			59,815			83,702
Depreciation and amortization		37,339			32,739			26,186

________________

(1) Corporate and other revenues are comprised solely of the elimination of intersegment revenues.  Intersegment revenues are summarized as follows (in millions):

	Years Ended December 31,
	2012		2011		2010
Launch Vehicles	$	50.2	$	118.3	$	53.4
Satellites and Space Systems		5.7		5.6		5.9
Advanced Space Programs		0.9		1.2		1.3
Total intersegment revenues	$	56.8	$	125.1	$	60.6

(2) The corporate and other operating loss in 2012 is comprised solely of unallocated professional fees and other costs related to a potential acquisition that was not consummated.  The corporate and other operating loss in 2010 is comprised of unallocated corporate-level costs and includes $1.6 million of transaction expenses incurred in connection with a business acquisition (see Note 3).

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Summary of Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2012

Summary of Selected Quarterly Financial Data (Unaudited) [Abstract]

Summary of Selected Quarterly Financial Data (Unaudited)

12.  Summary of Selected Quarterly Financial Data (Unaudited)

The following is a summary of selected quarterly financial data for the previous two years (in thousands, except per share data):

	Quarters Ended
	March 31		June 30		Sept. 30		Dec. 31
2012
Revenues	$	338,030	$	371,268	$	372,882	$	354,589
Income from operations		23,846		26,092		31,313		31,320
Net income		12,993		14,614		19,452		13,947	(1)
Basic income per share		0.22		0.25		0.33		0.29
Diluted income per share		0.22		0.25		0.33		0.29
2011
Revenues	$	317,703	$	350,599	$	342,170	$	335,451
Income from operations		10,116		22,807		24,668		22,203
Net income		12,335		21,217		16,473		17,369
Basic income per share		0.21		0.36		0.28		0.29
Diluted income per share		0.21		0.36		0.28		0.29

______________________

(1) In December 2012 the company recorded a $10.3 million pretax debt extinguishment charge ($6.3 million after tax) related to the repayment of convertible notes in connection with the financing transaction described in Note 6.

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Income Taxes

12 Months Ended

Dec. 31, 2012

Income Taxes [Abstract]

Income Taxes

8.  Income Taxes

 The significant components of the company's deferred tax assets and liabilities as of December 31, 2012 and 2011 were (in thousands):

	December 31,
	2012			2011
Current Deferred Tax Assets:
U.S. federal and state net operating loss carryforwards	$	8,909		$	36,028
Capitalized research and development costs		8,921			—
Accruals, reserves and other		25,374			20,322
Valuation allowance		(4,988	)		(4,937	)
Current deferred tax assets, net		38,216			51,413
Noncurrent Deferred Tax Assets (Liabilities):
State net operating loss carryforwards		1,136			8,448
Capitalized research and development costs		15,847			25,374
Tax credit/capital loss carryforwards and other		18,296			17,044
Debt costs		—			(4,710	)
Excess tax depreciation and other		(42,602	)		(38,969	)
		(7,323	)		7,187
Valuation allowance		(3,556	)		(4,456	)
Noncurrent deferred tax (liabilities) assets, net		(10,879	)		2,731
Total deferred tax assets, net	$	27,337		$	54,144

The company's income tax provisions for the years ended December 31, 2012, 2011 and 2010 were comprised of the following (in thousands):

	Years Ended December 31,
	2012			2011			2010
Current:
Federal	$	1,889		$	384		$	960
State		1,862			841			816
Foreign		102			115			—
Total current		3,853			1,340			1,776
Deferred:
Federal		29,264			29,558			21,247
State		(2,339	)		(10,259	)		(5,408	)
Total deferred		26,925			19,299			15,839
Total income tax provision	$	30,778		$	20,639		$	17,615

The company's income before income taxes included foreign income of $0.3 million and $0.4 million in 2012 and 2011, respectively.

A reconciliation of the statutory federal income tax rate to the company's effective tax rate for the years ended December 31, 2012, 2011 and 2010 is as follows:

		2012	2011	2010
U.S. federal statutory rate		35.0%	35.0%	35.0%
State taxes		3.6	3.3	3.4
Extraterritorial income exclusion		(3.1)	(8.7)	—
Research and development credits		(1.7)	(4.5)	(11.4)
Other, net		(0.3)	(1.7)	0.1
	Effective rate	33.5%	23.4%	27.1%

The company recognized research and development tax credits in all periods presented that were primarily attributable to the company's Antares and COTS research and development programs that are further discussed in Note 1.  In addition, the company recorded favorable income tax adjustments of $2.8 million and $7.7 million in 2012 and 2011, respectively, pertaining to the company's election to claim extraterritorial income exclusions related to prior year export activity.

At December 31, 2012, the company had U.S. federal net operating loss carryforwards of $24.9 million, portions of which expire beginning in 2022 through 2031, and U.S. capital loss carryforwards of $0.8 million, which expire in 2015.  The deferred tax assets related to capital losses have been fully offset with a valuation allowance due to the uncertainty of realization.  These net operating loss and capital loss carryforwards are subject to certain limitations and other restrictions.

Changes in the company's unrecognized tax benefits were as follows (in thousands):

	2012			2011			2010
Unrecognized tax benefits at beginning of year	$	16,732		$	12,386		$	7,508
Additions based on tax positions related to the current year		—			2,325			4,372
Additions for tax positions of prior years		1,548			2,351			562
Settlements with taxing authorities and other		—			—			(56	)
Reduction resulting from lapse of statute of limitation		(80	)		(330	)		—
Unrecognized tax benefits at end of year	$	18,200		$	16,732		$	12,386

All unrecognized tax benefits, if recognized, would lower the effective tax rate.

The company is subject to U.S. federal income tax and income tax in multiple state jurisdictions.  The company has substantially concluded all income tax matters for years through 1989.  In addition, the IRS completed an audit of the company's 2005 federal income tax return in 2008.

The company's practice is to recognize interest and/or penalties related to income tax matters in income tax expense.  No interest or penalties are recorded in the accompanying consolidated financial statements.

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Debt Obligations

12 Months Ended

Dec. 31, 2012

Debt Obligations [Abstract]

Debt Obligations

6.  Debt Obligations

Long-term obligations consisted of the following (in thousands):

	December 31,
	2012		2011
Senior secured term loan	$	150,000	$	—
Convertible senior subordinated notes		736		131,182
	$	150,736	$	131,182
Less current portion		(7,500)		—
Long-term portion	$	143,236	$	131,182

 The fair value of the senior secured term loan at December 31, 2012 was $150 million based on current market rates for debt of the same risk and maturity.  The fair value of the convertible senior subordinated notes at December 31, 2011 was estimated at approximately $145.2 million based on market pricing quoted by a broker dealer.  The company considers these to be Level 2 measures.

Term Loan and Credit Facility

On December 12, 2012, the company entered into an amendment (the "Amendment") to its existing revolving secured credit facility (the "Credit Facility"), discussed below.  The Amendment provided for a new $150 million senior secured term loan facility (the "Term Loan") and extended the scheduled maturity date on the Credit Facility to December 12, 2017.

The Term Loan has a five-year term, is secured on the same basis as the revolving credit facility and bears interest, at the company's option, at the London Interbank Offered Rate ("LIBOR") plus 1.75% per annum or a base rate plus 0.75% per annum.  The company is required to make quarterly principal payments of approximately $1.9 million.  The remaining principal amount of $114.4 million will be due at maturity.  The term loan is otherwise subject to terms and conditions substantially similar to those in the Credit Facility regarding guarantees, covenants and events of default.

The net proceeds received under the Term Loan were used to repay substantially all of the company's outstanding 2.4375% convertible senior subordinated notes due 2027 (the "Convertible Notes").  Debt issuance costs incurred in connection with the Amendment and issuance of the Term Loan amounted to $1.5 million, which will be amortized to interest expense over the five-year term.

The Credit Facility provides capacity for up to $300 million of revolving loans and permits the company to utilize up to $125 million of such capacity for the issuance of standby letters of credit.  The company's obligations under the Credit Facility are secured by substantially all of the company's assets except for real property.  The company has the option to increase the amount of the Credit Facility by up to $150 million, subject to obtaining additional loan commitments and the satisfaction of other specified conditions. Loans under the Credit Facility bear interest at LIBOR plus an applicable margin ranging from 1.75% to 2.50%, with the applicable margin varying according to the company's total leverage ratio, or, at the election of the company, at a base rate plus 0.75% to 1.50%.  Letters of credit issued under the Credit Facility accrue fees at a rate equal to the applicable margin for LIBOR loans.  In addition, the company is required to pay a quarterly commitment fee for the unused portion of the Credit Facility, if any, at a rate ranging from 0.30% to 0.50%.

As of December 31, 2012, there were no borrowings under the Credit Facility, although $15.4 million of letters of credit were issued under the Credit Facility.  Furtermore, borrowing capacity under the Credit Facility is limited by certain financial covenants, discussed below.  Accordingly, as of December 31, 2012, approximately $230 million of the Credit Facility was available for borrowings.

Debt Covenants

Orbital's Credit Facility contains covenants limiting the company's ability to, among other things, pay cash dividends, incur debt or liens, redeem or repurchase company stock, enter into transactions with affiliates, make investments, merge or consolidate with others or dispose of assets.  In addition, the Credit Facility contains financial covenants with respect to leverage and interest coverage.  As of December 31, 2012, the company was in compliance with all of these covenants.

Debt Extinguishment Expenses

During 2012, the company recorded $10.3 million of debt extinguishment expenses associated with the repurchase of the Convertible Notes, described above, consisting of $6.8 million of accelerated amortization of debt discount, $2.8 million in prepayment premiums and other expenses, and $0.7 million in accelerated amortization of debt issuance costs.

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Investments

12 Months Ended

Dec. 31, 2012

Investments [Abstract]

Investments

7.  Investments

As of December 31, 2012 and 2011, the company held investments consisting of three auction-rate debt securities (life insurance company capital reserve funds), an auction-rate equity security (financial guarantee company capital reserve fund) and two preferred stock investments.  These investments are classified as available for sale securities and as non-current assets on the company's balance sheet.  Contractual maturities for the debt securities are 12 years or greater and the remaining securities have no fixed maturity.  The amortized cost and fair value of these investments were as follows (in thousands):

	December 31, 2012							December 31, 2011
	Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value		Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value
Debt	$	7,150	$	(250	)	$	6,900	$	7,150	$	(1,050	)	$	6,100
Equity(1)		2,000		300			2,300		2,000		400			2,400
Total	$	9,150	$	50		$	9,200	$	9,150	$	(650	)	$	8,500

^{_______________________}

⁽¹⁾  As of December 31, 2012 and 2011, the amortized cost and fair values of the two preferred stock investments were $0.

The changes in fair value of the investments were as follows (in thousands):

	Years Ended December 31,
	2012			2011
Debt Securities
Fair value at beginning of period	$	6,100		$	6,700
Temporary impairment credits (charges), net		800			(600	)
Fair value at end of period	$	6,900		$	6,100
Equity Securities
Fair value at beginning of period	$	2,400		$	1,900
Temporary impairment (charges) credits, net		(100	)		500
Fair value at end of period	$	2,300		$	2,400
Total
Fair value at beginning of period	$	8,500		$	8,600
Temporary impairment credits (charges), net		700			(100	)
Fair value at end of period	$	9,200		$	8,500

The fair values of these securities are based on discounted cash flow analyses which consider the following Level 3 observable and unobservable inputs: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates

considered to reflect current market conditions and the relevant risk associated with each security; and (iii) the time horizon until each security will be sold.  The discount rates used in the present value calculations are based on yields on U.S. Treasury securities with similar time horizons (0.72% - 1.7% as of December 31, 2012) plus interest rate risk premiums (4.0% - 20.4% as of December 31, 2012) that are intended to compensate for general market risk and the risk specific to each security.  The risk premiums are based upon current credit default swap pricing market data for similar or related securities or credit spreads for corporate bonds with similar credit ratings and similar maturities.  The time horizons used in the present value calculations have a range of 3.5 - 8 .3 years as of December 31, 2012.

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies [Abstract]

Commitments and Contingencies

9.  Commitments and Contingencies

Leases

Aggregate minimum commitments under non-cancelable operating leases, primarily for office space and equipment rentals, at December 31, 2012 were as follows (in thousands):

2013	$	18,136
2014		16,442
2015		16,404
2016		16,629
2017		14,624
Thereafter		57,848
	$	140,083

Rent expense for 2012, 2011 and 2010 was $19.7 million, $19.3 million and $21.4 million, respectively.

U.S. Government Contracts

The accuracy and appropriateness of costs charged to U.S. Government contracts are subject to regulation, audit and possible disallowance by the Defense Contract Audit Agency or other government agencies.  Accordingly, costs billed or billable to U.S. Government customers are subject to potential adjustment upon audit by such agencies.

Most of the company's U.S. Government contracts are funded incrementally on a year-to-year basis.  Changes in government policies, priorities or funding levels through agency or program budget reductions by the U.S. Congress or executive agencies could materially adversely affect the company's financial condition or results of operations.  Furthermore, contracts with the U.S. Government may be terminated or suspended by the U.S. Government at any time, with or without cause.  Such contract suspensions or terminations could result in unreimbursable expenses or charges or otherwise adversely affect the company's financial condition and/or results of operations.

Research and Development Expenses

The company believes that a majority of the company's research and development expenses are recoverable and billable under contracts with the U.S. Government, from which the majority of the company's revenues are derived.  Charging practices relating to research and development and other costs that may be charged directly or indirectly to government contracts are subject to audit by U.S. Government agencies to determine if such costs are reasonable and allowable under government contracting regulations and accounting practices.  The company believes that research and development costs incurred in connection with the company's Antares development program (see Note 1) are allowable, although the U.S. Government has not yet made a final determination.  During 2012, 2011 and 2010, the company incurred $42.6 million, $34.3 million and $43.2 million, respectively, of such expenses that have been recorded as allowable costs.  Since the inception of the Antares program through December 31, 2012, the company has incurred $196.1 million of such costs.  If such costs were determined to be unallowable, the company could be required to record revenue and profit reductions in future periods.

Litigation

From time to time the company is party to certain litigation or other legal proceedings arising in the ordinary course of business.  Because of the uncertainties inherent in litigation, the company cannot predict the outcome of such litigation or other legal proceedings; however, the company believes that none of these matters will have a material adverse effect on the company's results of operations or financial condition.

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Business Acquisitions (Details) (USD $)	3 Months Ended								9 Months Ended	12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Apr. 02, 2010
Business Acquisition [Line Items]
Amount of cash paid to acquire certain assets and liabilities													$ 55,000,000
Revenues	354,589,000	372,882,000	371,268,000	338,030,000	335,451,000	342,170,000	350,599,000	317,703,000	69,800,000	1,436,769,000	1,345,923,000	1,294,577,000
Operating income	$ 31,320,000	$ 31,313,000	$ 26,092,000	$ 23,846,000	$ 22,203,000	$ 24,668,000	$ 22,807,000	$ 10,116,000	$ 7,300,000	$ 112,571,000	$ 79,794,000	$ 73,014,000

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Business and Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Business and Summary of Significant Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of Orbital and its wholly owned subsidiaries.  All significant intersegment balances and transactions have been eliminated.

Preparation of Consolidated Financial Statements

Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make estimates and assumptions, including estimates of future contract costs and earnings.  Such estimates and assumptions affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and earnings during the current reporting period.  Management periodically assesses and evaluates the adequacy and/or deficiency of estimated liabilities recorded for various reserves, liabilities, contract risks and uncertainties.  Actual results could differ from these estimates.

Certain reclassifications have been made to prior year amounts to conform to current year presentation.  All financial  amounts are stated in U.S. dollars unless otherwise indicated.

Revenue Recognition

Revenue Recognition

     Orbital's revenues are derived primarily from long-term contracts.  Revenues on long-term contracts are recognized using the percentage-of-completion method of accounting.   Such revenues are recorded based on the percentage that costs incurred to date bear to the most recent estimates of total costs to complete each contract.  Estimating future revenues, costs and profit, is a process requiring a high degree of management judgment, including management's assumptions regarding the company's operational performance as well as general economic conditions.  In the event of a change in total estimated contract revenue, cost or profit, the cumulative effect of such change is recorded in the period the change in estimate occurs.  Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and the company's profitability from a particular contract may be adversely affected to the extent that estimated costs to complete or incentive or award fee estimates are revised, delivery schedules are delayed, performance-based milestones are not achieved or progress under a contract is otherwise impeded.  Accordingly, the company's recorded revenues and operating profit from period to period can fluctuate significantly.  In the event cost estimates indicate a loss on a contract, the total amount of such loss, excluding general and administrative expenses, is recorded in the period in which the loss is first estimated.

Many of the company's contracts include provisions that increase or decrease contract value based on performance in relation to established targets or customer evaluations.  Mission success milestones and incentive and award fees are included in estimated contract revenue when the company is able to make reasonable predictions about whether the performance targets will be achieved and make dependable estimates of such amounts based upon the company's historical experience with similar types of activities and other objective criteria.  The company includes the estimated amount of mission success milestones and incentive and award fees in estimated contract revenue at the inception of each contract, with reassessments made each quarter throughout the period of contract performance.  If performance under such contracts were to differ from previous assumptions, or if the company were to revise its estimates or assumptions, current period revenues and profit would be adjusted and could fluctuate significantly.  The company's assessments are guided by the historical performance of the company's products and product families, the reliability record of the technology employed and assessments of technological considerations for each contract.

As part of the company's risk management strategy, the company generally insures significant mission success milestones.  Insurance recoveries are recorded as other income in the consolidated financial statements.  The company recognized insurance recoveries of $17.8 million for the year ended December 31, 2011.  There were no such insurance recoveries during 2012 and 2010.

Research and Development Expenses

Research and Development Expenses

Expenditures for company-sponsored research and development projects are expensed as incurred.  Research and development projects performed under contracts for customers are recorded as contract costs.

In 2008, the company entered into an agreement with the National Aeronautics and Space Administration ("NASA") to design, build and demonstrate a new space transportation system under a program called Commercial Orbital Transportation Services ("COTS"), for delivering cargo and supplies to the International Space Station.  Under the agreement, as amended, as of December 31, 2012, NASA has agreed to pay the company $288 million in cash milestone payments, partially funding Orbital's project costs which are currently estimated to be approximately $513 million.  The company expects to complete this project in 2013.

The COTS agreement is accounted for as a best-efforts research and development cost-sharing arrangement.  As such, the amounts funded by NASA are recognized proportionally as an offset to the company's COTS program research and development expenses, including associated general and administrative expenses.  The following table summarizes the COTS program research and development expenses incurred and amounts funded by NASA (in millions):

	2012			2011			2010			Inception to December 31, 2012
Research and development costs incurred (1)	$	62.6		$	158.8		$	136.5		$	480.5
Less amounts funded by NASA		(21.9	)		(108.0	)		(69.1	)		(282.2	)	(2)
Net research and development expenses	$	40.7		$	50.8		$	67.4		$	198.3

^{_______________________}

⁽¹⁾ Includes associated general and administrative expenses.

⁽²⁾ Through December 31, 2012, the company has received $276 million in cash from NASA and as of December 31, 2012, the company recorded an approximately $6 million receivable due from NASA.

The company is also engaged in a major product development program of a medium capacity rocket named Antares.  Approximately $42.6 million, $34.3 million and $48.3 million of the company's research and development expenses in 2012, 2011 and 2010, respectively, were attributable to the Antares program.  Since the inception of the Antares program through December 31, 2012, the company has incurred $234.8 million of such costs.

Stock-Based Compensation

Stock-Based Compensation

The company determines the fair value of its restricted stock unit grants based on the closing price of Orbital's common stock on the date of grant.  The fair value of stock options granted is determined using the Black-Scholes valuation model, although the company has not granted stock options since 2006.  Compensation expense pertaining to stock-based awards is recognized as expense over the service period, net of estimated forfeitures.  The company uses the tax law ordering method to determine intra-period tax allocation related to the tax attributes of stock-based compensation.

Income Taxes

Income Taxes

Orbital accounts for income taxes using the asset and liability method.  Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.  The company records valuation allowances to reduce net deferred tax assets to the amount considered more likely than not to be realized.  Changes in estimates of future taxable income can materially change the amount of such valuation allowances.

Earnings per Share

Earnings per Share

Basic earnings per share is calculated using the weighted-average number of common shares outstanding during the periods.  Diluted earnings per share includes the weighted-average effect of all potentially dilutive securities outstanding during the periods.

The computation of basic and diluted earnings per share is as follows (dollars in thousands, except per share amounts):

			Years Ended December 31,
Numerator			2012			2011			2010
		Net Income	$	61,006		$	67,394		$	47,469
		Percentage allocated to shareholders (1)		99.6	%		99.1	%		99.0	%
		Numerator for basic and diluted earnings per share	$	60,762		$	66,787		$	46,994
Denominator
		Denominator for basic earnings per share -
		weighted-average shares outstanding		59,165			58,531			57,683
		Dilutive effect of stock options and restricted stock units		292			596			652
		Denominator for diluted earnings per share		59,457			59,127			58,335
Per share income
		Basic	$	1.03		$	1.14		$	0.81
		Diluted		1.02			1.13			0.81
_________________________
	(1)	Basic weighted-average shares outstanding		59,165			58,531			57,683
		Basic weighted-average shares outstanding and
		unvested restricted stock units expected to vest		59,428			59,078			58,254
		Percentage allocated to shareholders		99.6	%		99.1	%		99.0	%

In accordance with GAAP, the company accounts for unvested share-based payment awards that have non-forfeitable rights to dividends or dividend equivalents as a separate class of securities in calculating earnings per share.  Certain of the company's unvested restricted stock units ("RSUs") contain rights to receive non-forfeitable dividends, and thus are participating securities requiring the two-class method to be used for computing earnings per share.  The calculation of earnings per share shown above excludes the income attributable to the unvested RSUs that include rights to receive non-forfeitable dividends from the numerator and excludes the impact of those units from the denominator.

In 2012, 2011 and 2010, diluted weighted-average shares outstanding excluded the effect of the company's convertible notes that were anti-dilutive.

Fair Value Measurements

Fair Value Measurements

The company utilizes fair value measurement guidance prescribed by GAAP to value its financial instruments. The guidance includes a definition of fair value, prescribes methods for measuring fair value, establishes a fair value hierarchy based on the inputs used to measure fair value and expands disclosures about the use of fair value measurements.

The valuation techniques utilized are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect internal market assumptions.

These two types of inputs create the following fair value hierarchy:

Level 1 - Quoted prices for identical instruments in active markets.

Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3 - Significant inputs to the valuation model are unobservable.

Fair value disclosures pertaining to financial instruments of the company that are included in these notes to the consolidated financial statements include money market funds (see Note 1, subsection "Cash and Cash Equivalents"), foreign exchange derivative instruments (see Note 1, subsection "Derivative Financial Instruments"), investments in auction-rate securities (see Note 7) and debt instruments recorded in long-term obligations (see Note 6).

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and short-term, highly liquid investments with maturities of 90 days or less.  The carrying amount reported in the balance sheet for cash and cash equivalents approximates its fair value.  At December 31, 2012 and 2011, the company had invested approximately $215 million and $259 million, respectively, in cash equivalents in the form of money market funds with three financial institutions.  The company considers these money market funds to be Level 1 financial instruments.

Inventories

Inventories

Inventories are stated at the lower of cost or estimated market value.  Cost is determined on an average cost or specific identification basis.  Estimated market value is determined based on assumptions about future demand and market conditions.  If actual market conditions were less favorable than those previously projected by management, inventory write-downs could be required.

Derivative Financial Instruments

Derivative Financial Instruments

Orbital occasionally uses foreign exchange derivative instruments to manage certain foreign currency rate exposures.  Derivative instruments are viewed as risk management tools by Orbital and are not used for trading or speculative purposes.  Derivatives used for hedging purposes are generally designated as effective hedges.  Accordingly, changes in the fair value of a derivative contract are highly correlated with changes in the fair value of the underlying hedged item at inception of the hedge and over the life of the hedge contract.  Derivative instruments are

recorded on the balance sheet at fair value.  The ineffective portion of all hedges, if any, is recognized currently in earnings.

In 2012, Orbital entered into a series of foreign exchange contracts to sell euros and purchase U.S. dollars in order to hedge the company's exposure to fluctuating foreign exchange rates in connection with a customer contract denominated in euros.  As of December 31, 2012, the company had ten foreign exchange contracts with a total contract value of €56.0 million, or $72.9 million, that have various expiration dates through March 2014.  As of December 31, 2012, the fair value of these foreign exchange contracts was a liability of $1.2 million.  The company considers these to be Level 2 financial instruments.

Investments

Investments

The company's investments in securities are reported at fair value.  These investments are classified as available-for-sale securities at the time of purchase and the company re-evaluates such designation as of each balance sheet date.  The company evaluates its investments periodically for possible other-than-temporary impairment by reviewing factors such as the length of time and extent to which fair value has been below cost basis, the financial condition of the issuer, the company's ability and intent to hold the investment for a period of time which may be sufficient for anticipated recovery of market value, and the credit values of debt securities.  The company records an impairment expense to the extent that the amortized cost exceeds the estimated fair market value of the securities held and the decline in value is determined to be other-than-temporary.  Temporary changes in fair value are included in accumulated other comprehensive income (loss), a component of stockholders' equity.

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment are stated at cost.  Major improvements are capitalized while expenditures for maintenance, repairs and minor improvements are charged to expense.  When assets are retired or otherwise disposed of, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is recognized.   Depreciation expense is determined using the straight-line method based on the following useful lives:

Buildings	20 years
Machinery, equipment and software	3 to 12 years
Leasehold improvements	Shorter of estimated useful life or lease term

The company self-constructs some of its ground and airborne support and special test equipment utilized in the manufacture, production and delivery of some of its products.  Orbital capitalizes direct costs incurred in constructing such equipment and certain allocated indirect costs.  The company also capitalizes certain costs incurred in connection with internally developed software.  These capitalized costs generally include direct software coding costs and certain allocated indirect costs.

Recoverability of Long-Lived Assets

Recoverability of Long-Lived Assets

Orbital's policy is to evaluate its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable.  When an evaluation indicates that an impairment has occurred, a loss is recognized and the asset or asset group is adjusted to its estimated fair value.  Given the inherent technical and commercial risks within the aerospace industry and the special purpose use of certain of the company's assets, future impairment charges could be required if the company were to change its current expectation that it will recover the carrying amount of its long-lived assets from future operations.

Goodwill

Goodwill

Goodwill is comprised of acquisition costs in excess of the fair values assigned to the underlying net assets of acquired businesses.  Goodwill is evaluated for potential impairment at least annually or whenever events or circumstances indicate that the carrying value of goodwill may not be recoverable.  The evaluation includes comparing the fair value of a reporting unit to its carrying value including goodwill.  If the carrying value exceeds the fair value, impairment is measured by comparing the implied value of goodwill to its carrying value and recorded in the current period.  Goodwill balances are included in the identifiable assets of the business segment to which they have been assigned.  There was no impairment of goodwill recorded during the three years ending December 31, 2012.

Deferred Revenue and Customer Advances

Deferred Revenue and Customer Advances

The company accounts for cash receipts from customers in excess of amounts recognized on certain contracts as "deferred revenues and customer advances."  These amounts are recorded as current liabilities since the associated services are performed within one year.

Cash Flow Classification of Debt Prepayment Premiums [Text Block]

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Debt Obligations (Tables)

12 Months Ended

Dec. 31, 2012

Debt Obligations [Abstract]

Schedule of long-term obligations

Long-term obligations consisted of the following (in thousands):

	December 31,
	2012		2011
Senior secured term loan	$	150,000	$	—
Convertible senior subordinated notes		736		131,182
	$	150,736	$	131,182
Less current portion		(7,500)		—
Long-term portion	$	143,236	$	131,182

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Stock Plans and Equity Transactions (Details) (USD $)	12 Months Ended
	Dec. 31, 2012		Dec. 31, 2011		Dec. 31, 2010
Summary of Stock Option Activity [Roll Forward]
Forfeited (in shares)	0
Stock-based compensation, additional disclosures [Abstract]
Stock-based compensation expense recognized	$ 6,400,000		$ 6,200,000		$ 7,000,000
Income tax benefit related to stock-based compensation expense	2,500,000		2,000,000		2,300,000
Intrinsic value of options exercised, computed as the market price on the exercise date less the price paid to exercise the options	2,600,000		3,800,000		8,100,000
Cash received from exercise of options	2,100,000		1,400,000		10,600,000
Grant date fair value of vested restricted stock units	5,500,000		6,100,000		7,000,000
Tax benefit recorded as an increase to additional paid-in capital related to stock-based compensation transactions	216,000		1,235,000		1,078,000
Shares of common stock available for grant under the company's stock-based incentive plans (in shares)	2,900,000
Aggregate intrinsic value of restricted stock units that are expected to vest	12,900,000
Unrecognized compensation expense related to non-vested restricted stock units	10,400,000
Unrecognized compensation expense, weighted-average period of recognition (in years)	1.96
Aggregate intrinsic value of stock options outstanding, all fully vested	3,300,000
Range 1 of Exercise Prices [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	$ 5.65
Upper range limit (in dollars per share)	$ 9.71
Number Outstanding (in shares)	452,954	[1]
Weighted Average Remaining Contractual Term (Years)	0.40
Weighted Average Exercise Price (in dollars per share)	$ 6.82
Range 2 of Exercise Prices [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	$ 10.93
Upper range limit (in dollars per share)	$ 12.98
Number Outstanding (in shares)	105,000	[1]
Weighted Average Remaining Contractual Term (Years)	2.10
Weighted Average Exercise Price (in dollars per share)	$ 12.26
Range 3 of Exercise Prices [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Lower range limit (in dollars per share)	$ 5.65
Upper range limit (in dollars per share)	$ 12.98
Number Outstanding (in shares)	557,954	[1]
Weighted Average Remaining Contractual Term (Years)	0.72
Weighted Average Exercise Price (in dollars per share)	$ 7.84
Stock Options [Member]
Summary of Stock Option Activity [Roll Forward]
Outstanding at beginning of period (in shares)	902,287		1,226,582		2,301,305
Granted (in shares)	0		0		0
Exercised (in shares)	(343,734)		(317,647)		(1,038,624)
Forfeited (in shares)			(448)		(2,599)
Expired (in shares)	(599)		(6,200)		(33,500)
Outstanding at end of period (in shares)	557,954	[2]	902,287		1,226,582
Weighted Average Exercise Price [Abstract]
Outstanding at beginning of period (in dollars per share)	$ 7.25		$ 6.46		$ 8.29
Granted (in dollars per share)	$ 0		$ 0		$ 0
Exercised (in dollars per share)	$ 6.28		$ 4.26		$ 10.21
Forfeited (in dollars per share)	$ 0		$ 5.79		$ 6.29
Expired (in dollars per share)	$ 5.79		$ 3.91		$ 16.24
Outstanding at end of period (in dollars per share)	$ 7.84		$ 7.25		$ 6.46
Weighted average remaining contractual term (in years)	0.72
Restricted Stock Units [Member]
Summary of Restricted Stock Units Activity [Roll Forward]
Outstanding at beginning of period (in shares)	782,112		684,674		473,615
Granted (in shares)	529,446	[3]	442,110	[3]	520,470	[3]
Vested (in shares)	(345,945)		(330,356)		(300,969)
Forfeited (in shares)	(29,980)		(14,316)		(8,442)
Outstanding at end of period (in shares)	935,633		782,112		684,674
Weighted Average Measurement Date Fair Value [Abstract]
Outstanding at beginning of period (in dollars per share)	$ 16.07		$ 16.38		$ 22.88
Granted (in dollars per share)	$ 12.90		$ 17.39		$ 14.47
Vested (in dollars per share)	$ 15.77		$ 18.47		$ 23.17
Forfeited (in dollars per share)	$ 14.85		$ 16.57		$ 19.98
Outstanding at end of period (in dollars per share)	$ 14.42		$ 16.07		$ 16.38
Employee Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock available for purchase (in shares)	419,000
Stock-based compensation, additional disclosures [Abstract]
Stock-based compensation expense recognized	$ 300,000		$ 400,000		$ 400,000

[1] (1)All outstanding options were exercisable as of December 31, 2012.

[2] (2)The weighted average remaining contractual term is 0.72 years.

[3] (1)The fair value of restricted stock unit grants is determined based on the closing market price of Orbital's common stock on the date of grant. Such value is recognized as expense over the service period, net of estimated forfeitures.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Defined Benefit plans tax	$ 263	$ (773)	$ 90
Unrealized loss on foreign exchange derivative instruments tax	$ 339

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Business Acquisitions

12 Months Ended

Dec. 31, 2012

Business Acquisitions [Abstract]

Business Acquisitions

3. Business Acquisitions

On April 2, 2010, the company acquired certain assets and liabilities of the spacecraft development and manufacturing business of General Dynamics Advanced Information Systems, a subsidiary of General Dynamics Corporation (the "Seller"), for $55 million in cash, subject to a potential working capital adjustment.  The company's consolidated financial statements reflect the operations of the acquired business since the date of acquisition.  Revenues and operating income of the acquired business were $69.8 million and $7.3 million, respectively, for the period from April 2, 2010 to December 31, 2010.

The acquisition was accounted for under the acquisition method in accordance with Accounting Standards Codification ("ASC") Topic 805, "Business Combinations."  The allocation of the purchase price for the tangible and identifiable intangible assets acquired and liabilities assumed was based on their estimated fair values at the date of acquisition using established valuation techniques.  The company may recognize changes to the acquired assets or liabilities as a result of a working capital adjustment.  In 2011, the company recorded an additional $0.5 million of goodwill related to the update of purchase accounting associated with the acquisition.  The company and the Seller are each disputing the other party's claim for a purchase price adjustment based on the calculation of working capital as of the closing date.

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Investments (Tables)

12 Months Ended

Dec. 31, 2012

Investments [Abstract]

Amortized Cost and Fair Value of Investments

The amortized cost and fair value of these investments were as follows (in thousands):

	December 31, 2012							December 31, 2011
	Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value		Cost or Amortized Cost		Net Unrealized Gain (Loss)			Fair Value
Debt	$	7,150	$	(250	)	$	6,900	$	7,150	$	(1,050	)	$	6,100
Equity(1)		2,000		300			2,300		2,000		400			2,400
Total	$	9,150	$	50		$	9,200	$	9,150	$	(650	)	$	8,500

Changes in Fair Value of Investments

The changes in fair value of the investments were as follows (in thousands):

	Years Ended December 31,
	2012			2011
Debt Securities
Fair value at beginning of period	$	6,100		$	6,700
Temporary impairment credits (charges), net		800			(600	)
Fair value at end of period	$	6,900		$	6,100
Equity Securities
Fair value at beginning of period	$	2,400		$	1,900
Temporary impairment (charges) credits, net		(100	)		500
Fair value at end of period	$	2,300		$	2,400
Total
Fair value at beginning of period	$	8,500		$	8,600
Temporary impairment credits (charges), net		700			(100	)
Fair value at end of period	$	9,200		$	8,500

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Investments (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Schedule of Available-for-sale Securities [Line Items]
Cost or Amortized Cost	$ 9,150	$ 9,150
Net Unrealized Gain (Loss)	50	(650)
Changes in fair value of investments [Roll Forward]
Fair value at beginning of period	8,500	8,600
Temporary impairment credits, net	700	(100)
Fair value at end of period	9,200	8,500
Minimum [Member]
Changes in fair value of investments [Roll Forward]
U.S. Treasury discount percentage range (in hundredths)	0.72%
Interest rate risk premiums (in hundredths)	4.00%
Time horizon used in present value calculations	3.5
Maximum [Member]
Changes in fair value of investments [Roll Forward]
U.S. Treasury discount percentage range (in hundredths)	1.70%
Interest rate risk premiums (in hundredths)	20.40%
Time horizon used in present value calculations	8.3
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost or Amortized Cost	7,150	7,150
Net Unrealized Gain (Loss)	(250)	(1,050)
Changes in fair value of investments [Roll Forward]
Fair value at beginning of period	6,100	6,700
Temporary impairment credits, net	800	(600)
Fair value at end of period	6,900	6,100
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost or Amortized Cost	2,000	2,000
Net Unrealized Gain (Loss)	300	400
Changes in fair value of investments [Roll Forward]
Fair value at beginning of period	2,400	1,900
Temporary impairment credits, net	(100)	500
Fair value at end of period	2,300	2,400
Preferred Stock Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Cost or Amortized Cost	0	0
Changes in fair value of investments [Roll Forward]
Fair value at end of period	$ 0	$ 0

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Schedule II VALUATION AND QUALIFYING ACCOUNTS

12 Months Ended

Dec. 31, 2012

Schedule II - Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

FORM 10-K FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010

(In thousands)

			Additions
					Charged/
	Balance at		Charged to		Credited to						Balance
	Start of		Costs and		Other						at End of
Description	Period		Expenses		Accounts			Deductions			Period
YEAR ENDED DECEMBER 31, 2010
Deferred income tax valuation allowance	$	12,654	$	350	$	96		$	(307	)	$	12,793
YEAR ENDED DECEMBER 31, 2011
Deferred income tax valuation allowance		12,793		75		38			(3,513	)		9,393
YEAR ENDED DECEMBER 31, 2012
Deferred income tax valuation allowance		9,393		2		(210	)		(641	)		8,544