DULLES, Va., Apr 21, 2005 (BUSINESS WIRE) -- Orbital Sciences Corporation (NYSE:ORB) today announced its financial results for the first quarter of 2005, reporting strong revenue, operating income, net income and cash flow results. The company also announced its intentions to repurchase up to $50 million of its outstanding securities during the next 12 months.

Orbital's first quarter 2005 revenues were $167.1 million, up 10% over first quarter 2004 revenues of $151.4 million. Operating income was $12.2 million, as compared to $14.2 million in the same quarter last year which included a $2.5 million non-recurring gain.

First quarter 2005 net income was $6.2 million, or $0.10 per diluted share. Adjusted net income(1) for the first quarter of 2005, which excludes non-cash income tax expense, was $10.1 million, or $0.16 adjusted diluted earnings per share(1), compared to net income of $11.5 million, or $0.18 diluted earnings per share, in 2004. Orbital reported first quarter 2005 free cash flow(1) of $5.1 million.

Commenting on the first quarter of 2005, David W. Thompson, Chairman and Chief Executive Officer, said, "The company started the year with solid operational, new business and financial performance. Our launch vehicles business segment exhibited a strong gain in operating profit and our satellites segment continued its robust revenue growth." He added, "While Orbital continued to invest in growth opportunities in these businesses, the company also received approval from its Board of Directors to deploy some of our expanding cash balances to extend our program to buy back stock or notes during the coming year."

(1) "Free cash flow," "adjusted net income" and "adjusted diluted
    earnings per share" are non-GAAP financial measures discussed in
    this release. For additional details, please refer to the section
    of this press release entitled "Disclosure of Non-GAAP Financial
    Measures."

Financial Highlights

Summary financial results were as follows (in millions, except per share data):

First Quarter
                                                     2005       2004
----------------------------------------------------------------------
Revenues                                            $167.1     $151.4
Operating Income                                      12.2       14.2
Net Income                                             6.2       11.5
Diluted Net Income per Share                        $ 0.10     $ 0.18
----------------------------------------------------------------------

Supplemental Financial Information

In the fourth quarter of 2004, the company reversed most of its deferred tax valuation allowance. As a result, the company recorded substantially higher income tax expense in the first quarter of 2005, including significant non-cash income taxes. The following information presents the company's adjusted net income for the first quarter of 2005, which is determined by adding back the portion of income tax expense that is offset by net operating loss carryforwards and other deferred tax assets. These supplemental results are provided so investors can more easily compare 2005 net income to 2004 net income, in which no such income tax expense was recorded (see the section of this press release entitled "Disclosure of Non-GAAP Financial Measures") (in millions, except per share data):

First Quarter
                                                     2005       2004
----------------------------------------------------------------------
Reported Net Income                                 $  6.2     $ 11.5
Add Portion of Income Tax Expense Offset by Net
 Operating Losses and Other Deferred Tax Assets        3.9         --
                                                    -------    -------
Adjusted Net Income                                 $ 10.1     $ 11.5
                                                    -------    -------
Adjusted Diluted Earnings Per Share                 $ 0.16     $ 0.18
Diluted Shares                                        63.5       65.4
----------------------------------------------------------------------

Revenues

Revenues by segment for the first quarter were as follows (in millions):

First Quarter
                                                     2005       2004
----------------------------------------------------------------------
Launch Vehicles                                     $ 80.0     $ 76.5
Satellites and Related Space Systems                  82.4       69.4
Transportation Management Systems                      7.0        7.3
Eliminations                                          (2.3)      (1.8)
                                                    -------    -------
Total Revenues                                      $167.1     $151.4
----------------------------------------------------------------------

Orbital's first quarter 2005 revenues were $167.1 million, up 10% over first quarter 2004, primarily due to a 19% revenue increase in the company's satellites and related space systems segment and a 5% revenue increase in the launch vehicles segment. The satellites and related space systems segment growth was driven by significantly higher revenues from science, technology and defense satellite contracts, offset partially by lower revenues in the company's communications satellites product line. The launch vehicles segment growth was driven by higher revenues in the missile defense interceptor launch vehicles and target launch vehicles product lines which were partially offset by lower space launch vehicles product line revenues.

Operating Income

Operating income by segment for the first quarter was as follows (in millions):

First Quarter
                                                     2005       2004
----------------------------------------------------------------------
Launch Vehicles                                     $  9.0     $  6.9
Satellites and Related Space Systems                   2.8        4.5
Transportation Management Systems                      0.4        0.3
Corporate and Other                                     --        2.5
                                                    -------    -------
Total Operating Income                              $ 12.2     $ 14.2
----------------------------------------------------------------------

Orbital reported operating income of $12.2 million in the first quarter of 2005 compared to $14.2 million in the first quarter of 2004. The first quarter of 2004 included a $2.5 million non-recurring gain from the sale of notes received from a former affiliate reported in the corporate and other segment. Excluding this non-recurring gain, operating income grew $0.6 million quarter over quarter, due to a 30% increase in launch vehicles segment income, partially offset by lower income in the satellites and related space systems segment. The increase in launch vehicles segment income was largely attributable to the absence in 2005 of an unfavorable profit adjustment on a Taurus rocket contract in the first quarter of 2004. The decrease in satellites and related space systems segment income was due to lower operating results in the communications satellites product line, partially offset by higher income from science, technology and defense satellite contracts consistent with the revenue growth in this product line. The decline in communications satellites operating results was due to lower activity in 2005 on certain communications satellites which are nearly complete and an operating loss on a communications satellite contract awarded late in 2003.

Net Income

Net income for the first quarter of 2005 was $6.2 million, as compared to $11.5 million in the first quarter of 2004. Adjusted net income, which excludes $3.9 million of non-cash income tax expense, was $10.1 million, or $0.16 adjusted diluted earnings per share, for the first quarter of 2005. First quarter 2005 adjusted net income increased $1.1 million, or $0.02 per share, compared to the first quarter of 2004 excluding a one-time $2.5 million gain.

Cash Flow and Balance Sheet

The company reported free cash flow of $5.1 million for the first quarter of 2005. Orbital's unrestricted cash balance was $130.9 million as of March 31, 2005. The company's cash flow was as follows (in millions):

First Quarter
                                                            2005
----------------------------------------------------------------------
Net Cash Provided by Operating Activities                  $  9.5
Capital Expenditures                                         (4.4)
                                                           -------
    Free Cash Flow                                            5.1
Repayment of Debt and Other                                  (0.1)
Proceeds from Issuance of Common Stock                        0.4
                                                           -------
     Net Increase in Cash                                     5.4
Beginning Cash Balance                                      125.5
                                                           -------
Ending Cash Balance                                        $130.9
----------------------------------------------------------------------

Summary balance sheet data as of March 31, 2005 was as follows (in
millions):

              Assets                      Liabilities and Equity
----------------------------------------------------------------------
Cash and Equivalents       $130.9   Short-Term Debt            $  0.1
Other Current Assets        206.9   Other Current Liabilities   141.2
Property and Equipment       83.3   Long-Term Debt              126.0
Goodwill                     55.6   Other Non-Current
                                     Liabilities                  0.6
Other Assets                191.7   Stockholders' Equity        400.5
                           -------                             -------
     Total Assets          $668.4       Total Liabilities
                                         and Equity            $668.4
----------------------------------------------------------------------

New Business Highlights

Since the beginning of 2005, Orbital has received approximately $260 million in new firm and option contract bookings. Major bookings included a new commercial communications satellite contract with PanAmSat Corporation and a contract selection to develop and build a NASA-sponsored scientific satellite for Southwest Research Institute. In addition, the company received approximately $30 million of option exercises under existing contracts. As of March 31, 2005, the company's firm contract backlog was approximately $1.05 billion and its total backlog (including options, indefinite-quantity contracts and undefinitized orders) was approximately $2.38 billion.

Operational Highlights

Since the beginning of the year, Orbital has carried out six space missions, including a target vehicle launch in February and another target launch in March, plus two space launches, one target launch and one spacecraft operation so far in April. The company also completed and delivered several additional launch vehicles for future uses and completed two transportation management systems contracts since the beginning of 2005.

Securities Repurchase Program

In April 2005, Orbital's Board of Directors authorized the purchase of up to $50 million of the company's outstanding securities over the next 12 months. This repurchase program replaces the program announced in 2004 which expires this month. The company may repurchase its 9% senior notes due 2011, common stock or common stock warrants that expire in 2006, or a combination thereof. Shares of common stock may be purchased from time to time in the open market, block purchase or negotiated transactions. The warrants and notes may be purchased in negotiated transactions. The timing, amount and type of securities to be repurchased will be determined based on the company's loan covenants, market conditions and other factors. The following outstanding securities are subject to the repurchase program: $126 million of 9% senior notes due 2011; 55.6 million shares of common stock; and approximately 82,000 warrants to purchase approximately 10.0 million shares of common stock with an exercise price of $3.86 per share that expire in August 2006.

2005 Financial Guidance Update

The company reaffirmed its financial guidance, indicating that it expects that 2005 revenues will be in the $700 to $725 million range and operating income margin will be in the 8.0% to 8.5% range. Including non-cash tax expense, the company forecasts 2005 diluted earnings per share in the $0.40 to $0.45 range, based on estimated average diluted shares of 65 to 67 million. The company expects free cash flow of $40 to $45 million for 2005.

Disclosure of Non-GAAP Financial Measures

The following are provided as definitions of non-GAAP (Generally Accepted Accounting Principles) financial measures used by the company within this press release. Orbital does not intend for the information to be considered in isolation or as a substitute for the related GAAP measures. Other companies may define these measures differently.

Free cash flow is defined as GAAP net cash provided by operating activities (the most directly comparable GAAP financial measure) less capital expenditures for property, plant and equipment. Management believes that free cash flow provides investors with an important perspective on the company's liquidity, financial flexibility and ability to fund operations and service debt.

Adjusted net income as presented within this press release is computed as GAAP net income (the most directly comparable GAAP financial measure) excluding the portion of income tax expense that will be offset by net operating loss carryforwards and other deferred tax assets. Adjusted diluted earnings per share is equal to adjusted net income divided by diluted shares. Management believes these measures provide investors with a more complete understanding of the company's financial performance in comparison to prior periods.

About Orbital

Orbital develops and manufactures small space and rocket systems for commercial, military and civil government customers. The company's primary products are satellites and launch vehicles, including low-orbit, geosynchronous and planetary spacecraft for communications, remote sensing, scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. Orbital also offers space-related technical services to government agencies and develops and builds satellite-based transportation management systems for public transit agencies and private vehicle fleet operators.

A transcript of the earnings teleconference call will be available on Orbital's website at http://www.orbital.com/Investor

2005 Annual Stockholders Meeting

Orbital's annual stockholders meeting will be held at 9:00 a.m. on Thursday, April 28, 2005, at the company's headquarters in Dulles, Virginia. The company will webcast the live audio of the meeting and post any presentation materials on its website at http://www.orbital.com/Investor

"Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements in this press release may be forward-looking in nature or "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. 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, product performance and market acceptance of products and technologies, as well as other risk factors and business considerations described in the company's SEC filings, including the annual report on Form 10-K, could impact Orbital's actual financial and operational results. Orbital assumes no obligation for updating the information contained in this press release.

ORBITAL SCIENCES CORPORATION
               Condensed Consolidated Income Statements
           (unaudited, in thousands, except per share data)

                                                     First Quarter
                                                    2005       2004
----------------------------------------------------------------------

Revenues                                          $167,149   $151,372
Costs of goods sold                                139,338    126,454
                                                 ---------- ----------
Gross profit                                        27,811     24,918
Research and development expenses                    1,032      1,742
Selling, general and administrative expenses        14,562     11,509
Settlement expense (income)                             --     (2,538)
                                                 ---------- ----------
Income from operations                              12,217     14,205
Other income, net                                      757        426
Interest expense                                    (2,780)    (2,909)
                                                 ---------- ----------
Income before income taxes                          10,194     11,722
Income taxes                                        (4,042)      (228)
                                                 ---------- ----------
Net income                                        $  6,152   $ 11,494
                                                 ========== ==========

Basic net income per share                           $0.11      $0.24
                                                 ========== ==========
Diluted net income per share                         $0.10      $0.18
                                                 ========== ==========

Shares used in computing basic net income per
 share                                              55,157     48,048
Shares used in computing diluted net income per
 share                                              63,461     65,370
----------------------------------------------------------------------


                     ORBITAL SCIENCES CORPORATION
                 Condensed Consolidated Balance Sheets
                            (in thousands)

                                                  March 31,   Dec. 31,
                                                    2005       2004
----------------------------------------------------------------------
Assets
Cash                                              $130,960   $125,504
Receivables, net                                   155,317    149,480
Inventory                                           12,931     13,565
Deferred income taxes, net                          26,791     26,710
Other current assets                                11,891     12,195
                                                 ---------- ----------
      Total current assets                         337,890    327,454
Property, plant and equipment, net                  83,341     83,154
Goodwill                                            55,551     55,551
Deferred income taxes, net                         181,961    185,940
Other non-current assets                             9,660     11,671
                                                 ---------- ----------
      Total Assets                                $668,403   $663,770
                                                 ========== ==========

Liabilities and Stockholders' Equity
Short-term borrowings                             $    102   $    161
Accounts payable and accrued expenses              126,361    121,454
Deferred revenues                                   14,787     19,478
                                                 ---------- ----------
     Total current liabilities                     141,250    141,093
Long-term debt                                     126,026    128,375
Other non-current liabilities                          625        178
Total stockholders' equity                         400,502    394,124
                                                 ---------- ----------
     Total Liabilities and Stockholders' Equity   $668,403   $663,770
                                                 ========== ==========


                     ORBITAL SCIENCES CORPORATION
            Condensed Consolidated Statements of Cash Flows
                       (unaudited, in thousands)

                                                     First Quarter
                                                     2005      2004
----------------------------------------------------------------------

Net income                                         $  6,152  $ 11,494
Depreciation and amortization                         3,636     3,652
Deferred taxes                                        3,896        --
Amortization of debt costs                              153       234
Changes in assets and liabilities                    (4,090)   29,460
Other                                                  (204)     (678)
                                                   --------- ---------
Net cash provided by operating activities             9,543    44,162
                                                   --------- ---------
Capital expenditures                                 (4,467)   (2,628)
Change in cash restricted for letters of credit,
 net                                                     30     1,567
                                                   --------- ---------
Net cash used in investing activities                (4,437)   (1,061)
                                                   --------- ---------
Repayment of debt and other                             (77)      (69)
Net proceeds from issuance of common stock              427     2,241
                                                   --------- ---------
Net cash provided by financing activities               350     2,172
                                                   --------- ---------
Net increase in cash                                  5,456    45,273
Cash, beginning of period                           125,504    60,900
                                                   --------- ---------
Cash, end of period                                $130,960  $106,173
                                                   ========= =========

SOURCE: Orbital Sciences Corporation

Orbital Sciences Corporation
Barron Beneski, 703-406-5528
beneski.barron@orbital.com