DULLES, Va., Mar 7, 2002 /PRNewswire-FirstCall via COMTEX/ --

Fourth Quarter 2001 Highlights * Revenue Increases to $121 Million, Operating Loss Narrows * Net Loss Includes Final ORBIMAGE and ORBCOMM Write-offs, Other Charges * New Orders of $285 Million, Including Major Satellite Program Wins * New $60 Million Bank Credit Facility Established (March 2002) Full Year 2001 Highlights * Three Non-Core Businesses Divested for Net Proceeds of $245 Million * Total Debt Reduced by Over 55% to $108 Million at Year-End * Operating Costs Cut by About 20% During Past Year * Total Backlog Reached $2.6 Billion, with Increased Profit Margins

Orbital Sciences Corporation (NYSE: ORB) today announced financial results for the fourth quarter and full year 2001, reporting income statement and balance sheet improvements relative to comparable periods in 2000. For the fourth quarter of 2001, the company reported revenues of $120.9 million, up 81% over fourth quarter 2000 revenues. Orbital reported a fourth quarter 2001 operating loss of $23.0 million compared to a fourth quarter 2000 operating loss of $63.3 million. The company's net loss for the fourth quarter of 2001 was $31.7 million ($0.80 per share), as compared to a quarterly net loss of $88.2 million ($2.35 per share) a year earlier.

As more fully described below, fourth quarter 2001 operating results included $20.7 million in remaining charges for the OrbView-3 satellite project, a $3.4 million litigation-related charge as well as $13.0 million of earnings related to the settlement of the NASA X-34 contract. Fourth quarter operations also included $12.0 million of charges for unprofitable contracts.

For the full year, Orbital reported 2001 revenues of $415.2 million, an increase of 9% over full year 2000 revenues. Orbital's 2001 loss from operations was $53.0 million compared to a loss from operations in 2000 of $165.5 million. The company's net income was $19.0 million ($0.49 per share) in 2001 as compared to a net loss of $278.2 million ($7.42 per share) for 2000.

Full year 2001 results included $114.6 million of income from discontinued operations, including net gains from the sale of three non-core businesses during the year. Full year net earnings also included $26.5 million of non- cash charges related to the company's allocated share of losses of its ORBIMAGE and ORBCOMM affiliates. Orbital believes that it has recognized all existing obligations to these affiliates and does not expect any further charges related to these investments.

The full year 2001 loss from operations includes non-recurring charges of $5.4 million for litigation-related matters and $4.9 million for excess facilities charges. In addition, full year results also include approximately $56.0 million of losses related to unprofitable contracts and $16.0 million of earnings in connection with the NASA X-34 contract.

"We are encouraged by the progress the company made in the fourth quarter toward our goal of restoring Orbital to profitability and positive cash flow," said Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer. "In 2001, Orbital effectively executed the major elements of our turnaround plan that is focused on the company's core space technology business. Specifically, we improved the cost and schedule performance of our satellite design and manufacturing division, completed the sale of three non-core business units and significantly reduced our total debt. Today, our financial foundation is much stronger than it was a year ago. As Orbital begins 2002, we are looking forward to returning the company to robust growth and improved profitability this year," he added.

Financial Highlights

Financial results for the fourth quarter and full year have been adjusted to exclude the contributions of non-core businesses divested in 2001, including Orbital's MDA and Magellan subsidiaries and its Sensor Systems Division. Summary results for the fourth quarter and full year 2001 as compared to the fourth quarter and full year 2000 are as follows ($ in millions, except per share data):

                                              Three Months Ended December 31,
                                                      2001            2000

    Consolidated Revenues                             $120.9          $66.9
    Gross Profit (Loss)                                (1.6)          (22.7)
    Operating Income (Loss)                           (23.0)          (63.3)
    Net Income (Loss)                                 (31.7)          (88.2)
    Net Income (Loss) Per Share                      $(0.80)         $(2.35)

                                                     Year Ended December 31,
                                                      2001            2000

    Consolidated Revenues                             $415.2         $379.5
    Gross Profit                                        27.8            0.0
    Operating Income (Loss)                            (53.0)        (165.5)
    Net Income (Loss)                                   19.0         (278.2)
    Net Income (Loss) Per Share                        $0.49         $(7.42)

Revenues

Orbital's fourth quarter revenues rose 81%, from $66.9 million in the fourth quarter of 2000 to $120.9 million in the fourth quarter of 2001. The company's 2001 revenues were bolstered by a large rise in launch vehicle product revenues, which was primarily attributable to new missile defense- related work, in addition to increased revenues from satellite and related space systems and electronic products. Orbital also recorded a favorable $13.0 million quarterly revenue adjustment as a result of a final contract settlement with NASA on the X-34 program.

For the full year 2001, Orbital's revenues were $415.2 million, a 9% increase over 2000 full year revenues of $379.5 million. Annual revenues in 2001 increased largely due to an increase in the company's launch vehicles and electronic systems products, partially offset by a decline in revenues from satellite and related space systems and advanced programs.

Operating Income (Loss)

The company's operating loss for the fourth quarter of 2001 was approximately $23.0 million, a significant improvement compared to an operating loss of $63.3 million in the comparable quarter in 2000. The fourth quarter 2001 operating loss included a number of specific significant items, with the largest being a $20.7 million charge related to costs incurred to date and the estimated costs to complete the OrbView-3 satellite project. Orbital recorded this charge in the fourth quarter as a result of the recent lack of progress with respect to the previously announced ORBIMAGE restructuring agreement, which expired in accordance with its terms in late 2001. In the near term, Orbital will continue to attempt to reach a new agreement to restructure ORBIMAGE. However, since there can be no assurance that an acceptable agreement will be reached, the company recorded this provision in the fourth quarter.

Also during the quarter, the company recorded losses of approximately $8.0 million in connection with an unprofitable satellite contract scheduled for completion in the second quarter of 2002, charges of $3.4 million in connection with the final settlement of litigation-related matters and charges of about $4.0 million related to other contracts. Fourth quarter operating results also reflect $13.0 million of operating income related to the final settlement of the NASA X-34 contract. Launch vehicles, advanced programs and electronic systems products recorded positive quarterly operating income, while satellite products generated an operating loss due primarily to the above-mentioned unprofitable contracts.

For the full year 2001, Orbital reported an operating loss of $53.0 million compared to a prior-year operating loss of $165.5 million. The 2001 operating loss included $52.0 million of losses from unprofitable satellite contracts (specifically the OrbView-3 and -4 imaging satellites and two GEO communications satellite programs), a provision of $5.4 million related to the settlement of various litigation-related matters, a $4.9 million charge for excess facilities and approximately $4.0 million of other contract-related charges. These charges were partially offset by a full-year $16.0 million benefit from the settlement of the NASA X-34 contract. For the year, launch vehicles, advanced programs and electronic systems generated positive operating profits, but satellite products recorded losses as a result of the above-mentioned items.

Net Income (Loss)

Orbital's net loss for the fourth quarter of 2001 was $31.7 million ($0.80 per share) as compared to a net loss of $88.2 million ($2.35 per share) in the same quarter of 2000. Included in the 2001 fourth quarter net loss was a $6.5 million charge to write-off the company's final (common stock) contribution to ORBCOMM's restructuring, which was made in December.

The company's full year 2001 net income of $19.0 million ($0.49 per share) represents a major improvement over its $278.2 million net loss ($7.42 per share) for 2000. This year's net earnings included $114.6 million of net income and gains from several non-core business divestitures. Full year net earnings also included non-cash charges of $26.5 million related to the company's allocated share of losses of affiliates. These charges include the above-mentioned $6.5 million charge related to ORBCOMM and $20.0 million of allocated losses of ORBIMAGE and other adjustments through the second quarter of 2001. As mentioned, the company does not anticipate any further charges in connection with these investments.

Cash Flow and Liquidity Status

The company generated $30.5 million of positive free cash flow (cash flow from continuing operations less capital expenditures) in the fourth quarter and negative $84.4 million cash flow for the full year 2001. In addition, Orbital repaid approximately $133.4 million of debt and received $235.9 million of net cash flow from non-core businesses divested in 2001.

The following table provides summary information on the company's cash flow and debt position for the fourth quarter and full year 2001 ($ in millions):

                                                 Fourth Quarter    Full-Year
                                                       2001           2001

    Net Operating Cash Flow                            $32.6         $(73.0)
    Capital Expenditures                                (2.1)         (11.4)
      Free Cash Flow                                    30.5         ( 84.4)
    Net Reduction of Debt and Other                     (0.8)        (133.4)
    Net Cash Flow From Discontinued Operations           0.9          235.9
      Net Cash Flow                                    $30.6          $18.1

    Beginning Cash Balance                              32.6           45.1
    Ending Cash Balance                                 63.2           63.2

    Beginning Total Debt                               109.6          242.8
    Ending Total Debt                                 $108.4         $108.4


At year-end 2001, Orbital had unrestricted cash of $63.2 million, up from $45.1 million at the end of 2000. In addition, as the company announced last week, Orbital established a new three-year bank facility with up to $60 million in borrowing capacity with Foothill Capital Corporation. This new credit facility is expected to provide the company with adequate liquidity to support its working capital needs for the foreseeable future. The company expects negative free cash flow in the first half of 2002 and for the full year, but anticipates positive free cash flow in the second half of 2002.

Summary balance sheet data as of December 31, 2001 is as below ($ in millions):

                 Summary Balance Sheet for December 31, 2001

    Assets

    Cash                             $63.2
    Other Current Assets             161.4
    Property and Equipment (Net)      88.8
    Goodwill (Net)                   109.1
    Other Assets                      10.2
      Total Assets                  $432.7


    Liabilities and Equity

    Short-Term Debt                 $103.7
    Other Current Liabilities        184.2
    Long-Term Debt                     4.7
    Other Non-Current Liabilities     45.8
    Stockholders' Equity              94.3
      Total Liabilities & Equity    $432.7


As Orbital has previously indicated, its $100 million subordinated convertible notes are due in October 2002, which the company is considering various alternatives to replace or refinance with new equity or debt proceeds prior to their maturity date. The company's continuation as a going concern is dependent upon its ability to restructure these notes, as well as to meet its 2002 cash flow plan and comply with the terms of its new credit facility. For these reasons, Orbital expects its independent auditors to modify their 2001 report to include a "going concern" uncertainty.

Cost Reduction Initiatives

As previously discussed, Orbital implemented a broadly-based cost reduction campaign in 2001 designed to aggressively cut operating and overhead costs, to improve profit margins and free cash flow, and to match the company's overall cost structure with its smaller scale of operations following the non-core asset divestitures in 2000 and 2001. As a result of these past actions, as well as a continuing emphasis on further operating efficiency improvements, the company expects to realize significant increases in employee productivity, profit margins and cash flow in 2002 and 2003.

New Business Highlights

During the fourth quarter, Orbital received approximately $285 million in new firm contracts and option awards for its space technology products, bringing total 2001 new orders to about $785 million (approximately $615 million firm and $170 million option). As a result, the company's firm backlog was about $585 million and its total backlog (including options, indefinite-quantity contracts and undefinitized orders) was about $2.55 billion at year-end.

Significant fourth quarter satellite-related awards included a $95 million option exercise in November for two geosynchronous communications satellites for PanAmSat, followed by an $80 million contract in December for the company's first planetary (deep space) spacecraft for the Jet Propulsion Laboratory. In its launch vehicle products, Orbital was awarded a preliminary contract in December by The Boeing Company to begin development and production work on an operational interceptor booster for America's missile defense program. The company expects that its current booster contract, funded at about $30 million for the initial December-to-March period, could generate approximately $325 million in revenues over the next three years and $900 million or more through 2008, if current U.S. missile defense plans are fully implemented.

Operational Highlights and Outlook

Orbital carried out four successful space missions since the beginning of 2002, including successful high-speed/high-altitude missile defense target intercept missions for the U.S. Missile Defense Agency and the U.S. Navy and a successful scientific satellite launch on a Pegasus rocket for NASA. The company currently plans to conduct a total of 16 to 18 space missions in 2002, involving three or four Orbital-built satellites, 12 or 13 of its rockets, and one or two other space systems that it supplies. In December 2001 and January 2002, Orbital completed its failure reviews and corrective action plans for the company's Hyper-X and Taurus launch vehicles, which failed in flights in June and September 2001, respectively. Both launcher programs are now moving forward to support follow-on missions in the next few years.

Financial Outlook for 2002

Looking ahead to 2002, Mr. Thompson indicated that Orbital currently expects to generate revenues in excess of $500 million and operating profit margins of 4 to 5% in the year ahead, based on a variety of assumptions about future events and conditions. The company also plans to continue its efforts to bolster liquidity and financial flexibility, with primary emphasis on replacing or refinancing its $100 million convertible debt obligations before their October 2002 maturity date. "With the outlook of increasing revenues, the benefit of a higher-margin backlog, a more efficient cost structure and a strengthened balance sheet, I believe Orbital is now well-positioned to build shareholder value in 2002. Our key challenges this year are to execute our major programs to plan and to address our debt structure for the longer term," he said.

Commenting further on the year ahead, Mr. Thompson added, "Market demand for our suborbital defense-related rockets and smaller GEO communications satellites is at an all-time high; we aim to add substantial orders at higher profit margins to our backlog during 2002 in these and other core product areas. With the completion of several difficult satellite contracts as well as cost reductions implemented in 2001, we are targeting improvements in profitability over the next several quarters, to go along with solid increases in revenue in our core space technology business."

"While we still face a number of significant challenges, I believe we can say that Orbital's 'back-to-basics' strategy, adopted two years ago, is working," he concluded.

Orbital is one of the world's leading developers and manufacturers of affordable space systems for commercial, civil government and military customers. The company's primary products are spacecraft and launch vehicles, includes low-orbit, geostationary and planetary spacecraft for communications, scientific and remote sensing missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense boosters that are used as target and interceptor 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.

    More information about Orbital can be found at http://www.orbital.com
Note: "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995.

Some of the statements in this release constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than those of historical facts included herein, including those related to the company's financial outlook, goals, business strategy, projected plans and objectives of management for future operations, new order trends and liquidity are forward-looking statements. Such "forward- looking statements" involve unknown risks and uncertainties that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements, expressed or implied by such forward-looking statements. Factors such as general economic and business conditions, availability of required capital for Orbital and its affiliates, continued government support and funding for key space and defense programs, the financial condition of major customers, product performance, market acceptance of products, services and technologies, consumer demand, and dependence upon long-term contracts and licensing agreements with commercial and government customers may impact the company's revenues, expenses and profit from period to period. These factors and other risks related to the company's business are and will be described in further detail in the company's Form 10-K/A for the year ended December 31, 2000 and its future SEC filings. Orbital assumes no obligation to update any such forward-looking information.

                         ORBITAL SCIENCES CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Unaudited, in thousands, except share data)

                                                     For the Quarter Ended
                                                          December 31,
                                                      2001           2000

    Revenues                                        $120,863        $66,881
    Costs of goods sold                              122,484         89,572
    Gross profit                                      (1,621)       (22,691)

    Research and development expenses                  1,441          2,613
    Selling, general and administrative expenses      15,065         21,737
    Amortization of goodwill                           1,502          1,390
    Asset impairment charge and other                     --         14,874
    Litigation-related settlement                      3,420             --
    Income (loss) from operations                    (23,049)       (63,305)

    Other income, net                                    862          2,717
    Interest expense, net                             (2,820)        (5,403)
    Allocated share of losses of affiliates           (6,500)       (24,893)
    Loss before provision for income taxes
     and discontinued operations                     (31,507)       (90,884)
    Provision for income taxes                            --             --
    Loss from continuing operations                  (31,507)       (90,884)

    Income (loss) from discontinued operations          (164)         2,670

    Net loss                                        $(31,671)      $(88,214)

    Net income (loss) per common and dilutive share:
     Loss from continuing operations                  $(0.80)        $(2.42)
     Income from discontinued operations                  --           0.07
     Net loss                                         $(0.80)        $(2.35)

    Shares used in computing per share amounts    39,435,000     37,519,000



                         ORBITAL SCIENCES CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Unaudited, in thousands, except share data)


                                                      For the Years Ended
                                                          December 31,
                                                      2001            2000

    Revenues                                        $415,249      $ 379,539
    Costs of goods sold                              387,433        379,504
    Gross profit                                      27,816             35

    Research and development expenses                  7,722         10,133
    Selling, general and administrative expenses      61,626         68,503
    Amortization of goodwill                           6,021          5,739
    Litigation-related settlements                     5,420         11,500
    Provision for doubtful ORBCOMM accounts               --         53,713
    Asset impairment charges                              --         15,911
    Loss from operations                            (52,973)      (165,464)

    Other income, net                                  5,525          5,108
    Interest expense, net                           (21,671)       (24,037)
    Allocated share of losses of affiliates         (26,495)      (119,183)
    Loss before provision for income taxes
     and discontinued operations                    (95,614)      (303,576)
    Provision for income taxes                            --        (9,886)
    Loss from continuing operations                 (95,614)      (313,462)

    Income from discontinued operations              114,565         35,272

    Net income (loss)                                $18,951     $(278,190)

    Net income (loss) per common and dilutive share:
     Loss from continuing operations                  $(2.49)        $(8.36)
     Income from discontinued operations                2.98           0.94
     Net income                                        $0.49         $(7.42)

    Shares used in computing per share amounts    38,424,000     37,468,000



                         ORBITAL SCIENCES CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                          (Unaudited, in thousands)

                                                          December 31,
                                                      2001           2000
    ASSETS
    Cash                                             $63,215        $45,076
    Other current assets                             161,383        132,839
       Total current assets                          224,598        177,915
    Non-current assets of discontinued
     operations, net                                      --        122,316
    Property, plant and equipment, net                88,795         94,088
    Goodwill                                         109,088        114,597
    Other non-current assets                          10,253          7,297
       TOTAL ASSETS                                 $432,734       $516,213

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Short-term borrowings                           $103,710       $134,431
    Accounts payable and accrued expenses            160,386        150,835
    Deferred revenues and other current liabilities   23,886         53,612
       Total current liabilities                     287,982        338,878
    Long-term debt                                     4,665        108,291
    Other non-current liabilities                      5,216          3,387
    Allocated losses of affiliate                     40,586         21,506

    Total stockholders' equity                        94,285         44,151
       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $432,734       $516,213



                         ORBITAL SCIENCES CORPORATION
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Unaudited, in thousands)

                                                     For the    For the Year
                                                  Quarter Ended     Ended
                                                    Dec. 31,      Dec. 31,
                                                      2001          2001

    Net operating cash flow                         $ 32,600      $(73,013)
    Capital expenditures                             (2,076)       (11,369)
    Net reduction of debt and other                    (815)      (133,402)
    Net cash flow from continuing operations          29,709      (217,784)

    Net proceeds from divestitures                        --        244,863
    Net cash provided by (used in) discontinued
     operations                                          942        (8,940)
    Net increase in cash                              30,651         18,139
    Cash, beginning of period                         32,564         45,076
    Cash, end of period                             $ 63,215        $63,215

CONTACT: Barron Beneski, Public and Investor Relations of Orbital Sciences Corporation, +1-703-406-5528, or beneski.barron@orbital.com .

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SOURCE Orbital Sciences Corporation

CONTACT:          Barron Beneski, Public and Investor Relations of Orbital
                  Sciences Corporation, +1-703-406-5528, or beneski.barron@orbital.com

URL:              http://www.orbital.com
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