DULLES, Va., Jul 22, 2002 /PRNewswire-FirstCall via COMTEX/ --

Second Quarter Highlights * Revenue Increases 25% to $135.4 Million * Income From Continuing Operations Rises to $5.4 Million (or $0.12 Diluted EPS) * Five Successful Space Missions Completed Six Month Highlights Six Month Highlights * Revenue Climbs 26% to $256.1 Million * Income From Continuing Operations Increases to $7.8 Million (or $0.17 Diluted EPS) * Nine Successful Space Missions Completed

Orbital Sciences Corporation (NYSE: ORB) today announced financial results for the second quarter of 2002 and the first six months of the year, reporting significant improvements in revenue, operating income and net income from continuing operations relative to the second quarter and the first half of 2001.

The company reported revenue of $135.4 million in the second quarter of 2002, up 25% over $108.5 million in revenue in the comparable period in 2001. Orbital's second quarter 2002 operating income was $7.2 million as compared to an operating loss of $8.5 million in the second quarter of 2001, a $15.7 million quarter-over-quarter improvement. The company's net income in the second quarter of 2002 was $5.4 million, or $0.12 earnings per diluted share, a significant improvement over the second quarter 2001 loss from continuing operations of $25.1 million, or $0.66 loss per diluted share.

"In the second quarter, we continued to realize the benefits of our 'back-to-basics' strategy which is focused on our core space technology businesses," said Mr. David W. Thompson, Orbital's Chairman and Chief Executive Officer. "Strong revenue and operating margin performance in our launch vehicles and electronic systems segments, and improved profitability in our satellite manufacturing business, were the primary drivers of our improved financial performance."

Mr. Thompson added, "In addition to focusing on strong program execution and maintaining an outstanding operational record, the company continued to achieve its financial objectives during the last three months. In particular, we devoted significant attention to our efforts to secure financing for the repayment of Orbital's $100 million convertible bonds that mature later this year."

For the first six months of 2002, the company reported revenue of $256.1 million, a 26% increase over the same period in 2001. Orbital generated first-half operating income of $12.4 million and net income of $7.8 million, or $0.17 income per diluted share. These results compare to $203.4 million in revenue, an operating loss of $13.0 million and a net loss from continuing operations of $47.8 million in the first six months of 2001, or $1.26 loss per diluted share.

    Financial Highlights
Summary financial results are as follows ($ in millions, except for per share data):

                                                        Quarter Ended June 30,
                                                              2002    2001

   Revenue                                                  $135.4  $108.5
    Gross Profit                                              23.1     6.6
    Operating Income (Loss)                                    7.2    (8.5)
    Income (Loss), Continuing Operations                       5.4   (25.1)
    Net Income                                                 5.4    66.6
    Income (Loss) Per Diluted Share, Continuing Operations    0.12   (0.66)
    Net Income Per Diluted Share                            $ 0.12  $ 1.75

                                                     Six Months Ended June 30,
                                                              2002    2001

    Revenue                                                 $256.1  $203.4
    Gross Profit                                              43.0    17.2
    Operating Income (Loss)                                   12.4   (13.0)
    Income (Loss), Continuing Operations                       7.8   (47.8)
    Net Income                                                 7.8    45.0
    Income (Loss) Per Diluted Share, Continuing Operations    0.17   (1.26)
    Net Income Per Diluted Share                            $ 0.17  $ 1.18
Revenue

Orbital's first quarter and six month revenue of $135.4 million and $256.1 million, respectively, increased approximately 25% over the same periods in 2001 primarily driven by growth in the company's launch vehicle business. The increase in launch vehicle revenue in 2002 is largely due to Orbital's work on its missile defense booster vehicle program under a multi-year contract from The Boeing Company.

    Revenue by business segment is as follows ($ in millions):

                                                      Quarter Ended June 30,
                                                        2002           2001

    Launch Vehicles and Advanced Programs              $63.8          $36.3
    Satellites and Related Space Systems                56.5           57.8
    Electronic Systems                                  16.0           15.1
    Eliminations and Other                              (0.9)          (0.7)
    Total Revenues                                    $135.4         $108.5

                                                     Six Months Ended June 30,
                                                        2002           2001

    Launch Vehicles and Advanced Programs             $108.4          $66.2
    Satellites and Related Space Systems               117.4          109.5
    Electronic Systems                                  32.0           30.0
    Eliminations and Other                              (1.7)          (2.3)
    Total Revenues                                    $256.1         $203.4

Operating Income

Orbital generated operating income in the second quarter and first six months of 2002 of $7.2 million and $12.4 million, respectively. For the second quarter and the first half of 2002, all three of the company's business segments -- launch vehicles and advanced programs, satellites and related space systems, and electronic systems for transportation management -- reported positive operating income.

    Operating income (loss) by segment is as follows ($ in millions):

                                                       Quarter Ended June 30,
                                                        2002           2001

    Launch Vehicles and Advanced Programs               $5.7           $7.5
    Satellites and Related Space Systems                 0.2          (13.1)
    Electronic Systems                                   1.6            0.3
    Corporate and Other                                 (0.3)          (3.2)
    Total Operating Income (Loss)                       $7.2          $(8.5)

                                                     Six Months Ended June 30,
                                                        2002           2001

    Launch Vehicles and Advanced Programs               $9.9           $7.0
    Satellites and Related Space Systems                 0.3          (14.9)
    Electronic Systems                                   2.9            0.5
    Corporate and Other                                 (0.7)          (5.6)
    Total Operating Income (Loss)                      $12.4         $(13.0)

Operating income for Orbital's launch vehicles and advanced programs segment decreased in the second quarter of 2002 as compared to the prior year primarily as a result of the benefit, in 2001, of a favorable $3.4 million contract earnings adjustment on the X-34 contract, which was terminated in March 2001. Excluding this item, operating income in the launch vehicles and advanced programs segment increased by $1.6 million as a result of increased revenue on missile defense-related programs, partially offset by the effect of lower revenue on higher-margin launch vehicle programs.

Operating income for Orbital's satellite and related space systems segment improved significantly in the second quarter of 2002 as compared to the prior year. This change is attributable to improved operating results on geosynchronous (GEO) satellite programs and the ORBIMAGE procurement contract, which generated significant losses in the second quarter of 2001. Results for the second quarter of 2002 include a charge of approximately $2.5 million for increased costs related to a GEO spacecraft delivered in June and launched in July 2002, and $1.0 million of profit related to the sale of inventory previously fully reserved in a prior year.

Other Income

Other income in the second quarter includes gains of $800,000 related to foreign currency translation and technology license fees. These items generated approximately $0.02 earnings per share in the quarter.

Net Income

Orbital's net income for the second quarter and first six months of 2002 was $5.4 million and $7.8 million, respectively. The improvement in second quarter 2002 net income over the net loss from continuing operations in the second quarter of 2001 was primarily attributable to increased operating income, the absence of equity losses in affiliates (which totaled $10.2 million in the second quarter of 2001) and a $4.0 million reduction in interest expense. For the first six months of 2002, the same primary factors -- improved operating income, the absence of equity losses in affiliates (which totaled $20.0 million during the six-month period in 2001) and $10.0 million lower interest expense -- accounted for the improvement.

In the second quarter and first six months of 2001, Orbital recorded net gains related to the sales of non-core businesses of $91.7 million and $92.8 million, respectively. The company's positive net income during these periods reflects these one-time gains.

    Cash Flow and Liquidity Status
The following table provides summary information on the company's cash flow and debt position for the second quarter and first six months of 2002 ($ in millions):

                                               Quarter Ended  Six Months Ended
                                               June 30, 2002    June 30, 2002

    Cash Used in Operating Activities              $(4.1)          $(22.6)
    Capital Expenditures                            (4.6)            (8.7)
    Free Cash Flow                                  (8.7)           (31.3)

    Net Proceeds from Issuance of Long-Term Debt      --             22.4
    Repayment of Debt and Other                     (0.5)            (2.8)
    Net Proceeds from Issuance of Common Stock       5.4              5.8
    Net Decrease in Cash                            (3.8)            (5.9)

    Beginning Cash Balance                          61.1             63.2
    Ending Cash Balance                             57.3             57.3

    Beginning Total Debt                           131.0            108.4
    Ending Total Debt                             $130.6           $130.6

As of June 30, 2002, Orbital's available cash balance was $57.3 million. The company had negative free cash flow (defined as cash flow from operations less capital expenditures) of $8.7 million and $31.3 million in the second quarter and first six months of 2002, respectively. In each of the first and second quarters of 2002, the company paid approximately $25 million of a $50 million vendor financing agreement that was outstanding as of the end of 2001, thereby liquidating this obligation.

Negative free cash flow for the first half of 2002 was significantly better than had been anticipated. However, Orbital expects negative cash flow during the third quarter to be in the range of $30 to $35 million. This shift is due primarily to the receipt of customer advanced payments in the second quarter previously anticipated to occur in the third quarter and the timing of certain subcontractor payments between the quarters.

During the second quarter, the company also received approximately $5.1 million in connection with the issuance of shares of Orbital common stock under the company's employee stock purchase plan.

                   Summary Balance Sheet for June 30, 2002
                               ($ in millions)

    Assets                                Liabilities and Equity

    Cash and Equivalents       $ 57.3     Short-Term Debt               $101.9
    Other Current Assets        158.2     Other Current Liabilities      135.8
    Property & Equipment (Net)   90.1     Long-Term Debt                  28.7
    Goodwill                    109.1     Other Non-Current Liabilities   45.1
    Other Assets                 11.9     Stockholders' Equity           115.1
    Total Assets               $426.6     Total Liabilities & Equity    $426.6
Accounting for Goodwill

During the second quarter of 2002, in accordance with Statement of Financial Accounting Standards No. 142 (Goodwill and Other Intangible Assets), Orbital determined that a probable impairment of goodwill exists within its electronic systems segment. The company currently estimates that an impairment charge of approximately $14 million will be included in the company's 2002 year-end results.

New Business Highlights

During the second quarter, Orbital received approximately $185 million in new contract awards (including $90 million firm and $95 million option contracts), bringing year-to-date new firm and option orders to over $1.1 billion. At the end of the second quarter of 2002, the company's firm backlog was about $800 million and its total backlog, which includes firm contracts as well as options, indefinite-quantity contracts and undefinitized orders, was approximately $2.6 billion. Several new satellite and rocket orders and contract additions received in July are not included in the above figures.

Operational Highlights and Outlook

In the last four months, Orbital carried out five space missions with a 100% success rate, including four missile defense-related suborbital rocket launches and the launch and initial deployment of the N-STAR c GEO communications satellite. Since the beginning of the year, the company's operational record totals nine successful space missions, consisting of seven rocket launches and two satellite and other space systems deployments. For the remainder of 2002, Orbital is aiming to carry out another seven or eight rocket and satellite missions, bringing the company's yearly total to 16 or 17 space missions.

Financial Outlook Update

Looking ahead to the second half of 2002, Orbital updated its financial guidance for the year provided in April 2002, when it reported first quarter financial results. On the basis of strong first-half new contract wins and improving operational performance, the company has increased its 2002 revenue target from $500-plus million to $525-plus million and boosted its expected operating income margin from the 4%-5% to the 5%-6% range. Orbital also revised upward its free cash flow guidance from its earlier negative $70 million target to a negative $60-65 million estimate for 2002.

About Orbital

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 include low-orbit, geosynchronous 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 and public works agencies, as well as 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 others related to the company's business are described in further detail in the company's SEC filings, including its Form 10-K. 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)

                                                        Quarter Ended
                                                           June 30,
                                                      2002           2001

    Revenue                                         $135,435       $108,489
    Cost of goods sold                               112,383        101,891
    Gross profit                                      23,052          6,598

    Research and development expenses                  2,242          2,554
    Selling, general and administrative expenses      13,568         11,094
    Amortization of goodwill                              --          1,441
    Income (loss) from operations                      7,242         (8,491)

    Other income, net                                    874            371
    Interest expense                                  (2,755)        (6,787)
    Allocated share of losses of affiliate                --        (10,230)
    Income (loss) before provision for income taxes    5,361        (25,137)

    Provision for income taxes                            --             --
    Income (loss) from continuing operations           5,361        (25,137)
    Income from discontinued operations                   --         91,708
    Net income                                        $5,361        $66,571

    Diluted earnings (loss) per share:
    Income (loss) from continuing operations           $0.12         $(0.66)
    Income from discontinued operations                   --           2.41
    Net income                                         $0.12          $1.75


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

                                                       Six Months Ended
                                                           June 30,
                                                      2002           2001

    Revenue                                        $ 256,147      $ 203,378
    Cost of goods sold                               213,150        186,133
    Gross profit                                      42,997         17,245

    Research and development expenses                  3,948          4,221
    Selling, general and administrative expenses      26,606         23,012
    Amortization of goodwill                              --          3,016
    Income (loss) from operations                     12,443        (13,004)

    Other income, net                                  1,090            980
    Interest expense                                  (5,780)       (15,810)
    Allocated share of losses of affiliate                --        (19,995)
    Income (loss) before provision for income taxes    7,753        (47,829)

    Provision for income taxes                            --             --
    Income (loss) from continuing operations           7,753        (47,829)
    Income from discontinued operations                   --         92,835
    Net income                                        $7,753        $45,006

    Diluted earnings (loss) per share:
    Income (loss) from continuing operations           $0.17         $(1.26)
    Income from discontinued operations                   --           2.44
    Net income                                         $0.17          $1.18


                         ORBITAL SCIENCES CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEET
                                (In thousands)

                                                     June 30,     December 31,
                                                      2002           2001
    ASSETS
    Cash                                             $57,280        $63,215
    Other current assets                             158,263        161,383
    Total current assets                             215,543        224,598

    Property, plant and equipment, net                90,052         88,795
    Goodwill                                         109,088        109,088
    Other non-current assets                          11,914         10,253
    Total Assets                                   $ 426,597      $ 432,734

    LIABILITIES AND STOCKHOLDERS' EQUITY
    Short-term borrowings                          $ 101,861      $ 103,710
    Accounts payable and accrued expenses            103,339        160,386
    Deferred revenues and other current liabilities   32,487         23,886
    Total current liabilities                        237,687        287,982

    Long-term debt                                    28,694          4,665
    Other non-current liabilities                      4,547          5,216
    Allocated losses of affiliate                     40,586         40,586
    Total stockholders' equity                       115,083         94,285
    Total Liabilities and Stockholders' Equity     $ 426,597      $ 432,734


                         ORBITAL SCIENCES CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
                                (In thousands)

                                               Quarter Ended  Six Months Ended
                                               June 30, 2002   June 30, 2002

    Net income                                     $5,361         $7,753
    Depreciation and amortization                   3,744          7,485
    Change in assets and liabilities              (13,226)       (37,803)
    Net cash used in operating activities          (4,121)       (22,565)

    Capital expenditures                           (4,590)        (8,732)

    Net proceeds from issuance of long-term debt       --         22,364
    Repayment of debt and other                      (465)        (2,822)
    Net proceeds from issuance of common stock      5,412          5,820
    Net cash provided by financing activities       4,947         25,362

    Net decrease in cash                           (3,764)        (5,935)

    Cash, beginning of period                      61,044         63,215
    Cash, end of period                           $57,280        $57,280


     For More Information Contact:  Barron Beneski (703) 406-5528
                                    Public and Investor Relations
                                    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, Beneski.barron@orbital.com 

URL:              http://www.orbital.com 
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