Orbital Reports Fourth Quarter and Full Year 2007Financial Results.

-- Revenues, Profit, Free Cash Flow and Backlog Set New Company Records --

-- Fourth Quarter Revenues Increase 36%, Net Income Jumps 26%, EPS Climbs to $0.26 --

DULLES, Va. -- Orbital Sciences Corporation (NYSE:ORB) today announced its financial results for the fourth quarter

and full year 2007. Orbital reported fourth quarter 2007 revenues of $293.1 million, a 36% increase compared to revenues of $215.8 million in the fourth quarter of 2006. The company's fourth quarter 2007 operating income was $24.1 million, an 18% increase compared to $20.4 million of operating income in the fourth quarter of 2006. Fourth quarter 2007 net income increased 26% to $15.8 million, or $0.26 diluted earnings per share, compared to adjusted net income* of $12.5 million, or $0.20 adjusted diluted earnings per share* in the fourth quarter of 2006. Orbital reported fourth quarter 2007 free cash flow* of $38.3 million compared to free cash flow of $2.9 million in the fourth quarter of 2006.

For the full year, Orbital reported revenues of $1,084 million in 2007, up 35% compared to $803 million in 2006. Operating income was $86.4 million in 2007, up 27% compared to $68.2 million in 2006. Net income increased 43% to $56.7 million in 2007, or $0.93 diluted earnings per share, compared to adjusted net income of $39.8 million, or $0.64 adjusted diluted earnings per share, in 2006. Orbital reported $81.9 million of free cash flow for full year 2007, compared to $78.5 million in 2006.

Commenting on Orbital's financial results, Mr. David W. Thompson, Chairman and Chief Executive Officer, said, "With exceptionally strong fourth quarter results, including record revenues, profits and free cash flow, Orbital completed another outstanding year in 2007. The company's advanced space programs business led the way, generating strong revenue and operating profit growth as compared to last year. Our launch vehicles, satellites and space systems and transportation management systems segments also posted impressive revenue growth."

(*)"Adjusted net income," "adjusted diluted earnings per share" and "free cash flow" are non-GAAP financial measures discussed in this release. For additional details, please refer to the sections of this press release entitled "Cash Flow and Balance Sheet" and "Disclosure of Non-GAAP Financial Measures."

Financial Highlights

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

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

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Revenues

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

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Orbital's fourth quarter 2007 revenues were $293.1 million, up 36% compared to fourth quarter 2006 revenues of $215.8 million, due to revenue growth in all business segments. Advanced space programs segment revenues increased $35.5 million, or 191%, driven by contract activity on the Orion human spacecraft program for NASA which began in late 2006. Launch vehicles segment revenues increased $24.3 million, or 30%, principally due to higher target and interceptor vehicle revenues driven by increased contract activity on missile defense programs. Satellites and space systems segment revenues increased $14.3 million, or 13%, due to activity on recently awarded communications satellites contracts, partially offset by lower activity levels on certain science and technology satellite contracts that are in the latter stages of production. Transportation management systems segment revenues increased $3.0 million, or 28%, due to an increase in product sales supporting existing public transit fleet management systems in addition to activity on recently awarded contracts.

Revenues by segment for the full year were as follows (in millions):

                                   >                Full        >  >         >




                                   >                2007        >  >   2006  >




Launch Vehicles                    >                   $  395-  >  >         >

$
310.6

Satellites and Space Systems       >                      466-  >  >         >


407.9

Advanced Space Programs            >                      175-  >  >         >


51.0

Transportation Management Systems  >                      50.2  >  >         >


37.7

Eliminations                       >                      (3.2  >  >      )  >


(4.3
)
Total Revenues                     >                   $  1,0-  >  >         >

$
802.9

Orbital's full year 2007 revenues were $1,084 million, up 35% compared to full year 2006 due to revenue growth in all business segments. Advanced space programs segment revenues increased $124.1 million, or 243%, driven by contract activity on the Orion program which began in late 2006. Launch vehicles segment revenues increased $84.8 million, or 27%, due to increased activity levels on target and interceptor vehicle programs. Satellites and space systems segment revenues increased $58.9 million, or 14%, due to activity on recently awarded communications satellites contracts, partially offset by lower activity levels on science and technology satellite contracts. Transportation management systems segment revenues increased $12.4 million, or 33%, due to an increase in product sales supporting existing public transit fleet management systems in addition to activity on recently awarded contracts.

Operating Income

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

                                   >                  Fou-        >




                                   >                  2007        >  2006




Launch Vehicles                    >                     $  10.6  >
$
8.5


Satellites and Space Systems       >                         8.4  >

9.4


Advanced Space Programs            >                         3.5  >

1.5


Transportation Management Systems  >                         1.6  >

1.0


Total Operating Income             >                     $  24.1  >
$
20.4

Orbital reported operating income of $24.1 million in the fourth quarter of 2007, up 18% over the fourth quarter of 2006 due to profit increases in all segments except for satellites and space systems. Launch vehicles segment operating income increased $2.1 million, or 24%, primarily due to increased activity levels on target and interceptor vehicle programs. Advanced space programs segment operating income increased $2.0 million, or 137%, due to increased contract activity on the Orion program. Transportation management systems segment operating income increased $0.6 million, or 61%, due to the increase in product sales and new contract activity mentioned above. Despite the increase in satellites and space systems segment revenues, operating income in this segment declined $1.1 million, or 11%, largely due to a favorable profit adjustment on a satellite contract in the fourth quarter of 2006.

Operating income by segment for the full year was as follows (in millions):

                                   >             Full        >        >




                                   >             2007        >  2006  >




Launch Vehicles                    >                $  39.5  >        >
$
34.0


Satellites and Space Systems       >                   30.6  >        >

27.6


Advanced Space Programs            >                   12.4  >        >

4.3


Transportation Management Systems  >                    3.9  >        >

2.5


Corporate and Other                >                      -  >        >

(0.2
)

Total Operating Income             >                $  86.4  >        >
$
68.2

Orbital reported operating income of $86.4 million for the year ended December 31, 2007, up 27% over full year 2006 due to profit increases in all segments. Launch vehicles segment operating income increased $5.4 million, or 16%, primarily due to increased activity levels on target and interceptor vehicle programs. Satellite and space systems segment operating income increased $3.0 million, or 11%, attributable to the significant increase in communications satellites contract activity partially offset by the decline in science and technology contract activity in 2007. Advanced space programs segment operating income increased $8.1 million, or 191%, due to increased contract activity on the Orion program. Transportation management systems segment operating income increased $1.4 million, or 54%, due to the increase in product sales and new contract activity mentioned above.

Net Income

Net income for the fourth quarter of 2007 was $15.8 million, or $0.26 diluted earnings per share, up from $12.5 million adjusted net income, or $0.20 adjusted diluted earnings per share, for the fourth quarter of 2006. Net income was $56.7 million, or $0.93 diluted earnings per share, for full year 2007 compared to $39.8 million adjusted net income, or $0.64 adjusted diluted earnings per share, for full year 2006. For comparison purposes, the 2006 financial results have been adjusted to exclude two fourth quarter 2006 transactions, a $10.4 million pretax debt extinguishment charge ($6.3 million after tax) and an investment liquidation gain of $1.6 million (pretax and after tax). Net income for the fourth quarter of 2006 including these transactions was $7.8 million, or $0.12 diluted earnings per share, and net income for full year 2006 was $35.1 million, or $0.56 diluted earnings per share.

Interest expense for the fourth quarter and full year 2007 decreased to $1.1 million and $4.7 million, respectively, compared to $3.0 million and $12.3 million, respectively, in the same periods in 2006. The decline in interest expense is due to a reduction in the interest rate on the company's long-term debt as a result of a refinancing transaction in December 2006.

Diluted weighted-average shares outstanding decreased to 60.6 million in the fourth quarter of 2007 compared to 62.7 million in the fourth quarter of 2006 due to share repurchases made by the company. Diluted weighted-average shares outstanding for the full year 2007 decreased to 60.9 million compared to 62.6 million for the full year 2006, also driven by share repurchases.

Cash Flow and Balance Sheet

Orbital reported free cash flow of $38.3 million for the fourth quarter of 2007 and $81.9 million for full year 2007. The company repurchased approximately 400,000 shares of its common stock for $8.4 million in the fourth quarter of 2007 and 1.6 million shares for $33.4 million throughout all of 2007. Orbital's unrestricted cash balance was $235.8 million as of December 31, 2007.

The company's cash flow was as follows (in millions):

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Summary balance sheet data as of December 31, 2007 was as follows (in millions):

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New Business Highlights

During the fourth quarter of 2007, Orbital received approximately $225 million in new firm and option contract bookings. In addition, the company received approximately $25 million of option exercises under existing contracts. For the full year, Orbital received approximately $1.71 billion in new firm and option contract bookings, and approximately $265 million of option exercises under existing contracts. As of December 31, 2007, the company's firm contract backlog was approximately $2.06 billion and its total backlog (including options, indefinite-quantity contracts and undefinitized orders) was approximately $3.90 billion.

Operational Highlights

In the fourth quarter of 2007, Orbital carried out six successful space missions, including three target vehicle launches and three satellite deployments. In December, the company launched two short-range, low-altitude Coyote targets for the U.S. Navy, as well as a medium-range ballistic target for a joint U.S.-Japanese missile defense test. Orbital also deployed and activated three commercial communications satellites in the fourth quarter, including the Intelsat IS-11 and Optus D2 satellites that were launched in October and the Horizons-2 satellite that was launched in December. Also in the fourth quarter, Orbital made several product deliveries for future missions, including the Thor 5 commercial communications satellite that was successfully launched on February 11, 2008, two Orbital Boost Vehicle (OBV) missile interceptors for operational deployments and three space payloads.

During 2007, Orbital conducted 19 major space missions, including the launch of 10 short-, medium- and long-range target vehicles, two space launch vehicles and one OBV interceptor rocket. Orbital also delivered and deployed five communications and science satellites for commercial and U.S. government customers. In addition, the company delivered 18 other space systems for future deployment, including nine OBV interceptors, one commercial communications satellite and five space payloads.

Orbital's 2008 operational schedule is expected to continue at a high level of activity. The company plans to carry out approximately 25 launch vehicle and spacecraft missions and to complete and deliver an additional 15 or more launch vehicles and satellites for future operations. Included in the operational totals are six or seven interceptor vehicle and space launch missions, as many as 12 target vehicle launches and up to six spacecraft deployments for commercial satellite operators and U.S. government customers.

2008 Financial Guidance

The company has revised its financial guidance for 2008, as summarized in the table below:

Full Year 2008                >                   >          Current

Previous




Revenues (in millions)        >                   >  $1,100 - $1,125

$1,075 - $1,100




Operating Income Margin       >                   >    8.25% - 8.50%

8.25% - 8.50%




Diluted Earnings Per Share    >                   >    $0.95 - $1.00

$0.93 - $0.98




Free Cash Flow (in millions)  >                   >        $75 - $80

$75 - $80

Orbital is engaged in a major new product development program to create a medium-capacity rocket called Taurus II. Orbital believes that this new rocket could substantially expand the company's space launch vehicle market, yielding significant potential revenue growth in 2009 and beyond. However, the Taurus II program entails a major development effort, the financial impact of which is not reflected in the 2008 guidance above. If the Taurus II program proceeds, the company anticipates that this effort would consume $40 million to $45 million of cash and would reduce full year 2008 diluted earnings per share by $0.12 to $0.16.

Disclosure of Non-GAAP Financial Measures

Free cash flow is defined as GAAP (Generally Accepted Accounting Principles) net cash provided by operating activities (the most directly comparable GAAP financial measure) less capital expenditures for property, plant and equipment. A quantitative reconciliation of free cash flow to net cash provided by operating activities is included above in the section entitled "Cash Flow and Balance Sheet." Management believes that the company's presentation of free cash flow is useful because it provides investors with an important perspective on the company's liquidity, financial flexibility and ability to fund operations and service debt. Orbital does not intend for this non-GAAP financial measure to be considered in isolation or as a substitute for the related GAAP measure. Other companies may define this measure differently.

Adjusted net income for 2006 is defined as GAAP net income (the most directly comparable GAAP financial measure) adjusted to exclude debt extinguishment expense and the gain from the dissolution of an investment. Adjusted diluted earnings per share is equal to adjusted net income divided by diluted shares. These measures are provided so investors can more easily compare 2007 results to 2006 results. The reconciliation of the reported net income to adjusted net income is as follows (in millions, except per share data):

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About Orbital

Orbital develops and manufactures small rockets and space systems for commercial, military and civil government customers. The company's primary products are satellites and launch vehicles, including low Earth-orbit, geosynchronous Earth-orbit and planetary spacecraft for communications, remote sensing, scientific and defense missions; human-rated space systems for Earth-orbit, lunar and other 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 software-based transportation management systems for public transit agencies and private vehicle fleet operators.

"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, new product development programs, product performance and market acceptance of products and technologies, the outcome of the qui tam litigation and related government investigation, as well as other risk factors and business considerations described in the company's SEC filings, including its 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.

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

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