Offer To Exchange Outstanding Options

EXHIBIT (a)(1)


ORBITAL SCIENCES CORPORATION


OFFER TO EXCHANGE OUTSTANDING OPTIONS
HAVING AN EXERCISE PRICE GREATER THAN $12.25 FOR NEW OPTIONS UNDER THE
ORBITAL SCIENCES CORPORATION 1997 STOCK OPTION AND INCENTIVE PLAN


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THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 5:OO P.M., NEW YORK CITY TIME, ON NOVEMBER 6, 2002,
UNLESS THE OFFER IS EXTENDED. --------------------------------------------------------------------------------


Orbital Sciences Corporation, a Delaware corporation, is offering to exchange outstanding options to purchase shares of our common stock, $.01 par value per share, that were granted under the Orbital Sciences Corporation 1997 Stock Option and Incentive Plan (the "1997 option plan") or the Orbital Sciences Corporation 1990 Stock Option Plan (the "1990 option plan," and, together with the 1997 option plan, the "plans") that have an exercise price greater than $12.25 per share and are held by regular full and part-time employees for new options that we will grant under the 1997 option plan. We are making this offer upon the terms and subject to the conditions set forth in this offer to exchange and in the related letter of transmittal (which together, as they may be amended from time to time, constitute the "offer"). Our executive officers and directors are not eligible to participate in the offer.


The number of shares of common stock subject to new options to be granted to each option holder will be equal to a percentage of the number of shares of common stock subject to the options tendered and accepted for exchange, subject to adjustments for any stock splits, stock dividends and similar events. The percentage is determined by the exercise price per share of the options tendered and accepted for exchange as follows:


Exercise Price per Share of Options % of Options Tendered and Accepted for Exchange
----------------------------------- -----------------------------------------------
Tendered and Accepted for Exchange to be Granted as New Options
---------------------------------- ----------------------------
Greater than $12.25 but less than or equal to $21.00 66 2/3%


Greater than $21.00 50%


However, we will not grant any options exercisable for fractional shares. Instead, we will round down to the nearest whole number.


We will grant the new options on or about the first business day that is at least six months and one day following the date we cancel the options tendered by you and accepted for exchange. You may only tender all or none of the outstanding options subject to an individual grant. If you choose to participate in the offer, you must also tender all options that were granted to you during the six months immediately prior to the expiration date of the offer, currently expected to be November 6, 2002, if the grants made during such period have an exercise price lower than the exercise price of the options that you wish to replace.


If you tender options for exchange as described in the offer, we will grant you new options under the 1997 option plan and pursuant to a new option agreement between you and us. The exercise price of the new options will be equal to the last reported sale price of our common stock on The New York Stock Exchange ("NYSE") on the date of grant. The new options will vest in three equal installments, with the first installment vesting on the grant date, the second installment vesting on the fifteenth (15th) month anniversary of the grant date and the third installment vesting on the thirty sixth (36th) month anniversary of the grant date, assuming you continue to meet the requirements for vesting specified in the 1997 option plan and the new option agreement. As a result, you may receive options with a new vesting schedule in exchange for options that have already vested.


This offer is not conditioned upon a minimum number of options being tendered. However, the offer is subject to conditions that we describe in section 6 of this offer to exchange.


ALTHOUGH OUR BOARD OF DIRECTORS HAS APPROVED THIS OFFER, NEITHER WE NOR OUR BOARD OF DIRECTORS MAKES ANY RECOMMENDATION AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS FOR EXCHANGE. YOU MUST MAKE YOUR OWN DECISION WHETHER TO TENDER YOUR OPTIONS.


Shares of our common stock are quoted on the NYSE under the symbol "ORB." On October 3, 2002, the last reported sale price of the common stock on the NYSE was $3.25 per share. WE RECOMMEND THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING WHETHER TO TENDER YOUR OPTIONS.


You should direct questions about this offer or requests for assistance or for additional copies of the offer to exchange or the letter of transmittal to the Office of the General Counsel of Orbital Sciences Corporation, 21839 Atlantic Boulevard, Dulles, Virginia 20166 (telephone: (703) 406-5000).


PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS YOU SHOULD CONSIDER IN CONNECTION WITH THE OFFER.


October 8, 2002


IMPORTANT


If you wish to tender your options for exchange, you must complete and sign the enclosed letter of transmittal in accordance with its instructions, and mail or otherwise deliver it and any other required documents to us at Orbital Sciences Corporation, 21839 Atlantic Boulevard, Dulles, Virginia 20166, Attn: Office of the General Counsel.


We recommend that if you choose to mail your letter of transmittal, you send it by certified mail or registered mail. Interoffice mail is not recommended since it cannot be tracked. Please keep a copy of all documents. Orbital will not be responsible for any lost mail, whether interoffice or otherwise.


We are not making this offer to, nor will we accept any tender of options from or on behalf of, option holders in any jurisdiction in which the offer or the acceptance of any tender of options would not be in compliance with the laws of such jurisdiction. However, we may, at our discretion, take any actions necessary for us to make this offer to option holders in any such jurisdiction.


WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON OUR BEHALF AS TO WHETHER YOU SHOULD TENDER OR REFRAIN FROM TENDERING YOUR OPTIONS PURSUANT TO THE OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR TO WHICH WE HAVE REFERRED YOU. WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFER OTHER THAN THE INFORMATION AND REPRESENTATIONS CONTAINED IN THIS DOCUMENT OR IN THE RELATED LETTER OF TRANSMITTAL. IF ANYONE MAKES ANY RECOMMENDATION OR REPRESENTATION TO YOU OR GIVES YOU ANY INFORMATION, YOU MUST NOT RELY UPON THAT RECOMMENDATION, REPRESENTATION OR INFORMATION AS HAVING BEEN AUTHORIZED BY US.


TABLE OF CONTENTS
Page SUMMARY TERM SHEET....................................................................................1


RISKS OF PARTICIPATING IN THE OFFER...................................................................7


THE OFFER.............................................................................................9
1. NUMBER OF OPTIONS; EXPIRATION DATE.....................................................9
2. PURPOSE OF THE OFFER...................................................................10
3. PROCEDURES FOR TENDERING OPTIONS.......................................................11
4. WITHDRAWAL RIGHTS......................................................................12
5. ACCEPTANCE OF OPTIONS FOR EXCHANGE AND ISSUANCE OF NEW OPTIONS.........................13
6. CONDITIONS OF THE OFFER................................................................13
7. PRICE RANGE OF COMMON STOCK UNDERLYING THE OPTIONS.....................................16
8. SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF NEW OPTIONS...............................16
9. INFORMATION CONCERNING ORBITAL SCIENCES CORPORATION....................................19
10. INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE OPTIONS.................................................................22
11. STATUS OF OPTIONS ACQUIRED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES
OF THE OFFER...........................................................................22
12. LEGAL MATTERS; REGULATORY APPROVALS....................................................23
13. MATERIAL FEDERAL INCOME TAX CONSEQUENCES...............................................23
14. EXTENSION OF OFFER; TERMINATION; AMENDMENT.............................................24
15. FEES AND EXPENSES......................................................................25
16. ADDITIONAL INFORMATION.................................................................25
17. MISCELLANEOUS..........................................................................26


SCHEDULE A-1..........................................................................................A-1 SCHEDULE A-2..........................................................................................A-2 SCHEDULE B............................................................................................B-1


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SUMMARY TERM SHEET


The following are answers to some of the questions that you may have about this offer. We urge you to read carefully the remainder of this offer to exchange and the accompanying letter of transmittal because the information in this summary is not complete, and additional important information is contained in the remainder of this offer to exchange and the letter of transmittal. We have included page references to the remainder of this offer to exchange where you can find a more complete description of the topics in this summary.


- WHAT SECURITIES ARE WE OFFERING TO EXCHANGE?


We are offering to exchange all stock options having an exercise price greater than $12.25 per share that are outstanding under the plans and held by regular full and part-time employees for new options to be granted under the 1997 option plan. The options must be properly tendered in order to be eligible for exchange. (Page 9)


Your outstanding grants of options under the plans are set forth on Schedule B to this offer to exchange.


- WHY ARE WE MAKING THE OFFER?


Many of our outstanding options, whether or not they are currently exercisable, have exercise prices that are significantly higher than the current market price of our common stock. We believe these options are unlikely to be exercised in the foreseeable future. By making this offer to exchange outstanding options for new options that will have an exercise price equal to the market value of our common stock on the grant date, we intend to provide our employees with the benefit of owning options that over time may have a greater potential to increase in value and thus create better performance incentives for our employees. (Page 10)


- WHAT ARE THE CONDITIONS TO THE OFFER?


The offer is not conditioned upon a minimum number of options being tendered. However, the offer is subject to a number of conditions, including the conditions described in section 6. We urge you to read these conditions carefully. (Page 13)


- ARE THERE ANY ELIGIBILITY REQUIREMENTS I MUST SATISFY AFTER I TENDER OPTIONS
IN ORDER TO RECEIVE THE NEW OPTIONS?


To receive a grant of new options pursuant to the offer and under the terms of the 1997 option plan, you must be a regular full or part-time employee of Orbital or a participating subsidiary from the date you tender options through and including the date we grant the new options. As discussed below, we will not grant the new options until on or about the first business day which is at least six months and one day following the date we cancel the options accepted for exchange. IF YOU ARE NOT AN EMPLOYEE OF ORBITAL OR A PARTICIPATING SUBSIDIARY FROM THE DATE YOU TENDER OPTIONS THROUGH AND INCLUDING THE DATE WE GRANT THE NEW OPTIONS, YOU WILL NOT RECEIVE ANY NEW OPTIONS OR ANY OTHER CONSIDERATION IN EXCHANGE FOR YOUR TENDERED OPTIONS THAT HAVE BEEN ACCEPTED FOR EXCHANGE. This means that if you die or resign or we terminate your employment prior to the date we grant the new options, you will not receive anything for the options that you tendered and we canceled. (Pages 9 and 13)


- HOW MANY NEW OPTIONS WILL I RECEIVE IN EXCHANGE FOR MY TENDERED OPTIONS?


If your options are properly tendered and accepted for exchange, you will be entitled to receive new options to purchase the number of shares of our common stock equal to a percentage of the number of shares of common stock subject to the options tendered by you and accepted for exchange, subject to adjustments for any stock splits, stock dividends and similar events. The percentage is determined by the exercise price per share of the options tendered and accepted for exchange as follows:


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Exercise Price per Share of Options % of Options Tendered and Accepted for Exchange
----------------------------------- -----------------------------------------------
Tendered and Accepted for Exchange to be Granted as New Options
---------------------------------- ----------------------------
Greater than $12.25 but less than or equal to $21.00 66 2/3%


Greater than $21.00 50%


For example, if you tender an option grant exercisable for 3,000 shares of common stock at an exercise price of $13.00 per share that we accept for exchange, you will receive a new option grant exercisable for 2,000 shares of common stock. If you tender an option grant exercisable for 3,000 shares of common stock at an exercise price of $22.00 per share that we accept for exchange, you will receive a new option grant exercisable for 1,500 shares of common stock.


We will not, however, issue any new options exercisable for fractional shares. Instead, we will round down to the nearest whole number. For example, if you tender an option exercisable for 1,000 shares at an exercise price of $13.00 that we accept for exchange, you will receive new options exercisable for 666 shares, rather than 666? shares. Also, if you tender an option exercisable for 1,225 shares at an exercise price of $22.00 that we accept for exchange, you will receive new options exercisable for 612 shares, rather than 612 1/2 shares.


Regardless of whether your options were issued under the 1990 option plan or the 1997 option plan, all new options will be granted under our 1997 option plan and will be subject to the terms and conditions of the 1997 option plan and a new option agreement between you and us. All options tendered and accepted for exchange by us pursuant to the offer will be canceled. (Pages 9, 13 and 16)


- WHEN WILL I RECEIVE MY NEW OPTIONS?


We will grant the new options on or about the first business day that is at least six months and one day after the date we cancel the options accepted for exchange. For example, if we cancel tendered options on November 6, 2002, which is the scheduled expiration date of the offer, the grant date of the new options will be on or about May 7, 2003. (Page 13)


- WHY WON'T I RECEIVE MY NEW OPTIONS IMMEDIATELY AFTER THE EXPIRATION DATE OF
THE OFFER?


We are adhering to the current accounting regulations to gain preferable accounting treatment. These regulations require that we wait more than six months after canceling stock options before any new stock options may be granted to employees accepting the exchange offer. If we were to grant options immediately after the expiration date of the offer, we would not gain the preferable accounting treatment and would be required for financial reporting purposes to recognize compensation expense against our earnings, which may negatively impact our stock price value. By granting new options at least six months and one day after the date of cancellation, we believe that we will not have to record such compensation expense. (Page 13)


- WHY DON'T WE SIMPLY REPRICE THE CURRENT OPTIONS?


Based on the same accounting guidance mentioned above, "repricing" existing options, or resetting the strike price of these outstanding options to the current market price of our stock, would result in charges against our earnings for financial reporting purposes. (Page 13)


- IF I TENDER OPTIONS IN THE OFFER, WILL I BE ELIGIBLE TO RECEIVE OTHER OPTION
GRANTS BEFORE I RECEIVE MY NEW OPTIONS?


No. We intend to defer the grant to you of other options until after the date of grant of your new options in order to avoid the adverse accounting charges against our earnings discussed above. (Pages 7 and 13)


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- WHAT HAPPENS IF ORBITAL ENTERS INTO AN AGREEMENT FOR A MERGER OR FOR ANOTHER
TYPE OF TRANSACTION THAT RESULTS IN A CHANGE OF CONTROL OF ORBITAL DURING
THE PERIOD AFTER MY OPTIONS ARE CANCELED BUT BEFORE I AM GRANTED NEW
OPTIONS?


Although we currently have no plans to enter into any such transaction, it is possible that before we grant the new options we might enter into an agreement for a merger, consolidation or reorganization of Orbital with one or more entities in which Orbital is not the surviving entity or for another type of transaction that results in a change of control of Orbital.


We reserve the right, in the event of any transaction described in the preceding paragraph, to take any actions we deem necessary or appropriate to complete a transaction that our board of directors believes is in the best interest of our company and our stockholders. This could include terminating your right to receive new options in this offer. If we were to terminate your right to receive new options in this offer in connection with such a transaction, employees who tendered options pursuant to this offer would not receive new options to purchase our common stock or securities of the acquiror or any other consideration for their tendered options.


If we were to enter into such a transaction, we would seek an agreement for the acquiror to grant Orbital employees entitled to new options in this offer options to acquire securities of the acquiror or to pay those Orbital employees other consideration comparable to the estimated value of the new options. We cannot assure you that we would be successful in negotiating such an agreement. (Pages 7 and 9)


- ARE THERE ANY ADDITIONAL CIRCUMSTANCES UNDER WHICH I WOULD NOT BE GRANTED
NEW OPTIONS?


Yes. If we are prohibited from granting new options to you by applicable law or regulation, we will not grant new options to you. Such prohibitions could result from changes in the rules, regulations or policies of the Securities and Exchange Commission (the "SEC") or the listing requirements of the NYSE, including the NYSE's current proposal to require shareholder approval of certain actions related to stock option plans. If such a situation occurs, we will use reasonable efforts to grant the new options, including seeking shareholder approval if necessary, but if the grant is prohibited by applicable law or regulation as of the date of the new option grant, which is expected to be May 7, 2003, and continuing thereafter, we will not grant you any new options and you will not receive any other consideration for the options that you tendered. (Pages 8 and 23)


- WHAT WILL THE EXERCISE PRICE OF THE NEW OPTIONS BE?


The exercise price of the new options will be equal to the last reported sale price of our common stock on the NYSE on the date we grant the new options. Accordingly, we cannot predict the exercise price of the new options. The exercise price of any option you tender is more than $12.25 per share. This price is higher than the current market price of our common stock, which was $3.25 per share on October 3, 2002. HOWEVER, BECAUSE WE WILL NOT GRANT NEW OPTIONS UNTIL AT LEAST SIX MONTHS AND ONE DAY AFTER THE DATE WE CANCEL THE OPTIONS ACCEPTED FOR EXCHANGE, THE NEW OPTIONS MAY HAVE A HIGHER EXERCISE PRICE THAN SOME OR ALL OF YOUR CURRENT OPTIONS. WE RECOMMEND THAT YOU OBTAIN CURRENT MARKET QUOTATIONS FOR OUR COMMON STOCK BEFORE DECIDING WHETHER TO TENDER YOUR OPTIONS. (Page 17)


- WHEN WILL THE NEW OPTIONS VEST?


The new options will vest in three equal installments, with the first installment vesting on the grant date, the second installment vesting on the fifteenth (15th) month anniversary of the grant date and the third installment vesting on the thirty sixth (36th) month anniversary of the grant date, assuming you continue to meet the requirements for vesting specified in the 1997 option plan and the new option agreement. Therefore, even if the options you tender are vested, you will not receive the new options until the grant date, and the new options you receive will not be fully vested and will be subject to a new vesting period. For example, if we grant a new option for 3,000 shares of common stock to you on May 7, 2003:


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- your right to purchase 1,000 shares will vest on May 7, 2003;


- your right to purchase an additional 1,000 shares will vest on August 7,
2004; and


- your right to purchase the remaining 1,000 shares will vest on May 7, 2006.


After the date we grant the new options, you generally will forfeit the non-vested portion of the new option grant when you cease to be employed with us or a participating subsidiary. (Page 18)


- DOES THE NEW GRANT DATE AND THE COMMENCEMENT OF A NEW VESTING PERIOD UNDER
THE NEW OPTIONS MEAN THAT I WOULD HAVE TO WAIT A LONGER PERIOD BEFORE I CAN
PURCHASE COMMON STOCK UNDER MY OPTIONS?


Probably, depending on when your options were issued. Since you will not receive any new options until the grant date (at least six months and one day after we cancel the options accepted for exchange) and any new options you receive will not be fully vested until three years after the grant date, you may lose the benefits of vesting under options you tender in the offer. For example, if the options you tender are fully vested, only one-third of the shares subject to the new options will be vested as of the grant date. Because the new options will not fully vest until three years after the grant date, you will not be able to fully exercise your new option to purchase our common stock until approximately 42 months after the cancellation date. (Page 18)


- DO I HAVE TO TENDER EACH OPTION FOR ALL OR ANY OF THE SHARES SUBJECT TO A
SPECIFIC OPTION GRANT?


Yes. You must tender all outstanding options comprising a full option grant. We are not accepting partial tenders of an individual option grant. For example, if you hold an option to purchase 3,000 shares of common stock at a particular exercise price, you must either tender all or none of such option. You cannot tender only part of the option and retain the remainder of the option. On the other hand, if you have multiple option grants, you may choose not to tender all of your grants. If a partial number of options subject to an individual grant have previously been exercised, then you must tender all of the remaining outstanding options subject to that grant. Additionally, if you choose to participate in the offer, you must tender all options that you received during the six months immediately prior to the expiration date of the offer, currently expected to be November 6, 2002, if those grants made during such period have an exercise price lower than the exercise price of the options that you wish to replace. (Page 9)


- IF I AM A U.S. RESIDENT FOR U.S. FEDERAL INCOME TAX PURPOSES WILL I HAVE TO
PAY TAXES IF I EXCHANGE MY OPTIONS IN THE OFFER?


If you exchange your current options for new options, you will not be required under current law to recognize income for U.S. federal income tax purposes at the time of the exchange. We believe that the exchange will be treated as a non-taxable exchange. Further, at the date of grant of the new options, you will not be required under current law to recognize income for U.S. federal income tax purposes. The grant of options is not recognized as taxable income. We recommend that you consult with your own tax advisor to determine the tax consequences of tendering options pursuant to the offer. (Page 23)


- IF I AM SUBJECT TO TAX IN A JURISDICTION OTHER THAN THE UNITED STATES, WILL
I HAVE TO PAY TAXES IF I EXCHANGE MY OPTIONS IN THE OFFER?


You may be taxed on either the exchange of your options for new options or the grant of new options. The foreign tax consequences of the offer may vary depending upon, among other things, the jurisdiction in which you are subject to tax and your particular circumstances. You are responsible for reporting and paying any taxes on your options based upon your country of residence, work location or assignment location. You are urged to consult your own tax advisor to determine any foreign tax consequences to you of participating in the offer. (Page 24)


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- WILL THE TERMS AND CONDITIONS OF MY NEW OPTIONS BE IDENTICAL TO THE TERMS OF
MY CURRENT OPTIONS?


No. This offer is open to option holders who have been granted options under several of our stock option plans. However, pursuant to the terms of the offer, we will be granting new options under the terms of the 1997 option plan and a new option agreement between you and us. (Page 18)


- WHEN DOES THE OFFER EXPIRE? CAN THE OFFER BE EXTENDED, AND IF SO, HOW WILL I
BE NOTIFIED IF IT IS EXTENDED?


The offer expires on November 6, 2002, at 5:00 p.m., New York City Time, unless we extend the offer.


We may, in our discretion, extend the offer at any time, but we cannot assure you that the offer will be extended or, if extended, for how long.


If the offer is extended, we will make a public announcement of the extension no later than 9:00 a.m., New York City Time, on the next business day following the previously scheduled expiration of the offer period. (Page 24)


- HOW DO I TENDER MY OPTIONS?


If you decide to tender your options, you must deliver, before 5:00 p.m., New York City Time, on November 6, 2002, a properly completed and duly executed letter of transmittal and any other documents required by the letter of transmittal to Orbital Sciences Corporation, 21839 Atlantic Boulevard, Dulles, Virginia 20166, Attn.: Office of the General Counsel.


If the offer is extended by us beyond that time, you must deliver these documents before the extended expiration of the offer.


We reserve the right to reject any or all tenders of options that we determine are not in appropriate form or that we determine are unlawful to accept. Otherwise, we will accept properly and timely tendered options which are not validly withdrawn. Subject to our rights to extend, terminate and amend the offer, we currentl ...