Orbital Sciences Corporation (NYSE: ORB) reported its financial results for the first quarter of 2008. Orbital’s first quarter revenues increased 30% to $296.0 million in 2008, compared to $228.2 million in 2007. The company’s first quarter operating income rose 23% to $21.6 million in 2008, as compared to $17.5 million in 2007. First quarter net income increased 19% to $13.7 million in 2008, compared to $11.5 million in 2007, and diluted earnings per share increased to $0.23, compared to $0.19 in the first quarter of 2007. Orbital reported first quarter 2008 free cash flow* of $17.8 million compared to free cash flow of $3.9 million in the first quarter of 2007.

Orbital's first quarter 2008 revenues were $296.0 million, up 30% compared to first quarter 2007 revenues of $228.2 million primarily due to significant revenue growth in the advanced space programs and launch vehicles segments. Advanced space programs segment revenues grew $46.3 million, or 176%, driven by a substantial increase in contract activity on the Orion human spacecraft program for NASA. Launch vehicles segment revenues increased $17.1 million, or 19%, principally due to increased contract activity on missile defense, space launch and target launch vehicle programs. Satellites and space systems segment revenues increased $2.1 million, or 2%, due to increased activity on communications satellites contracts, partially offset by lower activity levels on certain science and technology satellite contracts. Transportation management systems segment revenues increased $2.1 million, or 21%, due to an increase in activity on recently awarded contracts.

Operating income of $21.6 million in the first quarter of 2008 was up 23% compared to first quarter 2007 operating income of $17.5 million mainly due to profit growth in the advanced space programs segment. Advanced space programs segment operating income increased $2.8 million, or 129%, due to increased contract activity on the Orion program. Satellites and space systems segment operating income increased $1.1 million, or 15%, primarily due to increased profits on communications satellite contracts, partially offset by lower activity levels on certain science and technology satellite contracts. Launch vehicles segment operating income declined slightly due primarily to an increase in research and development costs (as discussed below) that offset $2.4 million of profit growth in missile defense and space launch vehicle programs. Transportation management systems segment operating income increased $0.5 million, or 81%, due to activity on recently awarded contracts.

The company's research and development expenses totaled $9.0 million in the first quarter of 2008, a $6.1 million increase compared to the first quarter of 2007 that was primarily driven by the new Taurus II launch vehicle program. Certain of the company's research and development expenses are recoverable under U.S. Government contracts. In the first quarter of 2008, discretionary research and development expenses incurred in excess of amounts recovered under U.S. Government contracts resulted in a $2.3 million reduction in operating income in the launch vehicles segment. Operating income in the launch vehicles segment before these unrecovered research and development expenses was $9.9 million* in the first quarter of 2008, an increase of $2.0 million, or 26%, compared to the first quarter of 2007.