Question-and-Answer Session
Operator
Your first question comes from the line of Howard Rubel – Jefferies & Co.
Howard Rubel – Jefferies & Co
First, if we look at the outlook for next year, not a lot of revenue growth maybe 3% or so, do you expect it to be pretty evenly spread or is it likely to be mostly in the Advanced Systems business?
David W. Thompson
Good morning, Howard. Let me take that to start with and then Garrett may want to add too it as well. I believe we are expecting good revenue growth in three of the four reporting segments this year.
The drivers at the product line level would be as follows: in the Launch Vehicles segment, our missile defense interceptors, both the, what we call the Orbital Boost Vehicle, which is part of GMD program and kinetic energy interceptor are expected to generate good revenue growth for us in 2008.
In the Advanced Program segment, military and intelligence satellites and human space systems are expected to be good contributors. And on top of that, although the absolute dollar figures are smaller in percentage terms, we expect TMS to also contribute strongly to top line growth.
Due to a drop-off in short-term activity in our science and environmental satellite area, the Satellite and Space Systems segment should be down for the year. But we may see some improvements in that as we get into the spring time depending on the timing of potential commercial satellite orders that we’re pursuing in the first half of the year.
So three of the four should be up; one should be down somewhat in revenue at the segment level.
Howard Rubel – Jefferies & Co
That’s very helpful, David. I appreciate that. And then on the other side, from an operational point of view, if we look at the fourth quarter R&D at almost $7 million, if you back out where you were a year ago, there is maybe $0.07 or so and improvement in the overall operations of the business.
Is all of the R&D in the Launch Vehicle area or is it spread a bit? The operating line looks okay, but then when you back out R&D, it’s very impressive in terms of the improvements. Maybe, you could address some of that, and then also where the R&D is going.
David W. Thompson
The major contributor to the R&D increase in the fourth quarter was our investment in the Taurus II launch vehicle. We didn’t think it was going to be significant enough to break out its impact at an EPS level for last year. But clearly, as we proceed this year, it will be. And so, we’ll try to give you visibility in all quarters this year to what EPS is and what it would have been in the absence of that investment.
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