COM DEV Announces First Quarter Fiscal 2010 Results

CAMBRIDGE, ON, March 11 /CNW/ - COM DEV International Ltd. (TSX:CDV) today announced first quarter financial results for the three month period ended January 31, 2010. All amounts are stated in Canadian dollars unless otherwise noted.

First Quarter Highlights

    
    -   Revenue was $56.7 million, compared to $56.5 million recorded in the
        first quarter of 2009.
    -   Gross margin was 24%, compared to 26% in Q1 2009.
    -   Net income was $2.2 million, or $0.03 per share, compared to
        $4.4 million or $0.06 per share for the prior year period.
    -   New orders won in the first quarter totaled $51 million, compared to
        $88 million a year earlier and $67 million in the fourth quarter of
        fiscal 2009.
    -   Backlog at January 31, 2010 was $157 million, compared to
        $163 million at the end of fiscal 2009.
    

"In the first quarter we maintained revenue levels from last year despite currency headwinds, but a number of additional factors contributed to suppressing our margins and profitability," said John Keating, CEO of COM DEV. "The program performance issues identified at the end of fiscal 2009 had an impact on our margins this quarter, as anticipated, and we also experienced cost increases on a couple of other programs. Our continued investment in growth included over $1 million of operating expenses for our exactEarth subsidiary which did not exist a year ago."

Mr. Keating continued: "We remain optimistic about our prospects for fiscal 2010. We have seen a good start to contract awards already in the second quarter, and our new business pipeline indicates a strong possibility of achieving record orders for the year. exactEarth continues to meet our expectations, having opened its new data centre and won a $1.4 million contract from the Canadian Government. The Government has also announced funding for the RADARSAT Constellation Mission, a program on which we expect to play an important role."

Financial Review

COM DEV's fiscal 2010 first quarter revenues of $56.7 million represented an increase of $0.2 million or 0.3% over the first quarter of 2009. The revenue split between the three market segments was 59% commercial, 30% civil and 11% military, compared to a 59/24/17 split in the first quarter of 2009. Based on current market activity levels, and the Company's historic success rate at winning new business, management continues to expect fiscal 2010 revenue to grow by at least 10% over fiscal 2009.

COM DEV received new orders totaling $51 million during the first quarter, of which 60% were commercial, 21% were civil, and 19% were military. In Q1 2009 the Company booked $88 million of new orders, with a commercial/civil/military split of 51/12/37.

Order backlog at quarter-end was $157 million, compared to backlog of $163 million three months earlier, and $189 million one year ago. These variations in backlog are consistent with historical patterns as the order profiles are typically lumpy in nature. Backlog was split between the Company's commercial, civil and military sectors at a ratio of 46%, 34% and 20% respectively, compared to 44%, 35% and 21% at January 31, 2009.

Gross margin was $13.4 million in the first quarter, representing 24% of revenues, compared to $14.7 million or 26% of revenues in the first quarter of 2009. The decrease in gross margin percentage was mainly the result of a small number of projects with reduced gross margins, as announced in Q4 2009, cost increases on a small number of commercial programs in Q1 2010 and less favourable exchange rates.

Net research and development expense was $2.9 million in the quarter, compared to $2.8 million in the first quarter of 2009. Gross R&D spending decreased by 4% from a year earlier to $3.7 million, but outside funding of R&D decreased by 26% to $0.8 million.

Selling expenses were $2.7 million in the first quarter, compared to $2.0 million in Q1 2009. The increase was due to a higher level of bidding costs in support of increased bidding activity, higher business development and sales and marketing costs in exactEarth and our COM DEV Canada division, and to an increase in commission costs. General and administrative expenses were $6.3 million, compared with $5.4 million in Q1 2009, with the increase due primarily to the startup activities in the exactEarth subsidiary and higher salary and benefit costs.

Net income for the quarter was $2.2 million, compared to $4.4 million in Q1 2009, while earnings per share were $0.03, compared to $0.06 a year earlier.

COM DEV ended the quarter with $18.2 million of cash and equivalents, compared to $21.4 million at October 31, 2009. Operating activities generated $4.4 million of cash in the first quarter. Financing activities used $1.6 million of cash, while investing activities used $5.9 million of cash. At January 31, 2010, COM DEV had outstanding debt of $18.2 million including the current portion, and the Company's $32 million credit facility was not drawn upon.

The Company's basic share count did not change during the first quarter, and stood at 76,100,289 on January 31, 2010 (fully diluted: 77,249,777).

Conference Call

A conference call will be held Thursday, March 11, 2010 at 5:00 pm EST to discuss this announcement. To access the live webcast, please visit the Company's website at www.comdevintl.com or www.newswire.ca for directions. Participants will require Windows Media Playe(TM) to listen to the webcast.

About COM DEV

COM DEV International Ltd. (www.comdevintl.com) is a leading global designer and manufacturer of space hardware subsystems. With facilities in Canada, the United Kingdom and the United States, COM DEV manufactures advanced products and subsystems that are sold to major satellite prime contractors for use in communications, space science, remote sensing and military satellites.

This news release contains statements that, to the extent they are not recitations of historical fact, may constitute "forward-looking statements" within the meaning of applicable Canadian securities laws. Forward-looking statements may include financial and other projections, as well as statements regarding COM DEV's future plans, objectives or economic performance, or the assumptions underlying any of the foregoing. COM DEV uses words such as "may", "would", "could", "will", "likely", "expect", "anticipate", "believe", "intend", "plan", "forecast", "project", "estimate" and similar expressions to identify forward-looking statements. Any such forward-looking statements are based on assumptions and analyses made by COM DEV in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors COM DEV believes are appropriate under the relevant circumstances. However, whether actual results and developments will conform to COM DEV's expectations and predictions is subject to any number of risks, assumptions and uncertainties. Many factors could cause COM DEV's actual results, historical financial statements, or future events to differ materially from those expressed or implied by the forward-looking statements contained in this news release. These factors include, without limitation: uncertainty in the global economic environment; fluctuations in currency exchange rates; delays in the purchasing decisions of COM DEV's customers; the competition COM DEV faces in its industry and/or marketplace; and the possibility of technical, logistical or planning issues in connection with the deployment of COM DEV's products or services.

The triangular logo and the word COM DEV are each registered trademarks and the property of COM DEV Ltd. All rights reserved.

    
                         COM DEV International Ltd.
                    Consolidated Statements of Operations
     (Canadian dollars in thousands, except for per share figures)
                                  Unaudited

    For the three months ended January 31                     2010      2009
    -------------------------------------------------------------------------
      Revenue                                             $ 56,687  $ 56,511
      Cost of revenue                                       43,262    41,833
                                                          --------- ---------
      Gross margin                                          13,425    14,678
                                                          --------- ---------
      Research and development costs                         3,685     3,846
      Research and development recovery                        768     1,044
                                                          --------- ---------
      Net research and development                           2,917     2,802
      Selling expenses                                       2,653     2,036
      General expenses                                       6,299     5,357
                                                          --------- ---------
      Operating income                                       1,556     4,483
      Interest expense                                         147       423
      Foreign exchange gain                                   (964)     (402)
      Other expense                                            146       108
                                                          --------- ---------
    Income before non-controlling interest                   2,227     4,354
      Non-controlling interest                                 (18)        -
                                                          --------- ---------
    Net income                                            $  2,245  $  4,354
                                                          --------- ---------
                                                          --------- ---------

    Earnings per share
    Basic and diluted earnings per share                  $   0.03  $   0.06



                         COM DEV International Ltd.
                         Consolidated Balance Sheets
                       (Canadian dollars in thousands)
                                  Unaudited

                                                        As at        As at
                                                     January 31,  October 31,
                                                         2010         2009
    -------------------------------------------------------------------------
    Assets
      Current
        Cash and cash equivalents                    $   18,228   $   21,404
        Accounts receivable                              38,453       53,674
        Inventory                                        55,662       51,114
        Prepaids and other                                3,612        3,112
        Income taxes recoverable                          4,615        4,615
        Future income tax assets - current                6,192        6,192
                                                     -----------  -----------
                                                        126,762      140,111
      Property, plant and equipment                      70,113       69,537
      Intangible assets                                  23,502       21,459
      Goodwill                                            2,360        2,388
      Future income tax assets - long term                1,881        1,723
                                                     -----------  -----------
      Total assets                                   $  224,618   $  235,218
                                                     -----------  -----------
                                                     -----------  -----------

    Liabilities
      Current
        Accounts payable and accrued liabilities     $   24,582   $   32,939
        Deferred revenue                                 19,836       22,510
        Current portion of loans payable                  6,562        6,587
                                                     -----------  -----------
                                                         50,980       62,036
                                                     -----------  -----------

    Long term
      Loans payable                                      11,606       13,401
      Employee future benefits                            1,888        1,872
                                                     -----------  -----------
                                                         13,494       15,273
                                                     -----------  -----------

      Total liabilities                                  64,474       77,309
                                                     -----------  -----------

    Non-controlling interest                                468          486
                                                     -----------  -----------

    Shareholders' equity
      Share capital                                     345,885      345,885
      Contributed surplus                                 3,138        2,804
      Deficit                                          (186,514)    (188,759)
      Accumulated other comprehensive income             (2,833)      (2,507)
                                                     -----------  -----------
      Total shareholders' equity                        159,676      157,423
                                                     -----------  -----------

    Total liabilities and shareholders' equity       $  224,618   $  235,218
                                                     -----------  -----------
                                                     -----------  -----------



                         COM DEV International Ltd.
                    Consolidated Statements of Cash Flows
                       (Canadian dollars in thousands)
                                  Unaudited

    For the three months ended January 31                     2010      2009
    -------------------------------------------------------------------------
    Operating activities
      Net income                                          $  2,245  $  4,354
      Amortization                                           2,617     2,849
      Loss on disposal of assets                                53         -
      Defined benefit plan expenses                            170       118
      Stock compensation expense                               277       176
      Employee stock option plan awards                         57        54
      Unrealized foreign exchange gain on derivatives         (947)     (209)
      Non-controlling interest                                 (18)        -
                                                          --------- ---------
                                                             4,454     7,342
      Net change in non-cash working capital items             (70)  (10,985)
                                                          --------- ---------
    Operating activities                                     4,384    (3,643)
                                                          --------- ---------

    Financing activities
      Shares issued                                              -       258
      Repayment of long term debt                           (1,584)   (1,570)
                                                          --------- ---------
    Financing activities                                    (1,584)   (1,312)
                                                          --------- ---------

    Investing activities
      Acquisition of property, plant and equipment          (2,700)     (449)
      Proceeds on disposal of property, plant and
       equipment                                                 1         -
      Acquisition of intangible assets                      (2,970)     (943)
      Employee future benefits contributions                  (197)     (153)
                                                          --------- ---------
    Investing activities                                    (5,866)   (1,545)
                                                          --------- ---------
    Effect of exchange rate changes on cash                   (110)     (359)
                                                          --------- ---------

    Net decrease in cash                                    (3,176)   (6,859)
    Cash and cash equivalents, beginning of period          21,404    16,102
                                                          --------- ---------
    Cash and cash equivalents, end of period              $ 18,228  $  9,243
                                                          --------- ---------
                                                          --------- ---------

    Interest paid                                         $    161  $    322
                                                          --------- ---------
                                                          --------- ---------
    Taxes paid                                            $    158  $      -
                                                          --------- ---------
                                                          --------- ---------



                         COM DEV International Ltd.
                 Consolidated Statements of Changes in Equity
                       (Canadian dollars in thousands)
                                  Unaudited

                                             Accumulated
    For the three                               Other
    months ended                            Comprehensive  Share  Contributed
    January 31, 2010      Total     Deficit     Income    Capital   Surplus
    -------------------------------------------------------------------------
    Balance, October
     31, 2009          $ 157,423  $(188,759) $  (2,507) $ 345,885    $ 2,804

    Comprehensive
     income
      Net Income           2,245      2,245         -           -          -
      Foreign currency
       translation
       adjustments
       (net of taxes
       of $nil)             (326)         -      (326)          -          -
                       ---------- ---------- ---------- ---------- ----------
                           1,919      2,245      (326)          -          -
    Common stock issued        -          -         -           -          -
    Value of ESOP awards      57          -         -           -         57
    Expense recognized
     for stock-based
     compensation            277          -         -           -        277
                       ---------- ---------- ---------- ---------- ----------
    Balance, January
     31, 2010          $ 159,676  $(186,514) $  (2,833) $ 345,885  $   3,138
                       ---------- ---------- ---------- ---------- ----------
                       ---------- ---------- ---------- ---------- ----------

    -------------------------------------------------------------------------

    For the three
    months ended
    January 31, 2009

    Balance, October
     31, 2008          $ 121,060  $(204,065) $    (729) $ 323,975  $   1,879

    Comprehensive
     income
      Net Income           4,354      4,354          -          -          -
      Foreign currency
       translation
       adjustments
       (net of taxes
       of $nil)             (434)         -       (434)         -          -
                      ----------- ---------- ---------- ---------- ----------
                           3,920      4,354       (434)         -          -
    Common stock
     issued                  257          -          -        286        (29)
    Value of ESOP awards      54          -          -          -         54
    Expense recognized
     for stock-based
     compensation            176          -          -          -        176
                       ---------- ---------- ---------- ---------- ----------
    Balance, January
     31, 2009          $ 125,467  $(199,711)   $(1,163) $ 324,261  $   2,080
                       ---------- ---------- ---------- ---------- ----------
                       ---------- ---------- ---------- ---------- ----------
    

%SEDAR: 00003673E

SOURCE COM DEV International Ltd.

For further information: For further information: Gary Calhoun, Chief Financial Officer, Tel: (519) 622-2300 ext. 2826, gary.calhoun@comdev.ca; Jeff Codispodi, The Equicom Group, Tel: (416) 815-0700 ext. 261, jcodispodi@equicomgroup.com

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