COM DEV Announces Fourth Quarter and Year End Fiscal 2007 Financial Results



    CAMBRIDGE, ON, Dec. 13 /CNW/ - COM DEV International Ltd. (TSX:CDV) today
announced unaudited financial results for the three- and twelve-month periods
ended October 31, 2007. All amounts are stated in Canadian dollars.

    
    Fiscal Year 2007 Highlights

    -   Revenue was $164.3 million, a 7% increase over the fiscal 2006 total
        of $153.8 million.
    -   Gross margin was 21%, compared to 29% in 2006.
    -   Net income was $10.9 million, or $0.16 per share, compared to a net
        income of $21.2 million or $0.34 per share the previous year.
    -   New orders totaled $207 million in the fiscal year, compared to
        $161 million in 2006.
    -   The Company purchased a facility in El Segundo, California and
        launched COM DEV USA to compete in the US Government space market.
    -   The Company expanded its Cambridge facility by 22% in order to
        increase production capacity to manage an increased volume of
        business.

    Fourth Quarter Highlights

    -   Q4 2007 revenue was $43.4 million, representing growth of 4% over the
        $41.7 million recorded a year earlier.
    -   Gross margin was 11%, compared to 28% in the fourth quarter of 2006.
    -   Net income was $4.1 million, or $0.06 per share, compared to
        $5.3 million or $0.08 per share in Q4 2006. Q4 2007 net income was
        positively impacted by the recognition of a $5.1 million provision
        for income tax recovery.
    -   New orders won in the fourth quarter totaled $55 million, compared to
        $45 million a year earlier and $49 million in the third quarter of
        fiscal 2007.
    -   Backlog at October 31, 2007 was a record $146 million, compared to
        $135 million at the end of Q3 2007.
    

    "We worked through a number of challenges in 2007, some of which were
internal to our organization. Currency exchange rates presented the major
external challenge, particularly in the fourth quarter, although the situation
has moderated since our year-end," said John Keating, CEO of COM DEV. "I
believe we also took important steps during the year to position the Company
for continued growth. We are on plan in establishing a US presence, and
completed a significant plant expansion in Cambridge. We invested in the
development of new technologies that we think hold great potential,
particularly our AIS initiative. And our success in winning new business
resulted in a 29% increase in new orders and a backlog that reached new record
highs in each of the past three quarters. I believe we are well positioned in
2008 to achieve our long-term objective of 10-15% annual revenue growth,
assuming a relatively stable currency environment."

    Financial Review

    Revenues grew by $10.5 million or 7% to $164.3 million in fiscal 2007, as
the Company successfully added capacity to address an increasing volume of
business won throughout the year. Fourth quarter 2007 revenues of
$43.4 million, while establishing a record high for COM DEV Space, were below
expectations as a result of an unprecedented 13% shift in exchange rates
during the quarter. The negative impact of the strengthening Canadian dollar
on reported Q4 revenues was $5.3 million.
    The fiscal 2007 revenue split by sector was 50% commercial, 30% civil and
20% military, relatively consistent with the 2006 split. Commercial space
revenues grew by $9.2 million or 13%, accounting for the vast majority of the
Company's growth in 2007, while in 2006 virtually all of the growth was
achieved in the other two sectors.
    COM DEV received new orders totaling $207 million during the year, of
which 65% were commercial, 27% were civil, and 8% were military. In fiscal
2006 the Company booked $161 million of new orders, and the
commercial/civil/military split was 40/39/21.
    With new orders exceeding revenues for the year, order backlog increased
to a new record high of $146 million at October 31, 2007, an increase of 36%
from the previous fiscal year. Backlog was split between the commercial, civil
and military sectors at a ratio of 57%, 30% and 13% respectively, compared to
31%, 47% and 22% at the end of fiscal 2006. Approximately 80% of the total
backlog is expected to be converted to revenue during fiscal 2008.
    Gross margin was $34.6 million in 2007, representing 21% of revenues,
compared to $45.1 million or 29% of revenues in 2006. Gross margin fell short
of management's target of delivering margins in the mid- to high-twenty
percent range, particularly in the fourth quarter when gross margin was 11%.
The fourth quarter shortfall is primarily attributable to the shift in
currency exchange rates, which caused a $5.3 million erosion in margins.
Additional factors suppressing Q4 margins included the inability of certain
elements of the Company's supply chain to respond to an increase in volume,
and a throughput in the Company's switch operations that was below
expectations. Fiscal 2007 margins were also impacted by a $5.1 million charge
incurred in the Company's second quarter due to a program cost overrun, and by
the addition during the year of significant production capacity which was not
immediately utilized as efficiently as existing capacity.
    Net research and development expense increased by $1.4 million to
$7.9 million in 2007 following the Company's strategic decision to expand its
R&D program in order to pursue near and medium term growth opportunities such
as the AIS initiative. Net R&D expense was favourably impacted by the
recognition of a $2.8 million investment tax credit.
    Selling, general and administrative expense increased by $3.8 million to
$19.7 million, due largely to the start-up of operations in California and
higher bidding and corporate development-related costs. The majority of
operational costs related to the California facility will continue to be
reflected in the SG&A line until the facility begins to generate external
revenue.
    Net income was $10.9 million in 2007, compared to $21.2 million the
previous year. Net income was favourably impacted by the recognition of a
$5.1 million income tax asset in Q4 2007 on the basis of an assessment of the
likelihood that the Company will realize benefit from the assets.
    COM DEV ended the year with $31.7 million of cash and equivalents,
compared to $25.7 million at October 31, 2006. Operating activities generated
$22.0 million of cash in 2007, compared to $29.9 million the previous year.
During the year the Company invested a total of $26 million in capital assets,
including the purchase and build-out of a production facility in California
and a significant plant expansion in Cambridge. The Company had outstanding
debt of $9.3 million at year end, leaving approximately $20 million of term
debt facilities available.
    The Company's basic share count averaged 67,657,753 (fully diluted:
68,181,398) in fiscal 2007, and stood at 68,035,418 on October 31, 2007.
    A complete set of audited financial statements and management's
discussion and analysis for the quarter and year ended October 31, 2007 are
expected to be filed in January, 2008.

    Conference Call

    A conference call will be held today, Thursday, December 13, 2007 at
5:30 pm EST to discuss this announcement. To access the live webcast, please
visit the Company's website at www.comdev.ca or www.newswire.ca for
directions. Participants will require Windows Media Player(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 express or implied by the
forward-looking statements contained in this news release. These factors
include, without limitation: the determinations made by the special committee
of COM DEV's board of directors which is charged with reviewing COM DEV's
historical stock option granting practices; the determinations made by outside
advisors, auditors and others with respect to this ongoing review;
unanticipated developments and delays encountered during this ongoing review;
developments relating to COM DEV's communication with the Ontario Securities
Commission during this ongoing review; additional corrections that may be
required based on factual findings and analysis obtained during this ongoing
review; legal and accounting developments regarding stock option grants and
interpretations of such guidance; 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.


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


    For the three months ended October 31                   2007        2006
    -------------------------------------------------------------------------

      Revenue                                          $  43,387   $  41,676
      Cost of revenue                                     38,559      30,016
                                                       ----------  ----------
      Gross margin                                         4,828      11,660
                                                       ----------  ----------
      Research and development costs                       4,024       2,411
      Research and development recovery                    3,505         824
                                                       ----------  ----------
      Net research and development                           519       1,587
      Selling and general expenses                         5,415       4,849
                                                       ----------  ----------
      Operating (loss) income                             (1,106)      5,224
      Interest expense (income)                                9        (102)
      Foreign exchange (gain) loss                          (387)        141
      Other expense (income)                                 169        (100)
                                                       ----------  ----------
    (Loss) income before non-controlling
     interest and income taxes                              (897)      5,285
       Non-controlling interest                               38          10
       Recovery of income taxes                           (5,115)          -
                                                       ----------  ----------
    (Loss) income from continuing
     operations                                            4,180       5,275
    Provision for discontinued
     operations                                               40           -
                                                       ----------  ----------
    Net income                                         $   4,140   $   5,275
                                                       ----------  ----------
                                                       ----------  ----------
    Earnings per share
    Basic and diluted earnings per share               $    0.06   $    0.08


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


    For the years ended October 31                          2007        2006
    -------------------------------------------------------------------------

      Revenue                                          $ 164,330   $ 153,773
      Cost of revenue                                    129,759     108,719
                                                       ----------  ----------
      Gross margin                                        34,571      45,054
                                                       ----------  ----------
      Research and development costs                      14,971      10,108
      Research and development recovery                    7,120       3,619
                                                       ----------  ----------
      Net research and development                         7,851       6,489
      Selling and general expenses                        19,668      15,897
                                                       ----------  ----------
      Operating income                                     7,052      22,669
      Interest (income) expense                             (427)      1,161
      Foreign exchange loss (gain)                           127        (344)
      Other expense                                          554         561
                                                       ----------  ----------
    Income before non-controlling
     interest and income taxes                             6,798      21,291
       Non-controlling interest                               60          88
                                                       ----------  ----------
       Recovery of income taxes                           (5,115)          -
    Income from continuing operations                     11,853      21,202
    Provision for discontinued operations                    974           -
                                                       ----------  ----------
    Net income                                         $  10,879   $  21,202
                                                       ----------  ----------
                                                       ----------  ----------
    Earnings per share
    Basic and diluted earnings per share               $    0.16   $    0.34


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

                                                         As at       As at
                                                      October 31, October 31,
                                                         2007         2006
    -------------------------------------------------------------------------

    Assets
      Current
        Cash and cash equivalents                      $  31,713   $  25,711
        Accounts receivable                               35,523      39,372
        Inventory                                         25,611      24,302
        Prepaids and other                                 4,864       2,016
        Income taxes recoverable                             956         383
        Future income tax assets - current                 3,957           -
                                                       ----------  ----------
                                                         102,624      91,784
      Capital assets                                      54,890      36,950
      Intangible assets                                    3,939       4,165
      Future income tax assets - long term                 3,958           -
                                                       ----------  ----------
      Total assets                                     $ 165,411   $ 132,899
                                                       ----------  ----------
                                                       ----------  ----------
    Liabilities
      Current
        Accounts payable and accrued liabilities       $  25,435   $  24,145
        Deferred revenue                                  23,204      13,004
        Current portion of loans payable                   1,720         265
        Current liabilities
         - discontinued operations                           399       1,721
                                                       ----------  ----------
                                                          50,758      39,135
                                                       ----------  ----------
      Long term
        Loans payable                                      7,692         444
        Long term liabilities
         - discontinued operations                             -          36
                                                       ----------  ----------
                                                           7,692         480
                                                       ----------  ----------

      Total liabilities                                   58,450      39,615
      Commitments and contingencies                    ----------  ----------

    Non-controlling interest                                 537         477
                                                       ----------  ----------
    Shareholders' equity
      Share capital                                      323,862     320,948
      Contributed surplus                                    999         580
      Deficit                                           (216,444)   (227,436)
      Accumulated other comprehensive income              (1,993)     (1,285)
                                                       ----------  ----------
      Total shareholders' equity                         106,424      92,807
                                                       ----------  ----------
    Total liabilities and shareholders' equity         $ 165,411   $ 132,899
                                                       ----------  ----------


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


    For the three months ended October 31                   2007        2006
    -------------------------------------------------------------------------

    Cash flows (used in) from
     operating activities
      Net income from continuing operations            $   4,180   $   5,275
      Amortization                                         2,341       1,927
      Loss (gain) on disposal of assets                       79         (41)
      Convertible debenture - accretion and
       interest                                                -           -
      Stock compensation expense                             254         250
      Future income taxes                                 (7,915)          -
      Unrealized foreign exchange gain on
       long term debt                                     (1,492)          -
      Non-controlling interest                                38          10
                                                       ----------  ----------
                                                          (2,515)      7,420
      Net change in non-cash
       working capital items                              21,467       5,867
                                                       ----------  ----------
    Cash flows from operating activities                  18,952      13,288
                                                       ----------  ----------

    Cash flows from financing activities
      Shares issued                                          667       1,896
      Repayment of long term debt                            (68)        (66)
                                                       ----------  ----------
    Cash flows from financing activities                     599       1,830
                                                       ----------  ----------

    Cash flows used in investing activities
      Acquisition of capital assets                       (6,548)     (4,656)
      Acquisition of intangible assets                       (59)       (110)
      Business acquisition                                     -          83
                                                       ----------  ----------
    Cash flows used in investing activities               (6,607)     (4,680)
                                                       ----------  ----------
    Effect of exchange rate changes on cash                 (852)          8
                                                       ----------  ----------

    Net increase in cash from
     continuing operations                                12,092      10,446
    Net cash used in discontinued
     operations                                              (67)         (3)
                                                       ----------  ----------
    Net increase in cash                                  12,025      10,443
    Cash and cash equivalents,
     beginning of period                                  19,688      15,268
                                                       ----------  ----------
    Cash and cash equivalents,
     end of period                                     $  31,713   $  25,711
                                                       ----------  ----------
                                                       ----------  ----------

    Interest paid                                      $     214   $      23
                                                       ----------  ----------


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


    For the years ended October 31                          2007        2006
    -------------------------------------------------------------------------

    Cash flows from operating activities
      Net income from continuing operations            $  11,853   $  21,202
      Amortization                                         7,621       7,307
      Loss (gain) on disposal of assets                      177         (75)
      Convertible debenture - accretion and interest           -         960
      Stock compensation expense                           1,012         585
      Future income taxes                                 (7,915)          -
      Unrealized foreign exchange gain
       on long term debt                                  (1,492)          -
      Non-controlling interest                                60          88
                                                       ----------  ----------
                                                          11,316      30,067
      Net change in non-cash working capital items        10,611        (184)
                                                       ----------  ----------
    Cash flows from operating activities                  21,927      29,883
                                                       ----------  ----------

    Cash flows from financing activities
      Shares issued                                        2,321       2,831
      Convertible debentures principal redemption              -         (46)
      Advance of long term debt                           10,988           -
      Repayment of long term debt                           (680)       (451)
                                                       ----------  ----------
    Cash flows from financing activities                  12,629       2,334
                                                       ----------  ----------

    Cash flows used in investing activities
      Acquisition of capital assets                      (25,224)     (6,853)
      Proceeds on disposal of capital assets                  22          38
      Acquisition of intangible assets                      (310)       (306)
      Business acquisition                                     -      (5,178)
                                                       ----------  ----------
    Cash flows used in investing activities              (25,512)    (12,299)
                                                       ----------  ----------
    Effect of exchange rate changes on cash                 (710)        (16)
                                                       ----------  ----------

    Net increase in cash from continuing operations        8,334      19,902
    Net cash used in discontinued operations              (2,332)       (370)
                                                       ----------  ----------
    Net increase in cash                                   6,002      19,532
    Cash and cash equivalents, beginning of year          25,711       6,179
                                                       ----------  ----------
    Cash and cash equivalents, end of year             $  31,713   $  25,711
                                                       ----------  ----------
                                                       ----------  ----------

    Interest paid                                      $     253   $     920
                                                       ----------  ----------
    


    %SEDAR: 00003673E




For further information:

For further information: Gary Calhoun, Chief Financial Officer, Tel:
(519) 622-2300 ext. 2826, Fax: (519) 622-2158, gary.calhoun@comdev.ca; Jeff
Codispodi, The Equicom Group, Tel: (416) 815-0700 ext. 261, Fax: (416)
815-0080, jcodispodi@equicomgroup.com

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