COM DEV Announces Second Quarter FY2008 Results



    CAMBRIDGE, ON, June 12 /CNW/ - COM DEV International Ltd. (TSX:CDV) today
announced its second quarter financial results for the three-month period
ended April 30, 2008. All amounts are stated in Canadian dollars unless
otherwise noted.

    
    Second Quarter Highlights

    -   Revenue was $54.2 million, an increase of 40% over the $38.6 million
        recorded in Q2 2007.

    -   Gross margin was 22%, compared to 19% in the second quarter of 2007.

    -   Net income was $2.0 million, or $0.03 per share, compared to a loss
        of $1.4 million, or $0.02 per share, in the same period last year.

    -   New orders won in the second quarter were $42 million, compared to
        $81 million a year earlier and $33 million in the first quarter of
        fiscal 2008.

    -   Backlog at quarter-end was $120 million, compared to $133 million at
        the end of Q1 2008.

    -   Subsequent to the end of the quarter, COM DEV announced that it had
        completed its US$12.2 million acquisition of the Passive Microwave
        Devices product line from L-3 Communications.
    

    "Our record revenues for the quarter reflect our recent success both in
winning new business and adding the production capacity to manage it," said
John Keating, CEO of COM DEV. "Margins and overall profitability, while in
line with our expectations, have been constrained by the currency environment
and by strategic decisions we've made to invest in some very promising growth
initiatives. We expect to see improvements by the end of the fiscal year as
COM DEV USA begins generating revenue to offset its expenses, and as more of
our workload has been contracted under current levels of exchange rates."

    Financial Review

    COM DEV's fiscal 2008 second quarter revenues of $54.2 million
represented an increase of $15.6 million or 40% over the previous year. This
marks a new record for space revenues in a single quarter, exceeding the
previous record, set one quarter earlier, by more than $9 million. Revenues
grew sequentially by 21%, compared to $44.9 million in the first quarter of
2008. Management continues to expect year over year revenue growth of 15% to
20%.
    In the second quarter, new orders totaled $42 million, of which 64% were
commercial, 34% were civil, and 2% were military. Backlog at quarter end was
$120 million, down from $133 million at the end of the previous quarter and
$130 million one year ago. Backlog was split between the Company's commercial,
civil and military sectors at a ratio of 54%, 39% and 7% respectively,
compared to 53%, 37% and 10% three months earlier.
    Second quarter gross margin was 22%, consistent with Q1 2008, and up from
19% in Q2 2007. Margins were suppressed in last year's second quarter by a
$5.1 million charge incurred due to a program cost overrun. Gross margin for
Q2 2008 was in line with management's guidance of the low twenty percent
levels for early fiscal 2008. As a greater portion of revenues reflect orders
won in the current exchange rate environment, management expects that margins
will continue towards long term guidance of mid to high twenty percent levels.
    Selling, general and administrative expenses for the second quarter were
$7.6 million, compared to $5.0 million in the same quarter last year and
$6.1 million in Q1 2008. Increased SG&A expenses can be attributed in part to
$1.2 million in activities related to the start-up of operations in El
Segundo, California, $0.75 million of costs associated with the
Board-appointed Special Committee's review of historic stock option granting
practices, and higher than normal bid & proposal costs. Management expects
that SG&A costs will begin to moderate as operations ramp up in El Segundo and
the review of the Company's historic stock option granting practices is
completed.
    Net research and development expense was $2.9 million the quarter,
compared to $2.7 million in Q2 2007. Total R&D spending (before funding) of
$4.6 million returned to levels similar to those recorded in the latter part
of fiscal 2007. Based on activities associated with Automatic Identification
System (AIS) work, micro-satellite development and roadmap growth activities,
management expects R&D spending levels for the rest of fiscal 2008 to be
similar to those seen in the current quarter.
    Net income for the quarter was $2.0 million, up from a net loss of
$1.4 million in Q2 2007, while earnings per share were $0.03, compared to
($0.02) a year earlier.
    COM DEV ended the second quarter of 2008 with $8.9 million of cash and
equivalents, compared to $14.3 million at January 31, 2008. Cash used in
operating activities was $1.9 million, compared to $13.1 million of cash
generated from operating activities a year earlier.
    The Company's basic share count averaged 68,059,648 (fully diluted:
68,220,957) in the second quarter of fiscal 2008, and stood at 68,069,688 on
June 10, 2008.

    Conference Call

    A conference call will be held Thursday, June 12, 2008 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.

    COM DEV, COM DEV International Products, COM DEV USA and COM DEV Europe
are registered trademarks of COM DEV International Ltd. 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: 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)
                                  Unaudited

    For the three months ended April 30                 2008         2007
    -------------------------------------------------------------------------

    Continuing Operations
      Revenue                                        $   54,165   $   38,590
      Cost of revenue                                    42,266       31,353
                                                    ------------ ------------
      Gross margin                                       11,899        7,237
                                                    ------------ ------------
      Research and development costs                      4,633        4,129
      Research and development recovery                   1,673        1,384
                                                    ------------ ------------
      Net research and development                        2,960        2,745
      Selling and general expenses                        7,580        4,997
                                                    ------------ ------------
      Operating income (loss)                             1,359         (505)
      Interest income                                      (168)        (159)
      Foreign exchange gain                                (544)         (50)
      Other expense                                         109          221
                                                    ------------ ------------
    Income (loss) before non-controlling interest         1,962         (517)
      Non-controlling interest                               (2)         (27)
                                                    ------------ ------------
    Income (loss) from continuing operations              1,964         (490)
    Provision for discontinued operations                     -          934
                                                    ------------ ------------
    Net income (loss)                                $    1,964   $   (1,424)
                                                    ------------ ------------
                                                    ------------ ------------

    Earnings (loss) per share
    Basic and diluted earnings (loss) per share
     from continuing operations                           $0.03       ($0.01)
    Basic and diluted loss per share from
     discontinued operations                              $0.00       ($0.01)
    Basic and diluted earnings (loss) per share           $0.03       ($0.02)



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

    For the six months ended April 30                   2008         2007
    -------------------------------------------------------------------------

    Continuing Operations
      Revenue                                        $   99,045   $   78,044
      Cost of revenue                                    77,083       59,524
                                                    ------------ ------------
      Gross margin                                       21,962       18,520
                                                    ------------ ------------
      Research and development costs                      7,407        6,655
      Research and development recovery                   2,430        2,338
                                                    ------------ ------------
      Net research and development                        4,977        4,317
      Selling and general expenses                       13,692        9,093
                                                    ------------ ------------
      Operating income                                    3,293        5,110
      Interest income                                      (231)        (377)
      Foreign exchange loss                                  26           73
      Other expense                                         176          276
                                                    ------------ ------------
    Income before non-controlling interest                3,322        5,138
      Non-controlling interest                               13            9
                                                    ------------ ------------
    Income from continuing operations                     3,309        5,129
    Provision for discontinued operations                     -          934
                                                    ------------ ------------
    Net income                                       $    3,309   $    4,195
                                                    ------------ ------------
                                                    ------------ ------------

    Earnings per share
    Basic and diluted earnings per share from
     continuing operations                                $0.05        $0.07
    Basic and diluted loss per share from
     discontinued operations                              $0.00       ($0.01)
    Basic and diluted earnings per share                  $0.05        $0.06



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

                                                        As at       As at
                                                      April 30,   October 31,
                                                        2008         2007
    -------------------------------------------------------------------------
    Assets
      Current
        Cash and cash equivalents                    $    8,875   $   31,713
        Accounts receivable                              50,336       35,523
        Inventory                                        38,148       25,611
        Prepaids and other                                2,491        4,864
        Income taxes recoverable                          2,231          956
        Future income tax assets - current                3,957        3,957
                                                    ------------ ------------
                                                        106,038      102,624
      Capital assets                                     57,467       54,890
      Intangible assets                                   4,016        3,939
      Deferred acquisition costs                            997            -
      Future income tax assets - long term                3,958        3,958
                                                    ------------ ------------
      Total assets                                   $  172,476   $  165,411
                                                    ------------ ------------
                                                    ------------ ------------

    Liabilities
      Current
        Accounts payable and accrued liabilities     $   33,399   $   25,435
        Deferred revenue                                 18,886       23,204
        Current portion of loans payable                  1,898        1,720
        Current liabilities - discontinued
         operations                                         128          399
                                                    ------------ ------------
                                                         54,311       50,758
                                                    ------------ ------------

      Long term
        Loans payable                                     7,256        7,692
                                                    ------------ ------------
                                                          7,256        7,692
                                                    ------------ ------------

      Total liabilities                                  61,567       58,450
                                                    ------------ ------------

    Non-controlling interest                                550          537
                                                    ------------ ------------

    Shareholders' equity
      Share capital                                     323,975      323,862
      Contributed surplus                                 1,383          999
      Deficit                                          (213,135)    (216,444)
      Accumulated other comprehensive income             (1,864)      (1,993)
                                                    ------------ ------------
      Total shareholders' equity                        110,359      106,424
                                                    ------------ ------------

    Total liabilities and shareholders' equity       $  172,476   $  165,411
                                                    ------------ ------------
                                                    ------------ ------------



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

    For the three months ended April 30                 2008         2007
    -------------------------------------------------------------------------

    Cash flows (used in) from operating activities
      Net income (loss) from continuing operations   $    1,964   $     (490)
      Amortization                                        2,025        1,811
      (Gain) loss on disposal of assets                    (211)          98
      Stock compensation expense                            233          252
      Unrealized foreign exchange loss on
       long term debt                                        81            -
      Non-controlling interest                               (2)         (27)
                                                    ------------ ------------
                                                          4,090        1,644
      Net change in non-cash working capital items       (5,951)      11,448
                                                    ------------ ------------
    Cash flows (used in) from operating activities        (1,861)      13,092
                                                    ------------ ------------

    Cash flows (used in) from financing activities
      Shares issued                                         111          121
      Repayment of long term debt                          (502)         (61)
                                                    ------------ ------------
    Cash flows (used in) from financing activities         (391)          60
                                                    ------------ ------------

    Cash flows used in investing activities
      Acquisition of capital assets                      (2,745)      (2,465)
      Proceeds on disposal of capital assets                213           22
      Acquisition of intangible assets                     (208)        (107)
      Business acquisition                                 (297)           -
                                                    ------------ ------------
    Cash flows used in investing activities              (3,037)      (2,550)
                                                    ------------ ------------
    Effect of exchange rate changes on cash                (102)        (179)
                                                    ------------ ------------

    Net (decrease) increase in cash from
     continuing operations                               (5,391)      10,423
    Net cash used in discontinued operations                  -          (28)
                                                    ------------ ------------
    Net (decrease) increase in cash                      (5,391)      10,395
    Cash and cash equivalents, beginning of period       14,266       15,203
                                                    ------------ ------------
    Cash and cash equivalents, end of period         $    8,875   $   25,598
                                                    ------------ ------------
                                                    ------------ ------------

    Interest paid                                    $      249   $       16
                                                    ------------ ------------
                                                    ------------ ------------



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

    For the six months ended April 30                   2008         2007
    -------------------------------------------------------------------------

    Cash flows (used in) from operating activities
      Net income from continuing operations          $    3,309   $    5,129
      Amortization                                        3,944        3,607
      (Gain) loss on disposal of assets                    (211)          98
      Stock compensation expense                            495          511
      Unrealized foreign exchange loss on
       long term debt                                       643            -
      Non-controlling interest                               13            9
                                                    ------------ ------------
                                                          8,193        9,354
      Net change in non-cash working capital items      (23,230)      (6,776)
                                                    ------------ ------------
    Cash flows (used in) from operating activities      (15,037)       2,578
                                                    ------------ ------------

    Cash flows (used in) from financing activities
      Shares issued                                         113          667
      Repayment of long term debt                          (902)        (223)
                                                    ------------ ------------
    Cash flows (used in) from financing activities         (789)         444
                                                    ------------ ------------

    Cash flows used in investing activities
      Acquisition of capital assets                      (6,217)      (3,170)
      Proceeds on disposal of capital assets                213           22
      Acquisition of intangible assets                     (317)        (174)
      Business acquisition                                 (374)           -
                                                    ------------ ------------
    Cash flows used in investing activities              (6,695)      (3,322)
                                                    ------------ ------------
    Effect of exchange rate changes on cash                 (46)         311
                                                    ------------ ------------

    Net (decrease) increase in cash from
     continuing operations                              (22,567)          11
    Net cash used in discontinued operations               (271)        (124)
                                                    ------------ ------------
    Net decrease in cash                                (22,838)        (113)
    Cash and cash equivalents, beginning of period       31,713       25,711
                                                    ------------ ------------
    Cash and cash equivalents, end of period         $    8,875   $   25,598
                                                    ------------ ------------
                                                    ------------ ------------

    Interest paid                                    $      468   $       26
                                                    ------------ ------------
                                                    ------------ ------------
    

    %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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