COM DEV Announces Third Quarter FY2007 Results



    CAMBRIDGE, ON, Sept. 13 /CNW/ - COM DEV International Ltd. (TSX:CDV)
today announced its third quarter financial results for the three-month period
ended July 31, 2007. All amounts are stated in Canadian dollars.

    
    Third Quarter Highlights

    -  Revenue was $42.9 million, an increase of 4% from the $41.2 million
       recorded in Q3 2006.
    -  Gross margin was 26%, compared to 29% in the third quarter of 2006.
    -  Net income was $2.5 million, or $0.04 per share, compared to a net
       income of $6.4 million or $0.10 per share a year earlier.
    -  New orders won in the third quarter totaled $50 million, compared to
       $43 million a year earlier and $81 million in the second quarter of
       fiscal 2007.
    -  Backlog at quarter-end was a record $135 million, compared to $130
       million at the end of Q2 2007.
    -  During the quarter COM DEV purchased a production facility in El
       Segundo, California and announced details of its planned expansion
       into the US government space market.
    

    "The 8% currency shift this quarter impacted the bottom line by
$2.2 million. In addition, we made significant incremental investments in SG&A
and R&D. We believe that, in the medium term, we will be able to overcome
currency shifts, as we have in the past, through efficiency improvements and
operational leverage. The robust nature of the marketplace, supported by our
record backlog, and coupled with our investments in growth should all
contribute towards increased revenue and improved profitability," said John
Keating, CEO of COM DEV. "We remain confident in our ability to achieve
revenue growth of at least 10% this year and further growth next year. We have
seen the fruits of our investment in our Ottawa business in the form of a $39
million contract award - we think our latest investments will also deliver
long-term shareholder value."

    Financial Review

    COM DEV's fiscal 2007 third quarter revenues of $42.9 million represented
an increase of $1.7 million or 4% over the prior year period. The Company's
top line results continue to benefit from increasing levels of backlog and
employees to address the workload. The strengthening of the Canadian dollar
compared to Q3 2006 levels negatively impacted revenues by approximately $1.8
million. The revenue split between the three sectors was 47% commercial, 33%
civil and 20% military. Management continues to expect revenue growth of at
least 10% in fiscal 2007.
    The Company received new orders totaling $50 million during the quarter,
of which 94% were commercial and 6% were civil. With new orders exceeding
revenues for the quarter, backlog increased to a new record high of
$135 million. Backlog was split between the Company's commercial, civil and
military sectors at a ratio of 41%, 40% and 19% respectively, compared to 25%,
50% and 25% at the end of Q2 2007.
    Gross profit was $11.2 million in the third quarter, representing 26% of
revenues, compared to $12.1 million or 29% of revenues in Q3 2006. Absent the
$1.8 million impact of foreign exchange shifts, gross margin for the quarter
would have been 29%.
    Net research and development expense increased by $1.4 million to
$3.0 million in Q3 2007 following the Company's recent strategic decision to
expand its R&D program in order to pursue near and medium term growth
opportunities.
    Selling, general and administrative expense increased by $1.4 million to
$5.2 million, due largely to the start-up of operations in California 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.
    In addition to the $1.8 million revenue impact of the strengthening
Canadian dollar, COM DEV also recognized a $0.4 million foreign exchange loss
in the third quarter due to accounting requirements to translate US
denominated balance sheet items. The total impact of the foreign exchange rate
shift was $2.2 million.
    Net income was $2.5 million in the third quarter of 2007, compared to
$6.4 million in the prior year's third quarter. The decrease can largely be
explained by the aforementioned foreign exchange rate shift, increase in R&D
spending and increase in SG&A expense. The combined negative impact on net
income of those three items was $4.6 million.
    COM DEV ended the third quarter of 2007 with $19.7 million of cash and
equivalents compared to $25.6 million at April 30, 2007. Cash generated from
operating activities was $0.4 million, compared to $4.9 million in Q3 2006.
The Company purchased $15.5 million of capital assets in the quarter,
primarily relating to the purchase of land, building and equipment in El
Segundo. The Company borrowed $11.2 million on its term debt facility, leaving
approximately $16.8 million of term debt facilities available.
    The Company's basic share count averaged 67,702,157 in the third quarter,
and stood at 67,861,678 on July 31, 2007.

    Conference Call

    A conference call will be held today, Thursday, September 13, 2007 at
5:30 pm EDT 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 and COM DEV Space are registered trademarks of COM DEV
International Ltd. This news release may contain certain forward-looking
statements that involve risks and uncertainties. Actual results may differ
materially from results indicated in any forward-looking statements. The
Company cautions that, among other things, in view of the rapid changes in
communications markets and technologies, and other risks including the cost
and market acceptance of the Company's new products, the level of individual
customer procurements and competitive product offerings and pricing, and
general economic circumstances, the Company's business prospects may be
materially different from forward-looking statements made by the Company.



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

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

      Revenue                                       $   42,899    $   41,229
      Cost of revenue                                   31,676        29,145
                                                   ------------  ------------
      Gross margin                                      11,223        12,084
                                                   ------------  ------------
      Research and development costs                     4,292         2,601
      Research and development recovery                  1,277           954
                                                   ------------  ------------
      Net research and development                       3,015         1,647
      Selling and general expenses                       5,160         3,761
                                                   ------------  ------------
      Operating income                                   3,048         6,676
      Interest (income) expense                            (59)          217
      Foreign exchange loss (gain)                         441          (189)
      Other expense                                        109           265
                                                   ------------  ------------
    Income before non-controlling interest               2,557         6,383
      Non-controlling interest                              13             6
                                                   ------------  ------------
    Net income                                      $    2,544    $    6,377
                                                   ------------  ------------
                                                   ------------  ------------

    Earnings per share
    Basic and diluted earnings per share                 $0.04         $0.10



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

    For the nine months ended July 31                     2007          2006
    -------------------------------------------------------------------------

      Revenue                                       $  120,943    $  112,097
      Cost of revenue                                   91,200        78,703
                                                   ------------  ------------
      Gross margin                                      29,743        33,394
                                                   ------------  ------------
      Research and development costs                    10,947         7,697
      Research and development recovery                  3,615         2,795
                                                   ------------  ------------
      Net research and development                       7,332         4,902
      Selling and general expenses                      14,253        11,048
                                                   ------------  ------------
      Operating income                                   8,158        17,444
      Interest (income) expense                           (436)        1,263
      Foreign exchange loss (gain)                         514          (485)
      Other expense                                        385           661
                                                   ------------  ------------
    Income before non-controlling interest               7,695        16,005
      Non-controlling interest                              22            78
                                                   ------------  ------------
    Income from continuing operations                    7,673        15,927
    Provision for discontinued operations                  934             -
    Net income                                      $    6,739    $   15,927
                                                   ------------  ------------
                                                   ------------  ------------

    Earnings per share
    Basic and diluted earnings per share                 $0.10         $0.26



                         COM DEV International Ltd.
                         Consolidated Balance Sheets
                       (Canadian dollars in thousands)
                                  Unaudited
                                                       As at         As at
                                                      July 31,    October 31,
                                                        2007          2006
    -------------------------------------------------------------------------
    Assets
      Current
        Cash and cash equivalents                   $   19,688    $   25,711
        Accounts receivable                             49,272        39,372
        Inventory                                       34,447        24,302
        Prepaids and other                               2,389         2,016
        Income taxes recoverable                           383           383
                                                   ------------  ------------
                                                       106,179        91,784
      Capital assets                                    50,412        36,950
      Intangible assets                                  4,156         4,165
                                                   ------------  ------------
      Total assets                                  $  160,747    $  132,899
                                                   ------------  ------------
                                                   ------------  ------------

    Liabilities
      Current
        Accounts payable and accrued liabilities    $   20,599    $   24,145
        Deferred revenue                                25,947        13,004
        Current portion of loans payable                 2,058           265
        Current liabilities - discontinued
         operations                                        378         1,721
                                                   ------------  ------------
                                                        48,982        39,135
                                                   ------------  ------------

      Long term
        Loans payable                                    9,079           444
        Long term liabilities - discontinued
         operations                                         48            36
                                                   ------------  ------------
                                                         9,127           480
                                                   ------------  ------------

      Total liabilities                                 58,109        39,615
                                                   ------------  ------------

    Non-controlling interest                               499           477
                                                   ------------  ------------

    Shareholders' equity
      Share capital                                    323,174       320,948
      Contributed surplus                                  766           580
      Deficit                                         (220,584)     (227,436)
      Accumulated other comprehensive income            (1,217)       (1,285)
                                                   ------------  ------------
      Total shareholders' equity                       102,139        92,807
                                                   ------------  ------------

    Total liabilities and shareholders' equity      $  160,747    $  132,899
                                                   ------------  ------------
                                                   ------------  ------------



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

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

    Cash flows from operating activities
      Net income from continuing operations         $    2,544    $    6,377
      Amortization                                       1,672         1,859
      Gain on disposal of assets                             -            (8)
      Convertible debenture - accretion and interest         -           581
      Stock compensation expense                           247           150
      Non-controlling interest                              13             6
                                                   ------------  ------------
                                                         4,476         8,965
      Net change in non-cash working capital items      (4,079)       (4,031)
                                                   ------------  ------------
    Cash flows from operating activities                   397         4,934
                                                   ------------  ------------

    Cash flows from financing activities
      Shares issued                                        987           891
      Convertible debentures principal redemption            -           (46)
      Advance of long term debt                         10,988             -
      Repayment of long term debt                         (389)         (103)
                                                   ------------  ------------
    Cash flows from financing activities                11,586           742
                                                   ------------  ------------

    Cash flows from investing activities
      Acquisition of capital assets                    (15,506)       (1,311)
      Proceeds on disposal of capital assets                 -             8
      Acquisition of intangible assets                     (77)          (86)
                                                   ------------  ------------
    Cash flows used in investing activities            (15,583)       (1,389)
                                                   ------------  ------------
    Effect of exchange rate changes on cash               (169)          101
                                                   ------------  ------------

    Net (decrease) increase in cash for
     continuing operations                              (3,769)        4,388
    Net cash used in discontinued operations            (2,141)         (103)
                                                   ------------  ------------
    Net (decrease) increase in cash                     (5,910)        4,285
    Cash and cash equivalents, beginning of period      25,598        10,983
                                                   ------------  ------------
    Cash and cash equivalents, end of period        $   19,688    $   15,268
                                                   ------------  ------------
                                                   ------------  ------------

    Interest paid                                   $       14    $      116
                                                   ------------  ------------
                                                   ------------  ------------



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

    For the nine months ended July 31                     2007          2006
    -------------------------------------------------------------------------

    Cash flows from operating activities
      Net income from continuing operations         $    7,673    $   15,927
      Amortization                                       5,280         5,380
      Loss (gain) on disposal of assets                     98           (34)
      Convertible debenture - accretion and interest         -           960
      Stock compensation expense                           758           335
      Non-controlling interest                              22            78
                                                   ------------  ------------
                                                        13,831        22,646
      Net change in non-cash working capital items     (10,856)       (6,051)
                                                   ------------  ------------
    Cash flows from operating activities                 2,975        16,595
                                                   ------------  ------------

    Cash flows from financing activities
      Shares issued                                      1,654           935
      Convertible debentures principal redemption            -           (46)
      Advance of long term debt                         10,988             -
      Repayment of long term debt                         (612)         (385)
                                                   ------------  ------------
    Cash flows from financing activities                12,030           504
                                                   ------------  ------------

    Cash flows from investing activities
      Acquisition of capital assets                    (18,676)       (2,197)
      Proceeds on disposal of capital assets                22            35
      Acquisition of intangible assets                    (251)         (196)
      Business acquisition                                   -        (5,261)
                                                   ------------  ------------
    Cash flows used in investing activities            (18,905)       (7,619)
                                                   ------------  ------------
    Effect of exchange rate changes on cash                142           (24)
                                                   ------------  ------------

    Net (decrease) increase in cash for continuing
     operations                                         (3,758)        9,456
    Net cash used in discontinued operations            (2,265)         (367)
                                                   ------------  ------------
    Net (decrease) increase in cash                     (6,023)        9,089
    Cash and cash equivalents, beginning of period      25,711         6,179
                                                   ------------  ------------
    Cash and cash equivalents, end of period        $   19,688    $   15,268
                                                   ------------  ------------
                                                   ------------  ------------

    Interest paid                                   $       40    $      897
                                                   ------------  ------------
                                                   ------------  ------------
    
    %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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