COM DEV Announces Third Quarter FY2008 Results



    Company increases 2008 revenue guidance

    CAMBRIDGE, ON, Sept. 11 /CNW/ - COM DEV International Ltd. (TSX:CDV)
today announced its third quarter financial results for the three-month period
ended July 31, 2008. All amounts are stated in Canadian dollars unless
otherwise noted.

    
    Third Quarter Highlights

    -   Revenue was $51.5 million, an increase of 20% over the $42.9 million
        recorded in Q3 2007.

    -   Gross margin was 23%, compared to 26% in the third quarter of 2007.

    -   Net income was $4.3 million, or $0.06 per share, compared to
        $2.5 million, or $0.04 per share, in the same period last year.

    -   New orders won in the third quarter were $95 million, compared to
        $50 million a year earlier and $42 million in the second quarter of
        fiscal 2008.

    -   Backlog at quarter-end was $161 million, compared to $120 million at
        the end of Q2 2008.

    -   Early in the quarter, COM DEV completed its US$12.2 million
        acquisition of the Passive Microwave Devices product line from L-3
        Communications.
    

    "I'm pleased to report solid top line and bottom line growth in the
quarter," said John Keating, CEO of COM DEV. "Margins continued to edge
upwards, and we made significant improvements in our operating expenses. In
what remains a very active market for satellite program awards, our ongoing
success at winning new business led to record highs in both new orders and
backlog in the quarter. Based on our performance to date and a robust pipeline
of business, we are increasing our fiscal 2008 revenue guidance to growth in
excess of 20%."

    Financial Review

    COM DEV's fiscal 2008 third quarter revenues of $51.5 million represented
an increase of $8.6 million or 20% over the previous year. For the first time,
top line results included a meaningful contribution from COM DEV USA, which
generated $3.5 million of revenues in the quarter. The revenue split between
the three market segments was 59% commercial, 26% civil and 15% military. On a
year-to-date basis, revenues of $150.5 million are 24% higher than revenues in
the comparable period of fiscal 2007. Management now expects that full year
revenue growth will be in excess of 20%, compared to earlier guidance of 15%
to 20%.
    New orders in the third quarter totaled $95 million, the highest of any
quarter in the Company's history. Among new orders, 38% were commercial, 43%
were civil, and 19% were military. Backlog also reached a new record level of
$161 million, compared to $120 million at the end of the previous quarter and
$135 million one year ago. Backlog was split between the Company's commercial,
civil and military sectors at a ratio of 44%, 44% and 12% respectively,
compared to 54%, 39% and 7% three months earlier.
    Gross margin was 23% in the third quarter, down from 26% in Q3 2007, and
up from 22% in the previous quarter. The sequential increase is due to
improving margin performance of the Company's core products, partly offset by
low margins in the El Segundo operations which have been staffed for higher
volumes of work than is currently underway. As the COM DEV USA workload
increases, management expects that gross margins will continue towards long
term guidance of mid to high twenty percent levels.
    Selling, general and administrative expenses for the third quarter were
$5.0 million, compared to $5.2 million in the same quarter last year and
$7.6 million in Q2 2008. The sequential decrease in SG&A is attributable to
the winding down of the Board-appointed Special Committee's review of historic
stock option granting practices, and the transitioning of certain COM DEV USA
expenses to factory overhead now that revenues are being generated by that
division.
    Net research and development expense was $2.1 million the quarter,
compared to $3.0 million in Q3 2007. Total R&D spending (before funding) of
$4.6 million was similar to levels recorded in recent quarters, but in the
third quarter the Company was successful in increasing the amount of external
funding for its R&D efforts. Management expects gross R&D spending to remain
at current levels in support of the development of its technology roadmap.
    Net income for the quarter was $4.3 million, up from $2.5 million in Q3
2007, while earnings per share were $0.06, compared to $0.04 a year earlier.
    COM DEV ended the third quarter of 2008 with $11.1 million of cash and
equivalents, compared to $8.9 million at April 30, 2008. The Company drew 
US$18 million on its term debt facility during the third quarter to complete
the acquisition.
    The Company generated $2.7 million of cash from operating activities,
compared to $0.4 million of cash generated from operating activities a year
earlier.
    The Company's basic share count averaged 68,069,688 (fully diluted:
68,267,266) in the third quarter of fiscal 2008, unchanged from share count
reported three months ago.

    Conference Call

    A conference call will be held Thursday, September 11, 2008 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, COM DEV International Products, COM DEV Canada, 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 July 31                2008             2007
    -------------------------------------------------------------------------

      Revenue                                   $    51,483      $    42,899
      Cost of revenue                                39,647           31,676
                                                ------------     ------------
      Gross margin                                   11,836           11,223
                                                ------------     ------------
      Research and development costs                  4,576            4,292
      Research and development recovery               2,492            1,277
                                                ------------     ------------
      Net research and development                    2,084            3,015
      Selling and general expenses                    5,017            5,160
                                                ------------     ------------
      Operating income                                4,735            3,048
      Interest expense (income)                         594              (59)
      Foreign exchange (gain) loss                     (148)             441
      Other expense                                      10              109
                                                ------------     ------------
    Income before non-controlling interest            4,279            2,557
      Non-controlling interest                           (6)              13
                                                ------------     ------------
    Net income                                  $     4,285      $     2,544
                                                ------------     ------------
                                                ------------     ------------
    Earnings per share
    Basic and diluted earnings per share              $0.06            $0.04



                         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                 2008             2007
    -------------------------------------------------------------------------

      Revenue                                   $   150,528      $   120,943
      Cost of revenue                               116,730           91,200
                                                ------------     ------------
      Gross margin                                   33,798           29,743
                                                ------------     ------------
      Research and development costs                 11,983           10,947
      Research and development recovery               4,922            3,615
                                                ------------     ------------
      Net research and development                    7,061            7,332
      Selling and general expenses                   18,709           14,253
                                                ------------     ------------
      Operating income                                8,028            8,158
      Interest expense (income)                         363             (436)
      Foreign exchange (gain) loss                     (122)             514
      Other expense                                     186              385
                                                ------------     ------------
    Income before non-controlling interest            7,601            7,695
      Non-controlling interest                            7               22
                                                ------------     ------------
    Income from continuing operations                 7,594            7,673
    Provision for discontinued operations                 -              934
                                                ------------     ------------
    Net income                                  $     7,594      $     6,739
                                                ------------     ------------
                                                ------------     ------------
    Earnings per share
    Basic and diluted earnings per share from
     continuing operations                            $0.11            $0.11
    Basic and diluted loss per share from
     discontinued operations                          $0.00           ($0.01)
    Basic and diluted earnings per share              $0.11            $0.10



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

                                                    As at            As at
                                                   July 31,       October 31,
                                                     2008             2007
    -------------------------------------------------------------------------
    Assets
      Current
        Cash and cash equivalents               $    11,127      $    31,713
        Accounts receivable                          39,912           35,523
        Inventory                                    40,373           25,611
        Prepaids and other                            2,291            4,864
        Income taxes recoverable                      2,368              956
        Future income tax assets - current            3,957            3,957
                                                ------------     ------------
                                                    100,028          102,624
      Capital assets                                 67,266           54,890
      Intangible assets                               9,122            3,939
      Goodwill                                        4,540                -
      Future income tax assets - long term            3,958            3,958
                                                ------------     ------------
      Total assets                              $   184,914      $   165,411
                                                ------------     ------------
                                                ------------     ------------

    Liabilities
      Current
        Accounts payable and accrued
         liabilities                            $    26,783      $    25,435
        Deferred revenue                             14,295           23,204
        Current portion of loans payable              5,253            1,720
        Current liabilities - discontinued
         operations                                     128              399
                                                ------------     ------------
                                                     46,459           50,758
                                                ------------     ------------

      Long term
        Loans payable                                20,964            7,692
        Employee future benefits                      2,055                -
                                                ------------     ------------
                                                     23,019            7,692
                                                ------------     ------------

      Total liabilities                              69,478           58,450
                                                ------------     ------------

    Non-controlling interest                            544              537
                                                ------------     ------------

    Shareholders' equity
      Share capital                                 323,975          323,862
      Contributed surplus                             1,627              999
      Deficit                                      (208,850)        (216,444)
      Accumulated other comprehensive income         (1,860)          (1,993)
                                                ------------     ------------
      Total shareholders' equity                    114,892          106,424
                                                ------------     ------------

    Total liabilities and shareholders'
     equity                                     $   184,914      $   165,411
                                                ------------     ------------
                                                ------------     ------------



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

    For the three months ended July 31                2008             2007
    -------------------------------------------------------------------------

    Cash flows (used in) from operating
     activities
      Net income from continuing operations     $     4,285      $     2,544
      Amortization                                    3,086            1,672
      Stock compensation expense                        244              247
      Unrealized foreign exchange loss on long
       term debt                                        201                -
      Non-controlling interest                           (6)              13
                                                ------------     ------------
                                                      7,809            4,476
      Net change in non-cash working capital
       items                                         (5,572)          (4,079)
                                                ------------     ------------
    Cash flows from operating activities              2,237              397
                                                ------------     ------------

    Cash flows from financing activities
      Shares issued                                       -              987
      Advance of long term debt                      18,174           10,988
      Repayment of long term debt                    (1,110)            (389)
                                                ------------     ------------
    Cash flows from financing activities             17,064           11,586
                                                ------------     ------------

    Cash flows used in investing activities
      Acquisition of capital assets                  (3,466)         (15,506)
      Acquisition of intangible assets                 (101)             (77)
      Business acquisition                          (13,111)               -
                                                ------------     ------------
    Cash flows used in investing activities         (16,678)         (15,583)
                                                ------------     ------------
    Effect of exchange rate changes on cash            (371)            (169)
                                                ------------     ------------

    Net increase (decrease) in cash from
     continuing operations                            2,252           (3,769)
    Net cash used in discontinued operations              -           (2,141)
                                                ------------     ------------
    Net increase (decrease) in cash                   2,252           (5,910)
    Cash and cash equivalents, beginning of
     period                                           8,875           25,598
                                                ------------     ------------
    Cash and cash equivalents, end of period    $    11,127      $    19,688
                                                ------------     ------------
                                                ------------     ------------

    Interest paid                               $       612      $        14
                                                ------------     ------------



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

    For the nine months ended July 31                 2008             2007
    -------------------------------------------------------------------------
    Cash flows (used in) from operating
     activities
      Net income from continuing operations     $     7,594      $     7,673
      Amortization                                    7,030            5,280
      (Gain) loss on disposal of assets                (211)              98
      Stock compensation expense                        739              758
      Unrealized foreign exchange loss on long
       term debt                                        844                -
      Non-controlling interest                            7               22
                                                ------------     ------------
                                                     16,002           13,831
      Net change in non-cash working capital
       items                                        (28,802)         (10,856)
                                                ------------     ------------
    Cash flows (used in) from operating
     activities                                     (12,800)           2,975
                                                ------------     ------------

    Cash flows from financing activities
      Shares issued                                     113            1,654
      Advance of long term debt                      18,174           10,988
      Repayment of long term debt                    (2,013)            (612)
                                                ------------     ------------
    Cash flows from financing activities             16,275           12,030
                                                ------------     ------------

    Cash flows (used in) from investing
     activities
      Acquisition of capital assets                  (9,683)         (18,676)
      Proceeds on disposal of capital assets            213               22
      Acquisition of intangible assets                 (418)            (251)
      Business acquisition                          (13,485)               -
                                                ------------     ------------
    Cash flows (used in) form investing
     activities                                     (23,373)         (18,905)
                                                ------------     ------------
    Effect of exchange rate changes on cash            (417)             142
                                                ------------     ------------

    Net decrease in cash from continuing
     operations                                     (20,315)          (3,758)
    Net cash used in discontinued operations           (271)          (2,265)
                                                ------------     ------------
    Net decrease in cash                            (20,586)          (6,023)
    Cash and cash equivalents, beginning of
     period                                          31,713           25,711
                                                ------------     ------------
    Cash and cash equivalents, end of period    $    11,127      $    19,688
                                                ------------     ------------
                                                ------------     ------------

    Interest paid                               $     1,079      $        40
                                                ------------     ------------
    





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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