Matrikon(TM) releases results for the second quarter of 2009 and declares quarterly dividend



    
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    Highlights
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    -   Q2-09 revenue growth of 1% to $19.66 million compared to Q2-08;
        YTD revenue at $39.24 million.

    -   Q2-09 net income of $2.03 million or $0.07 per share; YTD net income
        growth of 18% to $4.78 million or $0.16 per share compared to FY-08.

    -   Gross margin in Q2-09 of 59%, compared to 54% in Q2-08

    -   Board of directors declares quarterly dividend of $0.03 per common
        share
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    EDMONTON, April 18 /CNW/ - Matrikon Inc. (TSX:MTK), a leading provider of
solutions for industrial intelligence, today reported financial results for
the second quarter of fiscal year 2009 which ended February 28, 2009.
    Matrikon president and CEO Nizar J. Somji commented on the quarter: "Our
second quarter results were weaker than we anticipated. Consulting revenue was
particularly disappointing and went beyond our typical seasonal weakness. In
spite of this, we achieved some significant accomplishments. Very strong
software and support revenue are a clear indication that opportunities exist,
although the approval process is taking longer and stretching out the sales
cycle. Software revenue growth typically leads to consulting revenue in
subsequent periods as projects related to the product purchased ramp up. We
remain confident in our prospects and have been investing to ensure we are
well positioned to capitalize on the opportunities that a more stable economic
environment will present."
    Second quarter revenue was $19.66 million compared to $19.44 million in
Q2-08 and $19.58 million in Q1-09. Net income in the second quarter was $2.03
million or $0.07 per share compared to $1.81 million or $0.06 per share in
Q2-08 and $2.76 million or $0.09 per share in Q1-09.
    Year-to-date (YTD) revenue was down slightly at $39.24 million compared
to the first half of FY-08. YTD net income was $4.78 million or $0.16 per
share, compared to $4.05 million or $0.13 per share in the first half of
FY-08.
    Matrikon's board of directors also declared a dividend of $0.03 per
common share for the second quarter of fiscal year 2009. This dividend is
payable May 13, 2009 to all shareholders of record on April 29, 2009. The
dividend is an eligible dividend for Canadian tax purposes.

    
    Additional Highlights

    -   Software licenses were a near record $4.70 million in Q2-09,
        representing growth of 15% compared to Q2-08 and 27% compared to
        Q1-09. YTD software licenses grew by 1% to $8.39 million compared to
        $8.30 million in FY-08,

    -   Strong support revenue of $2.50 million was achieved in Q2-09,
        representing growth of 20% compared to Q2-08. YTD support revenue
        also grew by 20% to $5.02 million from $4.19 million in FY-08.

    -   Foreign currency translation gains amounted to $0.47 million in Q2-
        09, compared to a loss of $0.31 million in Q2-08, as the Canadian
        dollar weakened against other currencies in which we do business. YTD
        foreign currency translation gains were $1.61 million compared to a
        YTD loss of $0.79 million in FY-08.

    -   Quarterly gross margin was 59%, comprised of 99% gross margin on
        software license revenue, 93% on support revenue, 42% on consulting
        revenue and 27% on equipment revenue.

    -   Overhead expenses for Q2-09 were $9.69 million or 49% of revenue.
        Sales and marketing expenses were up 49% from Q2-08, as we continue
        to invest in sales and marketing to drive top-line growth. General &
        administrative expenses were up 35% compared to Q2-08 as a result of
        increased training, relocation and third party consulting fees. YTD
        overhead expenses were $19.02 million or 48% compared to $15.74
        million or 40% of revenue in the first six months of FY-08.

    -   Cash used in operations was $1.24 million in Q2-09 and $1.79 million
        for the first six months compared to cash generated by operations of
        $5.82 million in Q2-08 and $8.34 million for the first six months of
        FY-08. Increased accounts receivable, contracts in progress and
        slower collections in the quarter contributed to the cash decrease.
    

    MD&A and Financial Statements

    The MD&A and Financial Statements for the current quarter can be found on
Matrikon's website at
http://www.matrikon.com/about/corporate/investors/financial/q-reports.aspx or
by contacting Nicole Sayler at 1-877-628-7456 extension 4010.

    Conference Call and Webcast

    Matrikon President and CEO, Nizar J. Somji and CFO Jonathan Chia will
hold a conference call to discuss first quarter results on Monday, April 20,
2009 at 8:30 am ET (6:30 am MT). To participate live, call 416-644-3414 in the
Toronto area and 1-800-733-7560 in all other areas.
    A replay will be available until midnight, May 10, 2009. To access the
playback service, please dial 416-640-1917 in Toronto or 1-877-289-8525
elsewhere. The reservation number is 21302363 followed by the pound sign
(No.).
    The conference call will also be webcast at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2605460

    Matrikon is a registered trademark of Matrikon Inc.

    
    Forward Looking Statements
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    In order to provide our investors with an understanding of our current
    results and future prospects, our communications often include written or
    oral forward-looking statements. This new release, our Management's
    Discussion and Analysis (MD&A), and other materials filed with the
    Canadian securities regulators contain statements that are forward-
    looking. These statements are made pursuant to the "safe harbor"
    provisions of applicable Canadian securities legislation. These
    statements represent Matrikon's intentions, plans, expectations and
    beliefs and are based on our experience and our assessment of historical
    and future trends and the application of key assumptions relating to
    future events and circumstances. These statements may include, but are
    not limited to, comments about: our objectives and priorities for 2009
    and beyond, our strategies, expectations for our financial condition, the
    outlook for our operations, and external factors that may impact results,
    including global economies and industry trends.

    Forward-looking statements require assumptions and involve risks and
    uncertainties related to our business and the general economic
    environment, many beyond our control. There is significant risk that the
    predictions, forecasts, conclusions or projections we make will not prove
    to be accurate and that our actual results will be materially different
    from the targets, expectations, estimates or intentions expressed in the
    forward-looking statements. We caution readers of this news release and
    our MD&A not to place undue reliance on our forward-looking statements.
    The future outcomes that relate to forward-looking statements may be
    influenced by many factors, including but not limited to: general
    economic conditions in the countries in which we operate; currency
    fluctuations; market demand for our products and services; our ability to
    execute projects and deliver solutions; our ability to execute our
    strategic plans and to complete and integrate acquisitions; the degree of
    competition in the geographic and business areas in which we operate; our
    ability to attract and retain qualified employees and contain payroll
    costs; our ability to contain expenses; technological changes and
    research and development; the length of the sales cycle required to close
    larger solution contracts; availability of financial resources to carry
    out our strategy; our ability to protect our intellectual and intangible
    properties; legal claims; critical accounting estimates; the possible
    effects on our business of war or terrorist activities; disease or
    illness that affects local, national or international economies; and
    disruptions to public infrastructure, such as transportation,
    communications, power or water supply. We caution that this list is not
    exhaustive of all possible factors.

    Other factors could adversely affect our results. For more information,
    please see the discussion on the principal risks that could affect our
    results, beginning on page 52 of Matrikon's 2008 Annual Report.

    The assumptions in this news release and MD&A pertaining to: our positive
    outlook for the remainder of 2009, our belief that business opportunities
    remain strong, and our expected effective tax rate to be in the range of
    27% to 32% include: global economic and political stability at current
    levels, that certain opportunities in our pipeline will materialize as
    contracts, that our clients will continue to invest in initiatives that
    support efficiency and reduce costs, foreign exchange rates do not
    fluctuate excessively, and that we will continue to be able to inspire,
    motivate and maintain our employee base at a sufficient level to deliver
    on our objectives.

    When relying on forward-looking statements to make decisions with respect
    to Matrikon, investors should carefully consider these factors, as well
    as other uncertainties and potential events, and the inherent uncertainty
    of forward-looking statements. Unless required by law, we do not
    undertake to update any forward-looking statement, whether written or
    oral, that may be made from time to time by the company or on its behalf.
    -------------------------------------------------------------------------

    Management's Discussion & Analysis

    April 18, 2009
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    The following Management's Discussion & Analysis (MD&A) should be read in
    conjunction with the interim financial statements and notes to the
    consolidated financial statements for the quarter ended February 28, 2009
    and the Management's Discussion & Analysis and notes to the consolidated
    financial statements appearing in the Annual Report for the fiscal year
    ended August 31, 2008.

    Matrikon's Board of Directors, on the recommendation of the Audit
    Committee, approved the content of this MD&A on April 18, 2009.

    All dollar amounts included in this MD&A are Canadian dollars unless
    otherwise specified.
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    Non-GAAP Measures
    -------------------------------------------------------------------------
    We refer to terms that are not specifically defined in the CICA Handbook
    and do not have any standardized meaning prescribed by GAAP. These non-
    GAAP measures may not be comparable to similar measures presented by
    other companies.

    We believe that these non-GAAP measures are useful in assisting investors
    in understanding components of our financial results. The non-GAAP terms
    that we refer to in this analysis are defined below.

    Gross margin is our total revenue minus the cost of sales, divided by the
    total revenue, and is expressed as a percentage. This measure is used to
    indicate the relative efficiency with which we earn revenue. Gross margin
    is a percentage based on two GAAP measures and as such has no
    quantitative reconciliation. Gross margin within our segmented reporting
    includes intercompany revenue/expenses as part of total revenue.

    Net margin is our total net income (loss) divided by total revenue and is
    expressed as a percentage. This measure is used to indicate the relative
    efficiency with which we earn net income. Net margin is a percentage
    based on two GAAP measures and as such has no quantitative
    reconciliation.

    Utilization or utilization rate measures the billable time for each
    employee against the total available time, based on a standard 260 work
    days per year and is expressed as a percentage. Utilization is used to
    demonstrate capacity to increase output rate in our Solutions business
    without adding resources. Utilization is a measure of working capacity
    and not a financial measure and therefore has no reconciliation to GAAP.

    Average daily rate is consulting revenue divided by billable people
    multiplied by utilization rate divided by working days available in the
    period described. This measure is used by management to monitor overall
    project profitability and as an indication of progress in the transition
    of our business to higher margin engagements based on Matrikon
    technology. Average daily rate is based on non-financial measures and has
    no reconciliation to GAAP.

    Other Information
    -------------------------------------------------------------------------
    Additional information about Matrikon, including our annual information
    form, information circular and quarterly reports, is available on SEDAR
    at www.sedar.com and in the investor relations section of our website at
    www.matrikon.com/investors.
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    Strategic Progress Update
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    Note: This section is forward-looking by nature. It is qualified entirely
    by the Forward-Looking Statements disclaimer at the beginning of this
    MD&A. It is also qualified by the principal risks that could affect our
    business (see page 52 - 56 of our 2008 Annual Report).
    -------------------------------------------------------------------------

    The following table shows our progress against the fiscal year 2009
    objectives laid out in our annual report.

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    2009 Objectives        On Track?    6 Month Results
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    Grow top line while    In Progress  - YTD revenue is unchanged from
    maintaining                           the first six months of FY-08
    profitability                       - YTD net income increased 23%
                                          compared to the first six months
                                          of FY-08. Product revenue growth
                                          and foreign currency translation
                                          gains contributed to this increase
    -------------------------------------------------------------------------
    Improve employee       Yes          - Annualized voluntary employee
    retention                             turnover at the end of Q2-09 is
                                          33% lower than FY-08
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    Increase sales via     Yes          - YTD sales by Matrikon's reseller
    Reseller Partners                     partners grew by 68% compared to
                                          the first six months of FY-08
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    Increase sales volume  Yes          - YTD revenue from off-the-shelf
    of off-the-shelf                      products (Alarm Manager,
    products                              Operational Insight, Control
                                          Performance Monitor, and OPC) grew
                                          by 21% compared to the first six
                                          months of FY-08
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    One significant new    Yes          - Seven significant product
    product upgrade each                  upgrades were released in the
    quarter                               first six months of FY-09
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    Revenue from licenses  Yes          - YTD software license and support
    & support of 33%-35%                  revenue represent 34% of total
    of total revenue                      revenue
    -------------------------------------------------------------------------
    Continue to sell and   In Progress  - YTD, one new Well Performance
    deploy industry                       Monitor (WPM) client has been
    applications                          added.
                                        - As strategic enterprise
                                          initiatives, our industry
                                          applications typically have a
                                          longer sales cycle. Our fiscal 2009
                                          objectives have not been changed as
                                          our outlook remains positive on
                                          this area of our business.
    -------------------------------------------------------------------------

    Items of Note in Q2-09

    -   Strong software revenues: During the quarter, we achieved strong
        software license and support revenues. Software license revenues
        during Q2-09 increased 15% compared to Q2-08 and year-to-date sales
        of off-the-shelf products in fiscal 2009 grew 21% compared to first
        half of 2008. Our extended support revenue continues to grow, with
        $2.50 million in revenue in Q2-09.

    -   Foreign exchange: In Q2-09, the Canadian dollar continued to lose
        strength relative to the US dollar and the Euro, favorably impacting
        results. Foreign exchange gains resulted in an after-tax earnings-
        per-share (EPS) contribution of $0.04 for the first half of FY-09
        compared to $(0.03) for the same period in the prior year.

    -   Gross margin: In Q2-09, we achieved overall gross margin of 59%,
        compared to 54% in Q2-08. Gross margin in Q2-09 was positively
        impacted by higher margin software license and support revenues.

    -   Weak consulting revenue: With a week long company-wide closure in
        December, the second quarter has 10% fewer working days than other
        quarters. As a result, consulting revenue and utilization rates are
        lower in Q2 than other quarters. Consulting revenue was disappointing
        in Q2-09, having decreased by 13% even in comparison to Q2-08.
        Although opportunities exist, we are seeing a lengthier approval
        process throughout the sales cycle. Strong software sales typically
        result in improved consulting revenue in subsequent quarters.

    Summary of Results

    -------------------------------------------------------------------------
    3 Months       28-Feb-09       29-Feb-08       30-Nov-08    Q2-09  Q2-09
     Ended                 %               %               %      vs     vs
    (CAD $000s) (Q2-09) revenue (Q2-08) revenue (Q1-09) revenue Q2-08  Q1-09
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    Total
     Revenue   $19,661   100%  $19,444   100%  $19,579   100%      1%     0%
    -------------------------------------------------------------------------
    Consulting
     fees        9,852    50%   11,379    59%   12,152    62%    (13%)  (19%)
    -------------------------------------------------------------------------
      Margin on
       consulting
       fees        42%             37%             45%
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    Equipment
     sales       2,345    12%    1,632     8%    1,016     5%     44%   131%
    -------------------------------------------------------------------------
      Margin on
       equipment
       sales       27%             25%             25%
    -------------------------------------------------------------------------
    Total
     Solutions
     revenue    12,197    62%   13,011    67%   13,168    67%     (6%)   (7%)
    -------------------------------------------------------------------------
    Software
     license
     fees        4,695    24%    4,084    21%    3,693    19%     15%    27%
    -------------------------------------------------------------------------
      Margin on
       software
       license
       fees        99%             91%             97%
    -------------------------------------------------------------------------
    Support      2,498    13%    2,089    11%    2,521    13%     20%    (1%)
    -------------------------------------------------------------------------
      Margin on
       support     93%             95%             98%
    -------------------------------------------------------------------------
    Total
     Products
     revenue     7,193    37%    6,173    32%    6,214    32%     17%    16%
    -------------------------------------------------------------------------
    Interest
     income        271     1%      260     1%      197     1%      4%    38%
    -------------------------------------------------------------------------
      Consulting
       headcount   280             271             275             3%     2%
    -------------------------------------------------------------------------
      Gross
       margin      59%             54%             61%
    -------------------------------------------------------------------------
    Total
     Expenses    9,692    49%    7,916    41%    9,324    48%     22%     4%
    -------------------------------------------------------------------------
    Consulting
     G&A         1,474     7%    1,535     8%    1,668     9%     (4%)  (12%)
    -------------------------------------------------------------------------
    Sales &
     marketing   1,902    10%    1,275     6%    1,836     9%     49%     4%
    -------------------------------------------------------------------------
    Research &
     development 1,754     9%    1,694     9%    1,410     7%      4%    24%
    -------------------------------------------------------------------------
    General &
     admini-
     strative    3,919    20%    2,893    15%    3,716    19%     35%     5%
    -------------------------------------------------------------------------
      Operations
       headcount   262             230             270            14%    (3%)
    -------------------------------------------------------------------------
    Stock-based
     compensation  352     2%      203     1%      318     2%     73%    11%
    -------------------------------------------------------------------------
    Amortization   291     1%      316     2%      376     2%     (8%)  (23%)
    -------------------------------------------------------------------------
    Foreign
     exchange
     translation
     gain (loss)   468     2%     (313)   (2%)   1,144     6%   (250%)  (59%)
    -------------------------------------------------------------------------
    Net income   2,027    10%    1,809     9%    2,757    14%     12%   (26%)
    -------------------------------------------------------------------------
    Earnings
     per share
     - basic      0.07            0.06            0.09             9%   (27%)
    -------------------------------------------------------------------------
    Earnings
     per share
     - diluted    0.06            0.06            0.09             0%   (33%)
    -------------------------------------------------------------------------
    Weighted
     average
     shares
     outstanding
     (000s)     30,968          30,440          30,949             2%     0%
    -------------------------------------------------------------------------
    Total
     assets     66,040          67,932          64,454            (3%)    2%
    -------------------------------------------------------------------------
    Total long
     term
     liabilities   203             483             134           (58%)   51%
    -------------------------------------------------------------------------
    Deferred
     revenue     9,114           7,981           8,573            14%     6%
    -------------------------------------------------------------------------
    Contracts
     in
     progress    8,375           5,946           6,070            41%    38%
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
    6 Months Ended                   28-Feb-09         29-Feb-08     2009 vs.
    (CAN $000s)                          % revenue         % revenue   2008
    -------------------------------------------------------------------------
    Total Revenue                 $39,240     100%  $39,333     100%      0%
    -------------------------------------------------------------------------
    Consulting fees                22,004      56%   23,403      60%     (6%)
    -------------------------------------------------------------------------
      Margin on consulting fees       42%               39%
    -------------------------------------------------------------------------
    Equipment sales                 3,361       9%    2,914       7%     15%
    -------------------------------------------------------------------------
      Margin on equipment sales       27%               26%
    -------------------------------------------------------------------------
    Total Solutions revenue        25,365      65%   26,317      67%     (4%)
    -------------------------------------------------------------------------
    Software license fees           8,388      21%    8,295      21%      1%
    -------------------------------------------------------------------------
      Margin on software
       license fees                   99%               95%
    -------------------------------------------------------------------------
    Support                         5,019      13%    4,190      11%     20%
    -------------------------------------------------------------------------
      Margin on support               93%               93%
    -------------------------------------------------------------------------
    Total Products revenue         13,407      34%   12,485      32%      7%
    -------------------------------------------------------------------------
    Interest income                   468       1%      531       1%
    -------------------------------------------------------------------------
      Consulting headcount (average)  274               271               1%
    -------------------------------------------------------------------------
      Gross margin                    60%               55%
    -------------------------------------------------------------------------
    Total Expenses                 19,016      48%   15,736      40%     21%
    -------------------------------------------------------------------------
    Consulting G&A                  3,142       8%    3,031       8%      4%
    -------------------------------------------------------------------------
    Sales & marketing               3,738      10%    2,634       7%     42%
    -------------------------------------------------------------------------
    Research & development          3,164       8%    3,315       8%     (5%)
    -------------------------------------------------------------------------
    General & administrative        7,635      18%    5,691      14%     34%
    -------------------------------------------------------------------------
      Operations headcount (average)  262               230              14%
    -------------------------------------------------------------------------
    Stock-based compensation          667       2%      445       1%     50%
    -------------------------------------------------------------------------
    Amortization                      670       2%      620       2%      8%
    -------------------------------------------------------------------------
    Foreign exchange translation
     gain (loss)                    1,612       4%     (787)     (2%)  (305%)
    -------------------------------------------------------------------------
    Net income (loss)               4,784      12%    4,048      10%     18%
    -------------------------------------------------------------------------
    Earnings per share - basic       0.16              0.13              23%
    -------------------------------------------------------------------------
    Earnings per share - diluted     0.15              0.13              15%
    -------------------------------------------------------------------------
    Weighted average shares
     outstanding (000s)            30,958            30,431               2%
    -------------------------------------------------------------------------
    Total Assets                   66,040            67,932              (3%)
    -------------------------------------------------------------------------
    Total Long Term Liabilities       203               483             (58%)
    -------------------------------------------------------------------------
    Deferred revenue                9,114             7,981              14%
    -------------------------------------------------------------------------
    Contracts in progress           8,375             5,946              41%
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Note: This section is forward-looking by nature. It is qualified entirely
    by the Forward-Looking Statements disclaimer at the beginning of this
    MD&A. It is also qualified by the principal risks that could affect our
    business (see page 52 - 56 of our 2008 Annual Report).
    -------------------------------------------------------------------------
    

    Revenue

    We achieved strong software license revenues during Q2-09. Sales of our
off-the-shelf products increased 45% compared to Q2-08 and 38% compared to
Q1-09. Year-to-date product revenues comprise 34% of total revenues, which is
consistent with our target range. Sales by our Reseller Partners have also
grown 68% compared to Q2-08.
    Revenues from our industry applications decreased in comparison to
previous quarters due to the long sales cycle associated with these large
value projects. Despite this, YTD revenues from our Production Management
business grew 25% compared to Q2-08. Our Industry Solutions have contributed
$0.89 million to product revenue in the first six months of FY-09 compared to
$0.33 million in the equivalent period of FY-08.
    Our Solutions revenue declined 6% compared to Q2-08. This is mainly
attributed to low utilization, which resulted in a 13% decrease in consulting
revenue. Billable headcount in Q2-09 increased 3% compared to the same period
in the prior year as we continue to build bench strength by recruiting
talented people from local universities and colleges. This decrease was offset
by higher equipment revenues which are ancillary to our business and will
fluctuate from period-to-period. We continue to believe that the opportunities
for our Solutions remain strong and that increased product revenue in Q2 will
result in additional Solutions business going forward.
    Year-to-date Solutions revenues have decreased 4% compared to FY-08 due
to lower utilization, despite a slight increase in headcount.

    Gross Margin

    Gross margin in Q2-09 was 59%, compared to 54% in Q2-08 and 61% in Q1-09.
Gross margin in Q2-09 was positively impacted by strong software license and
support revenues, which had margins of 99% and 93% respectively. These
positive contributions were offset by lower utilization, delays on certain
projects and an increase in lower margin equipment sales.
    Year-to-date gross margin was 60% compared to 55% in the first six months
of FY-08. This gross margin improvement is a result of higher consulting
margins (42% compared to 39% in FY-08) and the increased contribution of
higher margin Product revenues to the revenue mix.

    Overhead Expenses

    We have continued to invest in infrastructure to support future growth
objectives. While we have not seen this growth materialize over the first six
months of FY-09, we continue to see opportunities and believe that we are
doing the right things to be well-positioned as the economy improves. Combined
overhead expenses in Q2-09 were $9.69 million (49% of revenue), compared to
$7.92 million (41% of revenue) in Q2-08 and $9.32 million (48% of revenue) in
Q1-08.

    Higher operating expenses in FY-09 include continuing investments in the
following areas:

    
    -   We have continued strategic investments in sales and marketing to
        support top-line growth. Sales and marketing headcount have increased
        31% compared to Q2-08 while expenses increased 49% compared to Q2-08
        and 42% year-to-date. We have also continued to raise our profile
        within our core vertical industries through tradeshow attendance and
        involvement with industry interest groups.

    -   With lower utilization rates, we have taken the opportunity to roll-
        out training initiatives aimed at developing current and future
        leaders.

    -   We have continued to build our resource base in India. These
        resources provide consulting and support services to our clients
        globally as well as product development services. During Q2-09,
        overhead expenses have increased $0.55 million with respect to this
        venture.

    -   R&D expenses increased 4% compared to Q2-08 and decreased 5% year-to-
        date. Without the incremental SR&ED credits of $0.50 million received
        in Q1-09, R&D expenses increased 11% year-to-date. This is consistent
        with an increase of 8% in headcount compared to Q2-08 as we continue
        to invest in the development of next generation products.

    Net Income

    We recorded net income of $2.03 million and net margin of 10% in Q2-09,
compared to 9% in Q2-08 and 14% in Q1-09. Year-to-date net income was $4.78
million for a net margin of 12% compared to $4.05 million or a net margin of
10% in the same period of FY-08.

    The following factors impacted net margin in both the quarter and
year-to-date periods:

    -   Software license and support revenue, which have a higher margin than
        consulting and equipment have grown in terms of overall revenue mix
        (37% in Q2-08, 34% year-to-date).

    -   A foreign currency translation gain of $0.47 million in Q2-09,
        compared to a loss of $0.31 million in Q2-08, as the Canadian dollar
        continued to weaken relative to certain currencies in which we do
        business. Net of tax, this resulted in a $0.01 increase in EPS for
        Q2-09 compared to $(0.01) in Q2-08.

    -   A reduced effective tax rate due to a tax recovery of $0.18 million
        relating to research and development tax credits realized in our
        Australian operations.
    

    These positive contributors to net margin were offset by increases in
stock-based compensation expenses as additional RSUs were granted and
accumulated based on dividend payouts throughout the year and a reduction in
other income caused by reduced interest earned on cash and cash equivalents
compared to previous quarters.
    The following tables show the percentage of revenue by the various
currencies in which we do business, and the period-end exchange rates.

    
    -------------------------------------------------------------------------
                                                            Period End
                              % Billings by Currency      Exchange Rate
                                  (3 Months Ended)        for $1.00 CAN
    -------------------------------------------------------------------------
                               Q2-09   Q2-08   Q1-09   Q2-09   Q2-08   Q1-09
    -------------------------------------------------------------------------
    Australian Dollar            15%     25%     28%  0.8104  0.9231  0.8129
    -------------------------------------------------------------------------
    British Pound                12%     14%     13%  1.7969  1.9424  1.9071
    -------------------------------------------------------------------------
    Canadian Dollar              12%     24%     17%       -       -       -
    -------------------------------------------------------------------------
    Euro                         10%      3%      5%  1.5997  1.4806  1.5747
    -------------------------------------------------------------------------
    United States Dollar         50%     34%     37%  1.2600  0.9788  1.2402
    -------------------------------------------------------------------------
    Other Currencies              1%       -       -       -       -       -
    -------------------------------------------------------------------------
    

    Comprehensive Income

    In FY-08, we began to report other comprehensive income. Other
comprehensive income accounts for currency translation related to our
self-sustaining foreign operations and resulted in a foreign currency loss of
$0.27 million in the quarter and a loss of $0.88 million year-to-date as the
Canadian dollar gained strength against the Australian dollar and British
pound.

    Segment Results

    We report four strategic business segments based on how we monitor and
assess performance internally: North America, Asia-Pacific, Europe Middle East
& Africa (EMEA) and Products. A fifth segment, Corporate, captures corporate
expenses. External revenue represents sales derived from arms-length
customers. Intercompany revenues and expenses represent the software license
and support fees that are payable to the region that owns the intellectual
property and fees for borrowed consulting labour.

    
    -------------------------------------------------------------------------
    3 Months Ended
    28-Feb-09                 North    Asia-                  Corp-
    CAN$ (000s)             America  Pacific   EMEA  Products orate    Total
    -------------------------------------------------------------------------
    External revenue           6,417   4,196   4,580   4,468       -  19,661
    -------------------------------------------------------------------------
    Intercompany revenue
     (cost of sales)             129    (287)   (874)  1,032       -       -
    -------------------------------------------------------------------------
    % of external revenue        33%     21%     23%     23%       -    100%
    -------------------------------------------------------------------------
    Gross profit               3,038   1,495   2,235   5,142    (275) 11,635
    -------------------------------------------------------------------------
    Gross margin                 46%     38%     60%     93%       -     59%
    -------------------------------------------------------------------------
    Expenses                  (1,040) (1,510) (1,379) (2,691) (3,072) (9,692)
    -------------------------------------------------------------------------
    Other income (loss) &
     foreign exchange
     gain (loss)                 162     (59)    (41)      -     509     571
    -------------------------------------------------------------------------
    Income (loss) before taxes 2,160     (74)    815   2,451  (2,838)  2,514
    -------------------------------------------------------------------------
    External revenue change %
     (Q2-09 vs Q2-08)           (26%)     1%     (2%)   125%       -      1%
    -------------------------------------------------------------------------
    Employees at 28-Feb-09       133     133      83     132      61     542
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    3 Months Ended
    29-Feb-08                  North    Asia-                  Corp-
    CAN$ (000s)              America  Pacific   EMEA  Products orate   Total
    -------------------------------------------------------------------------
    External revenue           8,620   4,162   4,680   1,982       -  19,444
    -------------------------------------------------------------------------
    Intercompany revenue
     (cost of sales)            (930)   (144)   (646)  1,720       -       -
    -------------------------------------------------------------------------
    % of external revenue        45%     21%     24%     10%       -    100%
    -------------------------------------------------------------------------
    Gross profit               3,458   1,824   2,134   3,117       -  10,533
    -------------------------------------------------------------------------
    Gross margin                 45%     45%     53%     84%       -     54%
    -------------------------------------------------------------------------
    Expenses                  (1,727) (1,266)   (906)(1,794)  (2,223) (7,916)
    -------------------------------------------------------------------------
    Other income (loss) &
     foreign exchange gain
     (loss)                       10      59      84      -     (248)    (95)
    -------------------------------------------------------------------------
    Income (loss) before
     taxes                     1,741     617   1,312  1,323   (2,471)  2,522
    -------------------------------------------------------------------------
    Employees at 29-Feb-08       136     118      73    106       68     501
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    6 Months Ended
    28-Feb-09                 North    Asia-                   Corp-
    CAN$ (000s)             America  Pacific   EMEA  Products  orate   Total
    -------------------------------------------------------------------------
    External revenue          14,520   9,114   9,132   6,474       -  39,240
    -------------------------------------------------------------------------
    Intercompany
     revenue (expenses)         (748)   (481) (1,370)  2,599       -       -
    -------------------------------------------------------------------------
    % of external revenue        37%     23%     23%     17%       -    100%
    -------------------------------------------------------------------------
    Gross profit               6,998   3,692   4,878   8,209    (275) 23,502
    -------------------------------------------------------------------------
    Gross margin                 51%     43%     63%     90%       -     60%
    -------------------------------------------------------------------------
    Expenses                  (2,810) (3,143) (2,994) (4,613) (5,456)(19,016)
    -------------------------------------------------------------------------
    Other income (loss) &
     foreign exchange gain
     (loss)                        -      66     120       -   1,664   1,850
    -------------------------------------------------------------------------
    Income (loss) before taxes 4,188     615   2,004   3,596  (4,067)  6,336
    -------------------------------------------------------------------------
    External revenue change
     % (YTD-09 vs YTD-08)        (9%)    (3%)    (9%)    65%       -     (0%)
    -------------------------------------------------------------------------
    Average employees at
     28-Feb-09                   139     133      80     119      65     536
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
    6 Months Ended
    29-Feb-08                  North    Asia-                  Corp-
    CAN$ (000s)              America  Pacific   EMEA  Products orate   Total
    -------------------------------------------------------------------------
    External revenue          15,973   9,422  10,008   3,930       -  39,333
    -------------------------------------------------------------------------
    Intercompany revenue
     (expenses)               (1,626)   (412) (1,411)  3,449       -       -
    -------------------------------------------------------------------------
    % of external revenue        41%     24%     25%     10%       -    100%
    -------------------------------------------------------------------------
    Gross profit               6,361   4,454   4,750   6,168       -  21,733
    -------------------------------------------------------------------------
    Gross margin                 44%     49%     55%     84%       -     55%
    -------------------------------------------------------------------------
    Expenses                  (3,382) (2,685) (1,844) (3,637) (4,188)(15,736)
    -------------------------------------------------------------------------
    Other income (loss) &
     foreign exchange
     gain (loss)                  28      97     165       -    (681)   (391)
    -------------------------------------------------------------------------
    Income (loss) before
     taxes                     3,007   1,866   3,071   2,531  (4,869)  5,606
    -------------------------------------------------------------------------
    Average employees at
     29-Feb-08                   141     118      72     114      71     516
    -------------------------------------------------------------------------
    

    North America: External revenue in the North America segment decreased by
21% compared to Q1-09, by 26% compared to Q2-08 and by 9% year-to-date.
Reduced Q2-09 consulting revenue was the primary contributor, exceeding the
expected seasonal decline due to 10% fewer working days. Utilization and
headcount were both down in Q2-09 in comparison to Q1-09 and Q2-08. In
addition, growth in lower margin equipment sales in the second quarter
contributed to a reduction in gross margin.
    Cost of sales in Q2-09 was down compared to Q2-08 as a result of
decreases in headcount and commissions payable.
    Asia-Pacific: For the first half of FY-09, external revenues were
impacted by the strengthening of the Canadian dollar relative to the
Australian dollar, the primary currency in which we transact business in
Asia-Pacific (0.9231 at February 29, 2008 compared to 0.8104 at February 28,
2009).
    Compared to Q1-09, external revenue in Asia-Pacific decreased by 15% due
to lower utilization and headcount. In natural currency, consulting revenue
decreased by 18% and software license revenue decreased by 12%. In addition to
the company wide holiday closure, the second quarter spans the summer months
in Asia-Pacific and thus annual leave is typically higher in the quarter.
Gross margin decreased by 9% due to higher labour costs.
    In natural currencies, external revenues increased 13% in comparison to
the first half of FY-08 due to higher software license and support revenues.
Cost of sales increased as a result of higher salary costs and a headcount
increase of 13%. Overhead expenses have increased primarily due to a 31%
increase in overhead headcount.
    EMEA: External revenue in the EMEA segment was flat compared to Q1-09;
however the revenue mix changed to include more software license fees as a
result of a corporate license sale in the second quarter. Compared to Q1-09,
expenses decreased by 15% as start-up costs relating to increasing our
presence in the Middle East were largely incurred in Q1-09.
    Compared to Q2-08, external revenue decreased 2% as a result of lower
consulting revenues. Expenses have increased 52% due to strategic investments
in sales and marketing, which include higher travel and administrative costs.
Headcount increased 14% compared to Q2-08 which has contributed to higher
salary costs and employee related expenses (such as relocation and training).
    Year-to-date, revenue decreased by 9% as a result of lower software
license sales. Consulting revenue and support have remained consistent. The
overall number of employees in the region has increased by 11% primarily in
the Middle East.
    Products: External revenue in the Products segment represents direct
software license and support sales and implementation services executed by the
Products group. Intercompany revenue represents the software license and
support fees paid by the other segments.
    External revenue increased 123% compared to Q1-09 and 125% compared to
Q2-08. We continue to see success in our Products strategy as off-the-shelf
software license revenue increased 38% compared to Q1-09 and 45% compared to
Q2-08. Year to date, sales by our Reseller Partners have also grown 68%
compared to Q2-08. Gross margins were positively impacted by higher software
license revenues and lower commission expenses.
    Overhead expenses increased in comparison to Q2-08 as a result of
continued investment in sales and marketing; and costs associated with
commencing operations in India with Matrikon-SoftDEL.
    At the beginning of FY-09, we included Control Performance Monitor in our
off-the-shelf products as it had achieved the characteristics of our
definition (simple to use and install with less than two weeks implementation
and training required). Control Performance Monitor revenue is not included in
the off-the-shelf product revenue in the comparable period.
    Corporate: The Corporate segment includes all shared corporate services
(including executive management, finance, information technology and human
resources) that is not allocated to other segments. In addition, the Corporate
segment includes stock-based compensation, other income or expenses, foreign
exchange translation gains and losses and amortization. Expenses in this
segment fluctuate period by period based on corporate activity and foreign
exchange rate fluctuations.
    Corporate expenses increased 29% compared to Q1-09 as a result of higher
employee expenses, administration costs (such as relocation, training and
professional fees) and expenses associated with our India initiative. We also
continued to invest in our infrastructure to support future growth by
transitioning to a new enterprise resource planning system (ERP) on December
1, 2008. The Corporate segment was also positively impacted by a favorable
shift in foreign exchange in Q2-09, which resulted in a translation gain of
$0.47 million, compared to a gain of $1.14 million in Q1-09 and a loss of
$0.31 million in Q2-08.
    Year-to-date, corporate expenses increased 30% as a result of higher
employee expenses and third party consultancy fees.

    Quarterly Results

    The following table presents a summary of our unaudited consolidated
operating results for the past eight quarters. This information should be read
in conjunction with the applicable interim financial statements, notes to the
financial statements and management's discussion and analysis.

    
    -------------------------------------------------------------------------
    CAN $000s
    except per
    share             FY 07                   FY 08                  FY 09
    amounts        Q3      Q4      Q1      Q2      Q3      Q4      Q1      Q2
    -------------------------------------------------------------------------
    Revenue    19,009  18,435  19,889  19,444  20,536  20,162  19,579  19,661
    -------------------------------------------------------------------------
    Gross
     profit     9,789   9,361  11,200  10,533  11,533  11,903  11,867  11,635
    -------------------------------------------------------------------------
    Gross
     margin       51%     51%     56%     54%     56%     59%     61%     59%
    -------------------------------------------------------------------------
    Operating
     income
     (loss)    (1,531)   (227)  3,380   2,617   3,103   2,842   2,543   1,943
    -------------------------------------------------------------------------
    Net income
     (loss)    (2,085)   (245)  2,239   1,809   2,467   2,583   2,757   2,027
    -------------------------------------------------------------------------
    Net margin   (11%)    (1%)    11%      9%     12%     13%     14%     10%
    -------------------------------------------------------------------------
    Shares
     outstanding
     (000s)    30,191  30,308  30,598  30,440  30,548  30,636  30,949  30,968
    -------------------------------------------------------------------------
    Diluted
     shares
     outstanding
     (000s)    30,691  31,574  31,549  31,340  31,467  31,494  31,649  31,622
    -------------------------------------------------------------------------
    EPS (loss)
     - basic    (0.07)  (0.01)   0.07    0.06    0.08    0.09    0.09    0.07
    -------------------------------------------------------------------------
    EPS (loss)
     - diluted  (0.07)  (0.01)   0.07    0.06    0.08    0.08    0.09    0.06
    -------------------------------------------------------------------------
    Headcount     582     530     530     501     506     521     545     542
    -------------------------------------------------------------------------

    Management has not noted any change to the seasonality of our business as
reported in the 2008 annual MD&A.

    Liquidity & Capital Resources

    -------------------------------------------------------------------------
    At                                                     Q2-09      Q2-09
    (CAN $000s except                                    vs Q1-09   vs Q2-08
     ratios)              28-Feb-09 29-Feb-08 30-Nov-08  % Change   % Change
    -------------------------------------------------------------------------
    Cash & equivalents       8,793    20,022    10,551       (17%)      (56%)
    -------------------------------------------------------------------------
    Accounts receivable     25,848    16,975    25,067         3%        52%
    -------------------------------------------------------------------------
    Trade receivables       19,326    13,876    19,690        (2%)       39%
    -------------------------------------------------------------------------
    Average collection
     period
    (trade receivables)    82 days   78 days   81 days      1 day     4 days
    -------------------------------------------------------------------------
    Contracts in progress    8,375     5,946     6,070        38%        41%
    -------------------------------------------------------------------------
    Deferred revenue         9,114     7,981     8,573         6%        14%
    -------------------------------------------------------------------------
    Current liabilities     20,056    17,269    19,763         1%        16%
    -------------------------------------------------------------------------
    Cash flow from
     operations (YTD)       (1,792)    8,335      (554)     (223%)     (121%)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Note: This section is forward-looking by nature. It is qualified entirely
    by the Forward-Looking Statements disclaimer at the beginning of this
    MD&A. It is also qualified by the principal risks that could affect our
    business (see page 52 - 56 of our 2008 Annual Report).
    -------------------------------------------------------------------------
    

    The rolling 12-month average collection period (on trade receivables) was
81 days at the end of Q2-09, an increase of 4 days compared to the end of
Q2-08 and an increase of 1 day compared to Q1-09. Despite this, our
receivables aged greater than 90 days has continued to decrease as a
percentage of our overall trade receivables balance.
    Current liabilities increased to $20.06 million at the end of Q2-09,
compared to $19.76 million at the end of Q1-09 and $17.27 million at the end
of Q2-08. Compared to Q1-09, this decrease is a result of increases in
deferred revenue. Deferred revenue at the end of the Q2-09 includes $5.32
million in deferred support revenue and $3.79 million in unearned software
license, services and equipment revenue, compared to $4.21 million in deferred
support revenue and $4.36 million in unearned software license, services and
equipment revenue in Q1-09.
    Cash used by operating activities was $1.79 million in Q2-09, compared to
cash used by operations of $0.55 million in Q1-09 and cash provided by
operations of $8.34 million in Q2-08. The decrease over the Q1-09 is a result
of an increase in accounts receivable and contracts in progress at the end of
Q2-09 along with a decrease in accounts payable. The higher accounts
receivable and contracts in progress balances was primarily a result of delays
experienced during our transition to the new ERP. Now that the conversion has
been completed, we expect these balances to return to historic levels. In
comparison to the same quarter of FY-08, cash provided by operations decreased
due to unrealized foreign exchange gains and a significant increase in
accounts receivables and contracts in progress. We also maintain a $7.00
million line of credit that has not been accessed at February 28, 2009.
    In Q2-09, we paid a quarterly dividend of $0.03 per common share.
    Our effective income tax rate was 18.4% in Q2-09 and 18% for the first
half of FY-09. Our effective income tax rate has been reduced as a result of
tax recoveries realized from research and development credits in Australia and
foreign exchange translation gains, which are not taxable. Year-to-date, our
effective tax rate is 24.1% compared to 27.8% in Q2-08. Our expected range for
FY-09 of 27% - 32% remains unchanged.
    Management believes that we have the capital resources and liquidity
necessary to meet our commitments, support our operations and finance our
current growth strategies.

    Financial Instruments

    Forward Contracts: We periodically enter into forward contracts to
partially manage our exposure to currency fluctuations between United States
(US) and Canadian dollars. Forward contracts are entered into based on our
projected requirements for converting US cash to Canadian dollars. Forward
contracts are recorded at fair value and are not designated as hedges for
accounting purposes. Changes to the market value are recorded into income or
expense. The fair value of these contracts is included in accounts receivable
for an unrealized gain or accounts payable for an unrealized loss.
    At February 28, 2009, the fair value of forward contracts was $0.003
million compared to $0.08 million at February 29, 2008 and $0.04 million at
November 30, 2008.
    At February 28, 2009, we were committed to sell $1.00 million US dollars
in March 2009 at a rate of $1.28.

    Foreign Currency Translation

    During the six months ended February 28, 2009, we determined that our
British subsidiary, Matrikon UK Limited ("MUK") and our German subsidiary,
Matrikon Deutschland AG ("MDAG") are self-sustaining entities due to a change
in economic circumstances. The British pound is the functional currency of
MUK, while the Euro is the functional currency of MDAG. As a self-sustaining
entity, each of MUK and MDAG's operations are translated using the current
rate method, which means that assets and liabilities are translated at the
exchange rate in effect at the balance sheet date, while revenues and expenses
are translated using the average exchange rates over the period. Translation
gains and losses related to MUK and MDAG are included in accumulated other
comprehensive (loss) income in shareholders' equity.
    Foreign exchange gains or losses from our integrated international
operations are taken into income in the Consolidated Statements of Income.

    Off Balance Sheet Arrangements

    Matrikon is a lessee under several operating type leases for office
space, office equipment and motor vehicles and is also a party to research
funding arrangements with educational institutions in Canada and Australia.
The future cash flow impacts of these arrangements are summarized in the table
below. Matrikon is not party to any undisclosed off balance sheet
arrangements.

    
                          ---------------------------------------------------
                                               Payment Due
                                  Less than                            After
    At February 28, 2009   Total     1 year  2-3 years  4-5 years    5 years
    -------------------------------------------------------------------------
    Operating lease
     obligations
     (CAN $000s)           5,607      1,522      3,199        876         10
    -------------------------------------------------------------------------
    Other long term
     obligations
     (CAN $000s)             200        100        100          -          -
    -------------------------------------------------------------------------
    Foreign exchange
     forward contracts
     (US $000s)            1,000      1,000          -          -          -
    -------------------------------------------------------------------------
    

    Normal Course Issuer Bid

    Matrikon announced a normal course issuer bid on January 14, 2009. Under
the bid, Matrikon may acquire up to 1,547,595 common shares, representing 5%
of current issued and outstanding shares as at January 14, 2009. The bid
commenced January 16, 2009 and will end January 15, 2010. No shares were
purchased during Q2-2009.

    Share Data

    Matrikon is listed on the Toronto Stock Exchange under the trading symbol
"MTK". As at April 17, 2009 there were 30,891,356 common shares of the
corporation issued and outstanding and 305,550 options and 647,572 restricted
share units outstanding, each convertible into one common share upon exercise
or exchange.

    Critical Accounting Estimates

    These interim financial statements were prepared with the same critical
accounting estimates and methods as fiscal year 2008. Please see pages 50-51
of Matrikon's annual MD&A for the fiscal year ended August 31, 2008 dated
November 5, 2008 for a discussion of these estimates.

    Basis of Presentation

    During Q2-09, we acquired a 49% equity interest in Matrikon SoftDEL
Private Ltd. ("MSPL"). As a result of our equity interest and operational
agreements, we have determined that we are the primary beneficiary as defined
by the CICA Handbook's Accounting Guideline 15 (Ac-G 15), "Consolidation of
Variable Interest Entities." Pursuant to AcG-15, we have consolidated the
results of MSPL since the date of the acquisition and have recorded the equity
in MSPL that is attributable to the partners of MSPL as non-controlling
interest.

    Recent Accounting Pronouncements Issued and Not Applied

    Convergence with International Financial Reporting Standards ("IFRS")

    Canada's Accounting Standards Board ratified a strategic plan that will
result in GAAP, as used by Canadian public companies, being evolved and
converged with IFRS over a transitional period to be completed by 2011. The
official changeover date to IFRS is for interim and annual financial
statements related to fiscal years on or after January 1, 2011. For Matrikon
this will be the period started September 1, 2011. We are currently assessing
the impact of the ultimate adoption of IFRS on our future financial reporting.
    We have established a Financial Reporting Team to review the adoption of
IFRS. The team has provided updates to management and the Audit Committee. We
have engaged an external expert advisor to assist in our assessment. We are
closely monitoring regulatory developments made by the Canadian Institute of
Chartered Accountants and the Canadian Securities Administrator that may
affect the timing, nature or disclosure of our adoption of IFRS. We are also
monitoring developments in accounting made by the Accounting Standards Board
of Canada (AcSB) and the International Accounting Standards Board (IASB) to
ensure that on adoption of IFRS, we are compliant with IFRS as issued by the
IASB.

    Goodwill and Intangible Assets

    In February 2008, the CICA issued Handbook Section 3064 - "Goodwill and
Intangible Assets" which will replace Handbook Section 3062 - "Goodwill and
Other Intangible Assets" and Section 3450 - "Research and Development Costs".
This revision aligns Canadian GAAP with IFRS and establishes standards for the
recognition, measurement, presentation and disclosure of goodwill and
intangible assets. This section applies to fiscal years beginning on or after
October 1, 2008. We are currently in the process of determining the impact of
adopting this new standard. This standard applies to our interim and annual
financial statements beginning September 1, 2009.

    Business Combinations

    In January 2009, the CICA issued Handbook Section 1582 - "Business
Combinations" which will replace Handbook Section 1581 - "Business
Combinations". Section 1582 requires that most identifiable assets,
liabilities, non-controlling interests and goodwill acquired in a business
combination will be recorded at fair value. Obligations for contingent
considerations and contingencies will also be recorded at fair value at the
acquisition date. The standard also requires acquisition-related costs to be
expensed as incurred and provides guidance on the accounting for restructuring
costs. This new standard substantially harmonizes Canadian GAAP with IFRS.
This section is applied prospectively to business combinations for which the
acquisition date is on or at the beginning of the first annual reporting
period beginning on or after January 1, 2011, specifically September 1, 2011
for our company. Earlier application is permitted. We will assess the impact
of this new standard prior to adoption.

    Consolidated Financial Statements

    In January 2009, the CICA issued Handbook Sections 1601 - "Consolidated
Financial Statements" and 1602 - "Noncontrolling Interests" which will replace
Handbook Section 1600 - "Consolidated Financial Statements". Section 1601
establishes standards for the preparation of consolidated financial
statements. Section 1602 establishes standards for accounting for a
non-controlling interest in a subsidiary in consolidated financial statements
subsequent to a business combination. These new standards substantially
harmonize Canadian GAAP with IFRS. These sections are to be implemented
concurrently with Section 1582.We will assess the impact of these new
standards prior to adoption.

    
    Change in Accounting Policies and Recently Adopted Canadian Accounting
    Pronouncements
    

    Capital Disclosures In November 2006, the CICA issued the new handbook
Section 1535, "Capital Disclosures," effective for annual and interim periods
beginning on or after October 1, 2007, specifically September 1, 2008 for our
company. This section establishes standards for disclosing information about a
company's capital and how it is managed in order that a user of the financial
statements may evaluate the company's objectives, policies, and processes for
managing capital. The adoption of this standard did not have an impact on our
financial position or the results of our operations.

    Financial Instruments

    In March 2007, the CICA issued Handbook Section 3863 - "Financial
Instruments - Presentation" to enhance financial statement users'
understanding of the significance of financial instruments to an entity's
financial position, performance and cash flows. This section establishes
standards for presentation of financial instruments and non financial
derivatives. It deals with the classification of financial instruments from
the perspective of the issuer, between liabilities and equity, the
classification of related interest, dividends, gains and losses, and the
circumstances in which financial assets and financial liabilities are offset.
This standard harmonizes disclosures with International Financial Reporting
Standards.
    CICA Handbook Section 3862 "Financial Instruments - Disclosures"
complements CICA Handbook Section 3861 with expanded disclosure requirements
for financial assets and liability categories. This standard harmonizes
disclosures with IFRS.
    These new standards apply to fiscal years beginning on or after October
1, 2007. This applies to our interim and annual financial statements beginning
September 1, 2008. The adoption of these standards did not have an impact on
the classification or valuation of our financial instruments.

    Risks Related to Our Business

    There has been no significant change in our risk factors from those
described in our 2008 Annual Report. Please see pages 52-56 of Matrikon's 2008
Annual Report.

    Change in Internal Control

    On December 1, 2008, we began the transition to a new ERP system. The ERP
includes the systems for recording transactions and forms the basis of our
financial statement preparation. We determined that a weakness existed
relating to the lack of access controls to the ERP, as users in our accounting
departments required administrative system rights to complete certain tasks.
The weakness identified is mitigated through compensating controls such that
there is no impact on our financial reporting and internal controls over
financial reporting. The system access control weakness will be rectified in
Q3-09.

    Internal Control over Financial Reporting and Disclosure Controls

    There were no changes during Q2-09 that materially affected or are
reasonably likely to materially affect our internal control over financial
reporting and disclosure controls. Please see page 57 of Matrikon's 2008
Annual Report for a discussion of internal controls over financial reporting
and disclosure controls.
    At August 31, 2008, we reported that we did not sufficiently design and
maintain effective controls over the identification of projects that should be
accounted for using Contract Accounting as defined by SOP 81-1. During Q2-09,
we continued to implement procedures that require all material contracts to be
reviewed, prior to commencement, to identify projects that require contract
accounting treatment. During the remainder of fiscal 2009, we will continue to
take steps to remediate this weakness and monitor the effectiveness of the
procedures management has put in place.

    Subsequent Events

    Subsequent to the quarter, our Board of Directors declared a dividend of
$0.03 per common share payable on May 13, 2009 to shareholders of record as of
April 29, 2009. The dividend is an eligible dividend for Canadian income tax
purposes.
    Subsequent to the quarter, we have also repurchased and cancelled 83,312
shares through the Normal Course Issuer Bid for a total of $0.14 million.

    
    -------------------------------------------------------------------------
    About Matrikon

    Founded in 1988, Matrikon is a growing international provider of
    integrated industrial intelligence solutions that enable our industrial
    customers to improve operating efficiency. Solutions include data
    acquisition and storage, data analysis for plant optimization, decision
    support systems, data connectivity and web delivered data presentation
    for improved collaboration.

    Matrikon is one of the largest industrial solution integrators in North
    America with a client base diversified across a number of industries,
    including oil and gas, power, forestry pulp and paper, refining and
    petrochemicals and mining and mineral processing.

    At February 28, 2009, Matrikon had 542 employees, including 105 in
    corporate and administrative services, 67 in sales and marketing, 102 in
    product development and support and 268 in professional services
    (Solutions).
    -------------------------------------------------------------------------
    





For further information:

For further information: Nicole Sayler, Corporate Communications
Director, (780) 945-4010, (877) 628-7456 x 4010, email:
nicole.sayler@matrikon.com

Organization Profile

MATRIKON INC.

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