Company reports record revenue; increases revenue guidance for the year

CAMBRIDGE - COM DEV International Ltd. announced its second quarter financial results for the three-month period ended April 30, 2009. All amounts are stated in Canadian dollars unless otherwise noted.

Second Quarter Highlights

· Revenue was $64.1 million, an increase of 18% over the $54.2 million recorded in the second quarter of 2008.

· Gross margin was 28%, compared to 24% in Q2 2008.

· Net income was $4.9 million, or $0.07 per share, compared to $2.0 million or $0.03 per share for the prior year period.

· New orders won in the second quarter totaled $50 million, compared to $42 million a year earlier and $88 million in the first quarter of fiscal 2009.

· Backlog at April 30, 2009 was $173 million, compared to $189 million three months earlier.

· The Company completed an equity financing which raised gross proceeds of $23 million, primarily to fund the commercialization of its AIS technology.

· Subsequent to the end of the quarter, the Company entered into an agreement to purchase a building in Cambridge, Ontario with 30,000 square feet of office and lab space. The building will be occupied by COM DEV’s Mission Development Group and newly formed subsidiary exactEarth™ Ltd.

“We generated record revenue in the second quarter and grew our margins and our bottom line, even as we continued to invest in the growth of the Company,” said John Keating, CEO of COM DEV. “The space sector remains healthy in the face of broader economic challenges. With a solid backlog and bright prospects for continuing strength in our new order activity, we are sufficiently confident to raise our revenue guidance to growth of at least 15% in fiscal 2009.”

Financial Review

COM DEV’s fiscal 2009 second quarter revenues of $64.1 million represented an increase of $9.9 million or 18% over the second quarter of 2008. The revenue split between the three market segments was 58% commercial, 26% civil and 16% military, compared to a 61/27/12 split in the second quarter of 2008. On a year-to-date basis, revenues of $120.6 million are 22% higher than revenues in the first six months of fiscal 2008. Management now anticipates full year revenue growth of at least 15%, compared to earlier guidance of growth of at least 10%.

COM DEV received new orders totaling $50 million during the quarter, of which 64% were commercial, and the remainder were civil. In Q2 2008 the Company booked $42 million of new orders, with a commercial/civil/military split of 64/34/2.

Order backlog at quarter-end was $173 million, compared to a record backlog of $189 million three months earlier, and $120 million one year ago. Backlog was split between the Company’s commercial, civil and military sectors at a ratio of 45%, 40% and 15% respectively, compared to 44%, 35% and 21% at the end of Q1 2009.

Gross margin was $17.8 million in Q2 2009, representing 28% of revenues, compared to $12.8 million or 24% of revenues in Q2 2008. Improved margins reflect the positive impacts of a stronger U.S. dollar, and higher volumes of work flowing through the organization during the period.

Net research and development expense was $4.5 million in the quarter, compared to $3.0 million in the second quarter of 2008. The increase was due to a combination of lower outside funding than the prior year, and spending on a development project which the Company believes holds potential for future work in both Europe and North America. Gross R&D spending in the quarter was $5.5 million, compared to $4.6 million in Q2 2008. Outside funding was $1.0 million in the current quarter, compared to $1.7 million a year earlier.

Selling, general and administrative expenses were $8.1 million in the second quarter, compared to $8.5 million in Q2 2008, while as a percentage of total revenue, SG&A was 13%, down from 16% a year earlier. Reduced costs associated with the work of the Special Committee were partly offset by increased costs related to bidding activities, business development, and corporate development.

Net income for the quarter was $4.9 million, up from $2.0 million in Q2 2008, while earnings per share were $0.07, compared to $0.03 a year earlier.

COM DEV ended the quarter with $31.9 million of cash and equivalents, compared to $9.2 million at January 31, 2009. Operating activities generated $7.2 million of cash in Q2 2009, while financing activities generated $19.6 million, primarily due to the issuance of 7,797,000 new common shares. At April 30, 2009, the Company had outstanding debt of $25.5 million including the current portion, and its $27 million line of credit facility was not drawn upon.

COM DEV’s basic share count averaged 73,790,688 (fully diluted: 74,009,630) in the second quarter, and stood at 76,100,289 on April 30, 2009.