CAMBRIDGE - COM DEV International Ltd. announced its third quarter financial results for the three-month period ended July 31, 2009. All amounts are stated in Canadian dollars unless otherwise noted.

Third Quarter Highlights

* Revenue was $61.5 million, an increase of 19% over the $51.5 million recorded in the third quarter of 2008.
* Gross margin was 29%, compared to 26% in Q3 2008.
* Net income was $5.2 million, or $0.07 per share, compared to $4.3 million or $0.06 per share for the prior year period.
* New orders won in the third quarter totaled $45 million, compared to $95 million a year earlier and $50 million in the second quarter of fiscal 2009.
* Backlog at July 31, 2009 was $156 million, compared to $173 million three months earlier.
* During the quarter the Company established a subsidiary, exactEarth™ Ltd, to implement full commercialization of its space-based AIS technology.

“Excellent operational performance in the third quarter allowed us to deliver our best gross margin percentage in over two years, and our best ever in dollar terms,” said John Keating, CEO of COM DEV. “Our business development team has been very busy pursuing new contracts as satellite order activity has been very healthy. For fiscal 2009 we remain on track to achieve record orders and revenue growth of at least 15%.”

Financial Review

COM DEV’s fiscal 2009 third quarter revenues of $61.5 million represented an increase of $10.0 million or 19% over the third quarter of 2008. While revenues declined by $2.6 million compared to the record level of Q2 2009, the strengthening of the Canadian dollar versus the U.S. dollar during the third quarter negatively impacted reported revenues by $3.5 million, and gross margin by $2.5 million. The revenue split between the three market segments was 52% commercial, 32% civil and 16% military, compared to a 59/26/15 split in the third quarter of 2008. On a year-to-date basis, revenues of $182.1 million are 21% higher than revenues in the first nine months of fiscal 2008. Management continues to anticipate full year revenue growth of at least 15%.

COM DEV received new orders totaling $45 million during the quarter, of which 60% were commercial, 23% were civil, and 17% were military. In Q3 2008 the Company booked $95 million of new orders, with a commercial/civil/military split of 38/43/19.

Order backlog at quarter-end was $156 million, compared to a backlog of $173 million three months earlier, and $161 million one year ago. Backlog was split between the Company’s commercial, civil and military sectors at a ratio of 46%, 35% and 19% respectively, compared to 45%, 40% and 15% at the end of Q2 2009.

Gross margin was $18.0 million in Q3 2009, representing 29% of revenues, compared to $13.1 million or 26% of revenues in Q3 2008. Improved margins reflect the positive impacts of a stronger U.S. dollar compared to a year earlier, and higher volumes of work flowing through the organization during the period.

Net research and development expense in Q3 2009 was $3.6 million, representing a $1.5 million increase from one year earlier, but a $0.9 million decrease from Q2 2009 levels. Gross R&D spending of $4.5 million in the quarter was consistent with $4.6 million in Q3 2008 and down from $5.5 million in Q2 2009. The year-over-year increase in net R&D expense was due to a reduction in outside funding to $0.9 million in the current quarter, compared to $2.5 million a year earlier, and $1.0 million in Q2 2009.

Selling, general and administrative expenses were $8.5 million in the third quarter, compared to $6.5 million in Q3 2008. As a percentage of total revenue, SG&A was 14%, compared to 13% a year earlier. The increase is due to the incremental SG&A cost of the COM DEV USA operations, increased foreign exchange rate impact on those U.S. costs, increased long-term incentive compensation costs, higher selling and business development costs and the increased costs of the exactEarth initiative.

Net income for the quarter was $5.2 million, up from $4.3 million in Q3 2008, while earnings per share were $0.07, compared to $0.06 a year earlier. Net income improved from $4.9 million in Q2 2009.

COM DEV ended the quarter with $19.8 million of cash and equivalents, compared to $31.9 million at April 30, 2009. During the third quarter the Company used $6.2 million of cash for operating activities, $1.8 million for financing activities, primarily for debt repayment, and $4.2 million for investing activities, including the $2.2 million purchase of a 30,000 square foot building in Cambridge, Ontario to provide office and lab space to the Company’s Missions Development Group and its exactEarth subsidiary.

At July 31, 2009, the Company had outstanding debt of $21.5 million including the current portion. Its operating line of credit, renegotiated during the third quarter to a maximum of $32 million, was not drawn upon.

COM DEV’s basic share count averaged 76,100,289 (fully diluted: 76,185,520) in the third quarter, and stood at 76,100,289 on July 31, 2009.