COM DEV Announces Preliminary Third Quarter Results

CAMBRIDGE – On August 26 COM DEV International Ltd. announced preliminary financial results for the three-month period ended July 31, 2010. All figures cited in this news release are based on preliminary financial data and are subject to change, as a result of the quarterly financial review process. All amounts are stated in Canadian dollars.

Management currently expects third quarter results to be as follows:

· Revenue of approximately $52 million

· Gross margin of 16%

· Net loss of approximately $1.7 million

· New orders of approximately $47 million

· Backlog of approximately $123 million at July 31, 2010, plus an additional $21 million in follow-on orders expected from Authorities to Proceed (ATPs) already awarded

· Cash balance of $9 million at July 31, 2010

Management now expects annual revenues for fiscal 2010 to be approximately 5% lower than fiscal 2009 revenues. This compares to previous guidance of minimal revenue growth.

“Our results in the third quarter were affected by continuing cost growth on the five programs that have recently proved troublesome for us,” said John Keating, CEO of COM DEV International. “These programs caused a combined negative gross margin impact of $6.7 million in the quarter. Collectively, those programs are 86% complete and are expected to represent a steadily decreasing proportion of our revenues, falling from 5% of Q3 2010 revenues to less than 2% of revenues by the second half of next year. We believe we have taken the appropriate steps to fully address the expected costs on these five programs, so they won’t continue to generate negative gross margins.

“The balance of our business remains on track and performing in line with our expectations, and our management team is committed to doing what is necessary to improve profitability. We are focusing on the pursuit of those opportunities that are best aligned with our core strengths, and we are working to ensure that our resources match current revenue opportunities,” Mr. Keating added.