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Fourth quarter results announced for Com Dev

Com Dev : 01 December, 2009  (Company News)
Disappointing performance on government programs had adverse affect on Com Dev quarterly results but annual growth still expected to be registered
Com Dev International has announced preliminary financial results for the three-month period ended October 31, 2009. All figures cited in this news release are based on preliminary financial data and are subject to change as a result of the year-end audit process. All amounts are stated in Canadian dollars.

Management currently expects fourth quarter results to be as follows:

- Revenue of $56 to $58 million
- Gross margin of 25%
- Net income of less than $1 million
- New orders of $66 to $68 million
- Backlog of $162 to $164 million at October 31, 2009
- Cash balance of $21 million at October 31, 2009

'We expect to report full year revenue growth of 14% and net income growth of over 20%, however, fourth quarter results were affected by disappointing performance in two of our domestic government programs,' said John Keating, CEO of Com Dev International. 'It has become apparent that the level of work required to satisfy the program requirements, was underestimated. In addition, we have identified problems with project management processes in the division, and in the fourth quarter we also experienced challenges with subcontractors that have since been resolved. We expect the combined effect of these issues to be a $4.3 million shortfall to both revenue and net income compared to our forecasts for the division. Today we announced that Dave Lizius has assumed the role of President of Com Dev Canada. Dave is a seasoned veteran of Com Dev and the space industry, and we believe he is the right person to lead the division as they address these issues, and move forward to capitalize on the government market opportunities in Canada.'

In the fourth quarter management also expects to record an unrealized foreign exchange loss of $1.5 million on the Company's portfolio of currency hedges due to the late October strengthening of the US dollar versus the Canadian dollar. This exchange loss is based on the mark-to-market valuation calculation using the spot rate of exchange on October 31, 2009, and varies daily as the spot rate changes.

Mr. Keating continued: 'We are encouraged by the preliminary results from our other three divisions which comprise over 80% of our business, and by our prospects for fiscal 2010. We expect to report record orders of nearly $250 million for 2009, and our sales pipeline remains full. In 2010 we anticipate revenue growth of at least 10%. Several very promising new business initiatives should begin to show traction towards the end of the year.'

Com Dev expects to reports its complete financial results for fiscal 2009 on January 11, 2010.
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