MDA Reports First Quarter 2003 Results

Results From Operations

First quarter 2003 revenues increased 19% to $153.0 million. This compares to revenues of $128.9 million for the three months ended March 31, 2002. Information Systems contributed $80.1 million of these revenues compared to $77.0 million for the three months ended March 31, 2002. Information Products had revenues of $72.9 million, compared to $51.9 million for the three months ended March 31, 2002.

Net earnings increased 29% to $10.3 million from $8.0 million the prior quarter, and to $0.27 diluted earnings per common share for the three months ended March 31, 2003 from $0.21 per common share for the three months ended March 31, 2002.

Earnings before income taxes, amortization of goodwill and capital assets, and interest expense (“EBITDA”) increased 21% to $23.9 million for the three months ended March 31, 2003, from $19.8 million for the three months ended March 31, 2002.

As at March 31, 2003 the Company had backlog of $732 million, including option backlog of $407 million.

Financing and Investing Activities

As at March 31, 2003, total assets employed were $540 million.

During the quarter, the Company renewed its $300 million credit facility, with 100% participation from its banking syndicate.

After tax operating cash flows for the quarter, net of purchases of capital and intangible assets, increased 50% to $12.1 million from $8.0 million for the first quarter of 2002. After financing the acquisition of Millar & Bryce, net long-term debt (debt less cash) was $88.9 million at March 31, 2003, compared to $85.7 million at December 31, 2002.

Other Matters

During the quarter the Company acquired 100% of the outstanding common shares of Millar & Bryce Limited for cash consideration of £7.8 million and contingent consideration of £1.5 million. Millar & Bryce is the largest, most established commercial provider of title and legal information in Scotland.

Operational Highlights

MDA provides essential information from anywhere in the world for decision making in the workplace, through two principal groups - Information Systems and Information Products.

The Information Systems Group provides mission critical information systems that help organizations achieve their prime operational objectives. In the 2 months since reporting our year-end results:

MDA continued to improve its position to play a key role in Mars exploration. Following the recent selection for one of the Definition Studies for the 2007 Mars Scout Mission, the Canadian Space Agency awarded MDA a $2.3 million contract to jointly develop concepts with NASA for the Mars Science Laboratory mission.

Manufacture of RADARSAT-2 is progressing as planned on many fronts. However, due to a delay in the development of a few critical components, the spacecraft as a whole is now significantly behind schedule. The ground segment continues on track.

Recently, work restarted on the Feasibility Study for an innovative, low cost tandem topographic mission with RADARSAT-2. The Canadian Space Agency has awarded MDA a $300,000 contract to analyze the feasibility, operational effectiveness, and affordability of such a mission.

In the Defence area, we won a $2.7 million contract to upgrade the Naval Combat Operator Trainer (NCOT) for the Canadian Department of National Defence. This is a computer-based simulator of the combat systems onboard the Iroquois and Halifax class warships of the Canadian Navy, and it’s used for training new sailors as well as experienced personnel. More recently we were awarded an additional $1.1 million for NCOT Operations and Maintenance support over the next fiscal year.

In the United States, we received a $2.3 million contract from NASA's Flight Mechanics Lab at the Johnson Space Center to provide software that will enable NASA to do 3-D visualizations and animations of data collected during space missions.

Also this quarter, the United States Air Force exercised a $2.5 million option to deploy the Terminal Instrument Procedure system at the Air Mobility Command. This system, which is used to create flight paths that are clear of obstacles and obstructions, has been under development with the USAF for the past two years. We continue to enhance the system as the Air Force has a further option to expand deployment to other Major Commands and Units in the future.

Finally, the MDA Systems team secured contracts with three more Local Authorities in the U.K. to modernize the processing of land information requests. Liverpool City Council, South Norfolk, and the Borough of Telford & Wrekin signed $1.5 million in first phase contracts under the Local Authority Modernization Program.

The Information Products Group aims to provide everything there is to know about a parcel of land. During the past two months, our Geographic Information Products Group secured a number of contracts:

The $4.5 million second phase of the Environmental Monitoring Information Network in Bangladesh was approved for implementation. This network will be used at both the local and national levels to help authorities predict environmental incidents such as flood or drought, and allow Bangladeshi authorities to address multiple water use issues.

We continued to book defence intelligence work worth $3.8 million. We also completed an important order to provide the U.S. National Imagery and Mapping Agency with a multi-level landcover database for more than 50% of the Earth. NIMA will use the new landcover information for a variety of logistical and planning purposes.

MDA signed a multi-year contract with Jeppesen, a subsidiary of Boeing Commercial Aviation Services, to provide a geographic information database for 289 airports around the world. Using high-resolution satellite imagery, we’ll produce information on runways and taxiways, which will increase airline safety and efficiency.

We commenced work on the third year of a long-term contract to provide land information of New York State for use by federal, state, and local government authorities. This phase involves 15 counties across the State.

And we were awarded a contract with a Texas engineering firm for 3-D land information to help build an effective drainage system.

In the Legal and Asset Information area, transaction levels in British Columbia and the United States continue to be strong after the traditionally slow time earlier in the year.

In the U.S., MDA introduced two new products - TrendFinder, an analytical Internet tool that allows realtors and lenders to monitor property market trends on a monthly basis, and Home Value Calibrator, which can be used by lenders for mortgage portfolio management.

At LandMDA, transaction volumes in Florida were steady at about 1,800 per week. In addition, we’ve been processing our first portfolio of 3,000 transactions from a new customer. In California, a number of prospective customers are testing our product, generating 100 transactions a week. We expect a few of these to convert to significant product orders in the next three months. Some of these prospective customers in California are already served by LandMDA in Florida.

In England and Wales, NLIS Hub transactions are over 4,300 per week, compared to 3,500 at last report. With regard to the Differential Pricing Program, 137 Local Authorities have now agreed to participate in the program, up from 106 when we last reported two months ago. Currently, 32% of NLIS Local Authority transactions are differentially priced. When all 137 Local Authorities complete implementation, 36% of transactions will be differentially priced.

The number of Local Authorities electronically connected continues to increase, and now account for just over 50% of all NLIS searches. At this point, 184 Local Authorities are able to handle search requests electronically. That's up from 165 at last report.

At our NLIS Channel, TransAction Online marked a major milestone of its own. We've just registered our 1,000th legal firm as a customer.

And in Scotland, we're rolling out a new Local Authority search product, the Property Enquiry Certificate. This is a document that provides specific information about a property and identifies any adverse findings, so that a buyer is aware of any potential problems with the site.

Related Websites:
www.mdacorporation.com