MDA Reports Third Quarter 2003 Results

Results From Operations

Third quarter 2003 revenues increased 13% to $166.9 million. This compares to revenues of $147.9 million for the third quarter of 2002. Information Products revenues increased 35% to $88.1 million, compared with the third quarter a year ago. Information Systems contributed revenues of $78.8 million for the quarter compared to $82.6 million for the third quarter last year. The Company continues to maintain a very healthy backlog and ended the quarter with $696 million of backlog, 90% of which relates to Information Systems.

During the year, the Canadian dollar has strengthened significantly. The exchange rates that are used for preparation of Canadian dollar financial statements have reduced the reported results from our foreign operations. From an accounting perspective, a strengthening in the Canadian dollar decreases the value of our foreign operations' financial results when consolidating the revenues and operating results from these self-sustaining operations. It is important to note that a strong Canadian dollar supports the Company's international expansion strategy.

Net earnings for the quarter increased 15% to $10.9 million ($0.28 per common share diluted), compared to net earnings for the 2002 third quarter of $9.5 million ($0.25 per common share diluted). In addition to the foreign exchange impact noted above, the Company also expensed the cost of its long-term compensation plan which was introduced January 1, 2003. Excluding these two items, the Company's earnings per share would have increased by $0.02 to $0.30 per common share for the three months ended September 30, 2003.

Revenues increased 12% for the nine months ended September 30, 2003 to $467.2 million. Information Systems contributed $225.1 million of these revenues compared to $235.5 million for the nine months ended September 30, 2002. Information Products revenues increased 34% to $242.1 million, compared to $180.5 million for the nine months ended September 30, 2002. Included in the results for 2003 is the acquisition of Millar & Bryce. Without Millar & Bryce, revenues for the Information Products Group increased 26% year over year.

Net earnings increased 20% to $32.0 million for the nine months ended September 30, 2003 ($0.83 per common share diluted). Net earnings for the nine months ended September 30, 2002, were $26.7 million ($0.70 per common share diluted).

Earnings before income taxes, amortization, and interest expense ("EBITA") increased to $25.0 million for the quarter, from $22.7 million for the 2002 third quarter. EBITA as a percentage of revenues was 15.0% for the three months ended September 30, 2003. For the nine months ended September 30, 2003, EBITA increased to $73.3 million, from $64.8 million for the prior period. EBITA as a percentage of revenues was 15.7% for the nine months ended September 30, 2003.

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. During the third quarter of 2003, MDA achieved several milestones:

In the robotics area, MDA has been pursuing positioning for Mars exploration work with several Space agencies. A significant breakthrough occurred this quarter when, after a challenging competition, NASA selected the Phoenix mission. MDA's role in this mission is expected to be the supply of a system to provide information on the atmosphere of Mars.

The Company's U.S. Information Systems operation received a $15 million contract extension for engineering work in support of the International Space Station program. The contract from Boeing involves systems engineering and software development for the Space Station.

In the Earth observation area, MDA was awarded a multi-million dollar contract to participate in the delivery of an additional mobile ground station to the United States military. The station will be able to obtain information from RADARSAT-1, as well as other satellites.

The Company was also awarded a job to upgrade an Asian station to handle DigitalGlobe's high resolution satellite data.

Although MDA was a major supplier to the final bidder on the Landsat Data Continuity mission, the United States government has decided to cancel the procurement at this point.

The RapidEye project continued to move ahead. Approvals in principle have been obtained, and the project is now in the final due diligence and documentation phase.

In the Defence area, the Information Systems group achieved a number of milestones, including:

• A $5.6 million, five-year contract extension from the Canadian Armed Forces for a mission critical system used for passenger booking and aircraft scheduling in Canada and Germany.

• A $1.9 million three-year renewal of an on-going research and development contract to work on an experimental airborne sonar system, to help Canada's CP 140 patrol aircraft monitor coastal waters.

• The successful completion of the Canadian Military Police Information System, which provides officers with the ability to record, maintain, and analyze information as they carry out their duties nationwide.

As well, the Company's major contract involving a new imaging and surveillance radar system for Canada's fleet of CP-140 patrol aircraft is proceeding well. The radar hardware subcontractor has been selected, and the project is moving to preliminary design completion in November. Concurrently, detailed planning and costing is now underway for Phase II, which is scheduled to start in January 2004.

MDA's Information Systems group was also awarded a $4.1 million contract to modernize the processing of land information requests at another Local Authority in England - the Borough of Telford & Wrekin. As part of the National Land Information System in the U.K., MDA will provide a turnkey system as well as manage the process of converting paper records to a digital database for the new system.

And finally, MDA teamed with the Clinton Group to win a contract with Health Canada. The project aims at defining new processes and business systems to support healthcare workers in obtaining all the tools and information they need to do their jobs - wherever they are.

The Information Products Group aims to provide everything there is to know about a parcel of land. During the third quarter of 2003, the MDA Geographic Information Products Group made major breakthroughs in the Defence and Enforcement markets.

MDA was awarded up to $58 million in land information business by various defence intelligence customers. So far orders have already been received for $34 million worth of information. The Company's secure 24-7 production centre is being used to generate the information products from satellite imagery.

MDA also received a $2.1 million order from an Asian customer for information products from RADARSAT-1. The products are used primarily for input to rice forecasting models. In British Columbia, Canadian Forest Products and Abitibi Consolidated awarded MDA $2.2 million worth of orders to produce forest inventory information products in the northern region of the province. This information is then used for forest planning and annual allowable cut calculations.

In the Legal and Asset Information area, transactions at BC OnLine continue to be strong.

In the United States, MDA's DataQuick has formed a strategic alliance with FNC Inc. that will considerably expand the Company's product offering to banks and appraisal firms. MDA's information products will now incorporate one of the largest proprietary appraisal databases available in the United States. The Company recently introduced the first new product in this area.

In England and Wales, NLIS Hub transactions are over 6,200 per week, compared to 5,500 at last report. The number of Local Authorities electronically connected continues to increase, and now account for 62% of all NLIS searches. At this point, 242 Local Authorities are able to handle search requests electronically. That's up from 212 at last report.

With regard to Differential Pricing, 156 Local Authorities have now agreed to participate, versus 146 at last report. In addition to the progress on Differential Pricing, the Company has focused its efforts on putting in place the mechanism to get NLIS profitable. The Company has obtained approval to increase prices at the Hub. The new pricing went into effect on October 6th.

Transactions at MDA's NLIS Channelcontinued to grow. As well, new pricing (commensurate with Hub pricing) went into effect.

At Millar & Bryce in Scotland, results were as expected. Our new product, Property Enquiry Certificates that incorporate information from Local Authorities, continued to penetrate the market on plan.

Related Websites:
www.mdacorporation.com