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Calian Reports Second Quarter Results: Continued Superior Results

(All amounts in this release are in Canadian Dollars) (May 09, 2012)

OTTAWA, ONTARIO -- (Marketwire) -- 05/09/12 -- Calian Technologies Ltd. (TSX:CTY) today released unaudited results for the second quarter ended March 31, 2012. Revenues for the quarter were $61.6 million, a 4% increase from the $59.4 million reported in the same quarter of the previous year. Net earnings were $3.7 million or $0.48 per share basic and diluted, compared to $3.3 million or $0.42 per share basic and diluted in the same quarter of the previous year. For the six-month period ending March 31, 2012, the Company reported revenues of $118.4 million and net earnings of $7.3 million or $0.95 per share basic and diluted, compared to revenues of $112.7 million and net earnings of $6.4 million or $0.83 per share basic and diluted in the prior year.

"I am very pleased with the excellent results that we posted in the second quarter of fiscal 2012. Revenues continued to grow in both divisions as we experienced robust demand in all of our service lines. I am particularly pleased with the growth in our BTS division which attained its best quarterly revenues on record despite a very competitive and dynamic marketplace. We are certainly encouraged by our achievements to date, which gives us added confidence in meeting our annual guidance numbers" stated Ray Basler, President and CEO.

"Gross margins were very strong this quarter with SED posting exceptional results. This was a function of excellent project execution, augmented by favorable input pricing and the recognition of tax credits reported on certain projects. The BTS division continues to cope with a very competitive landscape, but I am encouraged by the relatively small falloff in margins compared to the prior year. We continue to pay close attention to market conditions and if warranted, will dynamically adjust our pricing strategies accordingly" continued Basler.

"During the quarter we were delighted to consummate the acquisition of Primacy Management Inc. Primacy brings a strong management team and a history of profitability, but more importantly, it represents a critical step towards the goal of evolving our health service line and enhancing the Calian brand in the healthcare marketplace. Primacy not only expands our network of national healthcare practitioners but provides a unique opportunity to participate in geographically dispersed clinics without the significant up front capital requirements. While we are excited about the expansion opportunities that Primacy will bring, we recognize the importance and short term priority that must be placed on proper integration to continue serving a national client such as Loblaws. Primacy's results for the month of March have been included in the results of our BTS division" continued Basler.


While we are excited about the growth in both revenues and net earnings, we are mindful that customer spending patterns are constantly under pressure. We continue to believe that our key markets will remain relatively strong in the long term despite the potential impact of government cost cutting initiatives and increased competitive pressures in the near term. Ultimately, revenues realized will be dependent on the extent and timing of future contract awards as well as customer utilization of existing contracting vehicles. Based on available information and our prudent assessment of the marketplace during these unsettled economic times, we maintain our guidance with revenues for 2012 expected to be in the range of $230 million to $250 million and net earnings in the range of $1.70 to $1.95 per share.

About Calian

Calian employs over 2300 people with offices and projects that span Canada, U.S. and international markets. The company's capabilities include the provision of business and technology services to industry and government in the health, operations and maintenance, IT services and training domains as well as the design, manufacturing and maintenance of complex systems to the communications and defence sectors. Our goal is to be the best company to work for, buy from and invest in. The Business and Technology Services (BTS) Division is headquartered in Ottawa. This division augments customer workforces with flexible short and long-term placements of individuals and teams, provides access to critical recruiting capabilities and delivers outsourcing services for a variety of technical and professional functions. Our strength lies in understanding clients' needs, recruiting highly qualified personnel who understand and meet those needs, and then effectively managing those personnel within our customers' framework. Calian's Systems Engineering Division (SED) plans, designs and implements complex communication systems for many of the world's space agencies and leading satellite manufacturers and operators. SED also provides contract manufacturing services for both private sector and military customers in North America.

For further information, please visit our website at www.calian.com, or contact us at ir@calian.com

DISCLAIMER

Certain information included in this press release is forward-looking and is subject to important risks and uncertainties. The results or events predicted in these statements may differ materially from actual results or events. Such statements are generally accompanied by words such as "intend", "anticipate", "believe", "estimate", "expect" or similar statements. Factors which could cause results or events to differ from current expectations include, among other things: the impact of price competition; scarce number of qualified professionals; the impact of rapid technological and market change; loss of business or credit risk with major customers; technical risks on fixed price projects; general industry and market conditions and growth rates; international growth and global economic conditions, and including currency exchange rate fluctuations; and the impact of consolidations in the business services industry. For additional information with respect to certain of these and other factors, please see the Company's most recent annual report and other reports filed by Calian with the Ontario Securities Commission. Calian disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. No assurance can be given that actual results, performance or achievement expressed in, or implied by, forward-looking statements within this disclosure will occur, or if they do, that any benefits may be derived from them.

CALIAN TECHNOLOGIES LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION As at March 31, 2012, September 30, 2011 (Canadian dollars in thousands) September 30, NOTES March 31, 2012 2011 -------------------------------- ASSETS CURRENT ASSETS Cash $ 25,030 $ 30,742 Accounts receivable 42,454 35,181 Work in process 9,508 6,960 Prepaid expenses 5 2,216 2,751 Derivative assets 235 451 -------------------------------- Total current assets 79,443 76,085 Deferred tax assets - 480 Equipment 4,002 4,069 Application software 582 440 Acquired intangibles 12 4,624 - Goodwill 12 10,781 9,518 -------------------------------- Total non-current assets 19,989 14,507 -------------------------------- TOTAL ASSETS $ 99,432 $ 90,592 -------------------------------- -------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 19,497 $ 18,594 Unearned contract revenue 11,695 8,026 Share repurchase obligation 6 566 562 Derivative liabilities 113 1,054 -------------------------------- Total current liabilities 31,871 28,236 Deferred tax liabilities 1,205 - -------------------------------- Total non-current liabilities 1,205 - -------------------------------- TOTAL LIABILITIES 33,076 28,236 -------------------------------- -------------------------------- SHAREHOLDERS' EQUITY Issued capital 6 19,982 19,018 Contributed surplus 133 219 Retained earnings 45,604 43,345 Accumulated other comprehensive income (loss) 637 (226) -------------------------------- TOTAL SHAREHOLDERS' EQUITY 66,356 62,356 -------------------------------- $ 99,432 $ 90,592 -------------------------------- -------------------------------- CALIAN TECHNOLOGIES LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF NET EARNINGS For the periods ended March 31, 2012 and 2011 (Canadian dollars in thousands, except per share data) Three months Three months ended ended Six months Six months March 31, March 31, ended March ended March NOTES 2012 2011 31, 2012 31, 2011 ------------------------------------------------- Revenues $ 61,635 $ 59,433 $ 118,448 $ 112,693 Cost of revenues 50,085 48,929 95,987 91,946 ------------------------------------------------- Gross profit 11,550 10,504 22,461 20,747 Selling and marketing 1,183 1,158 2,281 2,255 General and administration 4,647 4,292 8,855 8,556 Facilities 833 838 1,644 1,671 ------------------------------------------------- Earnings before interest income and income tax expense 4,887 4,216 9,681 8,265 Interest income 7 84 236 163 467 ------------------------------------------------- Earnings before income tax expense 4,971 4,452 9,844 8,732 Income tax expense - current 1,240 1,096 2,446 2,128 Income tax expense - deferred 62 102 138 212 ------------------------------------------------- Total income tax expense 1,302 1,198 2,584 2,340 ------------------------------------------------- NET EARNINGS 3,669 3,254 7,260 6,392 ------------------------------------------------- ------------------------------------------------- NET EARNINGS PER SHARE: Basic 8 $ 0.48 $ 0.42 $ 0.95 $ 0.83 ------------------------------------------------- ------------------------------------------------- Diluted 8 $ 0.48 $ 0.42 $ 0.95 $ 0.83 ------------------------------------------------- ------------------------------------------------- CALIAN TECHNOLOGIES LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the periods ended March 31, 2012 and 2011 (Canadian dollars in thousands) Three Three months months ended ended Six months Six months March 31, March 31, ended March ended March NOTES 2012 2011 31, 2012 31, 2011 ------------------------------------------------ NET EARNINGS 3,669 3,254 7,260 6,392 Other comprehensive income, net of tax Unrealized (loss) on translating financial statements of an investment in a foreign operations, net of tax of nil (2011 - nil) (18) (17) (47) (46) Change in deferred gain on derivatives designated as cash flow hedges, net of tax of $47 and $336 (2011 - $21 and $178) 128 (51) 910 436 ------------------------------------------------ Other comprehensive income (loss), net of tax 110 (68) 863 390 ------------------------------------------------ COMPREHENSIVE INCOME $ 3,779 $ 3,186 $ 8,123 $ 6,782 ------------------------------------------------ ------------------------------------------------ CALIAN TECHNOLOGIES LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the six months ended March 31, 2012 and 2011 (Canadian dollars in thousands, except per share data) Issued Contributed Retained Notes capital surplus earnings Balance October 1, 2011 $ 19,018 $ 219 $ 43,345 Comprehensive income - - 7,260 Dividends ($0.52 per share) - - (3,987) Issue of shares under employee share purchase plan 6 418 - - Issue of shares under stock option plan 6 716 (124) - Stock option plan compensation expense 6 - 38 - Share repurchase 6 (167) - (1,014) Share purchase agreement - reclassification 6 (3) - - --------------------------------------------- Balance March 31, 2012 $ 19,982 $ 133 $ 45,604 --------------------------------------------- --------------------------------------------- CALIAN TECHNOLOGIES LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the six months ended March 31, 2012 and 2011 (Canadian dollars in thousands, except per share data) Foreign currency Cash flow translation hedging Notes reserve reserve Total Balance October 1, 2011 $ 22 $ (248) $ 62,356 Comprehensive income (47) 910 8,123 Dividends ($0.52 per share) - - (3,987) Issue of shares under employee share purchase plan 6 - - 418 Issue of shares under stock option plan 6 - - 592 Stock option plan compensation expense 6 - - 38 Share repurchase 6 - - (1,181) Share purchase agreement - reclassification 6 - - (3) --------------------------------------------- Balance March 31, 2012 $ (25) $ 662 $ 66,356 --------------------------------------------- --------------------------------------------- Issued Contributed Retained Notes capital surplus earnings Balance October 1, 2010 $ 18,511 $ 171 $ 38,275 Comprehensive income - - 6,392 Dividends ($0.47 per share) - - (3,625) Issue of shares under employee share purchase plan 6 384 - - Issue of shares under stock option plan 6 153 (15) - Stock option plan compensation expense 6 - 31 - Share repurchase 6 (128) - (832) Share purchase agreement - reclassification 6 108 - 660 --------------------------------------------- Balance March 31, 2011 $ 19,028 $ 187 $ 40,870 --------------------------------------------- --------------------------------------------- Foreign currency translation Cash flow Notes reserve hedging reserve Total Balance October 1, 2010 $ - $ 511 $ 57,468 Comprehensive income (46) 436 6,782 Dividends ($0.47 per share) - - (3,625) Issue of shares under employee share purchase plan 6 - - 384 Issue of shares under stock option plan 6 - - 138 Stock option plan compensation expense 6 - - 31 Share repurchase 6 - - (960) Share purchase agreement - reclassification 6 - - 768 --------------------------------------------- Balance March 31, 2011 $ (46) $ 947 $ 60,986 --------------------------------------------- --------------------------------------------- CALIAN TECHNOLOGIES LTD. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the periods ended March 31, 2012 and 2011 (Canadian dollars in thousands) Three Three months months ended ended Six months Six months March 31, March 31, ended March ended March NOTES 2012 2011 31, 2012 31, 2011 ------------------------------------------------ CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES Net earnings $ 3,669 $ 3,254 $ 7,260 $ 6,392 Items not affecting cash: Interest income 8 (84) (236) (163) (467) Income tax expense 1,302 1,198 2,584 2,340 Employee stock purchase plan and option plan compensation expense 39 52 75 67 Amortization 314 279 590 565 ------------------------------------------------ 5,240 4,547 10,346 8,897 Change in non-cash working capital Accounts receivable (4,570) (9,205) (6,916) (9,123) Work in process (3,321) (5) (2,548) 1,295 Prepaid expenses 826 844 541 3,293 Accounts payable and accrued liabilities 4,994 5,438 657 963 Unearned contract revenue 257 (422) 3,669 (3,515) ------------------------------------------------ 3,426 1,197 5,749 1,810 Interest received 84 76 163 147 Income tax paid (1,820) (1,013) (2,944) (2,271) ------------------------------------------------ 1,690 260 2,968 (314) ------------------------------------------------ CASH FLOWS USED IN FINANCING ACTIVITIES Issuance of common shares 6 790 322 942 460 Dividends (1,995) (1,927) (3,987) (3,625) Repurchase of shares 6 (26) (634) (1,181) (960) ------------------------------------------------ (1,231) (2,239) (4,226) (4,125) ------------------------------------------------ CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES Equipment and application software expenditures (178) (172) (595) (296) Acquisition 12 (3,812) - (3,812) - Receipt of debenture - 1,000 - 1,000 ------------------------------------------------ (3,990) 828 (4,407) 704 ------------------------------------------------ FOREIGN CURRENCY ADJUSTMENT (18) (17) (47) (46) NET CASH OUTFLOW (3,549) (1,168) (5,712) (3,781) CASH, BEGINNING OF PERIOD 28,579 26,442 30,742 29,055 ------------------------------------------------ CASH, END OF PERIOD $ 25,030 $ 25,274 $ 25,030 $ 25,274 ------------------------------------------------ ------------------------------------------------ CALIAN TECHNOLOGIES LTD. NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the periods ended March 31, 2012 and 2011 (Canadian dollars in thousands, except per share amounts) (Unaudited)

1. BASIS OF PREPARATION

Calian Technologies Ltd. ("the Company"), incorporated under the Canada Business Corporations Act, and its wholly-owned subsidiaries provide technology services to industry and government. The address of its registered office and principal place of business is 340 Legget Drive, Ottawa, Ontario K2K 1Y6.

These interim condensed consolidated financial statements are expressed in Canadian dollar and have been prepared in accordance with International Accounting Standard (IAS) IAS34 - Interim financial reporting and IFRS 1 - First-time adoption of International Financial Reporting Standards (IFRS), as issued by the International Accounting Standard Board (IASB). These interim consolidated financial statements have been prepared in accordance with the accounting policies the Company expects to adopt in its annual consolidated financial statements for the year ending September 30, 2012 which are described in Note 2- Summary of significant accounting policies, presented in the financial statements for the period ended December 31, 2011.

The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto prepared under previous Canadian generally accepted accounting principles included in the Company's Annual Report for the year ended September 30, 2011. Note 13 - Transition to IFRS and Note 14 presented in the financial statements for the period ended December 31, 2011 explain how the transition from previous Canadian GAAP to IFRS affected the Company's reported financial position as at October 1, 2010 and September 30, 2011, as well as the financial performance and cash flows for the year ended September 30, 2011 and the three-month period ended December 31, 2010.

These interim condensed consolidated financial statements for the three and six-month period ended March 31, 2012 were authorized for issuance by the Board on May 9, 2012.

2. FUTURE CHANGES IN ACCOUNTING POLICIES

IFRS 9 Financial instruments

IFRS 9 was issued in November 2009 introducing new requirements for the classification and measurement of financial assets. IFRS9 was further amended in October 2010 to include the requirements for the classification and measurement of financial liabilities and derecognition.

IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IFRS 10 Consolidated financial statements

IFRS 10 establishes principles for the presentation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 replaces IAS 27 - Consolidated and Separate Financial Statements and is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IFRS 12 Disclosure of interests in other entities

IFRS 12 is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. The standard requires an entity to disclose information regarding the nature and risks associated with its interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. IFRS 12 will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

IFRS 13 Fair value measurement

IFRS 13 is intended to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The standard will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company has not yet assessed the impact of the adoption of this standard on its consolidated financial statements.

IAS 1 Presentation of financial statements

In June 2011, the IASB amended IAS 1 - Presentation of financial statements. The principal change resulting from the amendments to IAS 1 is a requirement to group together items within other comprehensive income that may be reclassified to the statement of net earnings. The amendments also reaffirm existing requirements that items in other comprehensive income and net earnings should be presented as either a single statement or two consecutive statements. The amendment to IAS 1 will be effective for the Company's fiscal years beginning on or after January 1, 2013, with earlier application permitted. The Company does not expect any changes to its consolidated financial statement presentation from this amendment as the items within other comprehensive income that may be reclassified to the statement of comprehensive income are already grouped together.

IAS 28 Investments in associates and joint ventures

IAS 28 was re-issued by the IASB in May 2011 in order to conform to changes as a result of the issuance of IFRS 10, IFRS11, and IFRS 12. IAS 28 continues to prescribe the accounting for investments in associates, but is now the only source of guidance describing the application of the equity method. The amended IAS 28 will be applied by all entities that are investors with joint control of, or significant influence over, an investee. The amended version of IAS 28 is effective for financial years beginning on or after January 1, 2013, with earlier application permitted. The Company is evaluating the impact of the amendments to IAS 28 on its consolidated financial statements.

IAS 34 Interim financial reporting

In May 2010, the IASB issued amendments to IAS 34 as part of its annual improvements process. The amendments provided clarification of the disclosures required by IAS 34 when considered against the disclosure requirements of other IFRS and are effective for periods commencing on or after January 1, 2011, with earlier application permitted. The Company has applied these amendments in these unaudited interim condensed consolidated financial statements.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates:

The preparation of financial statements in conformity with IFRS requires the Company's management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ from those estimates.

Purchase Price allocation

As described in Note 12 of these financial statements, the Company acquired Primacy Management Inc. As a result of this acquisition, management was required to estimate the fair values of each identifiable asset and liability acquired through the acquisition. Fair value of cash, accounts receivable, accounts payable and equipment were estimated to approximate their carrying values in Primacy's records at the date of the transaction. The fair values of the intangibles were valued using the excess earnings method under the income approach.

4. SEASONALITY

The results of operations for the interim periods are not necessarily indicative of the results of operations for the full year. The Company's revenues and earnings have historically been subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays.

5. PREPAID EXPENSES

--------------------------------------------------------------------------- --------------------------------------------------------------------------- March 31, 2012 September 30, 2011 --------------------------------------------------------------------------- --------------------------------------------------------------------------- Prepaid operating expenses $ 778 $ 1,233 Milestone advance to subcontractors 1,438 1,518 --------------------------------------------------------------------------- $ 2,216 $ 2,751 --------------------------------------------------------------------------- ---------------------------------------------------------------------------

6. ISSUED CAPITAL

Share repurchase

During the second quarter ending March 31, 2012 (2011), the Company acquired 1,500 (34,800) of its outstanding common shares at an average price of $17.59 ($18.22) per share for a total of $26 ($634) including related expenses, through normal course issuer bids in place during the period. During the six-month period ending March 31, 2012 (2011), the Company acquired 66,700 (52,600) of its outstanding common shares at an average price of $17.70 ($18.23) for a total of $1,181 ($960) including related expenses. The excess of the purchase price over the stated capital of the shares was charged to retained earnings.

Stock options

The Company has an established stock option plan, which provides that the Board of Directors may grant stock options to eligible directors and employees. Under the plan, eligible directors and employees are granted the right to purchase shares of common stock at a price established by the Board of Directors on the date the options are granted but in no circumstances below fair market value of the shares at the date of grant. A total of 500,000 common shares are authorized for issuance under the plan, of which 345,000 are issued at March 31, 2012. At March 31, 2012 there were 105,000 options outstanding, 84,000 of which are exercisable.

During the three-month period ending March 31, 2012 (2011), the Company issued 33,300 (Nil) shares as a result of option exercises. Cash proceeds from exercise were $440 ($Nil). In addition, $93 ($Nil) was reclassified from contributed surplus to common shares. During the six-month period ending March 31, 2012 (2011), the Company issued 45,000 (15,200) shares as a result of option exercises. Cash proceeds from exercise were $592 ($138). In addition, $124 ($15) was reclassified from contributed surplus to common shares.

Employee Share Purchase Plan

During the three and six-month period ending March 31, 2012 (2011), the Company issued 23,674 (22,888) shares under the Company's Employee Share Purchase Plan at an average price of $14.76 ($14.06) for a total of $350 ($322).

Stock repurchase obligation

The Company has an agreement with a third party which provides for automatic repurchases of the Company's shares without the Company having the ability to influence the purchases. The financial liability is determined as the present value of the maximum redemption amount at each of the reporting periods. The reclassification adjustment is made by reducing issued capital and retained earnings with an offsetting adjustment to the share repurchase obligation account. An income adjustment will result for any shares repurchased below the maximum amount per share. The amount of income recognized in the period is insignificant.

7. INTEREST INCOME

Interest income is comprised of the following amounts:

---------------------------------------------------------------------------- Three months ended Six months ended March 31 March 31 2012 2011 2012 2011 ---------------------------------------------------------------------------- Interest earned on cash balances $ 84 $ 76 $ 163 $ 147 Accreted interest on host contract component of investment - 160 - 320 ---------------------------------------------------------------------------- Interest income $ 84 $ 236 $ 163 $ 467 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

8. NET EARNINGS PER SHARE

The diluted weighted average number of shares has been calculated as follows:

---------------------------------------------------------------------------- Three months ended Six months ended March 31 March 31 2012 2011 2012 2011 ---------------------------------------------------------------------------- Weighted average number of shares - basic 7,647,053 7,695,006 7,645,710 7,702,934 Addition to reflect the dilutive effect of employee stock options 11,077 14,928 11,638 17,830 ---------------------------------------------------------------------------- Weighted average number of shares - diluted 7,658,130 7,709,934 7,657,348 7,720,764 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Options that are anti-dilutive because the exercise price was greater than the average market price of the common shares are not included in the computation of diluted earnings per share. For the three-month period ending March 31, 2012 and 2011, no options were excluded from the above computation. For the six-month period ending March 31, 2012 and 2011, 95,000 (NIL) options were excluded from the above computation.

Net earnings is the measure of profit or loss used to calculate earnings per share.

9. SEGMENTED INFORMATION

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, regarding how to allocate resources and assess performance. The Company's chief operating decision maker is the Chief Executive Officer. The Company operates in two reportable segments described below, defined by their primary type of service offering, namely Systems Engineering and Business and Technology Services.

-- Systems Engineering involves planning, designing and implementing solutions that meet a customer's specific business and technical needs, primarily in the satellite communications sector. -- Business and Technology Services provides business and technology services to industry and government in the health, operations and maintenance, IT services and training.

The Company evaluates performance and allocates resources based on earnings before interest income and income taxes. The accounting policies of the segments are the same as those described in Note 2 - Summary of significant accounting policies.

Three months ended March 31, 2012 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Business and Systems Technology Engineering Services Corporate Total ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenues $ 16,140 $ 45,495 $ - $ 61,635 Earnings before interest income and income tax expense 2,874 2,892 (879) 4,887 Interest income (Note 7) 84 Income tax expense (1,302) ---------------------------------------------------------------------------- Net earnings $ 3,669 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total assets other than cash and goodwill $ 19,999 $ 43,430 $ 192 $ 62,621 Goodwill - 10,781 - 10,781 Cash - - 25,030 25,030 ---------------------------------------------------------------------------- Total assets $ 19,999 $ 54,211 $ 28,787 $ 99,432 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equipment and intangible expenditures $ 92 $ 86 $ - $ 178 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Acquired intangibles (Note 12) $ - $ 4,670 $ - $ 4,670 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Acquired goodwill (Note 12) $ - $ 1,263 $ - $ 1,263 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended March 31, 2011 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Business and Systems Technology Engineering Services Corporate Total ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenues $ 15,492 $ 43,941 $ - $ 59,433 Earnings before interest income and income tax expense 2,121 2,740 (645) 4,216 Interest income (Note 7) 236 Income tax expense (1,198) ---------------------------------------------------------------------------- Net earnings $ 3,254 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Year ended September 30, 2011

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Total assets other than cash and goodwill $ 16,257 $ 33,962 $ 113 $ 50,332 Goodwill - 9,518 - 9,518 Cash - - 30,742 30,742 ---------------------------------------------------------------------------- Total assets $ 16,257 $ 43,480 $ 30,855 $ 90,592 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equipment and intangible expenditures $ 352 $ 131 $ - $ 483 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Six months ended March 31, 2012

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Business and Systems Technology Engineering Services Corporate Total ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenues $ 32,557 $ 85,891 $ - $ 118,448 Earnings before interest income and income tax expense 5,772 5,414 (1,505) 9,681 Interest income (Note 7) 163 Income tax expense (2,584) ---------------------------------------------------------------------------- Net earnings $ 7,260 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Equipment and intangible expenditures $ 296 $ 299 $ - $ 595 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Acquired intangibles (Note 12) $ - $ 4,670 $ - $ 4,670 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Acquired goodwill (Note 12) $ - $ 1,263 $ - $ 1,263 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

Six months ended March 31, 2011

---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Business and Systems Technology Engineering Services Corporate Total ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Revenues $ 30,663 $ 82,030 $ - $ 112,693 Earnings before other income, interest income and income tax expense 4,339 5,192 (1,266) 8,265 Interest income (Note 7) 467 Income tax expense (2,340) ---------------------------------------------------------------------------- Net earnings $ 6,392 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

10. HEDGING

Foreign currency risk related to contracts

The Company is exposed to foreign currency fluctuations on its cash balance, accounts receivable, accounts payable and future cash flows related to contracts denominated in a foreign currency. Future cash flows will be realized over the life of the contracts. The Company utilizes derivative financial instruments, principally in the form of forward exchange contracts, in the management of its foreign currency exposures. The Company's objective is to manage and control exposures and secure the Company's profitability on existing contracts and therefore, the Company's policy is to hedge 100% of its foreign currency exposure excluding its exposure arising from the Company's US subsidiary. The Company does not utilize derivative financial instruments for trading or speculative purposes. The Company applies hedge accounting when appropriate documentation and effectiveness criteria are met.

The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives to specific firm contractually related commitments on projects.

The Company also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Hedge ineffectiveness has historically been insignificant.

The forward foreign exchange contracts primarily require the Company to purchase or sell certain foreign currencies with or for Canadian dollars at contractual rates. At March 31, 2012, the Company had the following forward foreign exchange contracts:

----------------------------------------------------------- ---------------- Equivalent Fair Value Type Notional Currency Maturity Cdn. Dollars March 31, 2012 ----------------------------------------------------------- ---------------- SELL 1,000 USD September 2015 $ 1,057 $ 60 SELL 1,000 USD September 2016 1,057 60 SELL 1,000 USD September 2017 1,057 60 BUY 23,348 USD April 2012 23,250 40 BUY 2,806 EURO April 2012 3,720 13 BUY 148 GPB April 2012 234 2 ---------------------------------------------------------------------------- Derivative assets $ 235 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- SELL 44,268 USD April 2012 $ 44,082 $ 75 SELL 7,904 EURO April 2012 10,478 38 ---------------------------------------------------------------------------- Derivative liabilities $ 113 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

A 10% strengthening (weakening) of the Canadian dollar against the following currency at March 31, 2012 would have increased (decreased) other comprehensive income as related to the forward foreign exchange contracts by the amounts shown below.

March 31, 2012 --------------- USD $ 1,786 EURO 678 GBP (23) --------------- $ 2,441 --------------- ---------------

11. CONTINGENCIES

In the normal course of business, the Company is party to employee related claims. The potential outcomes related to ex
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