Consolidated revenue was $26.1 million for the third quarter of fiscal 2002 compared with $38.7 million for the third quarter of fiscal 2001. Revenue in the third quarter was primarily impacted by the delay in the award of certain Government contracts and lower film and video rental revenue in the Commercial Systems division.

As a result of the lower revenue, the Company recorded a net loss of $1.6 million or $(0.08) per share on a higher average number of common shares outstanding versus net earnings of $2.2 million or $0.14 per share ($0.13 fully diluted) for the same quarter last year. The average number of common shares outstanding increased 18% to 19.0 million from 16.1 million primarily due to the issuance of 2.6 million common shares for net proceeds of $14.0 million from an equity financing in December 2001.

Consolidated revenue for the nine months of fiscal 2002 was $88.3 million versus $111.0 million in the same period last year. Net loss was $2.7 million or $(0.15) per share compared with net earnings of $4.7 million or $0.30 per share ($0.28 fully diluted) for the nine months of fiscal 2001.

Given the continued delays in order intake in the Government Systems Division, the Company is withdrawing current guidance of revenue in the range of $135 million and net earnings of approximately $2.9 million or 15 cents per share. In light of the announcement of a support agreement between Wescam and L-3 Communications, under which L-3 Communications will make an offer to acquire all Wescam’s common shares for $9.50 per share in cash, the Company has not issued any revised guidance.

The Government Systems Division generated revenue of $14.9 million, down 43.2 % from the $26.2 million for the same quarter a year ago. For the first nine months of fiscal 2002, the Government Systems Division reported revenue of $63.9 million, down 23.0 % from the $82.9 million in the same period last year. The Government Systems Division reported an operating loss of $3.8 million in the third quarter compared with operating income of $3.7 million for the third quarter last year. Year-to-date, the Government Systems Division reported an operating loss of $4.5 million compared with operating income of $11.4 million over the same period last year.

The Commercial Systems Division reported revenue of $11.2 million, down 10.4 % from $12.5 million in the same quarter of last year. Year-to-date, the Commercial Systems Division revenue of $24.4 million was 13.0% lower than revenue of $28.1 million for the first nine months of last year. The Commercial Systems Division reported operating income of $1.5 million for the third quarter compared with $668,000 for the third quarter last year. The Commercial Systems Division reported a year-to-date operating loss of $754,000 compared with last year’s nine- month operating loss of $2.8 million.
 

Backlog of long-term orders was $84.8 million at the end of the third quarter compared with $92.5 million at the end of the second quarter and $111.2 million at the end of the fiscal 2001. Following the end of the third quarter, Wescam has announced several new contracts. These include an $8 million, four-year contract with ESPN Regional Television for coverage of drag racing and PGA golf events; an $8.2 million contract to develop and integrate a laser designator into its step-stare turret for the U.S. Army; and a $5.7 million contract for additional MX sensor systems for the U.S. Coast Guard.

Certain information in this press release contains forward-looking statements. This information is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements due to factors such as customer demand and timing of buying decisions, product mix, competitive products and pricing pressures. In addition, uncertainties and difficulties in domestic and foreign financial markets and economies could adversely affect demand from customers. A major decline in the capital markets generally may negatively impact our ability to make future strategic acquisitions, raise capital or issue debt. These factors, as well as general economic and political conditions, may in turn have a material adverse effect on the Company’s actual results. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements. Additional information identifying risks and uncertainties is contained in the Company’s filings with the Ontario Securities Commission.

Wescam is a world leader in the design and manufacture of wireless visual information systems, the capabilities of which include the capture of images from mobile platforms and/or transmission of those images in real-time, to tactical command sites for interpretation or to production facilities for live broadcast.