As mentioned in Note 2, in the fourth quarter of 2007 during the preparation of the 2007 annual financial statements under US GAAP, an error was identified in the prior interim financial statements with respect to certain stock-based incentive compensation plans. The Company has corrected this error of $1 million in these consolidated financial statements. The previous Canadian GAAP to US GAAP reconciliation is therefore amended by the below restated reconciliation. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ------------------------------------------------------------------------- Recon- 2008 ciling As at April 30, 2008 Canadian Adjust- Refer- 2008 (millions of US dollars) GAAP ments ence US GAAP ------------------------------------------------------------------------- Assets Current Assets Cash and cash equivalents $ 143 $ (4) a $ 139 Short-term investments - - - Accounts receivable, net 261 (1) a,d 260 Note receivable 73 - 73 Unbilled revenue 111 - 111 Inventories, net 121 (4) a 117 Income taxes recoverable 56 - 56 Current portion of deferred tax assets 47 - 47 Prepaid expenses and other 33 (1) 32 Assets held for sale 27 - 27 ------------------------------------------------------------------------- Total Current Assets $ 872 $ (10) $ 862 - Property, plant and equipment, net 366 (2) a 364 Deferred tax assets 31 - 31 Long-term investments and other 191 (13) a,b,g 178 Goodwill 820 (21) 799 Intangible assets, net 526 (16) a 510 ------------------------------------------------------------------------- Total Assets $ 2,806 $ (62) $ 2,744 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities $ 303 $ (15) a,d,h $ 288 Current portion of deferred revenue 75 - 75 Income taxes payable 17 (1) 16 Current portion of long-term debt 20 - 20 Current portion of deferred tax liabilities 33 - 33 Liabilities related to assets held for sale 12 - 12 ------------------------------------------------------------------------- Total Current Liabilities $ 460 $ (16) $ 444 Long-term debt 280 - 280 Deferred revenue 14 - 14 Other long-term obligations 30 - 30 Deferred tax liabilities 152 (13) f,h 139 ------------------------------------------------------------------------- Total Liabilities $ 936 $ (29) $ 907 ------------------------------------------------------------------------- Shareholders' equity Share capital 506 (12) h 494 Additional paid in capital - 75 h 75 Retained earnings 961 (103) b,d,g,h 858 Accumulated other comprehensive income 403 7 a,f,g 410 ------------------------------------------------------------------------- Total shareholders' equity $ 1,870 $ (33) $ 1,837 ------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 2,806 $ (62) $ 2,744 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL POSITION ------------------------------------------------------------------------- Recon- 2007 ciling As at October 31 Canadian Adjust- Refer- 2007 (millions of US dollars) GAAP ments ence US GAAP ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents $ 259 $ (24) a $ 235 Short-term investments 91 11 102 Accounts receivable 284 3 a,d 287 Unbilled revenue 99 - 99 Inventories, net 134 (6) a 128 Income taxes recoverable 54 - 54 Current portion of income taxes 45 - 45 Prepaid expenses and other 21 1 22 Assets held for sale 1 - 1 ------------------------------------------------------------------------- Total Current Assets 988 (15) 973 Property, plant and equipment, net 390 (4) a 386 Deferred tax assets 4 - 4 Long-term investments and other 284 6 a,b,g 290 Goodwill 797 (15) 782 Intangible assets, net 601 (18) a 583 ------------------------------------------------------------------------- Total Assets $ 3,064 $ (46) $ 3,018 ------------------------------------------------------------------------- ------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $ 391 $ (7) a,h $ 384 Current portion of deferred revenue 71 - 71 Income taxes payable 57 - 57 Current portion of long-term debt 94 - 94 Current portion of deferred tax liabilities 10 - 10 ------------------------------------------------------------------------- Total Current Liabilities 623 (7) 616 Long-term debt 290 - 290 Deferred revenue 16 1 17 Other long-term obligations 29 1 30 Deferred tax liabilities 182 (14) f,h 168 Minority interest 1 (1) - ------------------------------------------------------------------------- Total Liabilities 1,141 (20) 1,121 ------------------------------------------------------------------------- Shareholders' equity Share capital 502 (9) h 493 Additional paid-in capital n/a 72 h 72 Retained earnings 945 (103) b,d,g,h 842 Accumulated other comprehensive income 476 14 a,f,g 490 ------------------------------------------------------------------------- Total shareholders' equity 1,923 (26) 1,897 ------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 3,064 $ (46) $ 3,018 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------------------------------------------- Three months ended Six months ended April 30, 2008 April 30, 2008 ------------------------------------------------------------------------- (millions of US dollars except CDN Recon. US CDN Recon. US Refer- per share amounts) GAAP Items(1) GAAP GAAP Items(1) GAAP ence Revenues Products $ 180 $ (11) $ 169 $ 331 $ (11) $ 320 a Services 149 8 157 302 - 302 Reimbursement revenues 24 - 24 50 - 50 ------------------------------------------------------------------------- Total revenues 353 (3) 350 683 (11) 672 ------------------------------------------------------------------------- Costs and expenses Direct cost of products (106) - (106) (201) - (201) a,c Direct cost of services (101) - (101) (193) - (193) Reimbursed expenses (24) - (24) (50) - (50) Selling, general and administration (73) (2) (75) (131) (8) (139) a,e,h Research and development (11) (11) (22) (20) (22) (42) a,b,c Depreciation and amortization (26) 3 (23) (56) 6 (50) a Restructuring charges - net (1) - (1) (1) - (1) Other expense - net 6 4 10 3 3 6 b,d ------------------------------------------------------------------------- Total costs and expenses (336) (6) (342) (649) (21) (670) ------------------------------------------------------------------------- Operating income (loss) from continuing operations 17 (9) 8 34 (32) 2 Interest expense (5) (1) (6) (11) (1) (12) Interest income 4 - 4 10 - 10 Mark-to-market on interest rate swaps - - - - 2 2 Equity earnings - 10 10 - 24 24 a ------------------------------------------------------------------------- Income (loss) from continuing operations before income taxes 16 - 16 33 (7) 26 Income tax (expense) recovery - current (7) 4 (3) (31) 6 (25) - deferred (2) - (2) 26 1 27 ------------------------------------------------------------------------- Income (loss) from continuing operations 7 4 11 28 - 28 Income from discontinued operations - net of income tax - - - - - - ------------------------------------------------------------------------- Net income $ 7 $ 4 $ 11 $ 28 $ - $ 28 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings (loss) per share - from continuing operations $ 0.06 $(0.03) $ 0.09 $ 0.23 $ - $ 0.23 - from discontinued operations - - - - - - ------------------------------------------------------------------------- Basic earnings (loss) per share $ 0.06 $(0.03) $ 0.09 $ 0.23 $ - $ 0.23 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Diluted earnings (loss) per share - from continuing operations $ 0.06 $(0.03) $ 0.09 $ 0.23 $ - $ 0.23 - from discontinued operations - - - - - - ------------------------------------------------------------------------- Diluted earnings (loss) per share $ 0.06 $(0.03) $ 0.09 $ 0.23 $ - $ 0.23 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Reconciling items between Canadian GAAP and US GAAP CONSOLIDATED STATEMENTS OF OPERATIONS ------------------------------------------------------------------------- Three months ended Six months ended April 30, 2007 April 30, 2007 ------------------------------------------------------------------------- (millions of US Restated Restated dollars except CDN Recon. US GAAP CDN Recon. US GAAP Refer- per share amounts) GAAP Items(1) (Note 2) GAAP Items(1) (Note 2) ence Revenues Products $ - $ - $ 129 $ - $ - $ 234 a Services - - 134 - - 270 Reimbursement revenues - - 23 - - 46 ------------------------------------------------------------------------- Total revenues 273 13 286 523 27 550 ------------------------------------------------------------------------- Costs and expenses Direct cost of products - (83) (83) - (154) (154) a,c Direct cost of services (164) 82 (82) (324) 152 (172) Reimbursed expenses - (23) (23) - (46) (46) Selling, general and administration (67) 6 (61) (120) 5 (115) a,e,h Research and development (7) (9) (16) (12) (16) (28) a,b,c Depreciation and amortization (20) 2 (18) (37) 5 (32) a,b Restructuring charges - net (28) 3 (25) (41) 3 (38) Other expenses - net (67) (7) (74) (66) (4) (70) b,d ------------------------------------------------------------------------- Total costs and expenses (353) (29) (382) (600) (55) (655) ------------------------------------------------------------------------- Operating loss from continuing operations (80) (16) (96) (77) (28) (105) Interest expense (8) - (8) (14) - (14) Interest income 10 - 10 14 - 14 Mark-to-market on interest note swaps - 1 1 - 1 1 Equity earnings - 11 11 - 25 25 a ------------------------------------------------------------------------- Loss from continuing operations before income taxes (78) (4) (82) (77) (2) (79) Income tax (expense) recovery - current 21 10 31 18 11 29 deferred (4) (4) - (5) (5) ------------------------------------------------------------------------- Income (loss) from continuing operations (57) 2 (55) (59) 4 (55) Income from discontinued operations - net of income tax 793 (1) 792 809 (1) 808 ------------------------------------------------------------------------- Net income $ 736 $ 1 $ 737 $ 750 $ 3 $ 753 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings (loss) per share - from continuing operations $(0.42) $ 0.02 $(0.40) $(0.42) $ 0.03 $(0.39) - from discontinued operations 5.77 - 5.77 5.74 (0.01) 5.73 ------------------------------------------------------------------------- Basic earnings (loss) per share $ 5.35 $ 0.02 $ 5.37 $ 5.32 $ 0.02 $ 5.34 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Diluted earnings (loss) per share - from continuing operations $(0.41) $ 0.01 $(0.40) $(0.42) $ 0.03 $(0.39) - from discontinued operations 5.75 - 5.75 5.72 - 5.72 ------------------------------------------------------------------------- Diluted earnings (loss) per share $ 5.34 $ 0.01 $ 5.35 $ 5.30 $ 0.03 $ 5.33 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended April 30, 2008 ------------------------------------------------------------------------- CDN Recon. US (millions of US dollars) GAAP Items(1) GAAP ------------------------------------------------------------------------- Operating activities Net income $ 7 $ 4 $ 11 Less: Income from discontinued operations - net of tax - - - ------------------------------------------------------------------------- Income (loss) from continuing operations 7 4 11 Adjustments to reconcile net income to cash provided (used in) operating activities relating to continuing operations Items not affecting current cash flow 33 (34) (1) Changes in non-cash working capital balances relating to operations (26) 2 (24) ------------------------------------------------------------------------- Cash provided by (used in) operating activities of continuing operations 14 (28) (14) Cash provided by operating activities of discontinued operations - - - ------------------------------------------------------------------------- 14 (28) (14) ------------------------------------------------------------------------- Investing activities Acquisitions - (2) (2) Increase in deferred development charges - - - Purchase of property, plant and equipment (15) - (15) Proceeds from sale of property, plant and equipment 2 - 2 Proceeds on sale of short-term investments - - - Proceeds on sale of long-term investment 4 - 4 Other (3) 1 (2) ------------------------------------------------------------------------- Cash provided by (used in) investing activities of continuing operations (12) (1) (13) ------------------------------------------------------------------------- Cash provided by investing activities of discontinued operations - - - ------------------------------------------------------------------------- Financing activities Repayment of long-term debt (1) - (1) Increase (decrease) in deferred revenue and other long-term obligations (1) - (1) Issuance of shares 4 - 4 Repurchase of shares (12) - (12) ------------------------------------------------------------------------- Cash used in financing activities of continuing operations (10) - (10) ------------------------------------------------------------------------- Cash used in financing activities of discontinued operations - - - ------------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents 1 31 32 ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents during the period (7) 2 (5) Cash and cash equivalents, beginning of period 150 (6) 144 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 143 $ (4) $ 139 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Six months ended April 30, 2008 ------------------------------------------------------------------------- CDN Recon. US (millions of US dollars) GAAP Items(1) GAAP ------------------------------------------------------------------------- Operating activities Net income $ 28 $ - $ 28 Less: Income from discontinued operations - net of tax - - - ------------------------------------------------------------------------- Income (loss) from continuing operations 28 - 28 Adjustments to reconcile net income to cash provided (used in) operating activities relating to continuing operations Items not affecting current cash flow 11 18 29 Changes in non-cash working capital balances relating to operations (123) (5) (128) ------------------------------------------------------------------------- Cash provided by (used in) operating activities of continuing operations (84) 13 (71) Cash provided by operating activities of discontinued operations - - - ------------------------------------------------------------------------- (84) 13 (71) ------------------------------------------------------------------------- Investing activities Acquisitions (2) - (2) Increase in deferred development charges (5) 5 - Purchase of property, plant and equipment (28) - (28) Proceeds from sale of property, plant and equipment 3 - 3 Proceeds on sale of short-term investments 101 - 101 Proceeds on sale of long-term investment 7 - 7 Other (2) - (2) ------------------------------------------------------------------------- Cash provided by (used in) investing activities of continuing operations 74 5 79 ------------------------------------------------------------------------- Cash provided by investing activities of discontinued operations - - - ------------------------------------------------------------------------- Financing activities Repayment of long-term debt (81) - (81) Increase (decrease) in deferred revenue and other long-term obligations - - - Issuance of shares 5 - 5 Repurchase of shares (17) (17) ------------------------------------------------------------------------- Cash used in financing activities of continuing operations (93) - (93) ------------------------------------------------------------------------- Cash used in financing activities of discontinued operations - - - ------------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents (2) (9) (11) ------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents during the period (105) 9 (96) Cash and cash equivalents, beginning of period 248 (13) 235 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 143 $ (4) $ 139 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Reconciling items between Canadian GAAP and US GAAP CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended April 30, 2007 ------------------------------------------------------------------------- Restated CDN Recon. US GAAP (millions of US dollars) GAAP Items(1) (Note 2) ------------------------------------------------------------------------- Cash flows from operating activities Net income $ 736 $ 1 $ 737 Less: Income from discontinued operations - net of tax 793 (1) 792 ------------------------------------------------------------------------- Income (loss) from continuing operations (57) 2 (55) Adjustments to reconcile net income to cash provided by operating activities relating to continuing operations Items not affecting current cash flow 143 (11) 132 Changes in non-cash working capital balances relating to operations 37 (3) 34 ------------------------------------------------------------------------- Cash provided by (used in) operating activities of continuing operations 123 (12) 111 Cash used in operating activities of discontinued operations (69) - (69) ------------------------------------------------------------------------- 54 (12) 42 ------------------------------------------------------------------------- Investing activities Acquisitions (603) - (603) Increase in deferred development charges - - - Purchase of property, plant and equipment (9) 2 (7) Proceeds from sale of property, plant and equipment - - - Proceeds on sale of short-term investments 25 - 25 Purchase of short-term investments (15) - (15) Proceeds on sale of long-term investments - 2 2 Other 1 (2) (1) ------------------------------------------------------------------------- Cash provided by investing activities of continuing operations (601) 2 (599) ------------------------------------------------------------------------- Cash provided by (used in) investing activities of discontinued operations 929 - 929 ------------------------------------------------------------------------- Financing activities Repayment of long-term debt (1) - (1) Increase (decrease) in deferred revenue and other long-term obligations (1) - (1) Payment of cash dividends - - - Issuance of shares 6 - 6 Repurchase of shares (441) - (441) ------------------------------------------------------------------------- Cash used in financing activities of continuing operations (437) - (437) ------------------------------------------------------------------------- Cash used in financing activities of discontinued operations - - - ------------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents 16 12 28 ------------------------------------------------------------------------- Net increase in cash and cash equivalents during the period (39) 2 (37) Cash and cash equivalents, beginning of period 340 (5) 335 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 301 $ (3) $ 298 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Six months ended April 30, 2007 ------------------------------------------------------------------------- Restated CDN Recon. US GAAP (millions of US dollars) GAAP Items(1) (Note 2) ------------------------------------------------------------------------- Cash flows from operating activities Net income $ 750 $ 3 $ 753 Less: Income from discontinued operations - net of tax 809 (1) 808 ------------------------------------------------------------------------- Income (loss) from continuing operations (59) 4 (55) Adjustments to reconcile net income to cash provided by operating activities relating to continuing operations Items not affecting current cash flow 156 4 160 Changes in non-cash working capital balances relating to operations 9 (8) 1 ------------------------------------------------------------------------- Cash provided by (used in) operating activities of continuing operations 106 - 106 Cash used in operating activities of discontinued operations (53) - (53) ------------------------------------------------------------------------- 53 - 53 ------------------------------------------------------------------------- Investing activities Acquisitions (603) - (603) Increase in deferred development charges (2) 2 - Purchase of property, plant and equipment (17) 1 (16) Proceeds from sale of property, plant and equipment - - - Proceeds on sale of short-term investments 151 - 151 Purchase of short-term investments (37) - (37) Proceeds on sale of long-term investments 13 - 13 Other - - - ------------------------------------------------------------------------- Cash provided by investing activities of continuing operations (495) 3 (492) ------------------------------------------------------------------------- Cash provided by (used in) investing activities of discontinued operations 929 - 929 ------------------------------------------------------------------------- Financing activities Repayment of long-term debt (7) - (7) Increase (decrease) in deferred revenue and other long-term obligations - - - Payment of cash dividends (3) - (3) Issuance of shares 10 - 10 Repurchase of shares (441) - (441) ------------------------------------------------------------------------- Cash used in financing activities of continuing operations (441) - (441) ------------------------------------------------------------------------- Cash used in financing activities of discontinued operations (2) - (2) ------------------------------------------------------------------------- Effect of foreign exchange rate changes on cash and cash equivalents 4 - 4 ------------------------------------------------------------------------- Net increase in cash and cash equivalents during the period 48 3 51 Cash and cash equivalents, beginning of period 253 (6) 247 ------------------------------------------------------------------------- Cash and cash equivalents, end of period $ 301 $ (3) $ 298 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Reconciling items between Canadian GAAP and US GAAP Three months Six months ended April 30 ended April 30 ------------------------------------------------------------------------- Restated Restated Note 2 Note 2 2008 2007 2008 2007 ------------------------------------------------------------------------- Net income (loss) from continuing operations in accordance with US GAAP $ 11 $ (55) $ 28 $ (55) US GAAP adjustments: Deferred development costs - net 2 (2) 6 (2) Mid term incentive plan reversal (2) (1) (6) (3) Mark-to-market on embedded derivatives (3) - 1 - Defined benefit pension plans - - 1 - Reduction in income tax expense arising from GAAP adjustments (1) 1 (2) 1 ------------------------------------------------------------------------- Net income (loss) from continuing operations in accordance with Canadian GAAP 7 (57) 28 (59) Income from discontinued operations in accordance with Canadian and US GAAP - net of tax - 793 - 809 ------------------------------------------------------------------------- Net income in accordance with Canadian GAAP $ 7 $ 736 $ 28 $ 750 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Basic earnings (loss) per share in accordance with Canadian GAAP - from continuing operations $ 0.06 $ (0.42) $ 0.23 $ (0.42) - from discontinued operations - 5.77 - 5.74 ------------------------------------------------------------------------- Basic earnings per share $ 0.06 $ 5.35 $ 0.23 $ 5.32 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Diluted earnings (loss) per share in accordance with Canadian GAAP - from continuing operations $ 0.06 $ (0.41) $ 0.23 $ (0.42) - from discontinued operations - 5.75 - 5.72 ------------------------------------------------------------------------- Diluted earnings per share $ 0.06 $ 5.34 $ 0.23 $ 5.30 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Recent Canadian Accounting Pronouncements a. Capital disclosures - The CICA issued Section 1535, "Capital Disclosures", which requires the disclosure of both the qualitative and quantitative information that enables users of financial statements to evaluate the entity's objectives, policies, and processes for managing capital. b. Inventories - The CICA issued Section 3031, "Inventories", which replaces existing Section 3030 and harmonizes the Canadian standards related to inventories with International Financial Reporting Standards. The new Section includes changes to the measurement of inventories, including guidance on costing, impairment testing, and disclosure requirements. c. Financial instruments - The CICA issued Section 3862 "Financial Instruments - Disclosure" and Section 3863, "Financial Instruments - Presentation" to replace Section 3861, "Financial Instruments - Disclosure and Presentation". The Company has adopted Sections 1535, 3862 and 3863 effective for its fiscal year beginning November 1, 2007 and these sections affect disclosures only. The Company is required to adopt Section 3031 effective November 1, 2008. The Company is currently evaluating the effects that the adoption of Section 3031 will have on its consolidated results of operations and financial condition and is not yet in a position to determine such effects. 20. Comparative Figures All comparative financial information has been restated to reflect the Company's results as if they had been historically reported in US dollars and in accordance with US GAAP. Certain figures for the previous year have been reclassified to conform to the current year's financial statement presentation. In addition, segmented information for 2006 has been revised to reflect the discontinued operations reported. 21. Subsequent Events - MAPLE Reactor On May 16, 2008, Atomic Energy of Canada Limited (AECL), a Canadian crown corporation, and the Government of Canada, publicly announced their intention to discontinue the development work on the MAPLE reactors located at Chalk River laboratories, effective immediately. The MAPLE reactors were to replace AECL's current National Research Universal reactor (NRU) and provide MDS Nordion with a long-term source of supply of medical isotopes. AECL and the Government of Canada have also publicly announced that they will work closely with MDS Nordion and continue to supply medical isotopes using the NRU and will pursue an extension of the NRU operation beyond its current expiry date of October 31, 2011. MDS has substantial financial interests in the success of the MAPLE reactor project, primarily through a related 40-year supply agreement with AECL, as a result of an exchange of non-monetary assets in February 2006 (see below). The Company was neither consulted nor informed in advance by AECL or the Canadian government about their decision. AECL's announcement and position represents a different perspective on the contract than that held by MDS. The Company will evaluate all options and pursue appropriate steps to protect the interests of patients, its customers and its shareholders. On February 22, 2006, the Company had announced an agreement resulting from a comprehensive mediation process with AECL related to the MAPLE reactor project. Under the agreement, AECL paid the Company $22 million, and assumed ownership of the MAPLE facilities and took responsibility for all costs associated with completing the project and the future production of medical isotopes from the MAPLE facilities. The parties retained certain rights related to existing claims. In addition, AECL acquired $47 million of MAPLE-related inventories in exchange for a non-interest bearing note having a net present value of $38 million, to be repaid over four years commencing in 2008. The agreement requires AECL to supply medical isotopes to MDS Nordion over a 40-year period, upon the MAPLE facilities meeting certain operational criteria, in exchange for a fixed percentage of the selling price. In accordance with SFAS # 153, "Exchanges of Non-Monetary Assets", the Company exchanged the MAPLE asset for the 40-year supply agreement which was recorded as an intangible asset at its fair value of $308 million. This amount is to be amortized on a straight-line basis over a 40-year period once commercial production of MAPLE isotopes begins. The Company recorded a loss on this transaction of $36 million in 2006. As a result of the May 16, 2008 announcement by AECL and the Government of Canada, MDS is reviewing the impact on its business from an operational and financial reporting perspective. The Company will evaluate all options and pursue appropriate steps to protect the interests of patients, its customers and its shareholders. The principal US GAAP reporting exposure for MDS related to the announcement is its intangible asset associated with the 40-year supply agreement currently carried at $342 million (revalued at the April 30, 2008 exchange rate). MDS will continue to evaluate the intangible asset for possible impairment and the relevant financial reporting implications based upon the progress of any dialogue, negotiations or legal proceedings between AECL, the Government of Canada and the Company. DATASOURCE: MDS Inc. CONTACT: PRNewswire - - 06/05/2008

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