MDSI reports 35% increase in software and services revenue

RICHMOND, British Columbia, May 19, 2003 — MDSI Mobile Data Solutions Inc., a provider of mobile workforce management solutions, earned three cents per fully diluted share in the first quarter of 2003.

According to Erik Dysthe, MDSI’s President, CEO and Chairman, “This was another solid quarter for MDSI® and a good first step in meeting our goals of a profitable and high-growth 2003. I am pleased to see the company continuing to execute well.”

Total Q1 revenue was $12.3 million, comprised of $7.9 million from software and services, $2.6 million from maintenance and support and $1.9 million from third party products and services. The third party products and services revenue amount included approximately $1.1 million that was attributable to subcontract work of third party integrators on a large project.

A corresponding, offsetting amount was also included in direct costs, as required under GAAP. Excluding this amount, total revenue for Q1 was $11.2 million, slightly better than MDSI’s forecast of between $10 million and $11 million, equal to Q4 2002’s result, and represented approximately 30% growth over Q1 2002 and approximately 35% growth in software and services revenue.

Total gross margin was 56.9 percent (excluding the value of work attributable to the subcontractor), down from 57.8 percent in Q1 2002, but equal to the gross margin in Q4 2002. At $5.8 million, total operating expenses was up marginally over $5.5 million recorded in Q1 2002 and approximately flat with $5.9 million recorded in Q4 2002. All of the company’s Canadian dollar denominated expenses in Q1 2003 increased as reported in U.S. dollars due to significant weakness in the U.S. dollar during the period. Similarly, foreign exchange loss resulting from translation of non-U.S. dollar denominated items on MDSI’s balance sheet amounted to one cent per fully diluted share, included in other expense for the period.

MDSI maintained a strong balance sheet during the quarter. At March 31, 2003, the company’s cash balance was $12.5 million, down from $12.8 million at March 31, 2002 and up from $11.0 million at December 31, 2002. The company continues to have no long term debt.

Previously unannounced, MDSI has signed a contract to upgrade a southern Californian gas and electric utility customer to Advantex r7. The customer has approximately 400 mobile workers and provides service to 3 million consumers through 1.3 million electric meters and 775,000 natural gas meters. Advantex® will be integrated with the utility’s customer information and outage management systems, will work with ruggedized laptops from Panasonic and Walkabout and will communicate over a private Motorola RD-LAP network.

Since the last quarterly earnings news release, MDSI announced Advantex r7 upgrade contracts with Illinois’ largest natural gas distribution company, Nicor, and with the Pacific Northwest’s largest natural gas distribution company, NW Natural Gas.

In other matters, the company announced the settlement of certain claims against it in the case of Mobile Data Solutions Inc. v. Citizens Telecom Services Co., L.L.C. in the District Court of Collin County Texas. On April 16, 2003, the company was informed that its insurer, Chubb Insurance Company, reached an agreement with Citizens to settle Citizens’ breach of contract and breach of warranty claims for $1 million.

The company is not a party to the settlement agreement and the settlement amount is to be paid by Chubb. The settlement agreement preserved the company’s right to appeal the court’s ruling that dismissed the company’s claims on summary judgment for lack of sufficient evidence of damages and Citizens’ right to appeal the court’s ruling that dismissed Citizens’ claims of fraud and negligent misrepresentation. The company intends to pursue its claims against Citizens on appeal.

MDSI reiterated its second quarter and full year 2003 forecasts (announced previously and summarized here) and added a forecast for Q3 2003:

— FY 2003: grow total revenues approximately 20 percent over 2002 (from continuing operations), grow software and services revenue approximately 30 percent over 2002, earn between $0.22 and $0.26 per fully diluted share.

— Q2 2003: total revenues of $11 million to $12 million, of which approximately $8 million will come from software and services. EPS per fully diluted share is expected to be between $0.04 and $0.05.

— Q3 2003: total revenues of $11.5 million to $12.5 million, of which approximately $8.5 million to $9.5 million will come from software and services. EPS per fully diluted share is expected to be between $0.05 and $0.07.

All forecasts exclude revenues and offsetting expenses that MDSI must recognize on a gross basis in connection with work done by third parties.

All figures in this news release are unaudited, expressed in U.S. dollars and are prepared in accordance with generally accepted accounting principles (GAAP) in the United States. For more information, unaudited, condensed consolidated statements of operations and unaudited, condensed consolidated balance sheets are presented below.

About MDSI

MDSI is the largest, most successful and experienced provider of mobile workforce management software in the world. MDSI’s software improves customer service and relationships and reduces operating costs by allowing companies to manage field resources more effectively. Headquartered in Richmond, BC, Canada, MDSI was founded in 1993 and has approximately 350 employees. The company has operations and support offices in the United States, Canada, Europe and Australia. MDSI services approximately 100 customers and has licensed more than 80,000 field service users around the world. MDSI is a public company traded on the Toronto Stock Exchange (MMD) and on NASDAQ (MDSI). www.mdsi-advantex.com.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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