OTTAWA, ONTARIO--(Marketwire - Nov. 10, 2010) - Calian Technologies Ltd. (TSX:CTY) today released unaudited results for the fourth quarter ended September 30, 2010. Revenues for the quarter were $52.9 million, a 3% decrease from the $54.4 million reported in the same quarter of the previous year. Net earnings were $3.2 million or $0.42 per share basic and diluted, compared to $3.5 million or $0.45 per share basic and diluted in the same quarter of the previous year. For the year 2010, the Company reported revenues of $215.7 million and net earnings of $13.6 million or $1.75 per share basic and diluted, compared to revenues of $227.2 million and net earnings of $16.5 million or $2.12 per share basic and $2.11 diluted in the prior year.

"Results for the quarter were generally in line with management expectations. Both divisions posted strong revenue showings, despite the tempering effect of the summer vacation period. Revenues in our BTS division reflected a gradual increase in activity on new programs coupled with the strong flow of work provided by our other historical contracts. Our short-term staffing group continues to face a challenging marketplace, but recent gains have been encouraging. In the SED division, work continues to progress on the third deep-space antenna for ESA, with design finalization and site activities generating substantial revenues. Our manufacturing group continues to be steady, albeit at a lower level of activity than the prior year, with ongoing requirements for KDS, RIM and DRS," stated Ray Basler, President and CEO.

"Despite a very competitive landscape, margins continue to be healthy. As expected SED margins have decreased relative to the same quarter last year, however BTS margins have remained stable despite an ever-changing project mix. Continued volatility of the Canadian dollar relative to other major currencies will certainly put pressure on margins for international pursuits" continued Basler.

"We continue to maintain a strong balance sheet with substantial cash balances despite a significant drawdown of unearned contract revenue. Our financial strength coupled with our operational expertise puts us in a solid position to execute our exiting backlog of work and to pursue new opportunities" continued Basler.

We believe that our key markets will remain strong and we are expecting exciting opportunities to materialize in the future. At the same time, we are cognizant of the potential impact of government cost cutting initiatives and overseas deployment reductions in the military. In addition, with unsettled commercial markets, we are seeing delays in spending decisions that have resulted in alterations to our anticipated revenue profiles. Consequently, revenues ultimately realized will be dependent on the extent and timing of future contract awards. At this juncture, we expect revenues for 2011 to be in the range of $215 million to $235 million and net earnings per share in the range of $1.50 to $1.80 per share.

About Calian

Calian sells technology services to industry and government in Canada and around the world. Calian provides customers with ready access to an exceptional team of engineers, telecommunications and technology professionals, health care professionals and other highly qualified staff. The Business and Technology Services Division augments customer workforces with flexible short and placements, recruitment and outsourcing of engineering, health care professionals and other skilled professionals. The Systems Engineering Division plans, designs and implements solutions for many of the world's space agencies and leading communications satellite manufacturers and operators, as well as providing contract manufacturing services for 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 CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS

(Canadian dollars in thousands, except per share data)

		Three months ended September 30						Year ended September 30
			2010			2009			2010			2009
Revenues		$	52,911		$	54,365		$	215,725		$	227,230
Cost of revenues			42,559			43,323			172,943			178,018
Gross profit			10,352			11,042			42,782			49,212
Selling and marketing			1,056			1,281			4,770			4,957
General and administration			3,744			3,541			15,310			15,714
Facilities			881			907			3,105			3,230
Stock option compensation (Note 9)			3			16			20			104
Depreciation and amortization			253			415			944			1,246
Prior years investment tax credits (Note 8)			-			-			-			(311	)
Earnings before other income and expense, interest income and income tax expense			4,415			4,882			18,633			24,272
Unrealized gain (loss) on fair value of conversion options of investment (Note 6)			(2	)		12			(52	)		(220	)
Loss on share exchange (Note 6)			-			-			-			(125	)
Interest income (Note 7)			215			177			753			715
Earnings before income tax expense			4,628			5,071			19,334			24,642
Income tax expense – current			1,234			1,682			5,195			8,055
Income tax expense – future			154			(60	)		529			135
			1,388			1,622			5,724			8,190
NET EARNINGS		$	3,240		$	3,449		$	13,610		$	16,452
Retained earnings, beginning of period			39,317			40,625			42,692			35,148
Excess of purchase price over stated capital on repurchase of shares (Note 9)			(724	)		(73	)		(2,226	)		(3,938	)
Dividends			(1,697	)		(1,309	)		(13,940	)		(4,970	)
Retained earnings, end of period		$	40,136		$	42,692		$	40,136		$	42,692
Net earnings per share: (Note 10)
	Basic	$	0.42		$	0.45		$	1.75		$	2.12
	Diluted	$	0.42		$	0.44		$	1.75		$	2.11
Weighted average number of shares: (Note 10)
	Basic		7,715,538			7,704,881			7,756,584			7,764,119
	Diluted		7,743,536			7,756,153			7,790,825			7,814,984

CALIAN TECHNOLOGIES LTD.

UNAUDITED CONSOLIDATED BALANCE SHEETS

(Canadian dollars in thousands)

		September 30, 2010		September 30, 2009
ASSETS
CURRENT ASSETS
	Cash	$	29,055	$	43,662
	Accounts receivable		33,954		32,816
	Work in process		3,576		2,766
	Prepaid expenses (Note 5)		6,329		5,656
	Future income taxes		696		1,472
	Derivative assets (Note 13)		158		679
	Investment (Note 6)		953		-
			74,721		87,051
INVESTMENT (Note 6)			2,464		3,037
EQUIPMENT			4,611		4,300
INTANGIBLE			543		420
GOODWILL			9,518		9,518
		$	91,857	$	104,326
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
	Accounts payable and accrued liabilities	$	20,896	$	22,644
	Unearned contract revenue		11,763		20,792
	Derivative liabilities (Note 13)		48		377
			32,707		43,813
CONTINGENCIES (Note 11)
SHAREHOLDERS' EQUITY
	Share capital (Note 9)		18,689		17,719
	Contributed surplus (Note 9)		171		285
	Retained earnings		40,136		42,692
	Accumulated other comprehensive loss		154		(183	)
			59,150		60,513
		$	91,857	$	104,326

CALIAN TECHNOLOGIES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Canadian dollars in thousands)

		Three months ended September 30						Year ended September 30
		2010			2009			2010			2009
Net earnings		$	3,240		$	3,449		$	13,610		$	16,452
	Unrealized gain (loss) on translating financial statements of self-sustaining foreign operation, net of tax of nil (2009 – nil)		(43	)		(112	)		(47	)		84
	Unrealized gain (loss) on fair value of host contract component of investment, net of tax of nil (2009 – nil)		-			44			-			(257	)
	Change in deferred gain on derivatives designated as cash flow hedges, net of tax of $171 and $246 (2009 - $707 and $450 year to date)		355			1,471			512			937
Other comprehensive income			312			1,403			465			764
Comprehensive income		$	3,552		$	4,852		$	14,075		$	17,216

CALIAN TECHNOLOGIES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE LOSS

(Canadian dollars in thousands)

	September 30, 2010			September 30, 2009
Unrealized cumulative loss on translating financial statements of self-sustaining foreign operation, net of tax	$	(357	)	$	(310	)
Unrealized cumulative gain on fair value of host contract component of investment, net of tax (Note 2)		-			128
Deferred gain (loss) on derivatives designated as cash flow hedges, net of tax		511			(1	)
Accumulated other comprehensive income (loss), end of period, net of tax		154			(183	)
Retained earnings, end of period		40,136			42,692
Accumulated other comprehensive income (loss) and retained earnings, end of period	$	40,290		$	42,509

CALIAN TECHNOLOGIES LTD.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Canadian dollars in thousands)

		Three months September 30						Year ended September 30
		2010			2009			2010			2009
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net earnings		$	3,240		$	3,449		$	13,610		$	16,452
Items not affecting cash:
	Interest accreted on host contract component of investment (Note 7)		(160	)		(135	)		(560	)		(474	)
	Employee stock purchase plan compensation expense		17			16			61			50
	Stock option compensation (Note 9)		3			16			20			104
	Write-off of Nortel receivable					-			-			757
	Depreciation and amortization		253			415			944			1,246
	Future income tax expense		154			(60	)		529			135
	Unrealized (gain) loss on fair value of conversion options of investment (Note 6)		2			(12	)		52			220
	Loss on share exchange (Note 6)		-			-			-			125
			3,509			3,689			14,656			18,615
Change in non-cash working capital
	Accounts receivable		1,281			4,816			(996	)		(758	)
	Work in process		501			(339	)		(810	)		1,996
	Prepaid expenses (Note 5)		1,315			(4,765	)		(673	)		(4,954	)
	Accounts payable and accrued liabilities		(2,288	)		-			(1,000	)		2,932
	Unearned contract revenue		(4,048	)		12,223			(9,029	)		8,224
			270			15,624			2,148			26,055
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
	Issuance of common shares		175			859			1,188			1,491
	Dividends		(1,697	)		(1,309	)		(13,940	)		(4,970	)
	Repurchase of shares (Note 9)		(838	)		(85	)		(2,578	)		(4,933	)
			(2,360	)		(535	)		(15,330	)		(8,412	)
CASH FLOWS USED IN INVESTING ACTIVITIES
	Equipment expenditures		(492	)		(171	)		(1,378	)		(1,392	)
			(492	)		(171	)		(1,378	)		(1,392	)
FOREIGN CURRENCY ADJUSTMENT			(43	)		(112	)		(47	)		84
NET CASH INFLOW (OUTFLOW)			(2,625	)		14,806			(14,607	)		16,335
CASH, BEGINNING OF PERIOD			31,680			28,856			43,662			27,327
CASH, END OF PERIOD		$	29,055		$	43,662		$	29,055		$	43,662

CALIAN TECHNOLOGIES LTD.

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

For the periods ended September 30, 2010 and 2009

(Canadian dollars in thousands, except per share amounts)

(Unaudited)

1. ACCOUNTING POLICIES

These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles. They do not include all of the information and notes required by generally accepted accounting principles for annual financial statements.

These interim consolidated financial statements have been prepared using the same accounting policies used in the preparation of the audited annual consolidated financial statements for the year ended September 30, 2010 with the exception of the application of the accounting policy described in Note 2. These interim consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements.

2. ADOPTION OF NEW ACCOUNTING POLICY

Effective October 1, 2009, management adopted amended Section 3855, Financial Instruments – Recognition and Measurement. Based on the amendments, management has the choice of classifying the host contract portion of its investment in AIM Healthcare Group (AIM) as an Available-For-Sale asset or as a Loans and Receivables asset. Management chose to classify the host contract as a Loans and Receivable asset. Loans and Receivable assets are recognized at amortized cost. At October 1, 2009, the carrying amount of the investment was decreased by $128 with a corresponding adjustment to Accumulated Other Comprehensive Income to return the investment to amortized cost. The value of the embedded derivative is still adjusted to fair value through net income.

In December 2009, the CICA issued Emerging Issues Committee-175 Multiple Deliverable Revenue Arrangements. This new EIC will be applicable to financial statements relating to the Company's annual financial statements beginning on October 1, 2011. Earlier adoption is permitted. The abstract addresses some aspects of the accounting by a vendor for arrangements under which it will perform multiple revenue-generating activities. The Company does not anticipate that the adoption of the new standards will have a significant impact on the financial statements of the Company.

3. ACCOUNTING ESTIMATES

For the periods ended September 30, 2010 and September 30, 2009, no material changes in estimates have been made.

Effective October 1, 2009, the Company modified its depreciation methodology from declining balance to straight-line depreciation, with amortization calculated over 5 to 10 years, to better reflect the estimated usage of the Company's equipment and intangible. The change did not have a material impact on the financial statements.

4. SEASONALITY

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

	Year ended September 30
	2010		2009
Prepaid operating expenses	$	705	$	635
Milestone advance to subcontractor		5,624		5,021
	$	6,329	$	5,656

6. INVESTMENT

On July 11, 2006, the Company invested $3,623 in Med-Emerg International Inc. (Med-Emerg) in the form of convertible preferred shares which included $116 of acquisition costs. On January 20, 2009, Med-Emerg announced that it successfully merged with AIM Health Group Inc. (AIM) in an all-stock transaction. At that time, Calian surrendered its preferred shares in Med-Emerg in exchange for a secured convertible debenture of AIM with a face value of $3,897. The share exchange resulted in a loss on exchange of $125.

The non-interest bearing debenture is convertible into 6,831,372 common shares of AIM at the Company's option. AIM is also entitled to cause the debenture to be converted into common shares when in any given 6-month period, trading volumes of AIM common shares exceed 1,089,642 shares and the weighted average share price is at least $0.57. Conversion is limited to 50% of the debenture in any 6-month period. On a fully converted basis, this investment represents a 6% interest based on the current number of common shares outstanding. The debenture is subordinated to secured creditors of record on January 20, 2009 and any bank indebtedness. The debenture is due to be redeemed in two instalments; $1,000 payable in cash on January 1, 2011 and the remaining $2,897 payable on July 11, 2011 in cash or AIM common shares at the option of AIM based on the then fair market value of the common shares.

Carrying value of investment:

Med-Emerg investment, at cost	$	3,623
Med-Emerg cumulative unrealized loss on conversion options		(1,878	)
Med-Emerg cumulative interest accretion on host contract		897
Med-Emerg fair value of investment on January 20, 2009, prior to exchange	$	2,642
Loss on share exchange		(125	)
AIM investment, at cost	$	2,517
AIM cumulative unrealized loss on conversion options		(17	)
AIM cumulative interest accretion on host contract		917
Carrying value of investment at September 30, 2010	$	3,417
Short-term		953
Long-term	$	2,464

The Company's investment is considered a hybrid instrument as it includes rights of conversion to common shares. The conversion options are considered to be embedded derivatives to be separated and valued independent of the underlying host contract. The conversion options are measured at fair value with changes in fair value recorded in net income. AIM shares are traded on the TSX Venture Exchange and currently trade in limited volume. The fair value of the conversion options applies the following data and assumptions to the Black-Scholes option pricing model:

AIM 30 day weighted average share price	$0.12
Risk free interest rate	1.00%
Actual stock price volatility	76%
Expected life of options	0.75 years

7. INTEREST INCOME

Interest income is comprised of the following amounts:

	Three months ended September 30				Year ended September 30
	2010		2009		2010		2009
Interest earned on cash balances	$	55	$	42	$	193	$	241
Accreted interest on host contract component of investment		160		135		560		474
Interest income	$	215	$	177	$	753	$	715

8. PRIOR YEARS INVESTMENT TAX CREDITS

During the second quarter of 2009, the Company received an assessment from the Canada Revenue Agency regarding the Company's re-filing of its 2006 scientific research and experimental development (R&D) claim allowing additional R&D costs to be claimed. As a result the Company received a refund of $311 of investment tax credits related to its 2006 R&D activities.

9. SHARE CAPITAL

Share repurchase

During the fourth quarter (and year) September 30, 2010, the Company acquired 47,320 (147,950) of its outstanding common shares at an average price of $17.71 ($17.43) per share for a total of $838 ($2,579) including related expenses, through normal course issuer bids in place during the period. During the quarter (and year) ending September 30, 2009 the Company acquired 5,100 (472,400) of its outstanding common shares at an average price of $16.58 ($10.44) per share for a total of $85 ($4,933) including related expenses, through normal course issuer bids in place during the period. 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 250,000 are issued at September 30, 2010.

During the quarter (and year) ending September 30, 2010 and relating to options issued in prior years, under the fair value based method, stock-option compensation expense within general and administrative costs of $3 and $20 was recorded related to stock options compared to $16 and $104 recorded in the quarter and year ending September 30, 2009. The offsetting credit was applied to contributed surplus.

The compensation costs during the year ending September 30, 2010 related to the issuance of options were calculated using the Black-Scholes option pricing model using the following assumptions:

Risk free interest rate	2.3%
Expected dividend yield	7.2%
Stock price volatility	26.7%
Expected life of options	3.47 years

10. NET EARNINGS PER SHARE

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

	Three months ended September 30		Year ended September 30
	2010	2009	2010	2009
Weighted average number of shares – basic	7,715,538	7,704,881	7,756,584	7,764,119
Addition to reflect the dilutive effect of employee stock options	27,998	51,272	34,241	50,865
Weighted average number of shares – diluted	7,743,536	7,756,153	7,790,825	7,814,984

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 periods September 30, 2010 and 2009, no options were excluded from the above computation of diluted weighted average number of shares.

11. CONTINGENCIES

In the normal course of business, the Company is party to employee related claims. The potential outcomes related to existing matters faced by the Company are not determinable at this time. The Company intends to defend these actions, and management believes that the resolution of these matters will not have a material adverse effect on the Company's financial condition.

12. 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 involves both short long-term and placements of personnel to augment customers' workforces (Staffing) as well as the long-term management of projects, facilities and customer business processes (Outsourcing).

The Company evaluates performance and allocates resources based on earnings before other expense, interest income and income taxes. The accounting policies of the segments are the same as those described in the significant accounting policies note in the audited annual consolidated financial statements.

Three months ended September 30, 2010
	Systems Engineering		Business and Technology Services		Corporate			Total
Revenues	$	15,651	$	37,260	$	-		$	52,911
Earnings before other expense, interest income and income tax expense		2,625		2,443		(653	)		4,415
Unrealized loss on fair value of conversion options of investment (Note 6)									(2	)
Interest income (Note 7)									215
Income tax expense									(1,388	)
Net earnings								$	3,240

Three months ended September 30, 2009
	Systems Engineering		Business and Technology Services		Corporate			Total
Revenues	$	15,789	$	38,576	$	-		$	54,365
Earnings before other income, interest income and income tax expense		3,051		2,417		(586	)		4,882
Unrealized gain on fair value of conversion options of investment (Note 6)									12
Interest income (Note 7)									177
Income tax expense									(1,622	)
Net earnings								$	3,449

Year ended September 30, 2010
	Systems Engineering		Business and Technology Services		Corporate			Total
Revenues	$	64,000	$	151,725	$	-		$	215,725
Earnings before other income, interest income and income tax expense		11,203		9,983		(2,553	)		18,633
Unrealized loss on fair value of conversion options of investment (Note 6)									(52	)
Interest income (Note 7)									753
Income tax expense									(5,724	)
Net earnings								$	13,610
Total assets other than cash and goodwill	$	16,507	$	33,287	$	3,490		$	53,284
Goodwill		-		9,518		-			9,518
Cash		-		-		29,055			29,055
Total assets	$	16,507	$	42,805	$	32,545		$	91,857
Equipment and intangible expenditures	$	668	$	710	$	-		$	1,378

Year ended September 30, 2009
	Systems Engineering		Business and Technology Services		Corporate			Total
Revenues	$	75,527	$	151,703	$	-		$	227,230
Earnings before other income, interest income and income tax expense		17,134		10,002		(2,864	)		24,272
Unrealized loss on fair value of conversion options of investment (Note 6)									(220	)
Loss on share exchange (Note 7)									(125	)
Interest income (Note 8)									715
Income tax expense									(8,190	)
Net earnings								$	16,452
Total assets other than cash and goodwill	$	17,436	$	30,588	$	3,122		$	51,146
Goodwill		-		9,518		-			9,518
Cash		-		-		43,662			43,662
Total assets	$	17,436	$	40,106	$	46,784		$	104,326
Equipment and intangible expenditures	$	755	$	637	$	-		$	1,392

13. 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 September 30, 2010, the Company had the following forward foreign exchange contracts:

Type	Notional	Currency	Maturity	Equivalent Cdn. Dollars		Fair Value September 30, 2010
SELL	19,628	USD	October 2010	$	20,252	$	56
SELL	1,000	USD	September 2015		1,057		28
SELL	1,000	USD	September 2016		1,057		28
SELL	1,000	USD	September 2017		1,057		28
BUY	6,563	EURO	October 2010		9,189		18
Derivative assets						$	158
BUY	4,065	USD	October 2010	$	4,194	$	11
SELL	12,262	EURO	October 2010		17,168		35
BUY	98	GPB	October 2010		160		2
Derivative liabilities						$	48

A 10% strengthening (weakening) of the Canadian dollar against the following currency at September 30, 2010 would have increased (decreased) other comprehensive income as related to the forward foreign exchange contracts by the amounts shown below.

	2010
USD	$	1,560
EURO		790
GBP		(15	)
	$	2,335

Management Discussion and Analysis – September 30, 2010 :

(Canadian dollars in thousands, except per share data)

RESULTS OF OPERATIONS

Revenues:

For the fourth quarter 2010, revenues were $52,911 compared to $54,365 reported for the same period in 2009 representing a 3% decrease from the prior year. For the year ending September 30, 2010 revenues were $215,725 compared to $227,230 for 2009 representing a 5% decrease from the prior year.

Systems Engineering's (SED) revenues were $15,651 in the quarter and $64,000 on a year-to-date basis representing a decrease of 1% and 15% from the $15,789 and $75,527 recorded last year. As expected, revenues are back to more traditional levels of activity in both the satellite engineering and contract manufacturing sectors due to the completion or near-completion of several large contracts in 2009 and decreased demand in the custom manufacturing area. Due to the project nature of its business, the SED division is susceptible to significant variation in volumes of activity from period to period.

Business and Technology Services (BTS) revenues were $37,260 in the quarter and $151,725 on a year-to-date basis representing a decrease of 3% for the quarter and unchanged for the year compared to the $38,576 and $151,703 achieved for the same period of last year. During the quarter BTS experienced steady activity on most of its contracts; however certain contracts experienced a longer than usual summer vacation slowdown.

Management expects that the marketplace over the next year will continue to be very competitive. The market conditions for SED are expected to be positive and should present new opportunities, although the related timing continues to be somewhat uncertain. Current BTS backlog is expected to provide a solid level of activity on existing contracts and new opportunities are expected to be available. However, the timing of future contract awards and customer demand in the short-term will ultimately determine revenues for the next year.

Gross margin:

Gross margin was 19.6% in the fourth quarter of 2010, compared to the 20.3% reported in the fourth quarter a year ago. On a year-to-date basis the Company reported margins of 19.8% compared to 21.7% for the same period last year. The consolidated gross margin for 2010 was affected by lower margins realized in both divisions and was also biased by the smaller proportion of SED revenues.

Gross margin in Systems Engineering was 26.6% this quarter compared to 30.0% in the fourth quarter of 2009 and was 26.7% for the year ending September 30, 2010 compared to 30.8% for the same period last year. With the level of business returning to more traditional levels, especially in the contract manufacturing sector, economies of scale achieved in the prior year could not be realized.

Gross margin in Business and Technology Services was 16.6% compared to the 16.4% reported in the fourth quarter of 2009 and 16.9% for the year compared to 17.1% for the same period last year. Gross margin for the quarter and the year are comparable to the prior year and reflect an ever changing project mix. Also, the highly competitive nature of the short-term staffing market continues to present challenges to maintaining margins commensurate with those achieved in prior years.

Because of the significant difference in gross margin between each of the two divisions, the overall gross margin of the Company is dependent on the relative level of revenue generated from each division. Management will continue to focus on execution in order to maximize margins. Increased competition is expected to put downward pressure on future margins in both divisions. In addition, the continued volatility of the Canadian dollar coupled with lower utilization levels in the short term are expected to further dampen margins in the SED division.

Operating expenses:

Selling and marketing, general and administration and facilities totalled $5,681 or 10.7% of revenues in the fourth quarter of 2010 compared to $5,729 or 10.5% of revenues reported in the fourth quarter of 2009. For the year ending September 30, 2010 operating expenses totalled $23,185 or 10.7% compared to $23,901 or 10.5% in 2009. Operating expenses were relatively stable and in line with the overall level of revenues.

Interest income:

Interest income for the fourth quarter of 2010 was $215 compared to $177 in 2009. For the year ending September 30, 2010, interest income was $753 compared to $715 in 2009. Interest income is comprised of interest earned on the Company's cash balances and accrued interest related to the investment in AIM Health Group Inc. (AIM).

Unrealized gain (loss) on fair value of conversion options of investment:

The Company recorded a loss of $2 for the quarter and $52 on a year-to-date basis compared to a gain of $12 and a loss of $220 for 2009 relating to the fair value of conversion options of investment. The reported unrealized gain or loss is a reflection of the movement in quoted market prices of AIM shares and the remaining term of the related conversion privilege.

Income taxes:

The provision for income taxes for the fourth quarter of 2010 was $1,388 or 30% of earnings before tax compared to $1,622 in 2009 or 32.0% of earnings before tax. On a year-to-date basis, the provision for income taxes was $5,724 or 29.6% of earnings before tax compared to $8,190 in 2009 or 33.2% of earnings before tax. The decrease in the realized tax rate is the result of a continued decrease in prescribed federal and provincial tax rates and the positive impact of adjustments related to the 2009 tax returns. The effective tax rate for 2011, prior to considering the impact of non-taxable transactions, is expected to be approximately 29%.

Net earnings:

As a result of the foregoing, in the fourth quarter of 2010 the Company recorded net earnings of $3,240 or $0.42 per share basic and diluted, compared to $3,449 or $0.45 per share basic and $0.44 diluted in the same quarter of the prior year. For the year ending September 30, 2010 the Company reported net earnings of $13,610 or $1.75 per share basic and diluted compared to $16,452 or $2.12 per share basic and $2.11 diluted in the same period of the prior year.

BACKLOG

The Company's backlog at September 30, 2010 was $924 million with terms extending to fiscal 2018. This compares to $873 million reported at the end of September 2009. Contracted Backlog represents maximum potential revenues remaining to be earned on signed contracts, whereas Option Renewals represent customers' options to further extend existing contracts under similar terms and conditions. Backlog is adjusted for work performed, new contract wins or extension options on new contracts, previous extension options exercised or lapsed, changes in revenue profiles, changes in customer utilization patterns or for changes in contract scope.

During the fourth quarter of 2010 there were no new significant contracts contributing to the increase in the Company's backlog. In addition, there were no contracts which were cancelled unexpectedly which resulted in a decrease in our backlog.

Most fee for service contracts provide the customer with the ability to adjust the timing and level of effort throughout the contract life and as such the amount actually realized could be materially different from the original contract value. The following table represents management's best estimate of the backlog realization for 2011, 2012 and beyond based on management's current visibility into customers' existing requirements.

Management's estimate of the realizable portion (current utilization rates and known customer requirements) is less than the total value of signed contracts and related options by approximately $228 million. The majority of this amount relates to the health services support contract. The Company's policy is to reduce the reported contractual backlog once it receives confirmation from the customer that indicates the utilization of the full contract value may not materialize.

(dollars in millions)	Fiscal 2011	Fiscal 2012	Beyond 2012	Estimated realizable portion of Backlog	Excess over estimated realizable portion	TOTAL
Contracted Backlog	$ 169	$ 94	$ 64	$ 327	$ 103	$ 430
Option Renewals	12	52	305	369	125	494
TOTAL	$ 181	$ 146	$ 369	$ 696	$ 228	$ 924
Business and Technology Services	$ 140	$ 128	$ 354	$ 622	$ 228	$ 850
Systems Engineering	41	18	15	74	-	74
TOTAL	$ 181	$ 146	$ 369	$ 696	$ 228	$ 924

FINANCIAL CONDITION AND CASHFLOWS

Operating activities:

Cash inflows from operating activities for the year ending September 30, 2010 were $2,148 compared to $26,055 in 2009. This year's decrease is the result of lower earnings coupled with working capital fluctuations in line with the ebbs and flows of the business and a decrease in advance customer payments of $9,029 compared to an increase of $8,244 in the prior year. The market for the Systems Engineering Division is characterized by contracts with billings tied to milestones achieved, which often results in significant working capital requirements. Conversely, given the nature of this business, it is sometimes possible to negotiate advance payments on contracts. Such advance payments give rise to unearned revenue that will be realized as revenue over the course of the contract. As at September 30, 2010, the Company's total unearned revenue amounted to $11,763. This compares to $20,792 one year earlier, with the decrease primarily attributable to work progressing on the third deep space antenna contract for ESA.

Financing activities:

During the year ending September 30, 2010, the Company paid quarterly dividends totalling $0.79 per share compared to 2009 when the Company paid quarterly dividends totalling $0.64 per share. In the first quarter of 2010, the Company also paid a special dividend of $1.00 in recognition of the exceptional performance in 2009. The Company intends to continue with its quarterly dividend policy for the foreseeable future.

During the year ending September 30, 2010, the Company repurchased 147,950 common shares through its normal course issuer bid at an average price of $17.43 compared to the previous year when the Company repurchased 472,400 shares at an average price of $10.44.

Capital resources:

At September 30, 2010 the Company had a short-term credit facility of $10,000 with a Canadian chartered bank that bears interest at prime and is secured by assets of the Company. An amount of $612 was drawn to issue a letter of credit to meet customer contractual requirements. Management believes that Calian has sufficient cash resources to continue to finance its working capital requirements and pay a quarterly dividend.

ADOPTION OF NEW ACCOUNTING RULES AND IMPACT ON 2010 FINANCIAL RESULTS

Effective October 1, 2009, management adopted amended Section 3855, Financial Instruments – Recognition and Measurement. Based on the amendments, management has the choice of classifying the host contract portion of its investment in AIM Healthcare Group (AIM) as an Available-For-Sale asset or as a Loans and Receivable asset. Management chooses to classify the host contract as a Loans and Receivables. Loans and Receivable assets are recognized at amortized cost. At September 30, 2009, the carrying amount of the investment was decreased by $128 with a corresponding adjustment to Accumulated Other Comprehensive Income.

SELECTED QUARTERLY FINANCIAL DATA

	Q4/10		Q3/10		Q2/10		Q1/10		Q4/09		Q3/09		Q2/09		Q1/09
Revenues	$	52,911	$	57,565	$	53,141	$	52,108	$	54,365	$	57,845	$	59,922	$	55,098
Net earnings	$	3,240	$	3,845	$	3,082	$	3,443	$	3,449	$	4,483	$	5,201	$	3,319
Net earnings per share
Basic	$	0.42	$	0.49	$	0.40	$	0.44	$	0.45	$	0.58	$	0.67	$	0.42
Diluted	$	0.42	$	0.49	$	0.40	$	0.44	$	0.44	$	0.58	$	0.67	$	0.42

SEASONALITY

The Company's operations are subject to some quarterly seasonality due to the timing of vacation periods and statutory holidays. Typically the Company's first and last quarter will be negatively impacted as a result of the Christmas season and summer vacation period. During these periods, the Company can only invoice for work performed and is also required to pay for statutory holidays. This results in reduced levels of revenues and in a drop in gross margins. This seasonality may not be apparent in the overall results of the Company depending on the impact of the realized sales mix of its various projects.

OUTLOOK

Management believes the Company is well positioned for sustained growth. The Company operates in markets that will continue to require the services that the Company offers. To further assure itself of a stable source of revenues, the Company will focus on increasing the percentage of its revenues derived from recurring business while pursuing new business in adjacent markets. The Systems Engineering Division has been working within a stable satellite sector for the last two years and the division is expecting new opportunities to arise as systems adopting the latest technologies will be required by customers to maintain and improve their service offerings. Management is also confident that systems such as MSTAR will continue to be in demand in the security and surveillance market although it cannot predict the timing and extent of future orders. Custom manufacturing activity levels will continue to be directly dependant upon SED's customers' requirements. The continued volatility of the Canadian dollar could impact the Systems Engineering Division's competitiveness when bidding against foreign competition on projects denominated in foreign currencies.

The Business and Technology Services Division's services are adaptable to many different markets. Currently, its strength lies in providing program management and delivery services to the Department of National Defence. Management believes that this department and many others within the federal government will continue to require more support services from private enterprises to supplement their current workforce. Management believes that the types of service the division offers will continue to be attractive to government agencies going forward.

GUIDANCE

We believe that our key markets will remain strong and we are expecting exciting opportunities to materialize in the future. At the same time, we are cognizant of the potential impact of government cost cutting initiatives and overseas deployment reductions in the military. In addition, with unsettled commercial markets, we are seeing delays in spending decisions that have resulted in alterations to our anticipated revenue profiles. Consequently, revenues ultimately realized will be dependent on the extent and timing of future contract awards. At this juncture, we expect revenues for 2011 to be in the range of $215 million to $235 million and net earnings per share in the range of $1.50 to $1.80 per share.

INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Canadian Accounting Standards Board has announced that Canadian publicly accountable enterprises will be required to report under International Financial Reporting Standards (IFRS) as replacement guidance for the Canadian generally accepted accounting principles (Canadian GAAP) effective for fiscal years beginning after January 1, 2010. Therefore, the Company will adopt IFRS as the basis of preparation for its interim and annual financial statements for periods beginning on October 1, 2011 with a transition date of October 1, 2010 to allow for comparative financial information. IFRS uses a conceptual framework similar to current Canadian GAAP, but there are significant differences in recognition, measurement and disclosures. In addition, it is expected that IFRS in effect at the time of reporting the Company's first IFRS financial statements will evolve from current IFRS and may result in additional differences.

In order to prepare for the conversion to IFRS, the Company has developed an IFRS changeover plan. This plan addresses key elements of the Company's conversion to IFRS including:

• Accounting policy changes and financial reporting requirements;
• Education and training requirements;
• Impacts on business activities and on Information technology and data systems;
• Internal control over financial reporting; and
• Disclosure controls and procedures.

We have also established a formal governance structure for the conversion to IFRS. The initiative is lead by the Chief Financial Officer who reports regularly to the Chief Executive Officer. The Chief Financial Officer also reports quarterly to the Audit Committee of the Board of Directors on the status of the project and the implications of the changeover to IFRS.

During 2010, the following activities were performed:

• A detailed assessment was substantially completed for all key standards and significant accounting policy choices including IFRS 1 elective exemption choices using IFRS standards in effect on date of transition;
• The creation of a duplicate IFRS compliant environment to track all adjusting IFRS entries for the Company's opening balance sheet and throughout the Company's dual reporting period of October 1, 2010 to September 30, 2011;
• A detailed assessment was performed of required changes to internal controls. Management concluded that internal controls applicable to the Company's reporting process under Canadian GAAP are fundamentally the same as those required in the Company's IFRS reporting environment;
• A detailed assessment was performed and some required changes to disclosure controls and procedures were identified. Disclosure controls and procedures have been updated to include all data required for financial statements disclosures under IFRS;
• A detailed assessment has been completed of the impact of IFRS on key performance indicators and business activities such as compensation arrangements, hedging activities and risk management practices. With the exception of modifying the term of certain hedging contracts related to a long-term customer contract, no significant changes were required;
• A detailed assessment was performed of required changes to systems, processes and documentation. With the exception of adjusting the Company's hedging documentation to reflect IFRS standard requirements, no significant changes were required;
• A complete IFRS financial statement model was built and reviewed by management and the board of directors;
• Data collection for the opening balance sheet is in progress; and
• Key finance employees responsible to carry out the IFRS conversion were provided with adequate training and resources throughout this process. The Company also held an IFRS information session with all members of the board of directors. The Audit Committee is also appraised quarterly on IFRS standards and policy choices available to the Company.

During 2011 the following activities will take place:

• Monitor standards to be issued by the IASB and provide the related training on such;
• Assess the impact of new IASB standards on the Company's opening balance sheet and its financial position and results of operations throughout the conversion period;
• Complete the data collection and finalize the assessment of the impact of adopting IFRS. Data collection for each quarter in fiscal 2011 is intended to be performed shortly following the closing of each quarter under Canadian GAAP;
• Complete the necessary work required to quantify the impact of the changeover to IFRS on the Company's financial position and result of operations at date of transition and affecting the comparative year 2011 and the first reporting year 2012;
• Prepare fiscal 2011 quarterly financial statements under IFRS standards, in preparation for reporting comparative information in 2012; the Company's first year of reporting under IFRS.

Based on the Company's work to date, we do not expect that the conversion to IFRS will result in any material impact on the financial position or results of operations of the Company and believe that the areas of higher potential impact will be around hedge accounting documentation and overall disclosure requirements. Management will also continue to monitor changes in IFRS which could be applicable to the Company during its change over period and assess any impact at that time. Additional information will also be provided in the Company's Management Discussion and Analysis in the 2010 annual report.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

During the most recent interim quarter ending September 30, 2010, there have been no changes in the design of the Company's internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, the Company's internal controls over financial reporting.

FORWARD-LOOKING STATEMENT

Certain information included in this management discussion and analysis 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, 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 the Company 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.

The foregoing discussion and analysis should be read in conjunction with the financial statements for the fourth quarter of 2010, and with the Management Discussion and Analysis in the 2009 annual report, including the section on risks and opportunities.

FOR FURTHER INFORMATION PLEASE CONTACT:

Ray Basler
Calian Technologies Ltd.
President and Chief Executive Officer
306-931-3425

OR

Jacqueline Gauthier
Calian Technologies Ltd.
Chief Financial Officer
613-599-8600
613-599-8650 (FAX)
info@calian.com
www.calian.com