Companies news of 2006-11-01 (page 1)

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    FEI Company Reports Revenue and Earnings Increase With Bookings at Record Levels for Third Quarter of 2006

    HILLSBORO, Ore., Nov. 1 /PRNewswire-FirstCall/ -- FEI Company reported results for the third quarter of 2006. Revenue and net income reached the highest third-quarter totals in the company's history. Bookings and the backlog of unfilled orders grew to record levels.

    Net sales for the quarter ended October 1, 2006 of $116.9 million were up 3% compared to the second quarter of 2006 and up 20% compared to the third quarter of 2005. Bookings in the latest quarter totaled $150.7 million, up 12% from the second quarter of 2006 and 50% from the third quarter of 2005. The book-to-bill ratio for the latest quarter was 1.29 to 1.00, and the backlog at the end of the quarter was $277.4 million, of which approximately 90% is expected to ship by the end of 2007.

    Net income on the basis of accounting principles generally accepted in the United States (GAAP) was $6.5 million for the third quarter of 2006, compared with net income of $4.1 million in the second quarter of 2006 and a net loss of $5.1 million in last year's third quarter. Diluted earnings per share in the latest quarter were $0.17, compared with diluted earnings per share of $0.11 in the second quarter of 2006 and a loss per share of $0.15 in the third quarter of 2005.

    "We recorded solid results in the third quarter," said Don Kania, president and CEO of FEI. "Revenue and earnings were at the high end of our guidance range. Our order rate was excellent, bookings were strong across all of our market divisions and our breakeven level stayed below $100 million per quarter."

    "Our outlook is for continued strong bookings, substantial revenue growth and further improvements in earnings in the fourth quarter of 2006," continued Kania. "We expect to end the year with a record backlog, and we are planning for improvements in revenue and earnings in 2007 compared with 2006. Our NanoBiology and NanoResearch and Industry markets are expected to remain robust as worldwide public and private investment in nanotechnology continues to grow. While we may experience some cyclical slowdown in the NanoElectronics market next year, industry advances to smaller geometries are expected to continue to provide us with growing long-run opportunities."

    Results for the latest quarter included a gain in non-operating income of $1.4 million from the sale of a minority interest in one private technology company, net of the write-down of another minority interest investment.

    The latest quarter also included $1.5 million of stock-based compensation expense, included in cost of sales and operating expenses, in accordance with the implementation of SFAS 123R. Stock-based compensation expense is expected to be approximately $1.8 million in the fourth quarter of 2006.

    Bookings and revenue comparisons for the company's three market segments and other data are included in the supplementary information attached to this release, along with detailed statements of operations and balance sheets.

    The company's balance sheet remained strong. Total cash and investments at the end of the quarter were $365.7 million compared with $364.1 million at the end of the second quarter. Total convertible debt at the end of the quarter was $310.9 million.

    Fourth Quarter Guidance and Outlook for 2007

    FEI currently expects net sales for the fourth quarter of 2006 to be between $125 million and $132 million. Bookings are projected to be at least $140 million. GAAP diluted earnings per share in the fourth quarter, including stock compensation expense, are expected to be in the range of $0.17 to $0.22 per share, assuming a tax rate of approximately 30%. FEI currently expects revenue and earnings for 2007 to improve over the levels of 2006.

    For reasons why the company's actual results may differ from guidance, please see the section titled "Safe Harbor Statement" below.

    Investor Conference Call -- 2:00 p.m. PST Wednesday, November 1, 2006

    Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-800-240-5318 (U.S., toll-free) or 1-303-262-2052 (international) and asking for the FEI Q3 Earnings call. The call can also be accessed via the web by going to FEI's Investor Relations page at http://www.fei.com/ , where the webcast will also be archived. A telephone replay of the call will also be accessible for one month by dialing 1-800-405-2236 (US) or 1-303-590-3000 (international) and entering the access code 11073646#.

    About FEI

    FEI's Tools for Nanotech(TM), featuring focused ion- and electron-beam technologies, deliver 3D characterization, analysis and modification capabilities with resolution down to the sub-Angstrom level. With R&D centers in North America and Europe and sales and service operations in more than 50 countries around the world, FEI is bringing the nanoscale within the grasp of leading researchers and manufacturers and helping to turn some of the biggest ideas of this century into reality. More information can be found on the FEI website at: http://www.fei.com/ .

    Safe Harbor Statement

    This news release contains forward-looking statements that include our guidance for the fourth quarter of 2006 as well as statements about our outlook, the outlook for various markets, future bookings, revenue, earnings, stock-based compensation expense, financial results, profitability and backlog growth. Factors that could affect these forward-looking statements include, but are not limited to, the continued growth in nanotechnology markets in general and more particularly, the strength of the NanoResearch and Industry, NanoElectronics and NanoBiology segments; cyclical changes in the data storage and semiconductor industries, which are the major components of the NanoElectronics market; fluctuations in foreign exchange and interest rates; our continued ability to maintain deferral accounting of hedge transactions; reduced profitability due to failure to achieve or sustain margin improvement or cost reductions; additional stock-based compensation expense from additional hiring; lower than expected customer orders; cancellation of customer orders; failure of customers to adopt new technologies; increased competition and new product offerings from competitors; lower average sales prices and reduced margins on some product sales due to increased competition; failure of the company's products and technology to find acceptance with customers; delays in shipping new products; changes in the mix of products sold in a quarter; failure of the company's ability to increase product shipments; unfavorable business conditions and lack of growth in the general economy, both domestic and foreign; failure to accurately estimate the amounts and timing of restructuring charges; restructurings and reorganizations not presently anticipated; timing of facilities closings, relocations, severance and other charges included in future restructurings, if any; reduced sales due to geopolitical risks; changes in trade policies and tariff regulations; additional research and development expenses; inability to overcome technological barriers; additional selling, general and administrative expenses; unanticipated events affecting the value of investments in private companies; additional costs related to future merger and acquisition activity; and failure of the company to achieve anticipated benefits of current or future acquisitions, including failure to achieve financial goals and integrate the acquisitions successfully. Please also refer to our Form 10-K, Forms 10-Q, Forms 8-K and other filings with the U.S. Securities and Exchange Commission for additional information on these factors and other factors that could cause actual results to differ materially from the forward-looking statements. FEI assumes no duty to update forward-looking statements.

    FEI Company and Subsidiaries Condensed Consolidated Balance Sheets (In thousands) (Unaudited) October 1, July 2, December 31, ASSETS 2006 2006 2005 CURRENT ASSETS: Cash and cash equivalents $92,323 $168,522 $59,177 Short-term investments in marketable securities 210,936 139,120 156,049 Short-term restricted cash 26,645 27,692 20,138 Receivables 135,680 122,542 98,330 Inventories 88,830 87,070 84,879 Deferred tax assets 3,911 3,446 5,157 Other current assets 31,608 39,417 32,328 Total current assets 589,933 587,809 456,058 Non-current investments in marketable securities 31,236 23,963 44,602 Long-term restricted cash 4,607 4,796 519 Property plant and equipment, net 58,982 59,131 59,011 Purchased technology, net 6,377 6,997 8,154 Goodwill 41,359 41,348 41,402 Deferred tax assets 1,440 2,393 1,095 Non-current service inventories 37,204 38,257 33,871 Other assets, net 9,104 13,578 11,319 TOTAL $780,242 $778,272 $656,031 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $32,590 $30,123 $26,186 Current accounts with Philips 1,508 2,162 1,964 Accrued payroll liabilities 18,194 13,536 9,205 Accrued warranty reserves 5,087 5,656 5,193 Accrued agent commissions 6,396 9,658 8,485 Deferred revenue 37,086 47,135 43,647 Income taxes payable 12,359 10,159 9,021 Accrued restructuring, reorganization and relocation 3,019 3,938 5,274 Other current liabilities 25,180 24,530 22,587 Total current liabilities 141,419 146,897 131,562 Convertible debt 310,882 310,882 225,000 Deferred tax liabilities 2,219 2,223 1,947 Other liabilities 5,877 5,607 5,079 SHAREHOLDERS' EQUITY: Preferred stock - 500 shares authorized; none issued and outstanding Common stock - 70,000 shares authorized; 33,792, 33,681 and 33,800 shares issued and outstanding at October 1, 2006, July 2, 2006 and December 31, 2005 340,315 337,290 332,125 Accumulated deficit (50,695) (57,203) (56,081) Accumulated other comprehensive income 30,225 32,576 16,399 Total shareholders' equity 319,845 312,663 292,443 TOTAL $780,242 $778,272 $656,031 FEI Company and Subsidiaries Condensed Consolidated Statements of Operations (In thousands, except per share amounts) (Unaudited) Thirty-Nine Thirteen Weeks Ended Weeks Ended Oct. 1, July 2, Oct. 2, Oct. 1, Oct. 2, 2006 2006 2005 2006 2005 NET SALES: Products $85,992 $84,855 $68,911 $257,471 $243,350 Service and components 30,948 28,293 28,211 86,386 82,258 Total net sales 116,940 113,148 97,122 343,857 325,608 COST OF SALES: Products 47,428 46,793 41,500 140,186 145,400 Service and components 21,582 19,991 19,188 62,424 58,176 Total cost of sales 69,010 66,784 60,688 202,610 203,576 Gross profit 47,930 46,364 36,434 141,247 122,032 OPERATING EXPENSES: Research and development 14,679 14,845 13,429 43,525 45,483 Selling, general and administrative 24,970 24,564 25,251 73,352 75,738 Amortization of purchased technology 610 645 720 1,896 3,579 CEO severance - - - 9,324 - Restructuring, reorganization and relocation 249 824 2,804 3,318 3,928 Asset impairment - - 801 465 16,745 Merger costs - 32 - 484 - Total operating expenses 40,508 40,910 43,005 132,364 145,473 OPERATING INCOME (LOSS) 7,422 5,454 (6,571) 8,883 (23,441) OTHER INCOME (EXPENSE): Interest income 3,663 3,089 1,866 8,996 5,585 Interest expense (2,018) (1,569) (1,392) (5,245) (7,881) Gain (loss) on investment disposals and impairment, net 1,374 - - 1,374 (770) Other expense, net (670) (526) (399) (1,579) (838) Total other income (expense), net 2,349 994 75 3,546 (3,904) INCOME (LOSS) BEFORE TAXES 9,771 6,448 (6,496) 12,429 (27,345) INCOME TAX EXPENSE (BENEFIT) 3,263 2,349 (1,393) 7,043 20,120 NET INCOME (LOSS) $6,508 $4,099 $(5,103) $5,386 $(47,465) PER SHARE DATA: Basic earnings (loss) per share $0.19 $0.12 $(0.15) $0.16 $(1.41) Diluted earnings (loss) per share $0.17 $0.11 $(0.15) $0.15 $(1.41) WEIGHTED AVERAGE SHARES OUTSTANDING: Basic 33,752 33,770 33,644 33,796 33,555 Diluted 39,572 39,691 33,644 39,614 33,555 RECONCILIATION OF RESULTS The following table reconciles the specific items excluded from U.S. GAAP in the calculation of Non-GAAP results for the periods indicated below: INCOME STATEMENT Thirty-Nine Thirteen Weeks Ended Weeks Ended (In thousands) Oct. 1, July 2, Oct. 2, Oct. 1, Oct. 2, 2006 2006 2005 2006 2005 U.S. GAAP income (loss) before taxes $9,771 $6,448 $(6,496) $12,429 $(27,345) Add back: CEO severance - - - 9,324 - Restructuring, reorganization and relocation 249 824 2,804 3,318 3,928 Asset impairment charges - - 801 465 16,745 Inventory write-offs and adjustments - - 2,435 - 8,851 Adjustments to investments (1,374) - - (1,374) 770 Merger costs - 32 - 484 - Stock based compensation expense 1,475 1,244 - 3,969 - Bond buy-back costs - 62 - 453 1,796 Non-GAAP income (loss) before taxes $10,121 $8,610 $(456) $29,068 $4,745 STOCK COMPENSATION The following table summarizes stock compensation: Cost of sales 205 202 - 604 - Research and development 197 220 - 645 - Selling, general and administrative 1,073 822 - 2,720 - Total $1,475 $1,244 $- $3,969 $-

    The press release and reconciliation table contain non-GAAP pre-tax net income information that excludes certain significant charges. These excluded items are:

    - CEO severance, primarily related to the charges associated with stock- based compensation and cash payments (included as part of the separate operating expense line item - restructuring, reorganization and relocation);

    - Restructuring charges, primarily for severance, lease termination and relocation expenses (included as part of the separate operating expense line item - restructuring, reorganization and relocation);

    - Asset impairment charges, primarily related to the company's changed strategy for enterprise resource planning systems and the company's semiconductor equipment products (included as a separate operating expense line item - asset impairment);

    - Inventory write-downs, related to the previously announced closure of the company's facility in Peabody, Massachusetts and the company's decision to no longer invest in certain business lines (included in cost of sales);

    - Adjustments to investments, primarily due to investment disposals and impairment (included as a separate other income/expense line item - gain (loss) on investment disposals and impairments, net);

    - Merger costs, primarily for due diligence costs (included as a separate operating expense line item - merger costs);

    - Stock based compensation expense, primarily for previously granted options, due to the adoption of SFAS 123R (included in cost of sales and operating expenses); and

    - Bond buy-back costs, primarily for the bond issuance (included as part of the separate other income (expense) line item-other expense, net).

    We generally use non-GAAP financial measures for assessing the company's performance against management targets, which do not account for charges or gains of this type, as a basis for making strategic and tactical decisions and as a means to evaluate period-to-period comparison. We believe that use of non-GAAP numbers is important as these figures ignore certain events that could obscure or enhance trends or other factors affecting our business. This is especially true when, as in this quarter, the GAAP financial information includes a number of charges that did not exist in the company's prior comparable reporting periods. For these reasons, we believe that these non- GAAP measures are also useful to investors. Further, we believe the financial analysts who regularly follow and report on our company or sector exclude items such as these when analyzing our performance relative to our guidance and the performance of other sector participants, and in projecting our future financial results.

    These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, GAAP measures of earnings per share. Our non-GAAP numbers may be different from those of other companies and direct comparison should not be relied upon.

    FEI Company and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited) Thirty-Nine Thirteen Weeks Ended(1) Weeks Ended(1) Oct. 1, July 2, Oct. 2, Oct. 1, Oct. 2, 2006 2006 2005 2006 2005 NET SALES: Products 73.5% 75.0% 71.0% 74.9% 74.7% Service 26.5% 25.0% 29.0% 25.1% 25.3% Total net sales 100.0% 100.0% 100.0% 100.0% 100.0% COST OF SALES: Products 40.5% 41.3% 42.6% 40.8% 44.7% Service 18.5% 17.7% 19.8% 18.2% 17.9% Total cost of sales 59.0% 59.0% 62.5% 58.9% 62.6% Gross profit 41.0% 41.0% 37.5% 41.1% 37.4% OPERATING EXPENSES: Research and development 12.6% 13.1% 13.8% 12.7% 14.0% Selling, general and administrative 21.4% 21.7% 26.0% 21.3% 23.3% Amortization of purchased technology 0.5% 0.6% 0.7% 0.6% 1.0% CEO severance 0.0% 0.0% 0.0% 2.7% 0.0% Restructuring, reorganization and relocation 0.3% 0.8% 3.0% 1.0% 1.2% Asset impairment 0.0% 0.0% 0.8% 0.1% 5.1% Merger costs 0.0% 0.0% 0.0% 0.1% 0.0% Total operating expenses 34.6% 36.2% 44.3% 38.5% 44.7% OPERATING INCOME (LOSS) 6.3% 4.8% -6.8% 2.6% -7.3% OTHER INCOME (EXPENSE): Interest income 3.1% 2.7% 1.9% 2.6% 1.7% Interest expense -1.7% -1.4% -1.4% -1.5% -2.4% Gain (loss) on investment disposals and impairment, net 1.2% 0.0% 0.0% 0.4% -0.2% Other expense, net -0.6% -0.5% -0.4% -0.5% -0.3% Total other expense, net 2.0% 0.9% 0.1% 1.1% -1.2% INCOME (LOSS) BEFORE TAXES 8.4% 5.7% -6.7% 3.6% -8.4% INCOME TAX EXPENSE (BENEFIT) 2.8% 2.1% -1.4% 2.0% 6.2% NET INCOME (LOSS) 5.6% 3.6% -5.3% 1.6% -14.6% (1) Percentages may not add due to rounding FEI COMPANY Supplemental Data Table 1 ($ in millions, except per share amounts) (Unaudited) Q3 Ended Q2 Ended Q3 Ended 10/1/2006 7/2/2006 10/2/2005 Income Statement Highlights Consolidated sales $116.9 $113.1 $97.1 Gross margin 41.0% 41.0% 37.5% R&D spending $14.7 $14.8 $13.4 R&D (% of sales) 12.6% 13.1% 13.8% SG&A $25.0 $24.6 $25.3 SG&A (% of sales) 21.4% 21.7% 26.0% Net income (loss) - GAAP $6.5 $4.1 ($5.1) Diluted earnings (loss) per share - GAAP $0.17 $0.11 ($0.15) Sales by Market Segment NanoElectronics $35.0 $40.6 $29.7 NanoResearch & Industry $37.6 $36.8 $30.9 NanoBiology $13.3 $7.4 $8.3 Service and Components $31.0 $28.3 $28.2 Sales by Geography North America $45.2 $32.7 $31.7 Europe $49.3 $47.0 $36.8 Asia Pacific $22.4 $33.4 $28.6 Bookings Total $150.7 $134.0 $100.3 Book to bill ratio 1.29 1.18 1.03 Backlog - total $277.4 $243.6 $171.8 Backlog - Service and Components $46.2 $47.0 $40.7 Bookings by Market Segment NanoElectronics $54.0 $51.1 $29.1 NanoResearch & Industry $43.2 $44.7 $34.9 NanoBiology $23.3 $7.3 $9.2 Service and Components $30.2 $30.9 $27.1 Balance Sheet Highlights Cash, equivalents, investments, restricted cash $365.7 $364.1 $268.0 Operating cash generated (used) ($5.3) $6.8 ($2.6) Accounts receivable $135.7 $122.5 $108.5 Days sales outstanding (DSO) 106 99 102 Inventory turnover 3.1 3.2 2.6 Inventories $88.8 $87.1 $97.9 Property, plant and equipment $59.0 $59.1 $64.2 Fixed asset investment (during quarter) $2.0 $1.3 $2.6 Depreciation expense $3.3 $3.3 $3.5 Current liabilities $141.4 $146.9 $129.3 Working capital $448.5 $440.9 $329.4 Shareholders' equity $319.8 $312.7 $311.5 Headcount (permanent and temporary) 1,705 1,646 1,736

    FEI Company

    CONTACT: Fletcher Chamberlin, Investor Relations of FEI Company,
    +1-503-726-7710

    Web site: http://www.feicompany.com/




    Cardiac Science Reports Third Quarter ResultsRevenue Increases 39%; Pro Forma Revenue Increases 16%Operating Cash Flow of $2.0 Million; $8.7 Million Year-to-DateWorldwide AED Growth Continues

    BOTHELL, Wash., Nov. 1 /PRNewswire-FirstCall/ -- Cardiac Science Corporation , a global leader in advanced cardiac monitoring and defibrillation products, today announced that revenue for the third quarter ended September 30, 2006 increased 39% to $38.1 million compared with $27.4 million in the third quarter of 2005.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20050913/SFTU139LOGO )

    The Company reported a net loss of $0.3 million, or $0.01 per share, in the third quarter of 2006 compared with a net loss of $0.6 million, or $0.04 per share in the third quarter of 2005. The Company generated cash from operations of $2.0 million in the recent third quarter.

    "While our total third quarter revenue was softer than we had expected, our pro forma AED revenue growth of 65% over the third quarter of last year is encouraging," said John Hinson, president and chief executive officer. "We are pleased with the continued momentum in our defibrillation revenue, both during the quarter and year to date. While we experienced lower than expected sales of certain of our domestic cardiac monitoring products during the quarter, we made progress in both international cardiac monitoring and service. With continued momentum in our global defibrillation revenues and the recently- announced initial shipments of our new GE "crash cart" defibrillator, we remain confident in the growth potential for our business, particularly as we move into 2007," Hinson added.

    Third Quarter Results

    Cardiac Science Corporation's third quarter 2006 financial performance includes the results of two predecessor companies, Quinton Cardiology Systems, Inc. (Quinton) and Cardiac Science, Inc. (CSI), which combined through a merger completed on September 1, 2005.

    Third quarter 2006 revenue of $38.1 million was up 39% from reported revenue in the third quarter of 2005 of $27.4 million. Third quarter 2006 revenue increased 16% over pro forma third quarter 2005 revenue, which would have totaled $32.9 million had Quinton and CSI been combined during that entire period, primarily reflecting the growth of the defibrillation business and, to a lesser extent, international cardiac monitoring.

    Comparisons of our results for the third quarters of 2006 and 2005 may not be meaningful because results for the third quarter of 2005 include the performance of Quinton for the full period, but include the results of CSI for only the one month period after the merger date. Accordingly, the Company believes that pro forma revenues, giving effect to the combination of Quinton and CSI as if the two companies had been combined for the full period in 2005, may be helpful to investors' comparison of the Company's third quarter results.

    Third quarter gross margin was 47.4%, consistent with the second quarter of 2006 and reflects an increase from the 44.7% reported for the third quarter of 2005.

    To provide additional insight into the underlying financial results of the Company's operations, the following table sets forth a reconciliation of reported GAAP results to Adjusted EBITDA, a non-GAAP measure, for the third quarter of 2006, compared with the third quarter of 2005:

    Reconciliation of Net Income to Adjusted EBITDA (in thousands) Three Months Ended Three Months Ended September 30, 2006 September 30, 2005 % of revenue % of revenue Net loss $(298) -0.8% $(569) -2.1% Depreciation and amortization 1,561 4.1% 792 2.9% Interest income (18) (0.1)% (123) -0.4% Income tax benefit (209) -0.5% (558) -2.0% EBITDA 1,036 2.7% (458) -1.7% Stock-based compensation 522 1.4% - - Pro forma merger related adjustments - - 1,464 5.4% Adjusted EBITDA $1,558 4.1% $1,006 3.7%

    Financial results in the third quarter were significantly affected by $1.2 million in litigation expense. This expense, which was higher than the Company had expected for the quarter, relates mostly to the patent infringement litigation with Philips Medical Systems and, to a lesser extent, to two other cases relating to the business of the former CSI. All three of these cases are scheduled to go to trial in the first half of 2007 and the Company expects that litigation expenses should decline significantly after these cases are resolved.

    Despite the high litigation costs, the Company generated net cash from operating activities in the third quarter of $2.0 million and had $10.7 million in cash as of September 30, 2006.

    First Nine Months Results

    Through the first nine months of 2006, the Company generated revenue of $116.5 million, compared with $70.7 million in reported revenue for the first nine months of 2005, an increase of 65%. Year to date revenue is up 10% over pro forma revenue for the first nine months of 2005, which would have been $106.1 million had Quinton and CSI been combined during that period. Comparing current year revenue to prior year pro forma combined revenue, year to date defibrillation revenue is up 29%, cardiac monitoring revenue is down 2% and service revenue is up 3%.

    Comparisons of reported revenue for the first nine months of 2006 and 2005 may not be meaningful because CSI's results are included only after September 1, 2005. Accordingly, the Company believes that pro forma revenue, giving effect to the combination of Quinton and CSI as if it the two companies had been combined for the full period in 2005, may be helpful to investors' comparison of the Company's financial results for the first nine months of 2006 and 2005.

    Gross margin for the first nine months of 2006 was 47.3% compared with 45.1% for the comparable period a year ago. The Company posted net income of $0.1 million, or $0.00 per diluted share, through the first nine months of 2006. This compares to net income of $1.3 million, or $0.10 per diluted share, for the first nine months of 2005, most of which relates to the profitability of Quinton prior to the merger.

    The following table sets forth a reconciliation of GAAP results to Adjusted EBITDA for the nine-month periods ended September 30, 2006 and 2005:

    Reconciliation of Net Income to Adjusted EBITDA (in thousands) Nine Months Ended Nine Months Ended September 30, 2006 September 30, 2005 % of revenue % of revenue Net income $84 0.1% $1,289 1.8% Depreciation and amortization 4,661 4.0% 1,606 2.2% Interest (income) expense 37 0.0% (381) -0.5% Income tax (benefit) expense (1) -0.0% 346 0.5% EBITDA 4,781 4.1% 2,860 4.0% Stock-based compensation 1,538 1.3% 39 0.1% Pro forma merger related adjustments 419 0.4% 1,585 2.2% Adjusted EBITDA $6,738 5.8% $4,484 6.3%

    Despite year to date litigation costs of $3.2 million, cash flow from operations through the first nine months of 2006 totaled $8.7 million. This compares to cash flow from operations of $1.5 million for the first nine months of 2005.

    The improvement in current year to date results is significant when compared to prior year pro forma results, which give effect to the combination as if it had occurred as of January 1, 2005. On this basis, Adjusted EBITDA improved from negative $(11.1) million for the first nine months of 2005 to $6.7 million for the first nine months of 2006. The following table sets forth that comparison:

    Comparison of Current Year Results to Prior Year Pro Forma Combined Results of Quinton and CSI Nine Months Ended Nine Months Ended September 30, 2006 September 30, 2005 Revenue $116,452 100.0% $106,091 100.0% Cost of revenues 61,401 52.7% 57,264 54.0% Gross profit 55,051 47.3% 48,827 46.0% % Operating costs 55,569 47.7% 65,438 61.6% Goodwill impairment - - 47,269 44.6% Operating loss (518) -0.4% (63,880) 60.2% Other income (expense) 562 0.4% (1,347) -1.2% Income (loss) before income taxes and minority interest 44 0.0% (65,227) -61.4% Income tax benefit 1 0.0% 6,196 5.8% Income (loss) before minority interest 45 0.1% (59,031) -55.6% Minority interest in loss of subsidiary 39 0.0% 24 0.0% Net income (loss) 84 0.1% (59,007) -55.6% Depreciation & amortization 4,661 4.0% 4,341 4.1% Interest (income) expense 37 0.0% 56 0.1% Income taxes (1) -0.0% (6,196) -5.9% EBITDA 4,781 4.1% (60,806) -57.3% Stock based compensation 1,538 1.3% 33 0.0% Goodwill impairment - - 47,269 44.6% Pro forma merger related adjustments 419 0.4% 2,362 2.3% Adjusted EBITDA 6,738 5.8% (11,142) -10.5% Outlook

    The Company currently anticipates that revenue for the fourth quarter will be between $37 and $41 million, resulting in revenue for the full year of between $153.5 and $157.5 million, compared with previous guidance of $160 to $170 million.

    The revised revenue guidance results from three factors. First, a significant portion of the growth in defibrillation revenues for the year has been the result of stronger than ever sales in Japan through the Company's partner, Nihon Kohden. As a result of the approval of a new AED by the Japanese Ministry of Health earlier than previously expected, the Company expects sales to the Japanese market to moderate in the fourth quarter as it prepares to market the new AED. Second, the longer than expected process to begin shipments of the GE "crash cart" defibrillators has reduced the amount of revenue that can be realized from these products between now and year end. Finally, given the third quarter performance, the Company has reduced the previous forecast for domestic cardiac monitoring products in the fourth quarter.

    Gross margin expectations remain in the range of 47% to 48%. Operating expenses are expected to be slightly higher than originally forecast, largely due to increased litigation expense. Litigation related expenses are expected to be in a range between $0.5 and $1.0 million in the fourth quarter.

    Excluding litigation related expenses, the Company expects to realize positive operating income in the fourth quarter and for the full year, as it has on this basis for each of the other quarters in 2006.

    Inclusive of litigation related expenses and income taxes, the Company expects fourth quarter net income to be in a range around break even. The Company expects Adjusted EBITDA for the fourth quarter to be in a range between 5% and 7% of revenues. In addition, the Company expects positive operating cash flow for the fourth quarter.

    The Company currently expects revenue growth in 2007 to be in a range around 10%. The Company will provide more specific guidance for fiscal 2007 as part of its fourth quarter earnings announcement in early 2007.

    "We have clearly encountered more challenges this year than we originally expected. At the same time, we believe the progress we have demonstrated on several levels, such as overall growth in year to date revenue, dramatic increases in international AED sales, growing momentum in the restructured domestic AED channel and improved performance in both international cardiac monitoring and service, bodes well for our future," said Mr. Hinson.

    Non-GAAP Financial Information

    This news release contains a discussion of Adjusted EBITDA, which is a non-GAAP financial measure provided as a complement to results provided in accordance with accounting principles generally accepted in the United States of America ("GAAP"). The term "Adjusted EBITDA" refers to a financial measure that we define as earnings before net interest, income taxes, depreciation, amortization, stock-based compensation and merger related expenses. Adjusted EBITDA is not a substitute for measures determined in accordance with GAAP, and may not be comparable to Adjusted EBITDA as reported by other companies. We believe Adjusted EBITDA to be relevant and useful information to our investors because it enables investors to compare the Company's performance before and after the merger of CSI and Quinton. Adjusted EBITDA is an integral part of our internal management reporting and planning process and is the primary measure used by our management to evaluate the operating performance of our operations. The components of Adjusted EBITDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance, and we also use Adjusted EBITDA for planning purposes and in presentations to our board of directors. Reconciliations of net income, the most comparable GAAP measure, to Adjusted EBITDA are contained in this press release.

    Conference Call Information

    Cardiac Science has scheduled a conference call for 4:30 p.m. Eastern Standard Time today to discuss the Company's financial results for the third quarter. The call will be hosted by John Hinson, chief executive officer, and Mike Matysik, chief financial officer.

    To access the conference call, please dial (866) 249-5225. International participants can call (303) 205-0066. The call will also be webcast live on the web at http://www.cardiacscience.com/. An audio replay of the call will be available for 7 days following the call at (800) 405-2236 for U.S. callers or (303) 590-3000 for those calling outside the U.S. The password required to access the replay is 11073355#. An audio archive will be available at http://www.cardiacscience.com/ for one month following the call.

    About Cardiac Science Corporation

    Cardiac Science is truly at the heart of saving lives. The Company develops, manufactures, and markets a family of advanced diagnostic and therapeutic cardiology devices and systems, including AEDs, electrocardiographs, stress test systems, Holter monitoring systems, hospital defibrillators, cardiac rehabilitation telemetry systems, patient monitor - defibrillators and cardiology data management systems. Cardiac Science also sells a variety of related products and consumables, and provides a comprehensive portfolio of training, maintenance and support services. The Company is the successor to various entities that have owned and operated cardiology-related businesses that sold products under the trusted brand names Burdick(R), Powerheart(R), and Quinton(R). Cardiac Science is headquartered in Bothell, WA, and also has operations in Lake Forest, California; Deerfield, Wisconsin; Shanghai, China and Manchester, United Kingdom.

    Forward Looking Statements

    This press release contains forward-looking statements. The word "believe," "expect," "intend," "anticipate," variations of such words, and similar expressions identify forward-looking statements, but their absence does not mean that the statement is not forward-looking. Forward looking statements in this press release include, but are not limited to, those relating to Cardiac Science Corporation's future revenue, earnings, earnings per share, cash flow, gross margins, key distribution partnerships and revenues derived from them, litigation related expenses, trial dates, product releases and revenues derived from them, and Adjusted EBITDA. These are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary significantly from the results expressed or implied in such statements. Factors that could cause or contribute to such varying results and other risks are more fully described in the Annual Report on Form 10-K filed by Cardiac Science Corporation for the year ended December 31, 2005. Cardiac Science Corporation undertakes no duty or obligation to update the information provided herein.

    Contact: Mike Matysik, Sr. Vice President and CFO of Cardiac Science Corporation, +1-425-402-2009, or Investors, Douglas Sherk, or Jenifer Kirtland, +1-415-896-6820, or Media, Steve DiMattia, +1-646-277-8706, all of EVC Group, Inc., for Cardiac Science Corporation.

    Cardiac Science Corporation and Subsidiaries Condensed Consolidated Statements of Operations (unaudited) (in thousands, except share and per share amounts) Three Months Ended September 30, 2006 2005 $ % $ % Revenues: Products $33,890 88.9% $24,033 87.6% Service 4,226 11.1% 3,413 12.4% Total revenues 38,116 100.0% 27,446 100.0% Cost of Revenues: Products 16,910 49.9% 13,029 54.2% Service 3,138 74.3% 2,139 62.7% Total cost of revenues 20,048 52.6% 15,168 55.3% Gross Profit: Products 16,980 50.1% 11,004 45.8% Service 1,088 25.7% 1,274 37.3% Gross profit 18,068 47.4% 12,278 44.7% Operating Expenses: Research and development 2,792 7.3% 2,262 8.2% Sales and marketing 10,045 26.4% 6,601 24.1% General and administrative 5,863 15.4% 4,697 17.1% Total operating expenses 18,700 49.1% 13,560 49.4% Operating loss (632) -1.7% (1,282) -4.7% Other Income: Interest income 18 0.0% 123 0.4% Other income, net 94 0.2% 34 0.1% Total other income 112 0.3% 157 0.6% Loss before income taxes and minority interest (520) -1.4% (1,125) -4.1% Income tax benefit 209 0.5% 558 2.0% Loss before minority interest in loss of consolidated entity (311) -0.8% (567) -2.1% Minority interest in income (loss) of consolidated entity 13 0.0% (2) 0.0% Net loss $(298) -0.8% $(569) -2.1% Loss per share - basic & diluted $(0.01) $(0.04) Weighted average shares outstanding - basic & diluted 22,523,266 14,523,096 Cardiac Science Corporation and Subsidiaries Condensed Consolidated Statements of Operations (unaudited) (in thousands, except share and per share amounts) Nine Months Ended September 30, 2006 2005 $ % $ % Revenues: Products $103,466 88.8% $61,450 86.9% Service 12,986 11.2% 9,294 13.1% Total revenues 116,452 100.0% 70,744 100.0% Cost of Revenues: Products 52,101 50.4% 32,909 53.6% Service 9,300 71.6% 5,916 63.7% Total cost of revenues 61,401 52.7% 38,825 54.9% Gross Profit: Products 51,365 49.6% 28,541 46.4% Service 3,686 28.4% 3,378 36.3% Gross profit 55,051 47.3% 31,919 45.1% Operating Expenses: Research and development 8,637 7.4% 5,979 8.5% Sales and marketing 29,342 25.2% 15,850 22.4% General and administrative 17,590 15.1% 9,008 12.7% Total operating expenses 55,569 47.7% 30,837 43.6% Operating income (loss) (518) -0.4% 1,082 1.5% Other Income: Interest income (expense) (37) 0.0% 381 0.5% Other income, net 599 0.5% 148 0.2% Total other income 562 0.5% 529 0.7% Income before income taxes and minority interest 44 0.0% 1,611 2.3% Income tax benefit (expense) 1 0.0% (346) -0.5% Income before minority interest in loss of consolidated entity 45 0.0% 1,265 1.8% Minority interest in loss of consolidated entity 39 0.0% 24 0.0% Net income $84 0.1% $1,289 1.8% Income per share - basic $0.00 $0.11 Income per share - diluted $0.00 $0.10 Weighted average shares outstanding - basic 22,480,553 12,099,187 Weighted average shares outstanding - diluted 22,551,600 12,429,725 Cardiac Science Corporation and Subsidiaries Condensed Consolidated Balance Sheets (unaudited) (in thousands) September 30, December 31, 2006 2005 ASSETS Current Assets: Cash and cash equivalents $10,699 $3,546 Accounts receivable, net 22,646 25,738 Inventories 19,873 22,052 Deferred income taxes 7,372 12,115 Prepaid expenses and other current assets 1,946 2,511 Total current assets 62,536 65,962 Machinery and equipment, net of accumulated depreciation 6,429 7,631 Intangible assets, net of accumulated amortization 32,736 35,338 Goodwill 110,119 111,215 Investment in unconsolidated entities 458 462 Other assets 228 100 Deferred income taxes 33,954 27,849 Total assets $246,460 $248,557 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $12,295 $11,642 Accrued liabilities 8,285 11,918 Warranty liability 2,666 2,348 Deferred revenue 7,109 7,924 Total current liabilities 30,355 33,832 Other liabilities 937 1,806 Total liabilities 31,292 35,638 Minority interest in consolidated entity 90 128 Shareholders' Equity 215,078 212,791 Total liabilities and shareholders' equity $246,460 $248,557 Cardiac Science Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Three Months Ended September 30, 2006 2005 Operating Activities: Net loss $(298) $(569) Adjustments to reconcile net loss to cash from operating activities: Depreciation and amortization 1,561 792 Stock-based compensation 522 - Deferred taxes (345) (541) Minority interest in consolidated entity (13) 2 Gain on sale of marketable equity securities - - Changes in operating assets and liabilities, net of business acquired: Accounts receivable 2,238 (481) Inventories (1,077) 1,081 Prepaid expenses and other current assets 348 117 Accounts payable 67 (1,864) Accrued and other liabilities (611) 626 Warranty liability (24) (188) Deferred revenue (376) 190 Net cash flows from (used in) operating activities 1,992 (835) Investing Activities: Purchases of machinery and equipment, net (137) (164) Payments of acquisition related costs (316) (14,806) Proceeds from collection of note 238 - Net cash flows used in investing activities (215) (14,970) Financing Activities: Proceeds from exercise of stock options and employee stock purchase plan 176 234 Costs related to issuance of stock - (140) Net cash flows from financing activities 176 94 Net change in cash and cash equivalents 1,953 (15,711) Cash and cash equivalents, beginning of period 8,746 23,830 Cash and cash equivalents, end of period $10,699 $8,119 Cardiac Science Corporation and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited) (in thousands) Nine Months Ended September 30, 2006 2005 Operating Activities: Net income $84 $1,289 Adjustments to reconcile net income to cash from operating activities: Depreciation and amortization 4,661 1,606 Stock-based compensation 1,538 39 Deferred taxes (233) 291 Minority interest in consolidated entity (39) (24) Gain on sale of marketable equity securities - (15) Changes in operating assets and liabilities, net of business acquired: Accounts receivable 3,136 160 Inventories 697 696 Prepaid expenses and other current assets 1,334 (18) Accounts payable 945 (1,967) Accrued and other liabilities (2,959) (791) Warranty liability 39 (222) Deferred revenue (467) 498 Net cash flows from operating activities 8,736 1,542 Investing Activities: Purchases of machinery and equipment, net (933) (491) Payments of acquisition related costs (1,530) (15,903) Proceeds from collection of note 238 - Proceeds from sale of marketable equity securities - 625 Net cash flows used in investing activities (2,225) (15,769) Financing Activities: Proceeds from exercise of stock options and employee stock purchase plan 642 584 Costs related to issuance of stock - (140) Net cash flows from financing activities 642 444 Net change in cash and cash equivalents 7,153 (13,783) Cash and cash equivalents, beginning of period 3,546 21,902 Cash and cash equivalents, end of period $10,699 $8,119 Reconciliation of Cash Flows From Operations to Pro Forma Cash Flow From Operations (Unaudited) (in thousands) Net cash flows from operating activities $8,736 $1,542 Pro forma adjustments for merger related payments 879 2,847 Pro forma cash flow from operations $9,615 $4,389

    Photo: http://www.newscom.com/cgi-bin/prnh/20050913/SFTU139LOGO
    AP Archive: http://photoarchive.ap.org/
    PRN Photo Desk photodesk@prnewswire.com Cardiac Science Corporation

    CONTACT: Mike Matysik, Sr. Vice President and CFO of Cardiac Science
    Corporation, +1-425-402-2009, or Investors, Douglas Sherk, or Jenifer
    Kirtland, +1-415-896-6820, or Media, Steve DiMattia, +1-646-277-8706, all of
    EVC Group, Inc., for Cardiac Science Corporation

    Web site: http://www.cardiacscience.com/




    Agile Software Announces Availability of Deloitte Consulting Enterprise Value Map for Agile PLMValue Map Designed to Help Agile Software Customers Optimize Product Innovation and Grow Shareholder Value Throughout the Product Lifecycle

    SAN JOSE, Calif., Nov. 1 /PRNewswire-FirstCall/ -- Agile Software Corporation , a leading provider of product lifecycle management (PLM) solutions, today announced the availability of Deloitte Consulting LLP's Enterprise Value Map (EVM) for Agile PLM to help companies achieve measurable value through improved product innovation and lifecycle management. The EVM for Agile PLM is designed to quickly assess weaknesses and problem areas in product innovation and align actionable steps for Agile customers with the appropriate Agile PLM solution by linking potential improvement initiatives and shareholder value.

    "We're pleased to support Deloitte Consulting's introduction of the Enterprise Value Map for Agile PLM, and believe that it will be a tremendous help to our customers that are wrestling with issues around product innovation and product lifecycle management," said Jay Fulcher, Agile president and CEO. "Agile's PLM solutions, combined with Deloitte Consulting's deep industry expertise and tools like the EVM for Agile PLM, can help companies improve their bottom line by aligning best practice business processes with product innovation."

    With Agile PLM and Deloitte Consulting's Product Innovation and Lifecycle Management (PILM) offerings, industry leaders focused on maintaining their market position can help sustain product development successes. Deloitte Consulting's PILM service line addresses a broad range of product development capabilities including innovation strategy, process excellence, design collaboration, intellectual property management, environmental and regulatory compliance, and R&D tax management. Companies that struggle with declining revenues, eroding margins and dwindling competitive advantage can use PILM to grow shareholder value.

    "The Product Lifecycle Management Value Map for Agile PLM is designed to accelerate the connection between actions companies can take to improve their product development capabilities with shareholder value, and the specific components in the Agile PLM suite of solutions that support those actions," said Mark Davis, principal and national leader of Deloitte Consulting's Product Innovation and Lifecycle Management (PILM) practice. "We believe it's a great tool for starting a discussion with our clients about how Deloitte Consulting's services can complement Agile's software solutions to help them transform the way they convert ideas into products and products into profits."

    "If a company is facing challenges in its innovation lifecycle, from invention to product end of life, the Enterprise Value Map can help it identify the specific Agile solutions to help solve their problem," said Rob Foster, senior manager, Deloitte Consulting LLP. "And if the company has already implemented Agile solutions, it can help them identify where they can leverage their investment by extending and expanding the value they receive. We believe that companies have only scratched the surface of what they can achieve with Agile's business solutions."

    Deloitte Consulting is Agile Software's longest-standing consulting alliance. The two companies have collaborated to help a number of companies in the life sciences, manufacturing and technology industries improve their PILM performance. The full-service consulting strategic alliance helps companies to benefit from the highly complementary methodologies and solutions offered by Agile Software's PLM solution suite and Deloitte Consulting's PILM service line.

    About Deloitte

    Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu" or other related names. Services are provided by the member firms or their subsidiaries or affiliates and not by the Deloitte Touche Tohmatsu Verein.

    Deloitte & Touche USA LLP is the US member firm of Deloitte Touche Tohmatsu. In the U.S., services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP and their subsidiaries), and not by Deloitte & Touche USA LLP.

    About Agile Software Corporation

    Agile Software Corporation helps companies drive profits, accelerate innovation, improve quality, enable globalization and ensure regulatory compliance throughout the product lifecycle. With a broad suite of enterprise class PLM solutions and time-to-value focused implementations, Agile helps companies get the most from their products. 3COM, Acer, Bayer, Broadcom, CooperVision, Dell Inc., Flextronics International, Foxconn, GE Medical Systems, Harris, Heinz, Johnson & Johnson, Johnson Diversey, Lockheed Martin, McAfee, McDonald's, Micron, Philips, QUALCOMM, Sharp, Shell, Siemens, Tyco Healthcare and ZF are among the over 11,000 customers in the automotive, aerospace and defense, consumer packaged goods, electronics, high tech, industrial products, and life sciences industries that have licensed Agile solutions. For more information, call 408-284-4000 or visit http://www.agile.com/ .

    NOTE: Agile, Agile Software and the Agile logo are registered trademarks and Agile On Demand, Agile Advantage, Agile Product Collaboration, Agile Product Cost Management, Agile Product Governance & Compliance, Agile Product Service & Improvement, Agile Product Quality Management, Agile Product Portfolio Management, Agile Engineering Collaboration, Agile Product Interchange and AgileMD are trademarks of Agile Software Corporation in the U.S. and/or other countries. All other brand or product names are trademarks and registered trademarks of their respective holders.

    "Safe Harbor" Statement Under the 1995 Private Securities Litigation Reform Act: This release includes forward-looking statements regarding an Agile product offering, the performance and capability of that product and the benefits derived by an Agile's customers from utilization of that product. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those predicted in the forward-looking statements, and are based upon information available to Agile as of the release date. We assume no obligation to update any such statements. Factors that could cause actual results to differ include, but are not limited to: problems in performance of that product; introduction of competing products that perform as well as or better than that product; unforeseen problems in that product that delays implementation or affects the performance of that product; and the inability of that product to deliver the return on investment or other benefits identified. These and other risk factors and risks associated with our business are discussed in the Company's quarterly and annual reports filed with the SEC including our quarterly report on Form 10-Q with respect to our quarter ended January 31, 2006.

    Agile Software Corporation

    CONTACT: Terri Pruett of Agile Software Corporation, +1-408-284-4048, or
    Terri.Pruett@agile.com

    Web site: http://www.agile.com/




    Cingular Wireless Expands Coverage in Lake County

    ORLANDO, Fla., Nov. 1 /PRNewswire/ -- A new Cingular Wireless cell site located at the intersection of U.S. Highway 27 and County Highway 474 in Clermont is expanding coverage in southeastern Lake County.

    The new site is providing connecting coverage along these routes and in the surrounding residential areas. It is one of 16 new Cingular cell sites to be built in West, Central and North Florida before year's end.

    "Quality and coverage are everything in our business," said Rudy Hermond, vice-president and general manager for Cingular's West, Central and North Florida markets. "It's great to see the investments we're making in our network are paying off for our customers."

    Cingular, the nation's largest wireless carrier, has invested more than $340 million in the Florida network alone this year building new cell sites, adding generators, completing the integration of the former AT&T Wireless and Cingular networks, and rolling out its ultra fast 3G network, which provides average mobile data connections between 400-700 kilobits per second on the downlink and bursts to more than a megabit per second.

    About Cingular Wireless

    Cingular Wireless is the largest wireless carrier in the United States, serving 58.7 million customers. Cingular, a joint venture between AT&T Inc. and BellSouth Corporation , has the largest digital voice and data network in the nation -- the ALLOVER(TM) network -- and the largest mobile-to-mobile community of any national wireless carrier. Cingular is a leader in third generation wireless technology. Its 3G network is the first widely available service in the world to use HSDPA (High Speed Downlink Packet Access) technology. Cingular is the only U.S. wireless carrier to offer Rollover(r), the wireless plan that lets customers keep their unused monthly minutes. Details of the company are available at http://www.cingular.com/. Get Cingular Wireless press releases emailed to you automatically. Sign up at http://cingular.mediaroom.com/.

    Cingular Wireless

    CONTACT: Kelly Layne Starling of Cingular Wireless, +1-561-775-4259, or
    wireless, +1-561-301-1414

    Web site: http://www.cingular.com/
    http://cingular.mediaroom.com/




    Microsoft Announces Worldwide Availability of Sixth Generation Windows Embedded CE 6.0Industry-leading Commercial Embedded Software Opens Core Components in Shared Source, Ships With Newly Integrated Visual Studio 2005

    REDMOND, Wash., Nov. 1 /PRNewswire-FirstCall/ -- Today, Craig Mundie, Microsoft Corp. chief research and strategy officer, announced the availability of Windows(R) Embedded CE 6.0, the latest version of the company's industry-leading software toolkit used to build real-time operating systems for devices such as Internet protocol (IP) set-top-boxes, Global Positioning Systems (GPS), wireless projectors, and a variety of industrial automation, consumer electronics and medical devices.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO )

    In conjunction with the 10-year anniversary of Windows Embedded, 100 percent of the Windows Embedded CE 6.0 kernel is now available through the Microsoft(R) Shared Source program, an overall increase of 56 percent from previous versions of Windows Embedded CE. The Shared Source program provides full source-code access for modification and redistribution by device-makers (subject to the terms of a license agreement), who are under no obligation to share their final designs with Microsoft or others. Although the Windows operating system is a general-purpose computing platform designed for creating a consistent experience, Windows Embedded CE 6.0 is a tool kit device-makers use for building customized operating system images for a variety of non- desktop devices. By providing access to certain parts of the Windows Embedded CE source code, such as the file system, device drivers and other core components, embedded developers are able to choose the code they need, compile it, and build their own, unique operating systems, quickly bringing their devices to market.

    Visual Studio(R) 2005 Professional Edition is also shipping as part of Windows Embedded CE 6.0. This marks another first for Microsoft; Platform Builder, an embedded-specific integrated development environment, will now be included as a powerful plug-in for Visual Studio 2005 Professional. This brings the entire development chain together in one, easy-to-use tool, from device to applications, shrinking time to market for device development.

    "Windows Embedded CE has not only defined a generation of small-footprint device development, but is the foundation for much of Microsoft's non-desktop strategy," Mundie said in a live webcast to thousands of developers worldwide today. "Over the next 10 years, Windows Embedded CE will continue to focus on creating new industry and design opportunities for device-makers and partners, while giving them the tools and technologies they need to create smarter, more connected scenarios."

    Windows Embedded CE 6.0 boasts a re-engineered kernel with capabilities such as a capacity for 32,000 simultaneous processes and 2 GB of virtual memory address space per process while maintaining the software's real-time capabilities. This enables developers to incorporate larger numbers of robust applications into more intelligent, complex devices used on the road, at work and or in the home:

    * On the road. With the introduction of new cell core data and voice components, Windows Embedded CE 6.0 will enable devices to establish data connections and voice calls over cellular networks, enabling the development of connections for machine-to-machine communication scenarios to build devices such as parking meters, vending machines and GPS devices. * At work. Windows Embedded CE 6.0 includes components designed to easily build projectors that use the built-in capability of Windows Vista(TM) to wirelessly access the desktop experience. * In the home. Windows Embedded CE 6.0 takes advantage of multimedia capabilities to allow the development of networked media devices, digital video recorders and IP set-top boxes.

    "Embedded devices are everywhere, and, as the number and variety of connected devices with embedded intelligence continues to grow, so does market demand for cost-effective, scalable, real-time operating systems that can support complex applications," said Daya Nadamuni, research vice president at Gartner Inc. "Vendors that break down barriers to development by offering advanced tools and community support to device-makers and developers stand to benefit from this growth. Further, as developers are able to view source code, they can debug devices more quickly and ultimately get unique devices to market faster."

    Windows Embedded CE 6.0 is launching with worldwide support from device- makers, many of which will bring new Windows Embedded CE 6.0-based devices to market this quarter. These companies include Taiwan-based Unitech; Netherlands-based Commodore International Corp.; Taiwan-based Advantech Co. Ltd.; and U.S.-based Applied Data Systems Inc., General Software Inc., Intelligent Instrumentation Inc., MICROS Systems Inc. and Wyse Technology. Systems integrators around the globe have also been involved in the testing and integration of key Windows Embedded CE 6.0 technologies, including France- based Adeneo Adetel Group; Germany-based 3SOFT GmbH and CDR Consulting; U.K.- based Pace Micro Technology Ltd.; and U.S.-based Atheros Communications Inc. and BSQUARE Corp. Chip-makers include Netherlands-based NXP Semiconductors, Taiwan-based VIA Technologies Inc., U.K.-based ARM and U.S.-based Intel Corporation.

    "An industry-leading platform for creating small-footprint connected devices, Windows Embedded CE has been a strategic element in our customers' device road maps for years, and we're already seeing strong demand for Windows Embedded CE 6.0," said Dr. Stephen Oh, vice president of Application Processor Development, Samsung Electronics' System LSI Division. "The Samsung Windows CE 6.0 BSP will include support for our ARM9- and ARM11-based application processor series, allowing for streamlined development and, ultimately, faster time to market for consumer electronics devices like portable navigation devices, media players, remote monitoring equipment, IP phones and gaming devices."

    Windows Embedded CE 6.0 uses a volume-based royalty licensing model; so device-makers can evaluate the entire product for 180 days, and purchase runtime licenses only when their devices start shipping. Microsoft provides the assurance of intellectual property (IP) indemnification (subject to the terms of a license agreement) and a 10-year product Support Lifecycle, helping ensure the integrity of its offerings so device-makers can rest assured that they have the support and protection for success.

    A free 180-day trial of the complete Windows Embedded CE 6.0 is available for download at http://www.microsoft.com/windows/embedded/eval/trial.mspx.

    Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

    Access to source code and redistribution rights are subject to the terms of the applicable license agreements with Microsoft Corp.

    NOTE: Microsoft, Windows, Visual Studio and Windows Vista are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

    The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

    Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO
    AP Archive: http://photoarchive.ap.org/
    PRN Photo Desk, photodesk@prnewswire.com Microsoft Corp.

    CONTACT: press only, Jen Knecht of Weber Shandwick, +1-212-445-8173, or
    jknecht@webershandwick.com, for Microsoft

    Web site: http://www.microsoft.com/




    LaserCard Corporation to Present at AeA Classic Financial Conference

    MOUNTAIN VIEW, Calif., Nov. 1 /PRNewswire-FirstCall/ -- LaserCard Corporation , announced today that it will participate at the AeA Classic Financial Conference on November 7 - 8, 2006, at the Monterey Conference Center and the Portola Plaza Hotel in Monterey, California. LaserCard's Chief Financial Officer, Steven Larson, will be presenting to the investment community on Tuesday, November 7th between 2:00 p.m. - 5:45 p.m., and Wednesday, November 8th between 8:00 a.m. - 12:45 pm Pacific Time.

    LaserCard's presentation from the conference will be posted to the Company's Web site at http://www.lasercard.com/ on November 2nd, at 2:00 p.m.

    AeA, founded in 1943, is a nationwide trade association that represents all segments of the technology industry and is dedicated solely to helping its members. In its 36th year, the AeA Classic Financial Conference continues to provide public technology companies with an environment in which to showcase their companies to key technology investors. For more information about the AeA Classic Financial Conference, please visit http://www.aeanet.org/ .

    About LaserCard Corporation

    LaserCard Corporation, a leader in secure ID solutions, manufactures and markets LaserCard(R) optical memory cards with IDLock(TM), chip-ready Optical/Smart(TM) cards and other advanced-technology secure identification cards. The Company has sold over 35 million secure ID cards to meet the demanding requirements for border security, immigration and national identification in countries around the world, including the United States, Canada, and Italy. In addition, the Company manufactures optical card read/write drives and develops optical card system software, card-related ID subsystems and peripherals. The Company operates a wholly owned German subsidiary, Challenge Card Design Plastikkarten GmbH, which manufactures advanced-technology cards and also markets cards, system solutions, and card personalization printers under the cards & more brand.

    LaserCard Corporation

    CONTACT: Steven G. Larson, VP Finance, +1-650-969-4428

    Web site: http://www.lasercard.com/
    http://www.aeanet.org/




    I.D. Systems Makes Deloitte's 'Fast 500' List for Second Year in a RowProvider of Wireless Asset Management Solutions Reaches #107 Among 500 Fastest-Growing Technology Companies in America

    HACKENSACK, N.J., Nov. 1 /PRNewswire-FirstCall/ -- I.D. Systems, Inc. , a leading provider of RFID-based wireless asset tracking and management solutions, today announced that it has been named to the Deloitte "Technology Fast 500" list for the second year in a row. The 2006 Deloitte Technology Fast 500 ranks the 500 fastest-growing technology companies in North America. Rankings are based on percentage revenue growth over five years (fiscal year revenues 2001-2005). This year, I.D. Systems achieved a rank of 107 with five-year revenue growth of 1,959 percent.

    Jeffrey Jagid, I.D. Systems' chairman and chief executive officer, said, "I.D. Systems continues to rank among the nation's fastest-growing companies due to the dedication of our employees and the unique effectiveness of our wireless solutions in reducing costs, improving productivity, and increasing workplace safety for our customers. We remain focused on leading our market, expanding the range of wireless solutions we offer, delivering a superior return on investment for our customers -- including some of the world's largest, most respected companies and government agencies -- and generating exceptional shareholder value."

    "Deloitte's Technology Fast 500 companies have shown the strength, vision and tenacity to succeed in today's very competitive technology environment," said Tony Kern, deputy managing principal of Deloitte's Technology, Media & Telecommunications industry practice. "We applaud the successes of I.D. Systems, Inc. and acknowledge it as one of the very few to accomplish such a fast growth rate over the past five years."

    About I.D. Systems

    Based in Hackensack, NJ, I.D. Systems, Inc. is a leading provider of wireless solutions for managing and securing high-value enterprise assets. These assets include industrial vehicles, such as forklifts and airport ground support equipment, and rental vehicles. The Company's patented Wireless Asset Net(R) system, which utilizes radio frequency identification, or RFID, technology, addresses the needs of organizations to control track, monitor and analyze their assets. For more information on I.D. Systems, visit http://www.id-systems.com/.

    About Deloitte

    Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of approximately 135,000 people worldwide, Deloitte delivers services in four professional areas, audit, tax, consulting and financial advisory services, and serves more than one-half of the world's largest companies, as well as large national enterprises, public institutions, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche Tohmatsu Verein and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte", "Deloitte & Touche", "Deloitte Touche Tohmatsu" or other related names. In the United States, Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu and services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte & Touche USA LLP. For more information, please visit the U.S. member firm's web site at http://www.deloitte.com/.

    "Safe Harbor" statement under the Private Securities Litigation Reform Act of

    1995:

    This press release contains forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that are subject to risk and uncertainties, including, but not limited to, future economic and business conditions, the loss of any of the Company's key customers or reduction in the purchase of its products by any such customers, the failure of the market for the Company's products to continue to develop, the inability to protect the Company's intellectual property, the inability to manage the Company's growth, the effects of competition from a wide variety of local, regional, national and other providers of wireless solutions and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2005. These risks could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. The Company assumes no obligation to update the information contained in this press release.

    I.D. Systems, Inc.

    CONTACT: Financial Press, Ned Mavrommatis, Chief Financial Officer,
    ned@id-systems.com, or Trade Press, Greg Smith, Vice President Marketing,
    gsmith@id-systems.com, both of I.D. Systems, Inc., +1-201-996-9000, or Fax:
    +1-201-996-9144

    Web site: http://www.id-systems.com/
    http://www.deloitte.com/




    I.D. Systems Makes Deloitte's 'Fast 500' List for Second Year in a Row

    HACKENSACK, New Jersey, November 1 /PRNewswire/ --

    - Provider of Wireless Asset Management Solutions Reaches #107 Among 500 Fastest-Growing Technology Companies in America

    I.D. Systems, Inc. (Nasdaq: IDSY), a leading provider of RFID-based wireless asset tracking and management solutions, today announced that it has been named to the Deloitte "Technology Fast 500" list for the second year in a row. The 2006 Deloitte Technology Fast 500 ranks the 500 fastest-growing technology companies in North America. Rankings are based on percentage revenue growth over five years (fiscal year revenues 2001-2005). This year, I.D. Systems achieved a rank of 107 with five-year revenue growth of 1,959 percent.

    Jeffrey Jagid, I.D. Systems' chairman and chief executive officer, said, "I.D. Systems continues to rank among the nation's fastest-growing companies due to the dedication of our employees and the unique effectiveness of our wireless solutions in reducing costs, improving productivity, and increasing workplace safety for our customers. We remain focused on leading our market, expanding the range of wireless solutions we offer, delivering a superior return on investment for our customers -- including some of the world's largest, most respected companies and government agencies -- and generating exceptional shareholder value."

    "Deloitte's Technology Fast 500 companies have shown the strength, vision and tenacity to succeed in today's very competitive technology environment," said Tony Kern, deputy managing principal of Deloitte's Technology, Media & Telecommunications industry practice. "We applaud the successes of I.D. Systems, Inc. and acknowledge it as one of the very few to accomplish such a fast growth rate over the past five years."

    About I.D. Systems

    Based in Hackensack, NJ, I.D. Systems, Inc. is a leading provider of wireless solutions for managing and securing high-value enterprise assets. These assets include industrial vehicles, such as forklifts and airport ground support equipment, and rental vehicles. The Company's patented Wireless Asset Net(R) system, which utilizes radio frequency identification, or RFID, technology, addresses the needs of organizations to control track, monitor and analyze their assets. For more information on I.D. Systems, visit www.id-systems.com.

    About Deloitte

    Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, its member firms and their respective subsidiaries and affiliates. Deloitte Touche Tohmatsu is an organization of member firms around the world devoted to excellence in providing professional services and advice, focused on client service through a global strategy executed locally in nearly 150 countries. With access to the deep intellectual capital of approximately 135,000 people worldwide, Deloitte delivers services in four professional areas, audit, tax, consulting and financial advisory services, and serves more than one-half of the world's largest companies, as well as large national enterprises, public institutions, and successful, fast-growing global growth companies. Services are not provided by the Deloitte Touche Tohmatsu Verein and, for regulatory and other reasons, certain member firms do not provide services in all four professional areas. As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other's acts or omissions. Each of the member firms is a separate and independent legal entity operating under the names "Deloitte", "Deloitte & Touche", "Deloitte Touche Tohmatsu" or other related names. In the United States, Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu and services are provided by the subsidiaries of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their subsidiaries), and not by Deloitte & Touche USA LLP. For more information, please visit the U.S. member firm's web site at www.deloitte.com.

    "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995:

    This press release contains forward looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and that are subject to risk and uncertainties, including, but not limited to, future economic and business conditions, the loss of any of the Company's key customers or reduction in the purchase of its products by any such customers, the failure of the market for the Company's products to continue to develop, the inability to protect the Company's intellectual property, the inability to manage the Company's growth, the effects of competition from a wide variety of local, regional, national and other providers of wireless solutions and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2005. These risks could cause actual results to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company. The Company assumes no obligation to update the information contained in this press release.

    Web site: http://www.id-systems.com http://www.deloitte.com

    I.D. Systems, Inc.

    Financial Press, Ned Mavrommatis, Chief Financial Officer, ned@id-systems.com, or Trade Press, Greg Smith, Vice President Marketing, gsmith@id-systems.com, both of I.D. Systems, Inc., +1-201-996-9000, or Fax: +1-201-996-9144




    Annual Awards Program Sponsored by Honeywell and National Center for Missing & Exploited Children to Recognize Teacher Commitment to Child SafetyTop Educators to Receive the Ultimate Classroom Makeover or $500 for School Supplies

    MORRIS TOWNSHIP, N.J., Nov. 1 /PRNewswire-FirstCall/ -- Honeywell and the National Center for Missing & Exploited Children(R) (NCMEC) announced today the launch of the second annual Got 2B Safe! Awards Program. Designed to recognize those teachers who are helping to keep children safer from abduction and sexual exploitation, the program will reward 100 winners with $500 for school supplies and five grand prize winners with free classroom makeovers from a professional designer worth $10,000 each.

    "It is crucial to arm our children with positive and empowering safety skills," said Tom Buckmaster, President, Honeywell Hometown Solutions. "Honeywell is committed to providing students and teachers with programs and experiences designed to keep America's children safer."

    The Got 2B Safe! program arms teachers, parents, and guardians with vital child safety skills. Teachers can log on to http://www.got2bsafe.com/ to learn more about the program and participate in the contest, which runs until Jan 31, 2007.

    "Education is in many ways the most important element in our efforts to keep children safer," said Ernie Allen, President and CEO of NCMEC. "We believe that teaching children about personal safety should be a top priority for everyone, and we are excited to partner with Honeywell on this vital program."

    Honeywell partnered with NCMEC in 2003 to address the issue of child safety. Since then, Got 2B Safe! materials have been distributed to every elementary school in America, reaching 72,000 schools and approximately 5 million students annually. During the first annual Got 2B Safe! Awards Program in 2005, nearly 1,000 U.S. teachers competed to be named one of "America's Safest Teachers."

    "The Got 2B Safe! Awards Program is wonderful for both students and teachers," said David Campbell, one of five Grand Prize winners from 2006. "This program is an amazing way for me to help my students become smarter about their own personal safety."

    The Got 2B Safe! program provides four simple rules for children to follow with the help of their families and teachers. Additional information is available at http://www.honeywell.com/got2bsafe.

    Got 2B Safe! Four Rules:

    1. Check First -- Children should always check with parents and guardians before accepting gifts, rides or invitations from anyone, including friends, acquaintances and people they don't know.

    2. Go With a Friend -- Simple and straightforward -- never go anywhere alone. Being with another person in public is safer and more fun.

    3. It's My Body -- Teach your children they have the right to say NO to any unwelcome, uncomfortable, or confusing touch or actions by others.

    4. Tell a Trusted Adult -- Teach your children to TELL a trusted adult -- parent, guardian, teacher, etc. -- if anyone or anything makes them feel scared, uncomfortable or confused.

    Honeywell received the 2004 Department of Justice Corporate Leadership Award for its partnership with NCMEC and commitment to child safety. Honeywell Family Safety and Security programs have reached an estimated 15 million children around the world.

    The Got 2B Safe! program is part of Honeywell Hometown Solutions, the company's corporate citizenship initiative, which focuses on four issues of vital importance: Family Safety and Security; Housing and Shelter; Science and Math Education and Humanitarian Relief. Together with leading public and non- profit institutions, Honeywell has developed powerful programs to address these needs in the communities it serves.

    About Honeywell

    Honeywell International is a $31 billion diversified technology and manufacturing leader, serving customers worldwide with aerospace products and services; control technologies for buildings, homes and industry; automotive products; turbochargers; specialty chemicals; fibers; and electronic and advanced materials. Based in Morris Township, N.J., Honeywell's shares are traded on the New York, London, Chicago and Pacific Stock Exchanges. It is one of the 30 stocks that make up the Dow Jones Industrial Average and is also a component of the Standard & Poor's 500 Index. For additional information, please visit http://www.honeywell.com/.

    About the National Center for Missing & Exploited Children

    The National Center for Missing & Exploited Children (NCMEC) is a 501(c)(3) nonprofit organization, that works in cooperation with the U.S. Department of Justice's Office of Juvenile Justice and Delinquency Prevention. NCMEC's congressionally mandated CyberTipline, a reporting mechanism for child sexual exploitation, has handled more than 401,200 leads. Since its establishment in 1984, NCMEC has assisted law enforcement with more than 122,600 missing child cases, resulting in the recovery of more than 104,900 children. For more information about NCMEC, call its toll-free, 24 hour hotline at 1-800-THE-LOST or visit its web site at http://www.missingkids.com/.

    Honeywell International

    CONTACT: Jim O'Leary, +1-973-455-6684, jim.o'leary@honeywell.com; or
    NCMEC Communications Department, +1-703-837-6111, media@ncmec.org

    Web site: http://www.honeywell.com/
    http://www.got2bsafe.com/
    http://www.missingkids.com/




    Aware, Inc. to Present at the 2006 AeA Classic Financial Conference

    BEDFORD, Mass., Nov. 1 /PRNewswire-FirstCall/ -- Aware, Inc. , a leading supplier of broadband technology and biometrics software, today announced that it will be presenting at the 2006 AeA Classic Financial Conference, November 5 - 8, 2006, in Monterey, CA. Aware will give key technology investors a first-hand opportunity to hear relevant industry updates, Aware's business strategy, and drivers for Aware's future growth in its presentations at the Portola Plaza Hotel on Tuesday, November 7th and Wednesday, November 8th in room #367.

    On Wednesday, November 8, 2006, at 11:00 a.m. Pacific (2:00 p.m. Eastern) a live webcast of the presentation will be available on Aware's investor relations website at http://www.aware.com/ir/presentations. Access to the replay will be available for 30 days beginning one hour after the webcast.

    AeA, a non-profit trade association conference that represents all segments of the technology industry, has scheduled presentations from more than 175 public technology companies and expects an audience of 700+ investors to attend the three-day event. For more information on the conference, please visit the AeA Classic website at: http://www.aeanet.org/FinancialServices/AeAClassic.asp. For more information about Aware, its products, or to learn more about its upcoming conferences, please visit the Aware website at http://www.aware.com/.

    About Aware

    Aware, Inc. designs, develops, licenses and markets DSL technologies that enable broadband communications over existing telephone networks. Its solutions, including splitterless G.lite, full-rate ADSL, ADSL2, ADSL2+, VDSL2, Bonded ADSL2+, Dr. DSL(R), StratiPHY(TM), StratiPHY-Bonded(TM), StratiPHY2+(TM), StratiPHY3(TM) and G.SHDSL, address central office as well as customer premise requirements. Aware is also a leading provider of standards- based biometric transaction and image compression software toolkits. More information can be found at http://www.aware.com/.

    Safe Harbor Warning

    Portions of this release contain forward-looking statements regarding future events and are subject to risks and uncertainties, such as estimates or projections of future revenue and earnings and the growth of the DSL market. Aware wishes to caution you that there are factors that could cause actual results to differ materially from the results indicated by such statements. These factors include, but are not limited to: we have a unique business model, our quarterly results are difficult to predict, we depend on a limited number of licensees, we derive a significant amount of revenue from a small number of customers, we depend on equipment companies to incorporate our technology into their products, we face intense competition from other DSL vendors, DSL technology competes with other technologies for broadband access, and our business is subject to rapid technological change. We refer you to the documents Aware files from time to time with the Securities and Exchange Commission.

    Dr. DSL, StratiPHY, StratiPHY2+, StratiPHY3, and StratiPHY-Bonded are trademarks or registered trademarks of Aware, Inc. Any other trademarks appearing herein are the property of their respective owners.

    Contact: Sarah LaLiberte Aware, Inc. 781-687-0695 sarahl@aware.com

    Aware, Inc.

    CONTACT: Sarah LaLiberte of Aware, Inc., +1-781-687-0695, or
    sarahl@aware.com

    Web site: http://www.aware.com/
    http://www.aware.com/ir/presentations
    http://www.aeanet.org/FinancialServices/AeAClassic.asp




    Endwave to Present at AeA Classic Financial Conference

    SAN JOSE, Calif., Nov. 1 /PRNewswire-FirstCall/ -- Endwave Corporation , a leading provider of high-frequency RF modules for telecommunications networks, defense electronics and homeland security systems, today announced that Ed Keible, President and Chief Executive Officer, and Brett Wallace, Chief Financial Officer, will be presenting at the AeA Classic Financial Conference at the Monterey Conference Center in Monterey, Calif. on Tuesday Nov. 7 and Wednesday, Nov. 8 in room # 303.

    A webcast will be available on Nov. 8 at 9:00 a.m. Pacific Time, and can be accessed at the investor page of the company's Web site. The webcast replay will be available for 90 days.

    The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at http://www.fulldisclosure.com/, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson's password-protected event management site, StreetEvents (http://www.streetevents.com/).

    About Endwave

    Endwave Corporation designs, manufactures and markets RF modules that enable the transmission, reception and processing of high-frequency signals in telecommunications networks, defense electronics and homeland security systems. Our RF modules are typically used in high-frequency applications and include integrated transceivers, amplifiers, synthesizers, oscillators, up and down converters, frequency multipliers and microwave switch arrays. Endwave has 38 issued patents covering its core technologies including semiconductor and proprietary circuit designs. Endwave Corporation is headquartered in San Jose, CA, with operations in Diamond Springs, CA; Andover, MA; and Chiang Mai, Thailand. Additional information about the company can be accessed from the company's web site at http://www.endwave.com/.

    Contact: Mary McGowan Summit IR Group Inc. Phone: 408-404-5401 mary@summitirgroup.com

    Endwave Corporation

    CONTACT: Mary McGowan of Summit IR Group Inc. for Endwave Corporation,
    +1-408-404-5401, or mary@summitirgroup.com

    Web site: http://www.endwave.com/




    Microsoft Makes a Splash at the Georgia Aquarium With National Essay ContestThe Microsoft "Zoo Tycoon" franchise and the Georgia Aquarium challenge kids to discuss marine conservation

    REDMOND, Wash., Nov. 1 /PRNewswire-FirstCall/ -- Microsoft(R) Game Studios is teaming up with the Georgia Aquarium to introduce an educational initiative that will help excite and inform students about the complexity of and caring for marine life. Microsoft Corp., the Georgia Aquarium and AirTran Airways today announced a national essay contest on marine conservation and the importance of preserving aquatic life.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO )

    In conjunction with the recent launch of "Zoo Tycoon 2(R): Marine Mania(R)," the newest addition to the award-winning "Zoo Tycoon" franchise, and the upcoming one-year anniversary of the Georgia Aquarium, the essay competition encourages students in grades six through eight to submit a 250- to 500-word essay focusing on why conservation of marine animals and the ocean is important.

    The grand prize winner receives a trip for four to Atlanta and a special behind-the-scenes tour of the Georgia Aquarium, where the winner and his or her family can observe whale sharks and African black-footed penguins in their natural habitats from exclusive views of the exhibits. They can also speak directly with staff biologists to learn more about how to take care of the marine animals. Runners-up receive copies of "Zoo Tycoon 2" and all franchise expansion packs, including "Zoo Tycoon 2: Marine Mania." Additional contest details will be available at the Zoo Tycoon Web site at http://zootycoon.com/.

    "Our research has shown that students choose aquariums as their top choice for field-trip destinations. They're the best places to both engage with marine life up close and form an understanding of the world's oceans," said Craig Davison, director of global games marketing in the Entertainment and Devices Division at Microsoft. "We feel privileged to help the Georgia Aquarium with its mission of connecting people with aquatic animals and teaching today's students about important issues like marine preservation and conservation."

    Microsoft Game Studios also sponsored a visit to the Georgia Aquarium today for 250 students from Atlanta-area schools. Visiting the largest aquarium in the world, students can observe more than 100,000 animals from 500 species, and discover how to best take care of them by playing "Zoo Tycoon 2: Marine Mania" at any of numerous kiosks available throughout the aquarium.

    Developed by Blue Fang Games LLC, "Zoo Tycoon 2: Marine Mania" continues the unique legacy of the "Zoo Tycoon" franchise of providing gameplay that is both fun and educational, while teaching aspiring zookeepers and gamers of all ages about the animal kingdom and how to ensure animal happiness, guest satisfaction and profitability.

    Today's event marks the initiation of an educational partnership between Microsoft Game Studios and the Georgia Aquarium, including future plans for using the "Zoo Tycoon" franchise as an educational tool within the aquarium's Learning Loop, a level of the aquarium dedicated to educational programs.

    "Microsoft has been a great corporate partner of the aquarium," said Jeff Swanagan, executive director of the Georgia Aquarium. "The 'Zoo Tycoon' games are known for their realistic and educational presentation, and we recognized that they would be a perfect fit for teaming up to help educate students and promote the importance of marine conservation."

    About the Georgia Aquarium

    The Georgia Aquarium opened in Atlanta, Georgia, on Nov. 23, 2005, as the world's largest aquarium. The Aquarium is a $250 million gift to the people of Georgia from Bernie Marcus, co-founder of The Home Depot, and his wife Billi, through the Marcus Foundation. The Aquarium, which has welcomed more than three million visitors in nine months, is overseen by a non-profit corporation run by a board of directors. The mission of the Georgia Aquarium is to be an entertaining, educational and scientific institution featuring exhibitions and programs of the highest standards, offering engaging and entertaining visitors' experiences, and promoting the conservation of aquatic biodiversity throughout the world. Georgia Aquarium is committed to continually working to provide the best guest experience. It is the goal of the Georgia Aquarium to educate audiences of all ages, while promoting a fun and entertaining learning experience that inspires guests to appreciate the world's aquatic biodiversity and to take conservation action. For additional information on the Georgia Aquarium, visit http://www.georgiaaquarium.org/.

    About AirTran Airways

    AirTran Airways, a Fortune 1000 company and one of America's largest low- fare airlines with 8,000 friendly, professional Crew Members, operates nearly 700 daily flights to 52 destinations. The airline's hub is at Hartsfield- Jackson Atlanta International Airport, where it is the second largest carrier. AirTran Airways' aircraft features the fuel-efficient Boeing 737-700 and 717- 200 to create America's youngest all-Boeing fleet. The airline is proud to be the presenting sponsor of the Tropical Diver exhibit at the Georgia Aquarium. It is also the first carrier to install XM Satellite Radio on a commercial aircraft and the only airline with Business Class and XM Satellite Radio on every flight. Convenient shipping options are available through AirTran Airways' cargo services. For reservations or more information, visit http://www.airtran.com/.

    About "Zoo Tycoon"

    "Zoo Tycoon" has been one of the top-selling "Tycoon" game titles since its launch in 2001. Simple to play yet challenging to master, "Zoo Tycoon" offers engaging gameplay for animal lovers and simulation game fans of all ages. The captivating imagery, clever gameplay and interactive tutorials in the vibrant and appealing "Zoo Tycoon" make it easy to play right out of the box. "Zoo Tycoon" has something for everyone, stimulating creativity and imagination as players respond to the needs of the animals and guests. Additional information is available at http://www.zootycoon.com/.

    About Blue Fang Games

    Blue Fang Games is an independent game developer dedicated to creating compelling, emotionally engaging games focused on the animal kingdom that set the benchmark for broad-based family entertainment. Blue Fang's "Zoo Tycoon" franchise, published by Microsoft Game Studios, has established itself as one of the most popular PC gaming franchises and has sold more than five million units worldwide. Founded in 1998, Blue Fang Games is located in Waltham, Mass. For more information, visit Blue Fang Games on the Web at http://www.bluefang.com/.

    About Microsoft Game Studios

    Microsoft Game Studios is a leading worldwide publisher and developer of games for the Xbox(R) and Xbox 360(TM) video game systems, the Windows(R) operating system and online platforms. Comprising a network of top developers, Microsoft Game Studios is committed to creating innovative and diverse games for Windows (http://www.microsoft.com/games), including such franchises as "Age of Empires(R)," "Flight Simulator" and "Zoo Tycoon"; Xbox and Xbox 360 (http://www.xbox.com/), including such games as the upcoming "Gears of War" and franchises such as "Halo(R)," "Fable(R)," "Project Gotham Racing(R)" and "Forza Motorsport(TM)"; and MSN(R) Games (http://www.games.msn.com/), the official games channel for the MSN network and home to such hits as "Bejeweled" and "Hexic(R)."

    About Microsoft

    Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

    Microsoft, Zoo Tycoon, Marine Mania, Xbox, Xbox 360, Windows, Age of Empires, Halo, Fable, Project Gotham Racing, Forza Motorsport, MSN and Hexic are either registered trademarks or trademarks of Microsoft Corp. in the United States and/or other countries.

    The names of actual companies and products mentioned herein may be the trademarks of their respective owners.

    Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20000822/MSFTLOGO
    AP Archive: http://photoarchive.ap.org/
    PRN Photo Desk photodesk@prnewswire.com Microsoft Corp.

    CONTACT: press only: Bethany Nielson of Edelman, +1-206-223-1606 or
    bethany.nielson@edelman.com, for Microsoft; or Erica Zelaya of Microsoft,
    +1-425-882-8080 or ericaz@microsoft.com

    Web site: http://www.microsoft.com/




    NVIDIA Announces Restatement Related to Stock-Based Compensation- NVIDIA Estimates No Material Impact to Fiscal Year 2007 Operating Results -

    SANTA CLARA, Calif., Nov. 1 /PRNewswire-FirstCall/ -- NVIDIA Corporation today announced that it expects to restate its previously-issued financial statements for the fiscal years 2004 through 2006, together with selected financial statements for earlier years, and for the first quarter of fiscal 2007 that ended April 30, 2006 to correct errors related to accounting for stock-based compensation expense.

    (Logo: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO )

    The Company currently estimates that the restatement will not have a material impact on the Company's operating results for any period in the current fiscal year 2007, and that the net impact of the restatement will be aggregate non-cash charges of less than $150 million for stock-based compensation expense, net of related tax effects.

    As previously announced, in June 2006 the Audit Committee of the Board of Directors of NVIDIA began a review of the Company's stock option practices based on the results of an internal review voluntarily undertaken by management. The Audit Committee's review covered the time from the Company's initial public offering in 1999 to the current fiscal year and, as previously disclosed, found instances of the use of incorrect measurement dates for certain option grants. The Audit Committee is being assisted by independent legal counsel and outside accounting experts.

    At this time, the Audit Committee has completed its forensic review of the option grants and is now working with the Company's management to finalize the financial impact of using incorrect measurement dates. As a result of its investigation, the Audit Committee has concluded that there are no concerns with respect to the integrity of current management.

    The Audit Committee has reached a preliminary conclusion, based upon the recommendation of management, that NVIDIA will need to restate its historical financial statements to record additional non-cash stock-based compensation expense related to stock option grants as a result of errors in recording the measurement date for certain stock option grants. Accordingly, the Company advises that all of the Company's financial statements and related communications for periods commencing on or after January 31, 1999 should not be relied upon.

    The stock-based compensation charges incurred will have the effect of decreasing reported net income or increasing reported loss from operations and decreasing the reported retained earnings figures contained in the Company's historical financial statements for the periods noted above. The Company does not expect that the anticipated restatements will have any impact on its historical revenues or cash position for any period. The Company's auditors have not completed their review of the findings of the investigation.

    NVIDIA intends to file its restated financial statements and its delinquent quarterly report for the second quarter of fiscal 2007 that ended July 30, 2006 as soon as practicable.

    About NVIDIA

    NVIDIA Corporation is the worldwide leader in programmable graphics processor technologies. The Company creates innovative, industry-changing products for computing, consumer electronics, and mobile devices. NVIDIA is headquartered in Santa Clara, CA and has offices throughout Asia, Europe, and the Americas. For more information, visit http://www.nvidia.com/.

    Certain statements in this press release including, but not limited to, statements as to the impact of the restatement on fiscal year 2007 operating results, the periods expected to be restated, the amount of the estimated, aggregate non-cash charges, the effect of the restatement on the Company's historical financial statements and the timing of the filing of restated and delinquent financial statements are forward-looking statements that are subject to risks and uncertainties that could cause results to be materially different than expectations. Important factors that could cause actual results to differ materially include: the final outcome of the Audit Committee's review; the conclusions of the Company's management and the conclusions of the independent registered public accounting firm based on the results of their reviews; the time needed by our independent registered public accounting firm to complete its audit, review and other procedures relating to the financial statements and delayed SEC reports and whether that firm will agree with the presentation of financial statements prepared by us; additional expenses that may be recorded; the amount of the tax benefit and recording of the tax effect as well as other factors detailed from time to time in the reports NVIDIA files with the Securities and Exchange Commission including its Form 10-Q for the quarter ended April 30, 2006. Copies of reports filed with the SEC are posted on our Web site and are available from NVIDIA without charge. These forward-looking statements are not guarantees of future performance and speak only as of the date hereof, and, except as required by law, NVIDIA disclaims any obligation to update these forward-looking statements to reflect future events or circumstances.

    NOTE: All company and/or product names may be trade names, trademarks and/or registered trademarks of the respective owners with which they are associated.

    Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020613/NVDALOGO
    AP Archive: http://photoarchive.ap.org/
    PRN Photo Desk, 888-776-6555 or 212-782-2840 NVIDIA Corporation

    CONTACT: Michael Hara, Investor Relations, +1-408-486-2511, or
    mhara@nvidia.com, or Calisa Cole, Corporate Communications, +1-408-486-6263,
    or ccole@nvidia.com, both of NVIDIA Corporation

    Web site: http://www.nvidia.com/




    SYSTIMAX(R) Solutions Combines Design and Performance in VisiPatch 360 SystemNew patching solution uses reverse patching technology to improve cord management

    RICHARDSON, Texas, Nov. 1 /PRNewswire-FirstCall/ -- SYSTIMAX(R) Solutions(TM) from CommScope , the worldwide leader in structured connectivity solutions, is totally rethinking and redefining the user experience with its 360-degree product design philosophy. The first result is its new SYSTIMAX VisiPatch(R) 360 System(TM), which incorporates integrated patching and cable management to deliver an ergonomically designed and aesthetically pleasing solution.

    "SYSTIMAX Solutions' new design philosophy allows us to create solutions that we believe are revolutionary, and the VisiPatch 360 System is just the first one to be introduced," said George Brooks, Global Business Director, Emerging Products, Enterprise Solutions. "This new patching solution uses enhanced specifications and an improved design to help boost performance while responding to our customers' need for an aesthetically pleasing solution that can support complex applications."

    The new VisiPatch system is both an RJ-45 alternative rack-mount patching solution and an optimized wall-mount solution that is designed to make cable management easier. By projecting cords away from the user and into the patching field, the VisiPatch 360 System makes the patch cord plug-end more accessible. This also makes reading the labeling information easier while facilitating future moves, adds and changes. The new system reduces cord cluster, patch cord and cable congestion associated with some RJ-45 systems, and maximizes usable density. Minimizing cable congestion and increasing usable density can save a company time, space and money.

    The VisiPatch system supports 10Gb/s and 1Gb/s applications with its superior transmission and performance. Snap-together components enable the system to be easily installed while its design provides maximum versatility.

    "We believe our customers value their usage of space and time in addition to resources and money," Brooks said. "Whether it is by reducing cable clutter, improving density, making moves, adds and changes easier to perform, or simply by taking up less space, the VisiPatch 360 system is designed to help them do just that."

    The VisiPatch 360 System is now available globally and more information can be found at http://www.systimax.com/.

    About SYSTIMAX Solutions

    SYSTIMAX Solutions from CommScope , is a worldwide leader in structured cabling systems and provides integrated end-to-end connectivity solutions for voice, data, video and building management applications in both wired and wireless enterprise networks.

    SYSTIMAX Solutions supplies its high performance and market-leading range of products through a network of highly skilled BusinessPartners. The product range includes the copper-based GigaSPEED X10D and GigaSPEED XL Solutions, the fiber optic LazrSPEED and TeraSPEED Solutions and the intelligent patching iPatch(R) System. The SYSTIMAX AirSPEED(TM) Solution adds a wireless option to the portfolio. Drawing on their Bell Labs heritage, the people of SYSTIMAX Labs who have spearheaded these innovations will continue to play an integral role in the future success of SYSTIMAX Solutions. Currently the company's BusinessPartners install an average of over 1,000 miles (1,600km) of SYSTIMAX cable every day in more than 130 countries worldwide.

    For further information please visit http://www.systimax.com/ Forward-Looking Statements

    All statements in this press release that are not historical facts should be considered forward-looking statements that are based on information currently available to management, management's beliefs, as well as on a number of assumptions concerning future events. Forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, which could cause the actual results to differ materially from those currently expected. For a more detailed description of the factors that could cause such a difference, please see CommScope's filings with the Securities and Exchange Commission. In providing forward-looking statements, the company does not intend, and is not undertaking any obligation or duty, to update these statements as a result of new information, future events or otherwise.

    CommScope, Inc.

    CONTACT: Sadie McCrary of M-C-C for SYSTIMAX Solutions,
    +1-972-480-8383, ext. 222, or sadie_mccrary@mccom.com

    Web site: http://www.commscope.com/
    http://www.systimax.com/




    Harland Financial Solutions Goes Live With Callidus On-Demand Enterprise Incentive Management SolutionLeading Financial Services Solution Provider Chooses and Implements On-Demand EIM to Improve Sales Performance, Reduce IT Infrastructure Complexity and Drive Revenue

    SAN JOSE, Calif., Nov. 1 /PRNewswire-FirstCall/ -- Callidus Software Inc. , the leader in Enterprise Incentive Management (EIM), today announced that Harland Financial Solutions, Inc. has selected and successfully gone live with Callidus On-Demand, the company's best-in-class Web-based enterprise incentive management solution. Harland Financial Solutions has implemented Callidus Software's On-Demand TrueComp(R) Manager, TrueInformation(R) and Callidus TrueAnalytics(TM) software modules to improve sales performance, reduce IT infrastructure complexity and drive revenue.

    Harland Financial Solutions was looking to further improve its sales compensation system, as its existing system was becoming cumbersome and challenging to maintain. The company needed an automated, easy-to-use, on-demand sales compensation system that would implement rapidly, provide the visibility and transparency required by Sarbanes-Oxley and could be readily available at an affordable price point. After a rigorous review of enterprise incentive management providers, Harland Financial Solutions selected Callidus' On-Demand solution to provide the best-of-breed EIM technology, analytics, intuitive graphical user interface and significant scalability the company required. Since the go-live of Harland Financial, the company is now processing over 40 compensation plans for their Retail, Lending, Mortgage, Bank Core, Credit Union and Intrieve System business units.

    "As one of the leading providers of technology to U.S. financial institutions, Harland Financial Solutions understands the critical role sales performance plays in a company's overall success," said Eric Setz, chief information officer of Harland Financial Solutions. "In our review of EIM vendors, only Callidus Software fully met our strict requirements, combining enterprise-class compensation solutions with on-demand's rapid implementation and deployment cycles at a cost tailored for the mid-sized business. With Callidus' On-Demand solutions, Harland Financial Solutions will gain control over its compensation process, improving sales performance, reducing IT infrastructure and aligning sales with its business objectives."

    "More and more mid-to-large sized businesses are realizing the significant benefits of Callidus Software's On-Demand solution," said Richard Furino, senior vice president worldwide client services of Callidus Software. "Companies like Harland Financial Solutions will not only experience the benefits of rapid implementation and deployment through the hosted environment, but will also have access to extensive resources and services such as the Sun Grid and our extensive domain expertise in EIM."

    Callidus' On-Demand levels the playing field for incentive compensation management. It provides medium-to-large sized enterprises a best-of-breed EIM solution in a hosted environment. The comprehensive on-demand EIM implementation developed by Callidus Software leverages the power of the Sun Grid Compute Utility to offer flexibility, efficiency, cost savings, security and reliability. The solution also delivers all the advantages of cutting-edge EIM with a selection of service levels and options to suit an organization's business objectives, requirements and resources. Upgrades and maintenance are entirely transparent to end users and occur automatically.

    Callidus On-Demand automated Harland Financial Solutions' sales compensation, further minimizing mispayments and increasing overall productivity. The solution provides the company's 150 payees with greater visibility into sales performance and allows management to easily adapt, or design sales compensation plans across multiple divisions to address new product offerings, sales promotions and align sales goals with corporate strategy. Callidus On-Demand also helps ensure Sarbanes-Oxley compliance by providing transparency and audit trails on the company's compensation plans.

    The Callidus solution integrates easily and seamlessly into Harland Financial Solutions' existing Softrax(R) accounts receivable system and its PeopleSoft(R) human resources system. Using Callidus On-Demand, Harland Financial Solutions experiences the following benefits:

    * Increased efficiencies, reduced operating costs and rapid ROI * Elimination of resource time and expense for maintenance and upgrades * High availability, security and minimal downtime. Availability Callidus' On-Demand solution is available now.

    Please visit http://www.callidussoftware.com/products/on-demand.jsp for more information.

    About Callidus Software(R)

    Founded in 1996, Callidus Software (http://www.callidussoftware.com/) is an industry leading Enterprise Incentive Management (EIM) provider to global companies across multiple industries. Callidus' EIM systems allow enterprises to develop and manage incentive compensation linked to the achievement of strategic business objectives. Through its TrueComp(R) Grid architecture, Callidus delivers the industry's only EIM solution that combines the power and scalability of grid computing with the flexibility of rules-based interface. Customers/Partners include 7-Eleven, Accenture, CUNA Mutual, HP, IBM, Philips Medical Systems, Sprint Nextel, Sun Microsystems and Wachovia. Callidus is publicly traded on the NASDAQ under the symbol CALD.

    About Harland Financial Solutions

    Harland Financial Solutions (http://www.harlandfinancialsolutions.com/), a wholly-owned subsidiary of John H. Harland Company, supplies software and services to thousands of financial institutions of all sizes, offering its solutions in both an in-house and service bureau environment. The company is a leader in core systems, item processing, enterprise content management, branch automation, customer relationship management, business intelligence, origination and document solutions, risk management, compliance training, financial accounting, open documents, mortgage solutions, electronic funds transfer (EFT), self service solutions and performance advisory services.

    About Harland

    Atlanta-based John H. Harland Company (http://www.harland.net/) is listed on the New York Stock Exchange under the symbol "JH." Harland is a leading provider of software and printed products to the financial institution market. Harland's software solutions include deposit & loan origination, platform, teller, call-center, mortgage, business intelligence, core systems and customer relationship management systems. Harland's printed products offerings include checks, direct marketing and financial forms. Scantron Corporation (http://www.scantron.com/), a wholly owned subsidiary, is a leading provider of software services and systems for the collection, management and interpretation of data to the financial, commercial and educational markets.

    Note on Forward-Looking Statements

    The forward looking statements included in this press release, including the ability of Callidus On-Demand solution to significantly cut project timelines, save cost compared with on-premise solutions and reduce IT infrastructure complexity and that the solution is always on and always upgraded, reflect management's best judgment based on factors currently known and involve risks and uncertainties. These risks and uncertainties include, but are not limited to, timing and size of software license orders, management's ability to successfully implement its business plan, changes in executive management, potential material fluctuations in financial results and future growth rates, decreases in customer spending, increased competition or new entrants in the marketplace, litigation and other risks detailed in Callidus' reports filed with the Securities and Exchange Commission (SEC), including its Form 10-K and Form 10-Qs, copies of which may be obtained by contacting Callidus Software's Investor Relations department at 408-808-6577, or from the Investor Relations section of Callidus Software's website (http://www.callidussoftware.com/). Actual results may differ materially from those presently reported. We assume no obligation to update the information contained in this release.

    NOTE: Callidus Software, the Callidus Software logo, Callidus TrueAnalytics, TrueChannel, TrueComp, TrueComp Datamart, TrueComp Grid, TrueComp Manager, TrueInformation, TrueIntegration, TruePerformance, TrueReferral, TrueResolution, TrueService and TrueSupport are trademarks of Callidus Software Inc. in the United States and other countries. All other brand, service or product names are trademarks or registered trademarks of their respective companies or owners.

    Callidus Software Inc.

    CONTACT: press, Jock Breitwieser of Callidus Software Inc.,
    +1-408-975-6683, or pr@callidussoftware.com

    Web site: http://www.harland.net/

    Web site: http://www.harlandfinancialsolutions.com/

    Web site: http://www.callidussoftware.com/




    Bernard Hodes Group Selects WANTED Technologies to Provide Recruitment Advertising Intelligence

    MONTREAL, Nov. 1 /PRNewswire-FirstCall/ -- WANTED Technologies Corp. (TSX-V: WAN) announces today that Bernard Hodes Group has signed an agreement to use WANTED's Web-based recruitment advertising dashboard technology. Sales representatives at Hodes will use WANTED Analytics to monitor recruitment advertising activity for employers across the United States.

    A leader in talent management solutions, recruitment and brand marketing, Hodes values strategy and research as much as creativity and innovation to provide clients with integrated hiring solutions.

    "Our success as an agency serving the human resources industry has been built on our ability to thoroughly understand our clients' objectives and to offer pioneering solutions to drive quality candidates to their organizations," said Harold Levy, Senior Vice President, Eastern Regional Manager, Bernard Hodes Group. "WANTED's Analytics dashboard adds another strategic tool to our sales process and makes our consultants more knowledgeable in their approach to employment branding initiatives. Having a summary of existing recruitment advertising activity adds value to our client presentations and offering."

    A steady increase in Internet advertising expenditures and Web-based candidate traffic make WANTED's recruitment intelligence indispensable to accurately monitor industry trends and hiring demands.

    "The online recruitment market is as vast as an ocean and just as difficult to navigate," said WANTED's CEO David Tanguay. "Our Analytics dashboard gives a bird's-eye view of a company's aggregated advertising and then allows users to drill down to more detailed ad intelligence. Further, our rigorous technology enables users to quickly identify and eliminate multiple job postings of the same position. This saves time and effort and helps guide sales people to an effective product offering for their clients."

    About Bernard Hodes Group

    As a fully integrated talent solutions provider, Bernard Hodes Group (http://www.hodes.com/) offers solutions that often combine multiple service offerings from the Company's core competency areas: Recruitment Marketing; Sourcing/Response Management; Hiring Process Re-engineering; and Staffing Technology (http://www.hodesiq.com/). All solutions are developed and measured within the company's 360-degree process methodology. The Company is headquartered in New York, with over 80 offices and affiliates around the globe. Bernard Hodes Group serves thousands of clients in virtually every industry, helping them to attract and retain talented workers in every skill set.

    Bernard Hodes Group is a part of the Omnicom Group, Inc. (NYSE - OMC) (http://www.omnicomgroup.com/). Omnicom is a leading global advertising, marketing and corporate communications company. Omnicom's branded networks and numerous specialty firms provide advertising, strategic media planning and buying, direct and promotional marketing, public relations and other specialty communications services to over 5,000 clients in more than 100 countries.

    About WANTED Technologies Corp.

    WANTED Technologies is a leading supplier of real-time sales and business intelligence solutions for the staffing and recruitment, real estate, and media classified advertising industries. Using its proprietary data mining, lead generation and CRM (Customer Relationship Management) integrated technologies, WANTED aggregates data from thousands of online job boards, real estate, newspapers and corporate Web sites in real time.

    Currently, WANTED's data is used to optimize sales and for the implementation of marketing strategies within classified ads departments of major media organizations as well as by staffing firms, advertising agencies and by human resources specialists.

    WANTED is also the exclusive data provider for The Conference Board's Help-Wanted Online Data SeriesTM a monthly economic indicator of job availability in the United States.

    The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release. Any statement that appears prospective shall not be interpreted as such.

    WANTED TECHNOLOGIES INC.

    CONTACT: Contacts: Mr. David Tanguay, President and CEO Vice President,
    (418) 523-6663, ext. 222; Mr. Philippe Freniere, CA, Vice President Finance &
    CFO, 1 (800) 530-0818, ext. 232; MaisonBrison / BarnesMcInerney Capital Market
    Communications Group: Mr. Jean Walter, (514) 731-0000, ext. 223,
    jean@maisonbrison.com; Source: WANTED Technologies Corp.




    Wells-Gardner Electronics to Report 2006 Second Quarter and First Half Results and Host Conference Call and Webcast

    CHICAGO, Nov. 1 /PRNewswire-FirstCall/ -- Wells-Gardner Electronics Corporation announced today that it will release its third quarter and first nine 2006 financial results after the market closes on Monday, November 6, 2006 and will host a conference call and webcast at 4:45 P.M. Eastern Time on Monday, November 6, 2006. Both the call and webcast are open to the general public.

    The conference call domestic dial in number is 866-356-4123 and the pass code is 71852501. Questions will be taken only from participants on the conference call. The teleconference will be webcast by Thomson/CCBN on the Company's website at http://www.wellsgardner.com/ under the investor relations section. The conference call will be available via replay for 30 days beginning Tuesday, November 7, 2006. The replay call in number is 888-286- 8010 and the pass code is 30855364.

    Founded in 1925, Wells-Gardner Electronics Corporation is a distributor and manufacturer of color video monitors and other related distribution products for a variety of markets including, but not limited to, gaming machine manufacturers, casinos, coin-operated video game manufacturers and other display integrators. During 2000, the Company formed a 50/50 joint venture named Wells-Eastern Asia Displays ("WEA") to manufacture video monitors in Malaysia. In addition, the Company acquired American Gaming & Electronics, Inc. ("AGE"), a leading parts distributor to the gaming markets, which sells parts and services to over 700 casinos in North America with offices in Las Vegas, Nevada, Egg Harbor Township, New Jersey and McCook, Illinois. AGE also sells refurbished gaming machines on a global basis as well as installs and services some brands of new gaming machines into casinos in North America. For additional investor information, please contact Jim Brace, VP & CFO Wells Gardner at (708) 290-2120 or Alan Woinski -- Gaming USA Corporation at (201) 599-8484.

    Wells-Gardner Electronics Corporation

    CONTACT: Jim Brace, VP & CFO Wells Gardner, +1-708-290-2120 or Alan
    Woinski of Gaming USA Corporation, +1-201-599-8484

    Web site: http://www.wellsgardner.com/




    Cognos President and CEO to Speak at the Goldman Sachs Software & IT Services Retreat on November 7

    OTTAWA and BURLINGTON, Mass., Nov. 1 /PRNewswire-FirstCall/ -- Cognos (Nasdaq: COGN; TSX: CSN), the world leader in business intelligence and performance management solutions, today announced that Rob Ashe, president and CEO, Cognos, will speak at the Goldman Sachs Software & IT Services Retreat on November 7, 2006 at the Goldman Sachs Conference Center in New York, N.Y.

    During the session, Mr. Ashe will discuss the current market landscape in business intelligence and performance management, and the company's strategies for continued market leadership. Mr. Ashe will also detail how Cognos provides global organizations with a complete performance management system, and how that system can deliver higher performance across the enterprise.

    The presentation will begin at 1:00 p.m. Eastern Time. Listeners can access the presentation via webcast at http://www.cognos.com/company/investor/events. A replay of the webcast will be archived in the Investor Relations area of the Cognos web site following the presentation.

    About Cognos:

    Cognos, the world leader in business intelligence and performance management solutions, provides world-class enterprise planning and BI software and services to help companies plan, understand and manage financial and operational performance.

    Cognos brings together technology, analytical applications, best practices, and a broad network of partners to give customers a complete performance system. The Cognos performance system is an open and adaptive solution that leverages an organization's ERP, packaged applications, and database investments. It gives customers the ability to answer the questions - - How are we doing? Why are we on or off track? What should we do about it? -- and enables them to understand and monitor current performance while planning future business strategies.

    Cognos serves more than 23,000 customers in more than 135 countries, and its top 100 enterprise customers consistently outperform market indexes. Cognos performance management solutions and services are also available from more than 3,000 worldwide partners and resellers. For more information, visit the Cognos Web site at http://www.cognos.com/.

    Cognos and the Cognos logo are trademarks or registered trademarks of Cognos Incorporated in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

    Media Contact: Sean Reid Cognos, 613-738-1440 Sean.reid@cognos.com Kristen Orfanos LP&P, 781-782-5852 Kristen_Orfanos@lpp.com Investor Relations: John Lawlor 613-738-3503 john.lawlor@cognos.com

    Cognos

    CONTACT: Media Contact: Sean Reid, +1-613-738-1440,
    Sean.reid@cognos.com, or Investor Contact: John Lawlor, +1-613-738-3503,
    john.lawlor@cognos.com, both of Cognos; or Kristen Orfanos of LP&P for Cognos,
    +1-781-782-5852, Kristen_Orfanos@lpp.com

    Web site: http://www.cognos.com/

    Company News On-Call: http://www.prnewswire.com/comp/107867.html




    Network CN Inc. Completes Additional Private Placement

    NEW YORK, Nov. 1 /PRNewswire-FirstCall/ -- Network CN Inc. (BULLETIN BOARD: NWCN) , a Chinese travel and media network company headquartered in Hong Kong, today announced the completion of a private placement of 1.2 million shares of restricted common stock at $0.85 per share. The transaction took place with a new shareholder based in Hong Kong and generated gross proceeds of approximately $1.02 million. Net proceeds from the financing will be used for general corporate purposes including initiation of activities related to the Company's proposed business in China.

    The offering was made pursuant to an exemption from registration with the SEC pursuant to Regulation S. The securities have not been registered under the Securities Act of 1933 or any state securities laws and unless so registered may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 and applicable state securities laws. The Company did not grant any registration rights to the new shareholder with respect to the Shares in the offering.

    This press release does not constitute an offer to sell or the solicitation of an offer to buy any of the securities nor shall there be any sale of these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification of the securities under the securities laws of any such state.

    About Network CN Inc.

    Headquartered in Hong Kong, Network CN Inc.'s vision is to build a nationwide network in China to service the needs of its customers. To achieve its vision, the Company has set out to build and run a Hotel Network, a Media Network and an e-Network. A Hotel Network has already been established. As of June 30, 2006, the Company had seventeen hotels and roughly 3,400 hotel rooms under management. In addition, the Company is actively pursuing the development of a Media Network and an e-Network via the Internet.

    This press release includes statements that may constitute "forward- looking" statements, usually containing the word "believe," "estimate," "project," "expect," "plan," "anticipate" or similar expressions. Forward- looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, competitive factors and changes in regulatory environments. These and other risks relating to Network CN Inc. business are set forth in the Company's Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on April 14, 2006, and other reports filed from time to time with the Securities and Exchange Commission. By making these forward- looking statements, Network CN Inc. disclaims any obligation to update these statements for revisions or changes after the date of this release.

    Network CN Inc.

    CONTACT: Network CN Inc., Investor Relations, ICR, LLC, +1-203-682-8200




    Cognos Executive to Speak at the Scotia Capital Telecom & Tech Conference on November 7

    OTTAWA and BURLINGTON, Mass., Nov. 1 /PRNewswire-FirstCall/ -- Cognos (Nasdaq: COGN; TSX: CSN), the world leader in business intelligence and performance management solutions, today announced that Rob Rose, chief strategy officer and vice president, product marketing, Cognos, will speak at the Scotia Capital Telecom & Tech Conference on November 7, 2006 at the Le Royal Meridien King Edward Hotel in Toronto, Ont.

    During the session, Mr. Rose will discuss the current market landscape in business intelligence and performance management, and the company's strategies for continued market leadership. Mr. Rose will also detail how Cognos provides global organizations with a complete performance management system, and how that system can deliver higher performance across the enterprise.

    The presentation will begin at 1:40 p.m. Eastern Time. Listeners can access the presentation via webcast at http://www.cognos.com/company/investor/events. A replay of the webcast will be archived in the Investor Relations area of the Cognos web site following the presentation.

    About Cognos:

    Cognos, the world leader in business intelligence and performance management solutions, provides world-class enterprise planning and BI software and services to help companies plan, understand and manage financial and operational performance.

    Cognos brings together technology, analytical applications, best practices, and a broad network of partners to give customers a complete performance system. The Cognos performance system is an open and adaptive solution that leverages an organization's ERP, packaged applications, and database investments. It gives customers the ability to answer the questions -- How are we doing? Why are we on or off track? What should we do about it? -- and enables them to understand and monitor current performance while planning future business strategies.

    Cognos serves more than 23,000 customers in more than 135 countries, and its top 100 enterprise customers consistently outperform market indexes. Cognos performance management solutions and services are also available from more than 3,000 worldwide partners and resellers. For more information, visit the Cognos Web site at http://www.cognos.com/.

    Cognos and the Cognos logo are trademarks or registered trademarks of Cognos Incorporated in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

    Media Contact: Sean Reid Cognos, 613-738-1440 Sean.reid@cognos.com Kristen Orfanos LP&P, 781-782-5852 Kristen_Orfanos@lpp.com Investor Relations: John Lawlor 613-738-3503 john.lawlor@cognos.com

    Cognos

    CONTACT: Media: Sean Reid of Cognos, +1-613-738-1440,
    Sean.reid@cognos.com; or Kristen Orfanos of LP&P, +1-781-782-5852,
    Kristen_Orfanos@lpp.com; or Investor Relations: John Lawlor of Cognos,
    +1-613-738-3503, john.lawlor@cognos.com

    Web site: http://www.cognos.com/

    Company News On-Call: http://www.prnewswire.com/comp/107867.html




    Garmin Reports Record Third Quarter; Revises Annual Guidance Upward

    CAYMAN ISLANDS, Nov. 1 /PRNewswire-FirstCall/ -- Garmin Ltd. today announced a record quarter ended September 30, 2006.

    Third Quarter 2006 Financial highlights: -- Total revenue of $408.0 million, up 62% from $251.3 million in third quarter 2005 -- Automotive/Mobile segment revenue increased 147% to $238.0 million in third quarter 2006 -- Outdoor/Fitness segment revenue increased 22% to $70.7 million in third quarter 2006 -- Marine segment revenue increased 12% to $40.6 million in third quarter 2006 -- Aviation segment revenue decreased 3% to $58.8 million in third quarter 2006 -- All geographic areas experienced significant growth: -- North America revenue was $264.7 million compared to $163.0 million, up 62% -- Europe revenue was $120.0 million compared to $75.6 million, up 59% -- Asia revenue was $23.3 million compared to $12.7 million, up 84% -- Mix of revenue by region remained stable relative to the year-ago quarter. Revenue from our automotive/mobile segment continued to become a larger portion of total company revenues when compared with the same quarter in 2005, and remained constant when compared to the second quarter of 2006 at 58% of total revenues. -- Earnings per share increased 19% to $0.56 from $0.47 in 2005; excluding foreign exchange, EPS increased 52% to $0.50 from $0.33 in 2005. -- Garmin's two-for-one stock split was effected at the close of the market on August 15, 2006. All share and per share amounts in this press release have been presented as if the stock split occurred in the earliest period presented. Year-to-Date 2006 Financial highlights: -- Total revenue of $1.16 billion, up 64% from $708.5 million year-to- date in 2005 -- Automotive/Mobile segment revenue increased 168% to $644.1 million year-to-date in 2006 -- Outdoor/Fitness segment revenue increased 22% to $205.4 million year- to-date in 2006 -- Marine segment revenue increased 9% to $141.4 million year-to-date in 2006 -- Aviation segment revenue increased 1% to $171.9 million year-to-date in 2006 -- All geographic areas experienced significant growth: -- North America revenue was $700.0 million compared to $449.7 million, up 56% -- Europe revenue was $399.6 million compared to $223.3 million, up 79% -- Asia revenue was $63.2 million compared to $35.5 million, up 78% -- Earnings per share increased 48% to $1.52 from $1.03 in the three quarters of 2005; excluding foreign exchange, EPS increased 57% to $1.48 from $0.94 in 2005 Business highlights: -- Strong sales in automotive/mobile, outdoor/fitness and marine segments, putting them on track to meet or exceed full year guidance for these segments. -- 1,227,000 units sold in the third quarter of 2006, up 73% from the same quarter in 2005. -- Delivered 8 new products in the quarter, with new products specifically geared to enhance our positions in the automotive and marine markets and to broaden our product offerings during the holiday season. -- Our newest Taiwan manufacturing facility has six production lines fully operational, bringing our total production lines in Taiwan to 20 and our production capacity to approximately 6 million units annually. If additional manufacturing lines were added to create a full capacity configuration, the newest facility could bring our total production volume to 11 million units annually. -- Promotional programs secured during the third quarter for the holiday season should drive solid fourth quarter sales. We continue to increase our retail distribution, adding Sears this holiday season, and U.S. inventories are in excellent shape to meet demand for our products. -- Continued to devote more resources to advertising, marketing, and sales activities across Europe, which resulted in greater brand awareness and strong growth in the seasonally lower third quarter. -- Strong and growing interest in our GPS-based Edge and Forerunner fitness lines and outdoor units with expandable memory, which continued to drive higher than expected growth for this segment. Executive overview from Dr. Min Kao, Chairman and Chief Executive Officer:

    "The third quarter was an exciting and challenging quarter for Garmin. We are pleased to have delivered 8 exciting and innovative new products, which have been well received by the market. We have prepared for the upcoming holiday season by increasing our inventory position, particularly in finished goods. We continue to experience strong sales of both new and existing automotive/mobile products, and look forward to a strong holiday season, spurred by consumer interest in our automotive/mobile and outdoor/fitness products, which are very popular at that time of year.

    We continued to experience triple digit growth in our automotive/mobile segment and improved market share both in Europe and the U.S., which demonstrates that our products continue to be well-positioned to take advantage of the growing demand for portable navigation devices in both of these important markets. We remain committed to the creation of innovative and feature-rich products which will allow us to broaden and deepen our penetration of the automotive/mobile market. With our popular nuvi(TM) and c- series product offerings, we hope to provide compelling, competitive features and useful content integrated into easy-to-use products that consumers will find attractive during the upcoming holiday season and beyond. We have the resources, focus and commitment to continue our leadership position in the rapidly expanding U.S. automotive market through 2006 and continue to grow our European brand awareness and market share as well.

    Our outdoor/fitness segment again grew faster than expected during the quarter, as response to our new Edge and ForeRunner products remained very positive. Fitness products in particular are popular during the holiday season, and we look forward to a seasonally strong performance in this category. Solid growth in both our automotive/mobile and outdoor/fitness segments has positioned us to exceed our earlier 2006 guidance for these segments.

    Response to our new marine product offerings remains positive, and while the second quarter's typically strong marine buying season was muted due to high fuel prices and poor weather, the third quarter showed some solid improvement over the same quarter in 2005. We continue to believe the marine segment is positioned to meet our 2006 guidance for this segment.

    We believe the long-term opportunities in our aviation business will be excellent, and were pleased with the positive response generated by the many exciting new products introduced for delivery in 2007 during the Oshkosh Air Show in late July, including the G600 retrofit product, G900 kit plane avionics suite, and G1000 retrofit cockpit for King Air C90 aircraft. However, delay of the WAAS roll-out resulted in softer results for this segment in the third quarter 2006, and pushed revenue opportunities for this new technology into 2007.

    We remain focused on the continued expansion and development of our worldwide markets and distribution channels as we pursue our growth goals. We are pleased to have maintained significant market share in the U.S. and continue to work to enhance brand recognition and product placement at U.S. retailers. We have established strong presence in certain European countries, and are working hard to expand our distribution, improve our market position, and enhance our brand visibility in the rest of Europe."

    Financial overview from Kevin Rauckman, Chief Financial Officer:

    "We are pleased with our financial results for the third quarter and the year to date, and look forward to a strong holiday season during the fourth quarter," said Kevin Rauckman, chief financial officer of Garmin Ltd. "Our revenue and earnings per share during the quarter grew 62% and 19% respectively, and grew 64% and 48% respectively year to date in 2006, exceeding our expectations. Excluding the impact of foreign exchange, EPS for the quarter grew 52%, from $0.33 to $0.50. Automotive/mobile segment quarterly revenues increased 147% compared to the prior year, and 168% year- to-date. New product introductions drove strong third quarter sales for our outdoor/fitness segment, with increases of 22% for both the quarter and year- to-date. Marine revenues grew 9% year-to-date, and aviation revenues were up 1% year-to-date in comparison to last year.

    Gross margin improved in our outdoor/fitness, marine, and automotive/mobile segments and declined in our aviation segment when compared with the year-ago quarter. Operating margin improved in our outdoor/fitness and auto/mobile segments and declined in our marine and aviation segments when compared with the year-ago quarter. Total operating margin of 29.7% for the third quarter of 2006 fell 140 basis points when compared to the previous quarter, and 420 basis points compared to the year-ago quarter. These results were better than expected. We are especially pleased with the strength of our automotive/mobile segment operating margins, as they increased 150 basis points to 25.0% during the period.

    We also generated $97.9 million of free cash flow in the third quarter of 2006, resulting in a cash and marketable securities balance of $888 million at the end of the quarter."

    Fiscal 2006 Outlook

    We remain optimistic about the future success of our business as we continue to bring new products to the market and we look forward to the remainder of the holiday selling season. General business expectations for fiscal 2006 are updated as follows:

    -- We anticipate overall revenue to exceed $1.68 billion in 2006, and earnings per share, excluding any foreign currency translation impact, to exceed $2.04. We assume our 2006 effective tax rate will be approximately 15.5% and estimate an earnings per share impact of $0.04 in 2006 due to the effects of implementing FAS123(R). -- We anticipate revenue growth rates within our outdoor/fitness, marine, and aviation segments to be 20 percent, 10 percent, and flat, respectively, in 2006. We expect short-term margins within these segments to be relatively stable despite the possibility of quarter-to- quarter variability due to product mix and the timing of new product introductions. -- We anticipate automotive/mobile revenue growth of greater than 140 percent in 2006, with declining operating margins due to product mix and a continued transition toward mass market levels. -- We continue to look forward to introducing approximately 70 new products in 2006. Nearly 60 new products have already been delivered year to date in 2006. -- We will continue to evaluate our production needs and increase the production capacity of our new Taiwan manufacturing facility as we see fit throughout the remainder of 2006 and into 2007 to support strong growth within our automotive/mobile, outdoor/fitness, and marine segments. -- We will maintain our increased focus on the development of European opportunities; growth will be supported with our new, larger European headquarters and distribution center, and continued focus and commitment of resources to build distribution and enhance awareness of the Garmin brand. -- We recently introduced an expanded fourth quarter advertising campaign in the U.S. and Europe. Our goal is to maintain our U.S. leadership and continue to expand our European market share in the face of growing competition. Dividend and Bonus Program

    As previously announced, the Garmin Board of Directors approved a post- stock split annual cash dividend of $0.50 per share payable to shareholders of record on December 1, 2006. This dividend will be paid on December 15, 2006.

    Garmin also has in effect a 2006 bonus program for substantially all employees that will entitle each employee to an additional month's salary if Garmin's 2006 annual revenue is 50% or more higher than 2005 revenue. Consistent with our announced annual revenue guidance for 2006, Garmin expects to pay such one month bonuses in December 2006. The financial impact of this bonus program has been reflected in accruals throughout the year and is included in our updated 2006 earnings per share guidance of $2.04.

    Non-GAAP Measures Net income (earnings) per share, excluding foreign currency

    Management believes that net income per share before the impact of foreign currency translation gain or loss is an important measure. The majority of the company's consolidated foreign currency translation gain or loss results from translation into New Taiwan dollars at the end of each reporting period of the significant cash and marketable securities, receivables and payables held in U.S. dollars by the company's Taiwan subsidiary. Such translation is required under GAAP because the functional currency of this subsidiary is New Taiwan dollars. However, there is minimal cash impact from such foreign currency translation and management expects that the Taiwan subsidiary will continue to hold the majority of its cash, cash equivalents and marketable securities in U.S. dollars. Accordingly, earnings per share before the impact of foreign currency translation gain or loss allows an assessment of the company's operating performance before the non-cash impact of the position of the U.S. dollar versus the New Taiwan dollar, which permits a consistent comparison of results between periods.

    The following table contains a reconciliation of GAAP net income per share to net income per share excluding the impact of foreign currency translation gain or loss.

    Garmin Ltd. And Subsidiaries Net income per share, excluding FX (in thousands, except per share information) 13-Weeks Ended 39-weeks Ended September September September September 30, 24, 30, 24, 2006 2005 2006 2005 Net Income (GAAP) $122,978 $102,490 $333,778 $224,085 Foreign currency (gain) / loss, net of tax effects ($12,569) ($29,583) ($8,776) ($19,217) Net income, excluding FX $110,409 $72,907 $325,002 $204,868 Net income per share (GAAP): Basic $0.57 $0.48 $1.54 $1.04 Diluted $0.56 $0.47 $1.52 $1.03 Net income per share, excluding FX: Basic $0.51 $0.34 $1.50 $0.95 Diluted $0.50 $0.33 $1.48 $0.94 Weighted average common shares outstanding: Basic 216,317 215,690 216,502 216,428 Diluted 218,866 217,860 218,878 218,318 Free cash flow

    Management believes that free cash flow is an important financial measure because it represents the amount of cash provided by operations that is available for investing and defines it as operating cash flow less capital expenditures for property and equipment.

    The following table contains a reconciliation of GAAP net cash provided by operating activities to free cash flow.

    Garmin Ltd. And Subsidiaries Free Cash Flow (in thousands) 13-Weeks Ended 39-Weeks Ended September September September September 30, 24, 30, 24, 2006 2005 2006 2005 Net cash provided by operating activities $116,749 $85,935 $249,125 $175,342 Less: purchases of property and equipment ($18,864) ($4,731) ($45,476) ($20,510) Free Cash Flow $97,885 $81,204 $203,649 $154,832 Earnings Call Information The information for Garmin Ltd.'s earnings call is as follows: When: Wednesday, November 1, 2006 at 11:00 a.m. Eastern Where: http://www.garmin.com/aboutGarmin/invRelations/irCalendar.html How: Simply log on to the web at the address above or call to listen in at 800-883-9537. Contact: investor.relations@garmin.com

    A phone recording will be available for five business days following the earnings call and can be accessed by dialing 800-642-1687 or (706) 645-9291 and utilizing the access code 8043309. An archive of the live webcast will be available until November 30, 2006 on the Garmin website at http://www.garmin.com/. To access the replay, click on the Investor Relations link and click over to the Events Calendar page.

    This release includes projections and other forward-looking statements regarding Garmin Ltd. and its business. Any statements regarding the company's estimated earnings and revenue for fiscal 2006, the Company's expected segment revenue growth rate, margins, the number of new products to be introduced in 2006 and the company's plans and objectives are forward- looking statements. The forward-looking events and circumstances discussed in this release may not occur and actual results could differ materially as a result of risk factors affecting Garmin, including, but not limited to, the risk factors that are described in the Annual Report on Form 10-K for the year ended December 31, 2005 filed by Garmin with the Securities and Exchange Commission (Commission file number 0-31983). A copy of Garmin's 2005 Form 10- K can be downloaded from http://www.garmin.com/aboutGarmin/invRelations/finReports.html.

    Through its operating subsidiaries, Garmin Ltd. designs, manufactures, and markets navigation, communications and information devices, most of which are enabled by GPS technology. Garmin is a leader in the general aviation and consumer markets and its products serve aviation, marine, outdoor, fitness, automotive, mobile and OEM applications. Garmin Ltd. is incorporated in the Cayman Islands, and its principal subsidiaries are located in the United States, Taiwan and United Kingdom. For more information, visit the investor relations site of Garmin Ltd. at http://www.garmin.com/ or contact the Investor Relations department at 913-397-8200. Garmin and Forerunner are registered trademarks, and Edge is a trademark of Garmin Ltd. or its subsidiaries.

    Garmin Ltd. And Subsidiaries Condensed Consolidated Balance Sheets (In thousands, except share information) (Unaudited) September 30, December 31, 2006 2005 Assets Current assets: Cash and cash equivalents $351,723 $334,352 Marketable securities 109,609 32,050 Accounts receivable, net 249,849 170,997 Inventories, net 333,471 199,841 Deferred income taxes 62,659 29,615 Prepaid expenses and other current assets 25,034 34,312 Total current assets 1,132,345 801,167 Property and equipment, net 209,135 179,173 Marketable securities 425,179 344,673 Restricted cash 1,461 1,356 Licensing agreements, net 3,301 6,517 Other intangible assets, net 28,116 29,349 Total assets $1,799,537 $1,362,235 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $125,236 $76,516 Salaries and benefits payable 21,233 13,005 Warranty reserve 28,973 18,817 Other accrued expenses 75,314 23,993 Income taxes payable 86,020 63,154 Dividend payable 108,389 0 Total current liabilities 445,165 195,485 Deferred income taxes 13,000 9,486 Stockholders' equity: Common stock 1,080 1,081 Additional paid-in capital 71,666 96,242 Retained earnings 1,297,843 1,072,454 Accumulated other comprehensive loss (29,217) (12,513) Total stockholders' equity 1,341,372 1,157,264 Total liabilities and stockholders' equity $1,799,537 $1,362,235 Garmin Ltd. And Subsidiaries Condensed Consolidated Statements of Income (Unaudited) (In thousands, except per share information) 13-Weeks Ended 39-Weeks Ended September 30, September 24, September 30, September 24, 2006 2005 2006 2005 Net sales $407,997 $251,329 $1,162,776 $708,477 Cost of goods sold 209,137 121,877 584,843 335,846 Gross profit 198,860 129,452 577,933 372,631 Selling, general and administrative expenses 47,489 24,180 140,167 77,790 Research and development expense 30,399 20,116 82,105 54,862 77,888 44,296 222,272 132,652 Operating income 120,972 85,156 355,661 239,979 Other income (expense): Interest income 9,622 4,726 25,464 13,115 Interest expense (2) (3) (14) (46) Foreign currency 14,874 36,388 10,386 23,784 Other 70 (140) 3,507 158 24,564 40,971 39,343 37,011 Income before income taxes 145,536 126,127 395,004 276,990 Income tax provision 22,558 23,637 61,226 52,905 Net income $122,978 $102,490 $333,778 $224,085 Net income per share: Basic $0.57 $0.48 $1.54 $1.04 Diluted $0.56 $0.47 $1.52 $1.03 Weighted average common shares outstanding: Basic 216,317 215,690 216,502 216,428 Diluted 218,866 217,860 218,878 218,318 Garmin Ltd. And Subsidiaries Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands) 39-Weeks Ended September 30, September 24, 2006 2005 Operating Activities: Net income $333,778 $224,085 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 15,447 13,703 Amortization 19,844 20,435 Loss (gain) on sale of property and equipment (8) 8 Provision for doubtful accounts 796 18 Deferred income taxes (29,867) (372) Foreign currency transaction gains/losses (19,724) (13,503) Provision for obsolete and slow moving inventories 15,260 10,830 Stock compensation expense 8,378 363 Realized gains on marketable securities (3,852) - Changes in operating assets and liabilities: Accounts receivable (79,648) (42,015) Inventories (148,891) (30,818) Other current assets (1,192) 473 Accounts payable 48,720 (2,173) Other current liabilities 69,704 2,683 Income taxes 22,866 (4,581) Purchase of licenses (2,486) (3,794) Net cash provided by operating activities 249,125 175,342 Investing activities: Purchases of property and equipment (45,476) (20,510) Purchase of intangible assets (1,513) (404) Purchase of marketable securities (348,621) (270,580) Redemption of marketable securities 197,008 220,494 Change in restricted cash (104) 42 Proceeds from asset sale 75 - Net cash used in investing activities (198,631) (70,958) Financing activities: Proceeds from issuance of common stock 10,042 4,238 Stock repurchase (50,451) (26,654) Tax benefit related to stock option exercise 7,453 - Net cash used in financing activities (32,956) (22,416) Effect of exchange rate changes on cash and cash equivalents (167) (633) Net increase in cash and cash equivalents 17,371 81,336 Cash and cash equivalents at beginning of period 334,352 249,909 Cash and cash equivalents at end of period $351,723 $331,245 Garmin Ltd. And Subsidiaries Revenue, Gross Profit, and Operating Income by Segment Reporting Segments Outdoor/ Auto/ Fitness Marine Mobile Aviation Total 13-Weeks Ended September 30, 2006 Net sales $70,651 $40,588 $237,981 $58,777 $407,997 Gross profit $39,803 $21,645 $99,708 $37,704 $198,860 Operating income $28,817 $13,659 $59,517 $18,979 $120,972 13-Weeks Ended September 24, 2005 Net sales $58,014 $36,389 $96,289 $60,637 $251,329 Gross profit $31,633 $18,927 $38,548 $40,344 $129,452 Operating income $22,458 $13,023 $23,496 $26,179 $85,156 39-Weeks Ended September 30, 2006 Net sales $205,412 $141,406 $644,097 $171,861 $1,162,776 Gross profit $118,615 $79,484 $269,855 $109,979 $577,933 Operating income $85,116 $53,718 $155,782 $61,045 $355,661 39-Weeks Ended September 24, 2005 Net sales $168,051 $130,276 $240,106 $170,044 $708,477 Gross profit $89,355 $66,174 $103,657 $113,445 $372,631 Operating income $62,603 $43,957 $61,746 $71,673 $239,979

    Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20061026/CGTH082LOGO
    AP Archive: http://photoarchive.ap.org/
    PRN Photo Desk, photodesk@prnewswire.com Garmin Ltd.

    CONTACT: INVESTOR CONTACT: Polly Schwerdt, +1-913-397-8200,
    investor.relations@garmin.com, MEDIA CONTACT: Ted Gartner, +1-913-397-8200,
    media.relations@garmin.com, both of Garmin Ltd.

    Web site: http://www.garmin.com/




    Consolidated Graphics Announces Record Quarterly Results- Second Quarter Diluted Earnings Per Share up 48% to $.98 - - Third Quarter Diluted Earnings Per Share Projected to be up 45% to $1.03 -

    HOUSTON, Nov. 1 /PRNewswire-FirstCall/ -- Consolidated Graphics, Inc. today announced financial results for its second quarter ended September 30, 2006.

    Revenue for the September quarter was $234.2 million, up 6% compared to $221.0 million a year ago. Net income for the September quarter was $13.7 million compared to net income of $9.3 million a year ago, resulting in a 48% increase in diluted earnings per share to a record $.98 from $.66 a year ago.

    For the six months ended September 30, 2006, total revenue was $472.7 million, up 10% compared to $430.9 million for the same period a year ago. Net income for the first six months of this year was $27.4 million compared to net income of $18.1 million a year ago, resulting in a 54% increase in diluted earnings per share to $1.96 from $1.27 a year ago.

    Commenting on the results, Joe R. Davis, Chairman and Chief Executive Officer of Consolidated Graphics stated, "We continue to capitalize on our many strategic advantages to grow sales and profits. I am particularly pleased with our 38% increase in operating margins to 10.2% in the September quarter, up from 7.4% last year and 9.4% in the June quarter, which reflects our ability to leverage sales growth as well as incremental purchasing and operating efficiencies. I am also pleased with our revenue growth of 6% in the September quarter and 10% year-to-date, which reflects strong contributions from our strategic sales initiatives and previously completed acquisitions."

    Mr. Davis continued, "We have a strong balance sheet supporting our growth strategies, including acquisitions. Our acquisition pipeline has grown to opportunities totaling $500 million in annual revenues in addition to the two companies currently under letters of intent. Our strong balance sheet also enables the execution of our share repurchase program pursuant to which we acquired 276,800 shares for $14.7 million in the September quarter."

    Mr. Davis concluded, "I expect the momentum from our revenue and profit growth initiatives to continue and drive more record results. For the December quarter, we project a 45% increase in diluted earnings per share to $1.03 on an 8% increase in revenues to $244 million, with each representing a projected quarterly record for Consolidated Graphics."

    Consolidated Graphics will host a conference call today, November 1, 2006, at 11:00 a.m. Eastern Time, to discuss its second quarter ended September 30, 2006 results. The conference call will be simultaneously broadcast live over the Internet. Listeners may access the live Web cast at the Company's homepage, http://www.cgx.com/ .

    Consolidated Graphics, Inc. is the nation's leading commercial sheetfed, web and digital printing company with a coast-to-coast presence spanning 26 states. Consolidated Graphics produces high-quality customized printed materials for a broad customer base that includes many of the most recognized companies in the country. Consolidated Graphics also offers an extensive and growing range of digital and Internet-based services and solutions marketed through CGXSolutions. Consolidated Graphics is focused on adding value to its operating companies by providing financial and operational strengths, management support and technological advantages associated with a national organization. For more information, visit the Company's Web site at http://www.cgx.com/ .

    This press release contains forward-looking statements, which involve known and unknown risks, uncertainties or other factors that could cause actual results to materially differ from the results, performance or other expectations implied by these forward-looking statements. Consolidated Graphics' expectations regarding future sales and profitability assume, among other things, stability in the economy and reasonable growth in the demand for its products, the continued availability of raw materials at affordable prices, retention of its key management and operating personnel, as well as other factors detailed in Consolidated Graphics' filings with the Securities and Exchange Commission. The forward-looking statements, assumptions and factors stated or referred to in this press release are based on information available to Consolidated Graphics today. Consolidated Graphics expressly disclaims any duty to provide updates to these forward-looking statements, assumptions and other factors after the day of this release to reflect the occurrence of events or circumstances or changes in expectations.

    (Table to follow) CONSOLIDATED GRAPHICS, INC. Consolidated Income Statements (In thousands, except per share data) (unaudited) Three Months Ended Six Months Ended September 30, September 30, 2006 2005 2006 2005 Sales $234,236 $220,993 $472,661 $430,908 Cost of Sales 171,780 166,928 346,200 325,040 Gross Profit 62,456 54,065 126,461 105,868 Selling Expenses 23,543 22,513 47,900 44,543 General and Administrative Expenses 15,013 15,104 32,228 29,463 Operating Income 23,900 16,448 46,333 31,862 Interest Expense, net 1,783 1,426 3,168 2,790 Income before Taxes 22,117 15,022 43,165 29,072 Income Taxes 8,427 5,689 15,745 11,010 Net Income $13,690 $9,333 $27,420 $18,062 Earnings Per Share Basic $1.01 $.68 $2.01 $1.31 Diluted $.98 $.66 $1.96 $1.27 Weighted Average Shares Outstanding Basic 13,513 13,754 13,609 13,761 Diluted 13,966 14,166 13,984 14,197

    Consolidated Graphics, Inc.

    CONTACT: G. Christopher Colville, Executive Vice President-Chief
    Financial Officer of Consolidated Graphics, Inc., +1-713-787-0977; or
    Christine Mohrmann, or Eric Boyriven, both of Financial Dynamics,
    +1-212-850-5600, for Consolidated Graphics, Inc.

    Web site: http://www.cgx.com/




    Prime Companies, Inc. Successfully Consummates the Purchase and Acquisition of Certain Dental Insite, LLC Strategic Business Assets, Including Its Dental Insite Software Source Code, All Its Rights and Its Customer Base

    YUBA CITY, Calif., Nov. 1 /PRNewswire-FirstCall/ -- Prime Companies, Inc. announces that it has executed and consummated the purchase of certain strategic assets from Dental Insite, LLC, including Dental Insite source code, all its rights and its customer base.

    *(LOGO: Send2Press.com/mediadesk/logo-PrimeCos_72dpi.jpg)

    Norbert J. Lima, President and CEO of Prime Companies is quoted as saying "Coupling Prime Companies' recent acquisition of certain of CRT's leading edge Digital Dental Technology products, with Dental Insite Practice Management Software will afford a total integrated solution to the Dental Industry inclusive of a HIPAA Compliant Record Keeping, billing and practice management software. We are bridging the 'digital divide' in the Dental Industry. A forward looking view of these acquisitions positions Prime Companies, Inc. to become a $25M to $30M company within 24 months with profitability anticipated in year one. These aggressive revenue increasing acquisitions will propel Prime Companies into immediate profitability and augment shareholder value."

    About PRIME COMPANIES, INC.:

    Prime Companies, Inc., through its wholly owned subsidiary Nacc-Tel, Corp, currently provides Broadband and telecommunications services (Voice and Data) to both commercial and consumer customers in the Northern California market area. The services offered include: Broadband, Data Networks, Interconnect, Voice Over the Internet (VOIP), and Voicemail Services. The recent Computer Resource Technologies asset purchase augmented Nacc-Tel, Corp's portfolio of services to include the provisioning of hardware and software products to the Dental and Medical industries in Colorado and the Midwest.

    Information: http://www.primecompanies.com/ About DENTAL INSITE, LLC:

    Dental Insite is a software company currently serving the Dental industries in Colorado and the Midwest with software products to better facilitate doctor patient management processes and incorporating total HIPAA compliant record keeping, billing and practice management software.

    Statements in this news release regarding Prime Companies, Inc. that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause such statement to differ materially from actual future events or results. Any such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The following factors, among others, could cause Prime Companies, Inc.'s actual results to differ materially from those described in a forward-looking statement: limited history of offering Prime Companies, Inc.'s services in its current form; history of losses; increasing competition from existing or new competitors; increased telecommunications costs resulting from the expansion of Prime Companies, Inc.'s services; rapid technological change; possible unavailability of financing as and if needed; dependence on a limited number of vendors, including without limitation third-party vendors for the provision and roll-out of the Prime Companies, Inc. broadband service; inability to develop the dental technology business; inability to achieve telecommunication cost savings through efficient hardware utilization; possible industry consolidation; and potential fluctuations in quarterly and annual results. This list is intended to identify only certain of the principal factors that could cause actual results to differ. Readers are referred to the reports and documents filed by Prime Companies, Inc. with the Securities and Exchange Commission for a discussion of these and other important risk factors.

    This release was issued on behalf of the above organization by Send2Press(R), a unit of Neotrope(R). http://www.send2press.com/

    Prime Companies, Inc.

    CONTACT: Norbert J. Lima, President and CEO of Prime Companies, Inc.,
    +1-530-755-3580

    Web site: http://www.primecompanies.com/




    Institut National de l'Audiovisuel Deploys Tektronix' MTS4EA Video Elementary Stream Analyzer in World Class Training CentreTektronix Analysis Software Proves Instrumental in Educating French Television Personnel on Preserving and Producing Quality Images and Sound

    BEAVERTON, Ore., Nov. 1 /PRNewswire-FirstCall/ -- Tektronix, Inc. , a leading worldwide provider of test, measurement and monitoring solutions, announced that France's Institut national de l'audiovisuel (Ina), the world's first audiovisual archive centre, has installed Tektronix MTS4EA Elementary Stream (ES) Analyzer software to augment its world-class training centre. The software will be used to help educate the next generation of AV and broadcast professionals.

    The institute, located near Paris, houses one of the world's largest archives of images and sound and is also Europe's leading training center for AV, broadcast and production professionals. The Ina's experience, expertise and international approach have made it a center of excellence that welcomes over 4,500 audiovisual and multimedia professionals every year from all over the world. The Ina provides a professional working environment, including editing rooms, radio and television studios, and advanced digital equipment, as well as top-flight trainers and instructors.

    "With the Tektronix MTS4EA, our instructors will be able to create new scenarios that will simulate what students will see as their careers advance," said Jean-Emmanuel Casalta, head of Ina Training Department. "The MTS4EA is a very instructive tool that demonstrates the best method of optimising both audio and video performance of compressed DTV systems and components, which is vital to their understanding of how these issues will impact their professional lives."

    "We are very proud to be associated with the prestigious Ina centre of learning," said Todd Biddle, Vice President, Video Product Line, Tektronix. "The rapid changes taking place throughout the audio/visual and broadcast industries mean that time spent gathering and analyzing data is money lost to a client, employer, or customer. Ina-trained video professionals can quickly implement the analysis provided by the MTS4EA into their businesses, whether they are equipment manufacturers, broadcasters or network operators."

    One of the fundamental goals of digital television broadcasting is to deliver audio and video in proper synchronization. Despite this, there are still numerous instances of audio and video synchronization errors in today's broadcasts. There is a corresponding lack of solutions available to accurately measure and characterize these errors.

    To address the problem, the Tektronix MTS4EA Analyzer software offers a flexible, upgradeable test solution for next and current generation video compression technologies. It provides complete elementary stream analysis support for MPEG-2, MPEG-4, H.264/AVC, VC-1, FRExt, H.261, H.263, H.263+ and 3GPP standards.

    About Tektronix

    Tektronix is a leading supplier of test, measurement, and monitoring products, solutions and services for the communications, computer, and semiconductor industries -- as well as military/aerospace, consumer electronics, education and a broad range of other industries worldwide. With 60 years of experience, Tektronix enables its customers to design, build, deploy, and manage next-generation global communications networks, advanced and pervasive technologies. Headquartered in Beaverton, Oregon, Tektronix has operations in 19 countries worldwide. Tektronix' Web address is http://www.tektronix.com/ .

    NOTE: Tektronix is a registered trademark of Tektronix, Inc. All other trade names referenced are the service marks, trademarks or registered trademarks of their respective companies.

    Tektronix, Inc.

    CONTACT: Amy Higgins of Tektronix, Inc., +1-503-627-6497, or
    Amy.L.Higgins@tektronix.com

    Web site: http://www.tektronix.com/




    National League of Poker Announces New 'Pigskin & Poker' Tournament SeriesFree 10 Week Promotion Includes $10,000 WSOP Entry Fee as Grand Prize

    FRAMINGHAM, Mass., Nov. 1 /PRNewswire-FirstCall/ -- Power Play Development Corp. announced a new tournament series called "Pigskin & Poker" that launched today on the National League of Poker http://www.nlop.com/ site. NLOP is the fastest growing US-legal poker site on the Internet, averaging over 750 daily registrations since its formal launch this summer.

    Poker and Pigskin runs weekly from October 28th, 2006 through January 8th, 2007. Registered contestants enter various NLOP poker contests and accumulate poker points as a reward for skillful poker play. Any consumer who is 21 or older at the time of registration can enter the Poker and Pigskin Tournament, with no purchase required.

    "With companies such as Party Poker abandoning the US market because of the recently passed Unlawful Internet Gambling Enforcement Act, millions of poker players are looking for a new home," said Michael Clebnik, COO of Power Play. "Our hope is that they will join the tens of thousands that have already found NLOP."

    "NLOP allows registered users the opportunity to win cash and prizes without gambling," explained Roy Evans EVP of NLOP. "Our advertisers and sponsors cover the prize awards and our players are afforded a free-to-play US-legal online poker experience. The Poker and Pigskin tournament series is our best ever with more than 4,000 prizes," continued Evans. "We are introducing Big Money Mondays, Double Shoot-outs, Mega point qualifiers, sponsored invitation only tournaments, and Hall-of-Fame monthly trophies for best overall play."

    Over $35,000 in cash and prizes will be awarded during the 10-week promotion including a $10,000 Seat to the 2007 World Series of Poker. NLOP will give away hundreds of dollars in cash prizes everyday. Players can register at http://poker.nlop.com/.

    About Power Play Development

    NLOP, Inc. is a wholly owned division of Power Play Development Corp. . Recently enacted federal laws have triggered a mass exodus of real-money online poker sites and left millions of US players with no place to play online poker. NLOP brings fun, free and compelling game play to the US audience in a legally compliant fashion. NLOP has created a captivating site where advertisers and sponsors are integrated into the game-play experience. Sponsors have recognized the interactive elements of NLOP's advergaming software, which totally engages the user and sponsor into the game-play. Players are afforded the opportunity to play in a legal, risk free poker environment and win cash and prizes without risking a penny. During the month of September, the NLOP network administered over 15 Million minutes of poker- play.

    To learn more about NLOP visit http://www.nlop.com/. Contact Information: Michael Clebnik COO Power Play Development Corp. 1-877-20-Poker X224

    Power Play Development Corp.

    CONTACT: Michael Clebnik, COO, Power Play Development Corp.,
    +1-877-20-Poker, ext. 224

    Web site: http://www.nlop.com/
    http://poker.nlop.com/




    BCE Reports 2006 Third Quarter Results- Delivered profitable growth and cost reduction improvements - Increased revenues per customer across the board in wireless, video and high-speed Internet - Improved Bell EBITDA margin, a key strategic objective - Increased free cash flow to $449 million in the quarterBELL PLANNED TRUST CONVERSION IMPACTED BY PROPOSED CHANGE IN FEDERAL TAX POLICYThis news release contains forward-looking statements. For a description of the related risk factors and assumptions please see the section entitled "Caution Concerning Forward-Looking Statements" later in this release.

    MONTREAL, Quebec, Nov. 1 /PRNewswire-FirstCall/ -- Bell Canada's focus on profitable growth and improved cost reductions produced a quarter of continuing progress as BCE Inc. (TSX, NYSE: BCE), Canada's largest communications company, today reported operating and financial results for the third quarter of 2006.

    "A focus on profitable growth combined with ongoing cost reductions are important building blocks of our strategy," said Michael Sabia, President and Chief Executive Officer of BCE and Chief Executive Officer of Bell Canada. "Improvement in Bell's EBITDA(1) and EBITDA margin, as well as a solid increase in free cash flow, reflects the progress being made in setting the foundation for 2007."

    Bell Canada reported revenues of $4,339 million in the third quarter, up 0.4% from the same quarter last year, driven by higher average revenues per user (ARPU) in residential growth services (wireless, video and high-speed Internet), as well as an expanding subscriber base in those services, improved revenue performance from the Bell Aliant Regional Communications Income Fund (Bell Aliant) and growth in revenues from wireless and Information, Communication and Technology (ICT) solutions in the Business segment. These results contributed to total BCE revenues of $4,422 million for the quarter ended September 30, 2006, an increase of 0.3% over last year.

    Bell Canada reported operating income of $827 million in the quarter, which is $78 million lower than the same quarter last year, mainly as a result of charges associated to previously announced workforce reductions and the related closure of real estate facilities and employee relocations as well as the formation of Bell Aliant. These same factors resulted in operating income of $810 million for BCE in the third quarter, compared to $909 million for the same period last year.

    Bell Canada EBITDA of $1,835 million is up 1.8% in the quarter, driven by higher ARPU in residential growth services, subscriber acquisitions and the achievement of efficiencies, such as lower total labour costs following workforce reductions, increased cost savings from supply chain and process- related efficiency initiatives and lower costs for wireless and video customer acquisitions. This contributed to BCE EBITDA of $1,840 million, an increase of $23 million over the same period last year. This represents the third quarter of sequential EBITDA growth.

    Bell Canada EBITDA margin improved in the quarter to 42.3% from 41.7% in the third quarter of 2005. This is an important performance achievement for Bell in light of the continued transformation of its revenue mix in an open and competitive market.

    BCE cash from operating activities rose to $1,602 million in the quarter compared to $1,569 million for the same period last year. Combined with improved discipline in capital spending, this contributed to Free Cash Flow(2) of $449 million in the quarter, an increase of $207 million from the same period last year.

    BCE earnings per share (EPS) were $0.36 for the quarter, compared to $0.48 for the same period last year, reflecting higher restructuring costs and other costs related mainly to the formation of Bell Aliant. EPS before restructuring and other items, net gains on investments and costs incurred to form Bell Aliant(3), which is the figure used for financial guidance purposes, reached $0.48 in the quarter, compared to $0.50 in the same period last year. Improved EBITDA performance helped offset the previously announced increase in pension cost, post-employment benefits cost and amortization expense, which was $0.03 higher this quarter compared to the third quarter of 2005.

    "Progress was made on each of the fundamental drivers of our business strategy in the quarter," added Mr. Sabia. "We are focused on customer service performance and continue to strengthen installation and repair services and provide specialized training to our customer-facing employees. Our strategy is to combine customer service improvements with leading-edge products running on the most advanced networks in the market to build a company that delivers a differentiated customer experience."

    In terms of BCE's strategic agenda, the company completed the sale of the majority of its interest in Bell Globemedia and announced the filing by Telesat Holdings of a preliminary prospectus and registration statement for an initial public offering of non-voting shares of Telesat in Canada and the U.S.

    Bell Canada Income Fund

    On October 11, 2006, BCE Inc. announced its intention to convert Bell Canada into an income trust.

    "Yesterday the federal government announced proposed changes to Canada's taxation system. Finance Minister James Flaherty said the changes are designed to level the playing field between trusts and corporations," said Mr. Sabia. "The Minister's announcement clearly has a significant impact on our proposed conversion and the immediate benefits such a conversion would have delivered to our shareholders. We will assess the proposed changes over the coming days and evaluate our options."

    "In any case, we will continue to build our business to create long-term, sustainable, shareholder value," added Mr. Sabia. "We will proceed with plans to eliminate BCE's holding company operations."

    THIRD QUARTER HIGHLIGHTS

    "The results for the quarter showed improved metrics, such as higher revenues per customer across all growth services as we continue our disciplined approach to profitable revenues," said George Cope, President and Chief Operating Officer of Bell Canada. "Furthermore, a targeted customer retention and winback strategy, as well as focused regional marketing strategies allowed us to maximize the value of our traditional voice and data business."

    Residential Segment

    The Residential Segment recorded across-the-board increases in average revenue per user (ARPU) in video, wireless and Internet while stabilizing the rate of decline of its traditional voice and data business.

    - Revenues for the third quarter were $1,799 million, compared to $1,770 million for the same period last year, a 1.6% increase. - Operating income of $400 million for the quarter is down 7% over the same period last year, but in line with expectations due mainly to the increase in amortization and previously announced pension costs. - Bell's multi-product household strategy continued to drive increased penetration of households subscribing to three or more products reaching over 24% of Ontario and Quebec households within the Bell footprint at the end of the third quarter, compared to 21% this time last year. Business Segment

    The Enterprise and Small and Medium-sized Business (SMB) units made significant progress in improving profitability during the quarter as a result of steady revenue growth in IP-based connectivity, ICT solutions and wireless services as well as cost reduction improvements.

    - Revenues for the third quarter were $1,495 million, compared to $1,473 million for the same period last year, up 1.5%. - Operating income in the quarter is up 9.9% to $223 million for the quarter, due to a combination of lower costs and higher revenue levels. - SMB continued to gain traction in the market as the Virtual Chief Information Officer (VCIO) for small and medium-sized businesses in Canada, and posted strong results in traditional businesses to make a significant contribution to Business results in the quarter. - In Enterprise, demand for ICT services continued to grow as Bell secured new accounts and expanded existing relationships. For example, The Desjardins Group, the largest integrated cooperative financial group in Canada, signed a multi-year contract with Bell valued at approximately $670 million, which: - Builds on relationship in place since 2001; - Delivers comprehensive outsourced IP-based communications; and - Expands ICT solution portfolio of voice, data and image service convergence on a single platform. Wireless

    Wireless posted continued improvements in post-paid ARPU levels and lower cost of acquisition and churn levels as Bell continued executing on its strategy of shifting its customer base to higher value subscribers.

    - Revenue growth of 14.3% to $912 million in the third quarter compared to $798 million in the third quarter of 2005. - Post-paid ARPU reached $66 per month, an increase of $3 compared to the same quarter in 2005. This is primarily due to a shift in the subscriber acquisition mix towards postpaid customers that generate higher ARPU levels by making more use of data services, text messaging, mobile browsing and gaming, as well as the popularity of "Fuel Me" bundled data offers and the "10-4" push-to-talk service. - Wireless EBITDA in the third quarter is up 13.2% to $411 million due to revenue growth and lower subscriber acquisition costs. - Wireless EBITDA margin is down modestly to 43.7%, attributable to higher handset upgrade and customer retention costs. - Bell added 114,000 new net wireless subscribers this quarter, of which 82%, or 94,000 were postpaid subscribers, up from only 50,000 post-paid subscribers in the same period last year. - The total subscriber base rose to 5,704,000 at the end of the third quarter. - Our blended churn rate remained unchanged year over year at 1.5%, despite higher prepaid churn in the quarter which had a negative impact on total net activations. - Postpaid churn has improved to 1.1% in the third quarter from 1.5% in the same period last year. Video

    Bell remains Canada's leading digital TV provider as the video unit reported strong financial performance due to an important step up in ARPU and a consistently low churn rate.

    - Revenue growth of 15.1% in the third quarter. - ARPU up $3 year over year to $54, reflecting the continued shift in product mix towards higher-priced programming packages, higher pay-per- view revenues, price increases implemented over the past year as well as set-top-box rental revenues. - EBITDA is up significantly in the quarter to $42 million from $12 million in the third quarter of 2005. - With 30,000 new subscribers added this quarter, the total number of subscribers is now at 1,788,000, up 6.6% year over year. - Churn remains low at 1% per month. High-speed Internet

    Bell remains Canada's leading Internet service provider and continued to post profit and revenue growth while operating in a highly competitive market.

    - ARPU improvements continue to reflect the company's strategy to attract customers to high-speed, premium-priced offers. - Total subscribers ended the quarter up 12.6% year over year to reach 2,403,000. - Net additions of 90,000 reflect the success of a targeted marketing campaign in the Quebec market. Although down from last year, these results are in line with expectations as net activation in the third quarter of 2005 were driven by the introduction of Basic Lite service in the Ontario market. Executing on key elements of business plan

    Bell made progress on all of the key elements of its business plan in the third quarter of 2006.

    - Growth services: Revenues from growth services (comprised of wireless, video, high-speed Internet and other next-generation services such as ICT solutions) generated 48% of total revenues at Bell Canada by the end of the third quarter, compared with 44% one year earlier. - Broadband: Fibre to the node (FTTN) was extended to 418 neighbourhood nodes in the third quarter of 2006. Bell also launched Sympatico Optimax, which leverages the latest in fibre optic technology for customers in Montreal and Toronto and provides an Internet connection with consistently fast maximum speeds of 10 to 16 megabits per second (Mbps). - Customer service: With 5.9 million customers now on One Bill, Bell has delivered enhanced service to customers as well as significant cost reductions. In addition, key metrics such as the adoption of online bill management tools by Enterprise customers, the continued reduction of missed appointments and the important DSL Hardening Program gains demonstrate measurable progress at enhancing Bell's customer service performance. - Cost reductions of $204 million in the quarter, for a total of $501 million in savings on a year-to-date basis, contributed to EBITDA margin improvement. NCIB Update

    During the third quarter, BCE purchased, under its Normal Course Issuer Bid program, an additional 4.4 million common shares at a cost of $114 million, for a total of 40 million shares purchased at a cost of approximately $1,108 million. This represented approximately 90% of the shares targeted for repurchase.

    Bell Aliant Regional Communications

    Bell Aliant's revenues were $841 million, up 1.8% over the previous year, due to growth in data and terminal sales and other revenues. Operating income was $204 million, up 5.2% over the previous year, driven by higher EBITDA and lower amortization expense.

    Telesat

    Telesat's revenues increased 0.9% in the third quarter of 2006 to $113 million, due to higher broadcast revenues, and increased revenue from Telesat's two-way broadband service. Operating income decreased 26% to $32 million, due mainly to one time special compensation costs related to senior executive changes made in September 2006 and higher amortization expense stemming from the launch of its Anik F1R satellite.

    Bell Canada Statutory Results

    Bell Canada "statutory results" includes Bell Canada and Bell Canada's interests in Bell Aliant (at 37.8%), Bell ExpressVu (at 52%), and Bell's other Canadian telcos.

    In the third quarter of 2006, Bell Canada's reported statutory revenue was $4.3 billion, up 0.4% compared to the same period last year. Year-to-date revenue was $12.9 billion, as compared to $12.8 billion for the same period last year. Net earnings applicable to common shares were $355 million in the third quarter of 2006, compared to net earnings of $488 million for the same period last year. Year-to-date net earnings applicable to common shares were $1,289 million, as compared to $1,596 million for the same period last year.

    Outlook

    Refer to the section entitled "Caution Concerning Forward-Looking Statements" later in this news release for a discussion concerning the material risk factors that could affect, and the material assumptions underlying, our 2006 guidance.

    BCE confirmed the following 2006 financial guidance: ------------------------------------------------------------------------- Guidance 2006E(i) ------------------------------------------------------------------------- Bell Canada ------------------------------------------------------------------------- Revenue growth 1% - 3% ------------------------------------------------------------------------- Cost savings $700M - $900M ------------------------------------------------------------------------- EBITDA margin (ii) Stable ------------------------------------------------------------------------- Capital intensity (iii) 16% - 17% ------------------------------------------------------------------------- BCE Inc. ------------------------------------------------------------------------- EPS (iv) $1.80 - $1.90 ------------------------------------------------------------------------- Free Cash Flow (v) $700M - $900M ------------------------------------------------------------------------- (i) All figures for 2006 are without giving effect to the proposed income trust conversion and related transactions which are expected to close in the first quarter of 2007. 2006 figures reflect the disposition of our interest in CGI and the reduction of our interest in Bell Globemedia to 15%, BCE's intentions for the use of proceeds from these transactions and the formation of the Bell Aliant Regional Communications Income Fund. (ii) EBITDA margin is EBITDA as a percentage of revenues. (iii) Capital intensity is capital expenditures as a percentage of revenues. (iv) Before restructuring and other items, net gains on investments and costs incurred to form the Bell Aliant Regional Communications Income Fund. (v) Cash from operating activities less capital expenditures, total dividends and other investing activities. For 2006, we expect to generate approximately $700 million to $900 million in free cash flow, excluding the funding of pension contributions from the acquisition of our Nortel and CGI shares by the Bell Canada pension fund. This amount reflects expected cash from operating activities of approximately $5.5 billion to $5.7 billion less capital expenditures, total dividends and other investing activities. Notes (1) The term EBITDA (earnings before interest, taxes, depreciation and amortization) does not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP). Please refer to the section of BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006, entitled "Non-GAAP Financial Measures," included in this news release, for more details on EBITDA including a reconciliation of EBITDA to operating income. (2) We define free cash flow as cash from operating activities after capital expenditures, total dividends and other investing activities. Free cash flow does not have any standardized meaning prescribed by Canadian GAAP. Please refer to the section of BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006, entitled "Non-GAAP Financial Measures," included in this news release, for more details on free cash flow including a reconciliation of cash from operating activities to free cash flow. (3) Net earnings and EPS before restructuring and other items, net gains on investments and costs incurred to form the Bell Aliant Regional Communications Income Fund do not have any standardized meaning prescribed by Canadian GAAP. Please refer to the section of BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006, entitled "Non-GAAP Financial Measures," included in this news release, for more details on net earnings and EPS before restructuring and other items, net gains on investments and costs incurred to form the Bell Aliant Regional Communications Income Fund including a reconciliation to net earnings applicable to common shares on a total and per share basis. Call with Financial Analysts

    BCE will hold a teleconference for financial analysts to discuss its third quarter results on Wednesday, November 1, 2006 at 8:00 a.m. (Eastern). Media are welcome to participate on a listen only basis.

    To participate, please dial 416-641-6105 or 1-866-696-5895 shortly before the start of the call. A replay will be available for one week by dialing 416- 695-5800 or 1-800-408-3053 and entering passcode: 3182500 (pound key). This teleconference will also be Webcast live and archived for 90 days on BCE's website at http://www.bce.ca/en/investors/investorevents/quarterlyresults/index.php.

    Caution Concerning Forward-Looking Statements

    Certain statements made in this news release, including, but not limited to, the statements appearing under the "Outlook" section, statements relating to Bell Canada's proposed income trust conversion, and other statements that are not historical facts, are forward-looking and are subject to important risks, uncertainties and assumptions. The results or events predicted in these forward-looking statements may differ materially from actual results or events. Except as otherwise indicated by BCE, these statements do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations or other transactions that may be announced or that may occur after the date hereof.

    For a description of material assumptions underlying forward-looking statements made in this news release and of material risk factors that could cause actual results or events to differ materially from current expectations please refer to the section entitled "Assumptions Made In The Preparation Of Forward-Looking Statements And Risks That Could Affect Our Business and Results" contained in BCE Inc.'s MD&A (found on pages 42 to 56 of the Bell Canada Enterprises 2005 Annual Report) for the year ended December 31, 2005 dated March 1, 2006 filed by BCE Inc. with the Canadian securities commissions (available on BCE's website at http://www.bce.ca/ and on SEDAR at http://www.sedar.com/), and with the U.S. Securities and Exchange Commission (SEC) under Form 40-F (available on EDGAR at http://www.sec.gov/), as updated in BCE Inc.'s 2006 First and Second Quarter MD&As dated May 2, 2006 and August 1, 2006, under the section entitled "Assumptions Made In The Preparation Of Forward-Looking Statements and Risks That Could Affect Our Business And Results", filed by BCE Inc. with the Canadian Securities Commissions and with the SEC under Form 6-K (available on the same websites referred to above), and as further updated in BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006, included in this news release, under the section entitled "Assumptions Made In The Preparation Of Forward- Looking Statements and Risks That Could Affect Our Business And Results".

    The forward-looking statements contained in this news release represent our expectations as of November 1, 2006 and, accordingly, are subject to change after such date. However, we disclaim any intention and assume no obligation to update or revise any forward-looking statement, whether as a result of new information or otherwise.

    About BCE Inc.

    BCE is Canada's largest communications company. Through its 28 million customer connections, BCE provides the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Under the Bell brand, the Company's services include local, long distance and wireless phone services, high-speed and wireless Internet access, IP-broadband services, information and communications technology services (or value-added services) and direct-to-home satellite and VDSL television services. Other BCE holdings include Telesat Canada, a pioneer and world leader in satellite operations and systems management, and an interest in Bell Globemedia, Canada's premier media company. BCE shares are listed in Canada, the United States and Europe.

    THE QUARTER AT A GLANCE ------------------------ This section provides a summary of the key measures we use to assess our performance and how our results in Q3 2006 compare to our results in Q3 2005. ------------------------

    On October 11, 2006, we announced our intention to wind down BCE Inc.'s holding company structure and convert Bell Canada into an income trust to be known as the Bell Canada Income Fund. The elimination of BCE Inc. is a further step in our plan to focus on Bell Canada and our core communications operations.

    Overall performance for Q3 2006 showed ongoing progress in our focus on execution as underlying operating trends continued to improve. The results for the quarter showed higher average revenue per user (ARPU) across all growth services, a significant increase in free cash flow and control over the pace of erosion in our legacy business.

    Revenue growth at Bell Canada in Q3 2006 was 0.4%, while EBITDA(1) improved in line with our expectations for the quarter at 1.8%, reflecting a continued focus on revenue quality, a disciplined approach towards subscriber acquisition, and the achievement of greater cost efficiencies. Our attention to profitable growth, along with our ongoing efforts to transform our overall cost structure and improve upon overall operational execution, has set a solid foundation for future growth. In addition, the sound financial performance of our growth services (comprised of wireless, video, high-speed Internet, and information and communications technology (ICT) solutions) and capital spending efficiency helped to drive a significant improvement in free cash flow in the third quarter. At the same time, although local access line losses increased year-over-year, the rate of erosion in our traditional voice business has stabilized since the beginning of 2006, as new competition starts to mature and as our customer winback initiatives gain momentum.

    In our Residential segment, the financial performance of our video, wireless and Internet businesses, driven by strong increases in ARPU and cost control, helped to offset the impact of ongoing erosion of our high-margin local wireline and long distance business and price reductions mandated by certain regulatory decisions. Growth in customer connections across all our growth services was affected by a lower number of net activations stemming from continued competitive intensity and our focus on balancing growth with profitability of our growth services.

    Our Business segment made significant progress in improving profitability during the quarter, as a result of solid cost control, steady revenue growth and the shift away from less profitable contracts. This was achieved despite the negative impact on operating margins from the continuing evolution in product mix from higher margin legacy services to Internet Protocol (IP) based services. Higher revenues reflected increased sales of IP-based connectivity and ICT solutions to our Enterprise and small and medium-sized business (SMB) customers, as well as higher wireless subscriptions.

    In the Bell Aliant(2) segment, growth in revenues from Internet, data and information technology (IT) services more than offset declining revenues from traditional wireline services attributable to expansion by competitors, technology substitution and regulatory constraints. Higher revenues, in combination with ongoing expense management driven by productivity initiatives, resulted in improved operating margins and profitability this quarter.

    In the Other Bell Canada segment, lower revenues resulted directly from the ongoing competitive market conditions in our wholesale business and sales of fibre and access capacity in Q3 2005, while operating income was negatively affected by restructuring charges related to the formation of Bell Aliant and costs associated with our 2006 workforce reduction program.

    Within the Other BCE segment, Telesat Canada (Telesat) announced that a preliminary prospectus was filed for an initial public offering of non-voting shares. Telesat reported a slightly improved level of revenues for the quarter generated by increased sales of its broadcast and two-way broadband services. Operating income was impacted by special compensation costs related to Telesat's senior executive changes made during the quarter.

    CUSTOMER CONNECTIONS Q3 2006 CONNECTIONS SEPTEMBER NET 30, (in thousands) ACTIVATIONS 2006 ------------------------------------------------------------------------- NAS (71) 12,237 High-Speed Internet 90 2,403 Wireless 114 5,704 Video 30 1,788 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) EBITDA, operating income before restructuring and other items, net earnings before restructuring and other items, net gains on investments and costs incurred to form the Bell Aliant Regional Communications Income Fund (Bell Aliant), and free cash flow do not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and are therefore unlikely to be comparable to similar measures presented by other companies. For more details on these measures, including a reconciliation to the most comparable GAAP measure, please refer to the section entitled Non-GAAP Financial Measures contained in BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006. (2) The Bell Aliant segment is comprised of the former Bell Canada regional wireline operations in Ontario and Quebec, the former Aliant wireline and related operations in Atlantic Canada, and Bell Canada's former 63.4% interest in NorthernTel Limited Partnership and Telebec Limited Partnership held indirectly through Bell Nordiq Group Inc. - Network Access Services (NAS) - NAS in service declined by 71,000 this quarter. In the past twelve months, our local access customer base has decreased 3.7%, representing a 0.4 percentage point increase, compared with the year-over-year erosion rate in the previous quarter. The higher number of local access line losses was due primarily to the competitive entry in 2005 of cable operators in our Quebec and Ontario markets with lower-priced cable telephony services. This decline was partly offset by increased customer winbacks and higher demand for access lines from a wholesale customer in Western Canada offering VoIP services. - High-Speed Internet - We added 90,000 net new high-speed Internet customers this quarter, compared to 106,000 net activations in Q3 2005, bringing our end of period customer base to 2,403,000 or 12.6% higher than last year. The year-over-year decline in new subscriber additions was expected as net activations in Q3 2005 were fuelled by the growth of our Basic Lite products and by extensive footprint expansion. - Wireless - We added 114,000 new net wireless subscribers this quarter, compared to 123,000 in Q3 2005, bringing our subscriber base at the end of Q3 2006 to 5,704,000. Higher revenue-generating postpaid subscribers accounted for 82%, or 94,000, of total net activations in the quarter, up from 41% last year, as a result of significantly improved customer retention efforts. Our overall churn rate remained unchanged year-over- year at 1.5%, despite higher prepaid churn in the quarter which had a negative impact on total net activations. - Video - We activated 30,000 new net video subscribers in the quarter, compared to 82,000 in Q3 2005, bringing our total subscriber base to 1,788,000 as of September 30, 2006 for a 6.6% increase over last year. The relatively fewer number of new subscriber activations in Q3 2006 compared with the previous year reflected reduced market growth, accelerated analog to digital migrations by cable operators, decreased sales in our retail channels and the acquisition of Cable VDN Inc. (Cable VDN) in Q3 2005, which added an incremental 12,500 new net customers to our subscriber base. Churn in the third quarter remained unchanged, year-over-year, at 1.0%. OPERATING REVENUES

    In Q3 2006, we generated revenues of $4,422 million at BCE, an increase of 0.3% compared with the same quarter in 2005, reflecting higher revenues in most Bell Canada segments as well as at Telesat. Revenues at Bell Canada grew by 0.4% to $4,339 million, driven primarily by higher ARPU and an increase in the number of subscribers in all our growth services, steady revenue growth at Bell Aliant, and continued solid wireless and ICT revenue growth in our Business segment. Telesat also reported slightly improved performance largely as a result of higher broadcast revenues. The results for Q3 2005 included revenues from the sales of customer contracts in our Business segment and fibre and access capacity in our wholesale unit, which affected our revenue growth rates in 2006.

    OPERATING INCOME AND EBITDA

    Operating income at BCE for the quarter was $810 million, down from $909 million in Q3 2005, due largely to $126 million of restructuring and other items associated with restructuring costs for employee departures initiated at Bell Canada, the relocation of employees and closing of real estate facilities related to a reduced workforce, as well as transaction costs related to the formation of Bell Aliant.

    Operating income before restructuring and other items(1) in Q3 2006 was $936 million or $4 million lower than the same quarter in 2005. Increased net benefit plans cost and higher amortization expense more than offset an improvement in EBITDA. EBITDA for BCE increased $23 million, or 1.3% year-over- year, to $1,840 million, due to an increase of 1.8% at Bell Canada.

    (1) EBITDA, operating income before restructuring and other items, net earnings before restructuring and other items, net gains on investments and costs incurred to form the Bell Aliant Regional Communications Income Fund (Bell Aliant), and free cash flow do not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and are therefore unlikely to be comparable to similar measures presented by other companies. For more details on these measures, including a reconciliation to the most comparable GAAP measure, please refer to the section entitled Non-GAAP Financial Measures contained in BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006.

    Similarly, Bell Canada's operating income in Q3 2006 was $827 million, or $78 million lower than Q3 2005, mainly because of restructuring costs related to both our workforce reduction initiative and the formation of Bell Aliant. Operating income before restructuring and other items was $938 million or $3 million higher than Q3 2005, due to higher EBITDA offset largely by higher net benefit plans cost and amortization expense. EBITDA at Bell Canada increased 1.8% to $1,835 million this quarter, reflecting higher revenues and a reduction in total operating expenses. Operating expenses decreased due primarily to lower labour costs from workforce reductions, increased cost savings from supply chain initiatives and process improvement initiatives, lower wireless and video customer acquisition costs, as well as lower expenses as a result of costs incurred in 2005 as we recovered from a labour dispute. These lower costs were offset in part by continued erosion of our NAS wireline customer base, higher wireless customer retention costs, higher capital taxes, and higher operating expenses from acquisitions made over the past year.

    As a result of higher overall revenues and improved EBITDA performance, Bell Canada's EBITDA margin increased to 42.3% in Q3 2006 from 41.7% in Q3 2005.

    NET EARNINGS / EARNINGS PER SHARE (EPS)

    Net earnings applicable to common shares for Q3 2006 were $285 million, or $0.36 per common share, which represents a decrease compared with net earnings of $441 million, or $0.48 per common share for Q3 2005. Net earnings in the quarter were negatively impacted by higher restructuring and other costs related mainly to the formation of Bell Aliant. EPS before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant(1), which is the figure used for financial guidance purposes, reached $0.48 per common share in Q3 2006 compared to $0.50 per common share in the same quarter last year. The year-over-year decrease resulted primarily from increased net benefit plans cost, consisting of pension and post-employment benefits expense, as well as higher amortization expense, offset partly by improved EBITDA performance.

    CAPITAL EXPENDITURES

    Capital expenditures for BCE were $760 million in Q3 2006, which was 21% lower than the same quarter last year. As a percentage of revenues, capital expenditures decreased this quarter to 17.2% from 21.7% in Q3 2005. Similarly, Bell Canada's capital expenditures decreased 18.1% this quarter to $715 million. As a result, Bell Canada's capital intensity in the quarter declined 3.7 percentage points, year-over-year, to 16.5%. The majority of capital spending in the quarter was focused on key strategic priorities within the growth areas of our business. The year-over-year decreases in spending at both BCE and Bell Canada reflected reduced expenditures on IT infrastructure and systems to support both our cost reduction program initiatives as well as customer contracts in the Business segment, the timing of spending associated with various strategic initiatives, reduced spending at Bell Aliant, lower expenditures related to wireless growth and capacity expansion, and the completion in the fourth quarter of 2005 of the Alberta SuperNet. The difference in capital expenditures between BCE and Bell Canada reflects spending on satellite builds at Telesat.

    CASH FROM OPERATING ACTIVITIES AND FREE CASH FLOW(1)

    In Q3 2006, cash from operating activities increased 2.1% to $1,602 million from $1,569 million in Q3 2005, due mainly to improvements in working capital, partly offset by payments related to a pay equity settlement announced in Q2 2006 and an increase in income taxes paid.

    We generated $449 million of free cash flow in Q3 2006, representing an improvement of $207 million over free cash flow of $242 million reported in Q3 2005. As a result, free cash flow improved to $502 million in the first nine months of 2006 from $120 million in 2005, reflecting reduced capital spending and an improvement in cash from operating activities, offset mainly by an increase in dividends paid to BCE Inc. common shareholders.

    (1) EBITDA, operating income before restructuring and other items, net earnings before restructuring and other items, net gains on investments and costs incurred to form the Bell Aliant Regional Communications Income Fund (Bell Aliant), and free cash flow do not have any standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and are therefore unlikely to be comparable to similar measures presented by other companies. For more details on these measures, including a reconciliation to the most comparable GAAP measure, please refer to the section entitled Non-GAAP Financial Measures contained in BCE Inc.'s 2006 Third Quarter MD&A dated October 31, 2006. MANAGEMENT'S DISCUSSION AND ANALYSIS ------------------------ In this MD&A, we, us, our and BCE mean BCE Inc., its subsidiaries and joint ventures. References to Bell Aliant include matters relating to, and actions taken by, both Aliant Inc. (Aliant) prior to July 7, 2006, and Bell Aliant Regional Communications Income Fund on and after such date. All amounts in this MD&A are in millions of Canadian dollars, except where otherwise noted. Please refer to the unaudited consolidated financial statements for the third quarter of 2006 when reading this MD&A. We also encourage you to read BCE Inc.'s MD&A for the year ended December 31, 2005 dated March 1, 2006 (BCE 2005 MD&A). You will find more information about BCE, including BCE Inc.'s annual information form for the year ended December 31, 2005 dated March 1, 2006 (BCE 2005 AIF) and recent financial reports, on BCE Inc.'s website at http://www.bce.ca/, on SEDAR at http://www.sedar.com/ and on EDGAR at http://www.sec.gov/. ------------------------

    This management's discussion and analysis of financial condition and results of operations (MD&A) comments on BCE's operations, performance and financial condition for the three months (Q3) and nine months (YTD) ended September 30, 2006 and 2005.

    ABOUT FORWARD-LOOKING STATEMENTS ------------------------ A statement we make is forward-looking when it uses what we know and expect today to make a statement about the future. Forward-looking statements may include words such as anticipate, assumption, believe, could, expect, goal, guidance, intend, may, objective, outlook, plan, seek, should, strive, target and will. ------------------------

    Securities laws encourage companies to disclose forward-looking information so that investors can get a better understanding of the company's future prospects and make informed investment decisions.

    Unless otherwise mentioned in this MD&A, or in BCE Inc.'s 2006 first or second quarter MD&A dated May 2, 2006 or August 1, 2006 (BCE 2006 First and Second Quarter MD&As), respectively, the outlooks provided in the BCE 2005 MD&A dated March 1, 2006 remain substantially unchanged.

    This MD&A contains forward-looking statements about BCE's objectives, plans, strategies, financial condition, results of operations, cash flows and businesses. These statements are forward-looking because they are based on our current expectations, estimates and assumptions about the markets we operate in, the Canadian economic environment and our ability to attract and retain customers and to manage network assets and operating costs. All such forward- looking statements are made pursuant to the 'safe harbor' provisions of the United States Private Securities Litigation Reform Act of 1995 and of any applicable Canadian securities legislation, including the Securities Act of Ontario. It is important to know that:

    - unless otherwise indicated, forward-looking statements in this MD&A describe our expectations at October 31, 2006 - our actual results could differ materially from what we expect if known or unknown risks affect our business, or if our estimates or assumptions turn out to be inaccurate. As a result, we cannot guarantee that any forward-looking statement will materialize and, accordingly, you are cautioned not to place undue reliance on these forward-looking statements. - except as otherwise indicated by BCE, forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made may have on our business. Such statements do not, unless otherwise specified by BCE, reflect the impact of dispositions, sales of assets, monetizations, mergers, acquisitions, other business combinations or transactions, asset write-downs or other charges announced or occurring after forward-looking statements are made. The financial impact of these transactions and non-recurring and other special items can be complex and depends on the facts particular to each of them. We therefore cannot describe the expected impact in a meaningful way or in the same way we present known risks affecting our business. - we disclaim any intention and assume no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.

    A number of assumptions were made by BCE in making forward-looking statements in the BCE 2005 MD&A and in this MD&A, such as certain Canadian economic assumptions, market assumptions, operational and financial assumptions, and assumptions about transactions. Certain factors that could cause results or events to differ materially from our current expectations include, among others, our ability to implement our strategies and plans, the intensity of competitive activity and the ability to achieve customer service improvement while reducing costs in accordance with our expectations. Assumptions made in the preparation of forward-looking statements and risks that could cause our actual results to differ materially from our current expectations are discussed throughout this MD&A and, in particular, in the section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results.

    ABOUT OUR BUSINESS

    A detailed description of our products and services and our objectives and strategy is provided in the BCE 2005 MD&A.

    STRATEGIC PRIORITIES

    Our strategy is to deliver unrivalled integrated communication services to customers efficiently and cost effectively, and to take a leadership position in providing Internet Protocol (IP) services. We continue to build on three key pillars that support this strategy: Customer Experience, Bandwidth and Next-Generation Services. Taken together, these pillars are designed to deliver simplicity to our customers and durable value creation for our shareholders. Advancing this strategy requires us to transform our cost structure and the way that we serve customers.

    During the quarter, we made progress on each of our three key priorities and on transforming our cost structure.

    1) Enhancing customer experience by providing superior products and service that build loyalty - At the end of Q3 2006, 5.9 million clients were enjoying the benefits of a single bill for their wireline, Internet, video and/or wireless services (our One Bill program), representing a 4.5 million increase over the past year. - We delivered improved service commitments and service levels in the quarter by reducing the number of missed appointments for fixed wireline installations and repairs by approximately 20% compared with the same period last year. - As a result of our DSL Hardening Program, which has improved the performance of the network as a result of new software upgrades and installation of new hardware, we have reduced major outages of our high-speed Internet service by 20% on a year-to-date basis over the same period last year. - As at the end of the quarter, 91% of our Enterprise customers adopted our online bill manager tool, a service that provides self-serve capabilities for business customers, enabling them to view, track and pay invoices online and to produce customized reports. - By the end of the quarter, in conjunction with our new Service Accreditation Program, we had trained 72% of our customer-facing employees in the Residential and Business segments on consistent service standards. - Our multi-product household strategy continued to drive increased penetration of households subscribing to three or more products (a combination of local wireline, Internet, video, wireless and long distance services), reaching over 24% of total households in our Ontario and Quebec footprint at the end of Q3 2006, up from 21% one year earlier. - Since the beginning of the year, our first call resolution rate in the Residential segment decreased 0.8 percentage points due mainly to seasonality and reflecting an increase in the volume of work orders associated with both the residential move and the back-to-school periods. 2) Deliver abundant and reliable bandwidth to enable next-generation services - We continued our rollout of fibre-to-the-node (FTTN) by deploying another 418 neighbourhood nodes in Q3 2006, raising the total number of nodes deployed to 3,310. - Bell Mobility Inc. (Bell Mobility) expanded the core footprint of its Evolution, Data Optimized (EVDO) wireless data network to include London and Quebec City, increasing coverage to 52% of the Canadian population. - In August, we launched Sympatico Optimax, a high-speed Internet service that leverages the latest in fibre optic technology, in parts of Toronto. The service offers an Internet connection that delivers consistently fast Internet service, with maximum speeds of 10 to 16 megabits per second (Mbps). The service is also currently available in certain areas of Montreal and is expected to be deployed progressively across significant portions of Toronto and Montreal by year-end. 3) Create next-generation services to drive profitable future growth

    Revenues from growth services (comprised of wireless, video, high-speed Internet and other next-generation services such as information and communications technology (ICT) solutions) accounted for 48% of total revenues at Bell Canada by the end of Q3 2006, compared with 44% one year earlier. Mainly as a result of the lower than expected revenue decline in our legacy wireline business since the beginning of the year, we now expect that growth services will represent over 50% of total Bell Canada revenues by the end of the year rather than 55% as previously anticipated.

    - Bell Mobility launched a music video ringtones service. The service, which is the first of its kind in Canada, allows clients to listen to and/or watch digital music videos directly on their wireless phone when it rings. - Sympatico introduced 'Personal Vault' for Residential and small and medium-sized business (SMB) customers on October 16, 2006, a comprehensive new online storage solution that is available exclusively from Bell Canada to back-up, access and share content including digital photos, financial records, music and video files. - We opened a new testing lab in Montreal to accelerate testing of new services based on Internet telephony and multimedia standards with the objective of bringing superior products and services to market with maximum speed and simplicity and with less risk. Transforming our cost structure

    Overall, our various cost-reduction initiatives resulted in savings of $204 million in the third quarter of 2006, bringing total savings on a year-to-date basis to $501 million. These cost savings were realized primarily through process improvements in our business units and our supply chain transformation program, contributing to an improvement in Bell Canada's EBITDA margin year-over-year.

    Cost reductions from efficiency-related process improvements amounted to $96 million in the quarter and $243 million year-to-date. These savings were due primarily to:

    - continued rollout of our initiative to reduce the number of invoices printed and mailed to Residential customers through our One Bill program - improved scheduling of customer appointments and repair times, which enhanced our ability to solve customer problems with just one visit (our 'One and Done' program) - contact centre efficiencies and changes to certain processes at our call centres, resulting in lower call volumes - workforce reductions resulting from 'One and Done' and other operational efficiency initiatives.

    Supply transformation savings of $108 million in the quarter and $258 million year-to-date were realized from:

    - increased controls over discretionary spending - reduced spending on information technology (IT) services - outsourcing of selected contact centre call volumes - renegotiated contracts resulting in vendor rebates for wireless handsets, wireline data and voice equipment, and Internet portal services that we resell to our customers.

    In the third quarter, an additional 793 employees departed, bringing the total number of employee departures associated with our 2006 workforce reduction program to 2,664. Our initial plan for 2006, called for a total headcount reduction this year of 3,000 to 4,000 positions. Due to a fewer number of attrition-related departures than originally expected and our decision to retain a greater mix of internal direct sales agents in support of our revenue growth initiatives, we do not expect headcount reductions in 2006 to exceed 3,000. However, our operating cost savings target for 2006 remains on track due to higher savings from decreased use of contractors and consultants in line with our objective to lower total overall labour costs.

    CORPORATE DEVELOPMENTS Wind down of BCE Inc. and the formation of the Bell Canada Income Fund

    On October 11, 2006, BCE Inc. announced that it intends to eliminate its holding company structure and convert Bell Canada into an income trust to be known as the Bell Canada Income Fund. In addition, BCE Inc. and Bell Canada intend to amalgamate together with certain other subsidiaries to form a new company to be known as Bell Canada. The conversion to an income trust is timely for the company as its tax losses and deferred tax deductions would be substantially utilized in 2007, resulting in a large increase in cash taxes payable beginning in 2008.

    The conversion of Bell Canada into an income trust, and related transactions, will be carried out pursuant to a Plan of Arrangement (the 'Arrangement') under the Canada Business Corporations Act. Under the Arrangement, each of the outstanding common shares of BCE Inc. will be exchanged for units in the Bell Canada Income Fund on a one-for-one basis.

    BCE Inc. and Bell Canada expect to mail an information circular and other applicable materials with respect to the Arrangement in December 2006. BCE Inc. and Bell Canada currently expect to hold a meeting of their common and preferred shareholders to consider the Arrangement in January 2007.

    The transaction is subject to the receipt of all necessary security holder, regulatory and stock exchange approvals and other consents. Provided that all necessary conditions to the Arrangement are satisfied, the transaction is expected to be completed and the Bell Canada Income Fund units to begin trading in the first quarter of 2007.

    Bell Aliant

    The income trust transaction announced by BCE Inc. and Aliant on March 7, 2006 to form Bell Aliant closed on July 7, 2006. Bell Aliant combines Bell Canada's former regional wireline operations in rural Ontario and Quebec with Aliant's former wireline, information technology and related operations in Atlantic Canada, and also includes Bell Canada's former 63.4% interest in NorthernTel Limited Partnership (NorthernTel) and Telebec Limited Partnership (Telebec) held indirectly through Bell Nordiq Group Inc. (Bell Nordiq). Upon closing of the transaction BCE held a 73.5% indirect interest in Bell Aliant, which it subsequently reduced to 44.7% through a distribution of trust units by way of a return of capital to holders of BCE Inc. common shares on July 10, 2006. In conjunction with this, BCE Inc. reduced its outstanding common shares by 75.8 million. Bell Aliant began trading on the Toronto Stock Exchange on July 10, 2006 under the symbol 'BA.UN'. The financial results of Bell Aliant continue to be consolidated by BCE.

    Subsequent to the end of the third quarter, Bell Aliant made a proposal to take Bell Nordiq Income Fund private.

    Completion of Bell Globemedia Reorganization

    Following the receipt of regulatory approval, the transaction involving the reorganization of the ownership of Bell Globemedia announced on December 2, 2005 was completed on August 30, 2006. As part of the transaction, which reduced BCE's interest in Bell Globemedia from 68.5% to 20%, BCE retains certain important rights and has entered into a commercial agreement with Bell Globemedia to have access to existing and future content. Subsequent to the conclusion of this transaction, Bell Globemedia completed its takeover bid of CHUM Limited, resulting in a further reduction of BCE's ownership in Bell Globemedia from 20% to 15%.

    Telesat Initial Public Offering

    On September 18, 2006, Telesat Holding Inc. filed a preliminary prospectus and a registration statement for an initial public offering (IPO) of non-voting shares both in Canada and the United States. Prior to completion of the offering, Telesat intends to undergo a debt recapitalization the net proceeds of which, together with the net proceeds of the offering, will be distributed to BCE. Upon closing of the offering, Telesat Holding Inc. will be the parent company of Telesat Canada.

    Normal Course Issuer Bid

    During the quarter, BCE Inc. purchased an additional 4.4 million common shares for a total cost of $114 million under its Normal Course Issuer Bid (NCIB) program. This brought the total number of common shares repurchased and cancelled as at September 30, 2006 to 40 million, representing approximately 90% of the total common shares targeted for repurchase, for a total cash outlay of $1,108 million. BCE Inc. commenced the NCIB program on February 1, 2006 with the intention to purchase and cancel approximately 5%, or 45 million, of its outstanding common shares over a twelve-month period.

    NON-GAAP FINANCIAL MEASURES ------------------------ This section describes the non-GAAP financial measures we use in the MD&A to explain our financial results. It also provides reconciliations of the non-GAAP financial measures to the most comparable Canadian GAAP financial measures. ------------------------ EBITDA ------------------------ We define EBITDA (earnings before interest, taxes, depreciation and amortization) as operating revenues less operating expenses, meaning it represents operating income before amortization expense, net benefit plans cost, and restructuring and other items. ------------------------

    The term EBITDA does not have any standardized meaning according to Canadian generally accepted accounting principles (GAAP). It is therefore unlikely to be comparable to similar measures presented by other companies. EBITDA is presented on a consistent basis from period to period.

    We use EBITDA, among other measures, to assess the operating performance of our ongoing businesses without the effects of amortization expense, net benefit plans cost, and restructuring and other items. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. We exclude amortization expense and net benefit plans cost because they largely depend on the accounting methods and assumptions a company uses, as well as non- operating factors such as the historical cost of capital assets and the fund performance of a company's pension plans. Excluding restructuring and other items does not imply they are necessarily non-recurring.

    EBITDA allows us to compare our operating performance on a consistent basis. We believe that certain investors and analysts use EBITDA to measure a company's ability to service debt and to meet other payment obligations, or as a common measurement to value companies in the telecommunications industry.

    The most comparable Canadian GAAP financial measure is operating income. The following tables are reconciliations of operating income to EBITDA on a consolidated basis for BCE and Bell Canada.

    BCE Q3 Q3 YTD YTD 2006 2005 2006 2005 ------------------------------------------------------------------------- Operating income 810 909 2,572 2,879 Amortization expense 786 774 2,332 2,285 Net benefit plans cost 118 103 388 300 Restructuring and other items 126 31 264 31 ------------------------------------------------------------------------- EBITDA 1,840 1,817 5,556 5,495 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BELL CANADA Q3 Q3 YTD YTD 2006 2005 2006 2005 ------------------------------------------------------------------------- Operating income 827 905 2,571 2,868 Amortization expense 772 756 2,289 2,233 Net benefit plans cost 125 111 404 324 Restructuring and other items 111 30 246 30 ------------------------------------------------------------------------- EBITDA 1,835 1,802 5,510 5,455 ------------------------------------------------------------------------- ------------------------------------------------------------------------- OPERATING INCOME BEFORE RESTRUCTURING AND OTHER ITEMS

    The term operating income before restructuring and other items does not have any standardized meaning according to Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies.

    We use operating income before restructuring and other items, among other measures, to assess the operating performance of our ongoing businesses without the effects of restructuring and other items. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding restructuring and other items does not imply they are necessarily non- recurring.

    The most comparable Canadian GAAP financial measure is operating income. The following tables are reconciliations of operating income to operating income before restructuring and other items on a consolidated basis for BCE and Bell Canada.

    BCE Q3 Q3 YTD YTD 2006 2005 2006 2005 ------------------------------------------------------------------------- Operating income 810 909 2,572 2,879 Restructuring and other items 126 31 264 31 ------------------------------------------------------------------------- Operating income before restructuring and other items 936 940 2,836 2,910 ------------------------------------------------------------------------- ------------------------------------------------------------------------- BELL CANADA Q3 Q3 YTD YTD 2006 2005 2006 2005 ------------------------------------------------------------------------- Operating income 827 905 2,571 2,868 Restructuring and other items 111 30 246 30 ------------------------------------------------------------------------- Operating income before restructuring and other items 938 935 2,817 2,898 ------------------------------------------------------------------------- ------------------------------------------------------------------------- NET EARNINGS BEFORE RESTRUCTURING AND OTHER ITEMS, NET GAINS ON INVESTMENTS, AND COSTS INCURRED TO FORM BELL ALIANT

    The term net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant does not have any standardized meaning according to Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies.

    We use net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant, among other measures, to assess the operating performance of our ongoing businesses without the effects of after-tax restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant. We exclude these items because they affect the comparability of our financial results and could potentially distort the analysis of trends in business performance. Excluding these items does not imply they are necessarily non-recurring.

    The most comparable Canadian GAAP financial measure is net earnings applicable to common shares.

    The following table is a reconciliation of net earnings applicable to common shares to net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant on a consolidated basis and per BCE Inc. common share.

    Q3 2006 Q3 2005 ------------------------------------------------------------------------- PER PER TOTAL SHARE TOTAL SHARE ------------------------------------------------------------------------- Net earnings applicable to common shares 285 0.36 441 0.48 Restructuring and other items(1) 71 0.09 21 0.02 Net (loss) gains on investments 3 - - - Other costs incurred to form Bell Aliant(2) 28 0.03 - - ------------------------------------------------------------------------- Net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant 387 0.48 462 0.50 ------------------------------------------------------------------------- ------------------------------------------------------------------------- YTD 2006 YTD 2005 ------------------------------------------------------------------------- PER PER TOTAL SHARE TOTAL SHARE ------------------------------------------------------------------------- Net earnings applicable to common shares 1,238 1.41 1,478 1.60 Restructuring and other items(1) 156 0.18 21 0.02 Net (loss) gains on investments (113) (0.13) (27) (0.03) Other costs incurred to form Bell Aliant(2) 42 0.05 - - ------------------------------------------------------------------------- Net earnings before restructuring and other items, net gains on investments, and costs incurred to form Bell Aliant 1,323 1.51 1,472 1.59 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Includes transactions costs associated with the formation of Bell Aliant. These costs relate mainly to investment banking, professional and consulting fees. In Q3 2006 we incurred $95 million ($51 million after tax and non-controlling interest) of transaction costs, and $138 million ($77 million after tax and non-controlling interest) in the first nine months of 2006. (2) Includes premium costs incurred by Bell Aliant on early redemption of long-term debt as a result of the formation of Bell Aliant. In Q3 2006 we incurred $82 million ($28 million after tax and non- controlling interest) and $122 million ($42 million after tax and non-controlling interest) in the first nine months of 2006. FREE CASH FLOW ------------------------ We define free cash flow as cash from operating activities after capital expenditures, total dividends and other investing activities. ------------------------

    The term free cash flow does not have any standardized meaning according to Canadian GAAP. It is therefore unlikely to be comparable to similar measures presented by other companies. Free cash flow is presented on a consistent basis from period to period.

    We consider free cash flow to be an important indicator of the financial strength and performance of our business because it shows how much cash is available to repay debt and reinvest in our company. We present free cash flow consistently from period-to-period, which allows us to compare our financial performance on a consistent basis.

    We believe that certain investors and analysts use free cash flow to value a business and its underlying assets.

    The most comparable Canadian GAAP financial measure is cash from operating activities. The following table is a reconciliation of cash from operating activities to free cash flow on a consolidated basis.

    Q3 Q3 YTD YTD 2006 2005 2006 2005 ------------------------------------------------------------------------- Cash from operating activities 1,602 1,569 3,862 3,778 Capital expenditures (760) (958) (2,198) (2,565) Total dividends paid (390) (373) (1,148) (1,096) Other investing activities (3) 4 (14) 3 ------------------------------------------------------------------------- Free cash flow 449 242 502 120 ------------------------------------------------------------------------- ------------------------------------------------------------------------- QUARTERLY FINANCIAL INFORMATION

    The following table shows selected consolidated financial data for the eight most recently completed quarters. This information has been prepared on the same basis as the annual consolidated financial statements, but is unaudited.

    2006 2005 ------------------------------------------------------------------------- Q3 Q2 Q1 Q4 ------------------------------------------------------------------------- Operating revenues 4,422 4,388 4,356 4,539 EBITDA 1,840 1,875 1,841 1,736 Amortization expense (786) (790) (756) (776) Net benefit plans cost (118) (134) (136) (59) Restructuring and other items (126) (50) (88) (24) ------------------------------------------------------------------------- Operating income 810 901 861 877 Earnings from continuing operations 324 444 406 387 Discontinued operations (22) 50 88 43 Extraordinary gain - - - - ------------------------------------------------------------------------- Net earnings 302 494 494 430 Net earnings applicable to common shares 285 476 477 413 Included in net earnings: Net gains on investments Continuing operations 8 - 1 - Discontinued operations (11) 35 80 - Restructuring and other items (71) (27) (58) (16) Costs incurred to form Bell Aliant (28) (14) - - ------------------------------------------------------------------------- Net earnings per common share Continuing operations - basic 0.39 0.47 0.42 0.39 Continuing operations - diluted 0.39 0.47 0.42 0.39 Net earnings - basic 0.36 0.53 0.52 0.44 Net earnings - diluted 0.36 0.53 0.52 0.44 Average number of common shares outstanding (millions) 818.8 896.4 920.5 927.3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- 2005 2004 ------------------------------------------------------------------------- Q3 Q2 Q1 Q4 ------------------------------------------------------------------------- Operating revenues 4,408 4,368 4,290 4,379 EBITDA 1,817 1,857 1,821 1,670 Amortization expense (774) (763) (748) (772) Net benefit plans cost (103) (99) (98) (63) Restructuring and other items (31) (5) 5 (124) ------------------------------------------------------------------------- Operating income 909 990 980 711 Earnings from continuing operations 444 541 459 339 Discontinued operations 15 40 32 26 Extraordinary gain - - - 69 ------------------------------------------------------------------------- Net earnings 459 581 491 434 Net earnings applicable to common shares 441 563 474 417 Included in net earnings: Net gains on investments Continuing operations - 33 - 85 Discontinued operations - (5) (1) (24) Restructuring and other items (21) (3) 3 (61) Costs incurred to form Bell Aliant - - - - ------------------------------------------------------------------------- Net earnings per common share Continuing operations - basic 0.46 0.57 0.48 0.35 Continuing operations - diluted 0.46 0.57 0.48 0.35 Net earnings - basic 0.48 0.61 0.51 0.45 Net earnings - diluted 0.48 0.61 0.51 0.45 Average number of common shares outstanding (millions) 927.0 926.6 926.2 925.3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- FINANCIAL RESULTS ANALYSIS ------------------------ This section provides detailed information and analysis about our performance in Q3 2006 and YTD 2006 compared with Q3 2005 and YTD 2005. It focuses on our consolidated operating results and provides financial information for each of our operating segments. ------------------------ CONSOLIDATED ANALYSIS Q3 Q3 % YTD YTD % 2006 2005 CHANGE 2006 2005 CHANGE ------------------------------------------------------------------------- Operating revenues 4,422 4,408 0.3% 13,166 13,066 0.8% Operating expenses (2,582) (2,591) 0.3% (7,610) (7,571) (0.5%) ------------------------------------------------------------------------- EBITDA 1,840 1,817 1.3% 5,556 5,495 1.1% Amortization expense (786) (774) (1.6%) (2,332) (2,285) (2.1%) Net benefit plans cost (118) (103) (14.6%) (388) (300) (29.3%) Restructuring and other items (126) (31) n.m. (264) (31) n.m. ------------------------------------------------------------------------- Operating income 810 909 (10.9%) 2,572 2,879 (10.7%) Other (expense) income (113) 1 n.m. (149) 31 n.m. Interest expense (247) (238) (3.8%) (713) (710) (0.4%) ------------------------------------------------------------------------- Pre-tax earnings from continuing operations 450 672 (33.0%) 1,710 2,200 (22.3%) Income taxes (85) (179) 52.5% (412) (607) 32.1% Non-controlling interest (41) (49) 16.3% (124) (149) 16.8% ------------------------------------------------------------------------- Earnings from continuing operations 324 444 (27.0%) 1,174 1,444 (18.7%) Discontinued operations (22) 15 n.m. 116 87 33.3% ------------------------------------------------------------------------- Net earnings 302 459 (34.2%) 1,290 1,531 (15.7%) Dividends on preferred shares (17) (18) 5.6% (52) (53) 1.9% ------------------------------------------------------------------------- Net earnings applicable to common shares 285 441 (35.4%) 1,238 1,478 (16.2%) ------------------------------------------------------------------------- EPS 0.36 0.48 (25.0%) 1.41 1.60 (11.9%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- n.m.: not meaningful Operating Revenues

    Total operating revenues at BCE grew 0.3% to $4,422 million in Q3 2006 and 0.8% to $13,166 million year-to-date, reflecting improved performance at Bell Canada, offset partially by lower revenues in our Other BCE segment. At Bell Canada, revenues increased 0.4% and 0.9% in the third quarter and first nine months of 2006 to $4,339 million and $12,897 million, respectively. The year-over-year improvements were driven primarily by: higher average revenue per user (ARPU) and subscriber base growth in our Residential segment's Wireless, Internet and Video units; Internet, data and IT services revenue growth at Bell Aliant; and higher wireless subscriptions and sales of IP-based connectivity and ICT solutions to our Business segment customers. In each case, the positive contribution to our top-line results more than compensated for the ongoing erosion of our traditional legacy services and the impact of regulatory decisions. Higher operating revenues at our Residential, Business and Bell Aliant segments in 2006 were partially offset by year-over-year decreases at our Other Bell Canada segment, due primarily to our wholesale operations where competitive pressures in the long distance market and lower data revenues from the sales of fibre and access capacity last year negatively impacted results.

    Total operating revenues in the third quarter reflected a negative net impact from regulatory decisions amounting to approximately $13 million year- over-year. The Canadian Radio-television and Telecommunications Commission's (CRTC) rulings included a reduction in local rates associated with the Price Caps deferral account, a reduction in rates we charge for switching and aggregation services to long distance service providers and an adjustment to the fees we charge to competitive local service providers for co-location in Bell Canada's switching offices. The CRTC's decision in 2005 regarding Competitior Digital Network Services (CDN Decision) partially offsets the adverse regulatory impact on operating revenues this year.

    In addition, the results for Q3 2005 included the positive impact on revenues generated from the sale of customer contracts in our Enterprise unit related to legacy point-of-sale systems, fibre and access capacity sales in our Wholesale unit, and the sale of U.S. conferencing solutions.

    See Segmented Analysis for a discussion of operating revenues on a segmented basis, and Product Line Analysis for a discussion of operating revenues on a product line basis.

    Operating Income

    Operating income at BCE in the third quarter of 2006 was $810 million, down 10.9% from $909 million in the same quarter last year, while on a year-to-date basis operating income decreased 10.7% to $2,572 million from $2,879 million in 2005. Similarly, Bell Canada's operating income declined by 8.6% and 10.4% to $827 million and $2,571 million for the same respective periods. The year-over-year decreases were due largely to restructuring and other items related to restructuring costs for involuntary employee departures at Bell Canada, the relocation of employees and closing of real estate facilities related to a reduced workforce, as well as costs incurred to form Bell Aliant.

    Operating income before restructuring and other items in Q3 2006 was $936 million or 0.4% lower than the same quarter in 2005 at BCE, and was $938 million or 0.3% higher at Bell Canada. Similarly, on a year-to-date basis, operating income before restructuring and other items at BCE was $2,836 million, or 2.5%, lower than the first nine months of 2005 and was $2,817 million or 2.8% lower at Bell Canada. The decreases in operating income before restructuring and other items at both BCE and Bell Canada this quarter, compared with the third quarter of 2005, resulted primarily from continued erosion of our high-margin residential network access services (NAS) wireline customer base, continued operating margin pressure from the transformation of our product mix towards growth services, higher wireless customer retention costs, higher operating expenses from business acquisitions made over the past year, higher capital taxes resulting mainly from the creation of Bell Aliant, as well as increased net benefit plans cost and amortization expense. These negative impacts were partially offset by incremental savings stemming from our various supply and process transformation cost-reduction initiatives, lower customer acquisition costs in our wireless and video units, lower labour costs resulting mainly from employee workforce reductions, lower expenses as a result of costs incurred in Q3 2005 as we recovered from a labour dispute with our technicians in Ontario, as well as higher operating revenues at Bell Canada. On a year-to-date basis, the decreases in operating income before restructuring and other items also were impacted by higher wireless customer acquisition costs in the first quarter of 2006 due to increased gross activations and higher year-over-year costs from our ongoing investment in service improvement.

    See Segmented Analysis for a discussion of operating income on a segmented basis.

    EBITDA

    EBITDA for BCE increased this quarter and year-to-date by 1.3% and 1.1%, respectively, to $1,840 million and $5,556 million from $1,817 million and $5,495 million in the same periods last year. These results reflected improved year-over-year operating performance at Bell Canada in both the third quarter and first nine months of the year, offset by lower EBITDA at Telesat due largely to special compensation costs in Q3 2006 as a result of executive changes and non-recurring revenues this year from the sale of network services that occurred in the second and third quarters of 2005.

    At Bell Canada, EBITDA was $1,835 million this quarter and $5,510 million year-to-date, representing increases of 1.8% and 1.0%, respectively, over the previous year. The results for 2006 reflect improved performance at our Business, Bell Aliant, and Other Bell Canada segments offset mostly by a slight decrease at our Residential segment. On a year-to-date basis, however, our Other Bell Canada segment contributed positively to EBITDA due principally to lower operating expenses, while our Residential segment's EBITDA remained virtually unchanged.

    EBITDA margin for BCE and Bell Canada in Q3 2006 improved 0.4 and 0.6 percentage points, respectively, compared with the same quarter last year, to 41.6% and 42.3%. In the first nine months of the year, EBITDA margin increased slightly at BCE to 42.2% from 42.1%, while Bell Canada's EBITDA margin remained unchanged at 42.7%, compared with the same period in 2005. The relative stability in margins year-over-year reflected a significant step-up in savings from our cost reduction program and stabilizing levels of erosion in our traditional voice and data services. Lower labour costs achieved through workforce reductions and other productivity initiatives such as outsourcing of call centre activities, resolution of residual service issues from a labour dispute with our technicians that created operating expense pressures in 2005, as well as lower customer acquisition costs, due primarily to lower wireless, video and high-speed Internet activations collectively, also contributed towards maintaining steady EBITDA margins. These favourable impacts were offset in part by a number of operating cost pressures, which included continued loss of high-margin legacy voice and data revenues across all our segments, higher operating costs in wireless mainly from increased customer retention activity, higher capital taxes, as well as higher operating expenses from acquisitions made over the past year.

    Wireless EBITDA increased by 13.2% to $411 million in Q3 2006 from $363 million in Q3 2005, driven primarily by wireless revenue growth of 14.3% and lower customer acquisition costs despite higher gross subscriber additions in the third quarter of this year. Nevertheless, wireless EBITDA margin decreased 0.3 percentage points to 43.7% in Q3 2006 from 44.0% in the same quarter last year, due in large part to higher handset upgrade and customer retention costs.

    On a year-to-date basis, wireless EBITDA improved 13.8% to $1,133 million from $996 million in 2005, reflecting revenue growth of 12.7%, reduced customer contact centre costs and lower bad debt expense. These factors contributed to wireless EBITDA margin of 42.9% year-to-date, representing a 0.2 percentage point improvement in margin compared with the first nine months of 2005 when customer service issues related to our billing system conversion had a negative impact on our financial results, particularly during the first three months of the year. The year-over-year EBITDA margin improvement was offset partly by increased retention costs associated with our customer lifecycle management initiatives, as well as the recognition in Q2 2005 of a portion of deferred revenues related to unused prepaid minutes.

    Wireless cost of acquisition (COA) improved 3.9% to $415 per gross activation in Q3 2006 from $432 per gross activation for the same quarter in 2005. Lower COA resulted from a decrease in handset subsidies due to volume rebates received from handset manufacturers, the exercise of pricing discipline despite intense competition, and a higher number of prepaid gross activations year-over-year. These decreases were partly offset by higher marketing expenses associated with our Frank & Gordon campaign and the marketing of Solo Mobile, as well as higher sales commissions from a focus on acquiring higher-value subscribers. On a year-to-date basis, despite the mitigating impact of a larger number of gross subscriber activations year-over-year, COA increased 1.2% to $410 per gross activation in 2006 from $405 per gross activation in the previous year, mainly as a result of higher handset subsidies earlier in the year on premium-priced handsets used to attract high-ARPU, longer-term contract customers, increased advertising costs, promotional initiatives, and higher sales commissions.

    Video EBITDA increased significantly both on a quarterly and year-to-date basis to $42 million and $155 million, respectively, compared with $12 million and $22 million for the same periods in 2005. The year-over-year improvements reflected strong double-digit revenue growth brought about by the combined impact of higher ARPU and a 6.6% increase in the number of customers, as well as significantly lower subscriber acquisition costs due to fewer gross activations and the favourable impact from a higher number of set-top box (STB) rentals. Lower call centre expenses stemming from reduced average call handling times and outsourcing also contributed to the improvement in EBITDA.

    Amortization Expense

    Amortization expense of $786 million in Q3 2006 and $2,332 million on a year-to-date basis in 2006 represent increases of 1.6% and 2.1%, respectively, compared to the same periods last year. This was a result of an increase in our capital asset base from higher investment in the growth areas of the business, as well as capital spending that continues to be higher than asset retirements partly offset by a slight increase in the average life of capital assets.

    Net Benefit Plans Cost

    The net benefit plans cost of $118 million in Q3 2006 and $388 million on a year-to-date basis in 2006 represent increases of 14.6% and 29%, respectively, compared to the same periods last year. The increases resulted mainly from a reduction in the discount rate, which increased the cost of our pension plan liabilities and, therefore, net benefit plans cost.

    On December 31, 2005, the discount rate was reduced from 6.2% to 5.2%. On July 7, 2006, following the formation of Bell Aliant, the discount rate was increased to 5.6% to reflect changes in long-term market interest rates. The increase in discount rate will result in a reduction in net benefit plans cost of approximately $30 million for the second half of 2006 compared to the first six months of 2006.

    (New actuarial valuations were completed in June 2006 for our defined benefit pension plans. For further information, please see Liquidity within our Financial and Capital Management section.)

    Restructuring and Other Items

    We recorded restructuring charges and other items of $126 million in Q3 2006 and $264 million on a year-to-date basis in 2006. These included:

    - charges of $11 million in the third quarter of 2006 and $85 million on a year-to-date basis related to new restructuring costs for the involuntary departure of approximately 200 employees in the third quarter and 1,430 employees on a year-to-date basis - charges of $20 million in the third quarter of 2006 and $44 million on a year-to-date basis for relocating employees and closing real estate facilities that are no longer needed because of the reduction in the workforce from our restructuring costs - transaction costs of $95 million in the third quarter of 2006 and $138 million on a year-to-date basis related to the formation of Bell Aliant. These transaction costs related mainly to investment banking, professional and consulting fees. Net Earnings and Earnings per Share (EPS)

    Net earnings applicable to common shares for Q3 2006 were $285 million, or $0.36 per common share, which represents a decrease of 35% compared with net earnings of $441 million, or $0.48 per common share for the same period last year. Included in net earnings in Q3 2006 was a net charge of $71 million from restructuring and other items, a net charge of $28 million relating to a premium cost incurred by Bell Aliant on early redemption of long-term debt as a result of the formation of Bell Aliant and net gains on investments of $8 million mainly attributable to a $9 million gain on the acquisition by the Bell Canada pension fund of our Nortel Networks Corporation (Nortel) investment. Net earnings were further impacted in the third quarter of 2006 by net losses from discontinued operations of $11 million which included a net loss of $4 million on the sale of most of our interest in Bell Globemedia Inc. (Bell Globemedia) and an $8 million write-down of our CGI Group Inc. (CGI) investment as a result of the acquisition by the Bell Canada pension fund of 25 million of our CGI shares. In the third quarter of 2005, net earnings included a net charge of $21 million from restructuring and other items. Excluding the impact of these items, net earnings of $387 million, or $0.48 per common share, decreased by $75 million, or $0.02 per common share over Q3 2005.

    On a quarterly basis, improved EBITDA performance was more than offset by higher amortization expense and higher net benefit plans cost. There was minimal impact on EPS as a result of the formation of Bell Aliant as the favourable impact from the decrease in tax expense resulting from the non- taxable portion of Bell Aliant's income and the reduction in outstanding common shares of BCE Inc. in conjunction with the formation of Bell Aliant was offset by an increase in non-controlling interest. Income taxes further decreased due mainly to lower pre-tax earnings in Q3 2006 and other adjustments to our estimated future tax liability partly offset by $39 million of savings in Q3 2005 resulting from the loss monetization program between Bell Canada and Bell Canada International Inc. (BCI).

    On a year-to-date basis, net earnings applicable to common shares were $1,238 million, or $1.41 per common share, 16.2% lower than $1,478 million, or $1.60 per common share, for the same period last year. Year-to-date earnings were further impacted by a net charge of $85 million from restructuring and other items associated with our new employee workforce reduction initiatives, the related relocation of employees and closing of real estate facilities, and the transaction costs related to the formation of Bell Aliant. Net earnings was also impacted by a net charge of $14 million incurred by Bell Aliant on early redemption of long-term debt as a result of the formation of Bell Aliant offset mainly by $116 million of net gains from discontinued operations, which related mainly to the gain on sale of most of our interest in CGI in the first quarter of 2006 and a gain of $52 million on the return of capital from BCI offset by a write-down of $17 million on our remaining investment in CGI.

    The year-to-date decrease was further impacted by net gains on investments in 2005 of $27 million which included a $39 million dilution gain in our interest in TerreStar Networks Inc. (TerreStar), a mobile satellite services company partly offset by a $7 million write-down of Bell Globemedia's investment in TQS Inc. which was included in discontinued operations. Excluding the impact of these items, net earnings of $1,323 million, or $1.51 per common share, decreased by $149 million, or $0.08 per common share over last year.

    On a year-to-date basis, income tax expense was further impacted by the decrease in corporate federal income tax rates, the elimination of the large corporation tax stemming from the 2006 federal budget and favourable audit settlements in the first quarter of 2006. Savings in Q2 2005 of $60 million resulting from the loss monetization program between Bell Canada and BCI partially offset the year-to-date decrease.

    SEGMENTED ANALYSIS

    Starting in the third quarter of 2006, our segment reporting reflects the formation of Bell Aliant and it is reported as a separate segment. Since Bell Aliant includes the operation of Bell Canada's former regional wireline operations and Bell Nordiq, the results of our other segments have been restated to reflect the sale of these operations.

    OPERATING Q3 Q3 % YTD YTD % REVENUES 2006 2005 CHANGE 2006 2005 CHANGE ------------------------------------------------------------------------- Residential 1,799 1,770 1.6% 5,288 5,229 1.1% Business 1,495 1,473 1.5% 4,466 4,375 2.1% Bell Aliant 841 826 1.8% 2,506 2,483 0.9% Other Bell Canada 393 436 (9.9%) 1,190 1,229 (3.2%) Inter-segment eliminations (189) (183) (3.3%) (553) (533) (3.8%) ------------------------------------------------------------------------- Bell Canada 4,339 4,322 0.4% 12,897 12,783 0.9% Other BCE 125 127 (1.6%) 393 407 (3.4%) Inter-segment eliminations (42) (41) (2.4%) (124) (124) - ------------------------------------------------------------------------- Total operating revenues 4,422 4,408 0.3% 13,166 13,066 0.8% ------------------------------------------------------------------------- ------------------------------------------------------------------------- OPERATING Q3 Q3 % YTD YTD % INCOME 2006 2005 CHANGE 2006 2005 CHANGE ------------------------------------------------------------------------- Residential 400 430 (7.0%) 1,307 1,379 (5.2%) Business 223 203 9.9% 576 641 (10.1%) Bell Aliant 204 194 5.2% 572 573 (0.2%) Other Bell Canada - 78 n.m. 116 275 (57.8%) ------------------------------------------------------------------------- Bell Canada 827 905 (8.6%) 2,571 2,868 (10.4%) Other BCE (17) 4 n.m. 1 11 (90.9%) ------------------------------------------------------------------------- Total operating income 810 909 (10.9%) 2,572 2,879 (10.7%) ------------------------------------------------------------------------- ------------------------------------------------------------------------- n.m. not meaningful Residential Segment

    Residential revenues increased 1.6% in the third quarter of 2006 and 1.1% in the first nine months of 2006, compared with the same periods last year, to reach $1,799 million and $5,288 million, respectively. Wireless, video, and data revenues contributed 4.0%, 2.1% and 1.6%, respectively, to overall Residential revenue growth in Q3 2006, while terminal sales and other revenues added a further 0.3%. The revenue performance of our growth engines in the quarter was offset largely by negative contributions of 4.7% from local and access services and 1.7% from long distance. On a year-to-date basis, wireless, video, and data revenues contributed 3.0%, 2.7% and 1.3%, respectively, to overall Residential revenue growth in 2006, which was offset largely by negative contributions of 3.6% from local and access services, 2.0% from long distance, and 0.3% from terminal sales and other revenues. Both the quarterly and year-to-date increases were the result of significantly higher video, wireless and high-speed Internet ARPU subscribers. The year-over-year improvements were adversely affected by lower wireline revenues stemming from increased NAS losses due mainly to increased cable telephony competition, continued wireless long distance and VoIP substitution, the impact of CRTC- mandated local rate reductions, as well as ongoing aggressive price competition.

    BCE Inc.

    CONTACT: Pierre Leclerc, Media Relations, (514) 391-2007, 1-877-391-2007,
    pierre.leclerc@bell.ca; Thane Fotopoulos, Investor Relations, (514) 870-4619,
    thane.fotopoulos@bell.ca




    /FIRST ADD - MO378 - BCE Inc./

    Wireline

    Local and access, which represents the largest proportion of our Residential segment revenues, declined this quarter and year-to-date, compared with the same periods in 2005, due mainly to NAS erosion and CRTC-required price reductions for basic service and related SmartTouch features. NAS decreased this quarter primarily as a result of losses to cable companies and competitive local exchange carriers (CLECs), wireline to wireless substitution, as well as continued pressure from growth in high-speed Internet access which reduces the need for second telephone lines. The rate of year- over-year NAS erosion increased in Q3 2006 as the major cable companies operating in our Ontario and Quebec markets continued to expand their service footprints and to vigorously market low-priced cable telephony offerings through bundled offers with other services. The CRTC's Deferral Account decision, which required local rate reductions effective June 1, 2006, reduced local and access revenues by approximately $17 million in the quarter and $21 million year-to-date.

    In line with NAS erosion, long distance revenues were lower both this quarter and year-to-date, compared with the same periods last year, reflecting lower average revenue per minute (ARPM), a decrease in the overall volume of conversation minutes, and lower prepaid calling card sales. However, mainly as a result of an increase in the network charge from $2.95 per month to $4.50 per month, which became effective on April 15, 2006, as well as higher overseas and calling card per-minute rates, total long distance revenues remained relatively unchanged compared with the first two quarters of 2006, while the year-over-year rate of decline slowed compared with previous quarters. Lower ARPM reflected ongoing competition from non-traditional long distance providers, increased adoption of our Block-of-Time (BOT) minute plans, and a lower volume of higher-priced overseas minutes. Overall minutes also declined year over year, as usage gains stemming from our BOT and bundle products were more than offset by the impact from increased NAS erosion and losses of domestic and overseas minutes to alternative, non-traditional long distance service providers.

    (For further information about our wireline business, please see Local and access and Long distance within our Product Line Analysis.)

    Wireless

    Third-quarter and year-to-date Residential wireless revenues increased year-over-year, mainly as a result of a higher average number of customers, a shift in new subscribers towards higher-value rate plans, the growing impact of higher-than-average ARPU prepaid customers from Solo and Virgin Mobile, price increases over the past year for certain services and features, and the continued popularity of our '10-4' push-to-talk service. Higher data usage stemming from our extended EVDO network, increased adoption of 'Fuel Me' bundles, text messaging, mobile browsing and gaming, all of which have been facilitated by the availability of new handsets with enhanced MP3 download and video streaming capabilities, also contributed to the year-over-year improvement in Residential wireless revenues.

    (For further information about our wireless business, please see Wireless within our Product Line Analysis.)

    Data

    Higher Residential data revenues for both the quarter and first nine months of the year were driven by high-speed Internet subscriber base growth of 12.6% and higher ARPU. The improvement in ARPU has been driven by:

    - the implementation of several price increases over the past year, including: - a $5 increase in Q4 2005 for new customers in Ontario subscribing to DSL Basic or Lite service - a $5 increase in Q2 2006 for existing customers in Ontario either on DSL Basic or Lite service - a $2 increase in Q2 2006 for new customers in Ontario subscribing to High-Speed Edition - a $2 increase in Q3 2006 for existing customers in Ontario on High-Speed Edition - a reduction in customer credits - a 34% increase in combined revenues from our Sympatico.MSN.ca web portal and other value-added services such as MSN Premium, Security Services, Games Mania and Home Networking.

    Sympatico customers generated 58.4 million video streams in the quarter, nearly a six-fold increase compared with Q3 2005. The portal, which reaches approximately 87% of online Canadians, currently averages 19.1 million unique visitors per month, reflecting an increase of 17% over the past year. The year-over-year improvements in Residential data revenues were moderated by promotional offers on our Basic and High-Speed Edition products in Quebec.

    (For further information about our data business, please see Data within our Product Line Analysis.)

    Video

    Our Video unit reported strong revenue growth of 15.1% and 20% for the three and nine months ended September 30, 2006, respectively, to $289 million and $852 million compared with the same periods in 2005. The year-over-year improvements were driven by subscriber growth, higher ARPU reflecting the impact of price increases implemented over the past year, continued up-selling of customers to enhanced programming packages, further growth of set-top box (STB) rentals and higher pay-per-view take rates.

    Our video subscriber base has grown by 6.6% over the past twelve months to reach 1,788,000 as at September 30, 2006. In Q3 2006, we added 30,000 new net video subscribers, bringing the total number of new customers activated since the beginning of the year to 61,000. These results compare with new net video subscriber additions of 82,000 and 174,000 for the same comparable periods in 2005. The year-over-year decreases can be attributed to fewer sales in our retail channels, aggressive analog to digital conversions by cable operators, and our acquisition of Cable VDN Inc. (Cable VDN) in Q3 2005 which contributed 12,500 new net subscribers. In addition, total market growth was higher in 2005. The impact of card swaps undertaken by Bell ExpressVu and other direct-to-home (DTH) satellite television providers may have been a contributor to higher growth last year. Despite lower than expected sales in our retail channels in Q3 2006, subscriber acquisition improved throughout the quarter as a result of the launch of our 'All-in-One' Plans, which combine programming, equipment, installation and warranty into simple packages.

    Our video churn rate in the quarter remained unchanged, year-over-year, at 1.0%, reflecting the success of our customer retention activities. On a year-to-date basis, churn increased by just 0.1 percentage point to 1.0%, despite several price increases introduced over the past year, a lower proportion of our subscribers on long-term contracts, and the challenging competitive environment such as aggressive offers on hardware.

    Video ARPU increased to $54 per month in Q3 2006 from $51 per month in Q3 2005. The $3 improvement was due mainly to the shift in product mix towards higher-priced programming packages and to higher pay-per-view revenues, and to a lesser extent to price increases on service offerings implemented since the fourth quarter of 2005. During 2005, we applied rate increases of $2 and $3, respectively, on our basic and theme packages for all new customers effective October. In 2006, we continued to exercise pricing discipline by implementing a $2 rate increase at the beginning of the year on our standard digital programming package for all existing customers without a contract and we increased the system access fee by $3 per month for all our legacy subscribers in May. Customer credits on STB rentals and programming as well as retention discounts partly offset the year-over-year increase in third quarter ARPU. Similarly, on a year-to-date basis, video ARPU increased to $53 per month, reflecting a $4 improvement compared with the same period in 2005.

    Residential Operating Income

    Our Residential segment reported operating income of $400 million this quarter and $1,307 million year-to-date, down 7.0% and 5.2%, respectively, from the comparable periods in 2005. In each case, the decrease was due to a higher rate of decline in our high-margin residential NAS wireline customer base, increased customer retention costs and advertising expenses in our wireless unit, as well as increased amortization expense and net benefit plans cost. These factors were mitigated in part by higher revenues across all our growth services, a decrease in total subscriber acquisition expenses in wireless and video, lower contact centre costs driven by reduced handle times and outsourcing of call volumes, as well as savings from other cost-reduction initiatives which included the ongoing implementation of our One Bill initiative and improved scheduling of customer appointments and repair times.

    Business Segment

    Business segment revenues for the three and nine months ended September 30, 2006 were $1,495 million and $4,466 million, respectively, representing increases of 1.5% and 2.1% over the same periods in 2005. The results for Q3 2005 were impacted positively by the sale of customer contracts related to legacy point-of-sale systems and our U.S. conferencing solutions. Our SMB and Bell West units accounted for 0.8% and 2.0% of the total growth in Business segment revenues in Q3 2006, partly offset by a negative contribution of 1.3% from our Enterprise unit. Similarly, on a year-to-date basis, SMB and Bell West both contributed to the increase in Business segment revenues, accounting for 0.8% and 2.1% of the total respectively, while Enterprise partly offset this growth with a negative contribution of 0.8%.

    Both in the quarter and year-to-date, increases in ICT and wireless revenues from SMB and Enterprise customers were partly offset by further declines in long distance and legacy data revenues as a result of continued intense competitive pricing pressures and ongoing migration of customers' voice and data traffic to our IP-based systems. In addition, wireline access revenues increased in Q3 2006, reflecting stabilization in the rate of erosion in legacy wireline connectivity services and the impact of pricing initiatives implemented by our Enterprise and SMB units.

    Enterprise

    Revenues generated by our Enterprise unit decreased both this quarter and on a year-to-date basis, compared with the same periods in 2005, due primarily to a decline in long distance and legacy data services revenues stemming from competitive price reductions and the ongoing migration of our customers' voice and data traffic to IP-based systems. Higher wireless revenues fuelled by continued solid subscriber growth and increased ARPU, as well as improved penetration of ICT products and services and higher IP connectivity revenues, mitigated the year-over-year decreases in total Enterprise revenues.

    Data revenues decreased in the quarter and first nine months of the year, mainly as a result of competitive price reductions on customer contracts for legacy data services and the positive impact on revenues in Q3 2005 from the sale of customer contracts related to legacy point-of-sales systems, which tempered IP-based connectivity and ICT revenue growth year over year. ICT revenues grew by 5% this quarter and 9% in the first nine months of 2006, reflecting increased sales from companies acquired over the past year to enhance the breadth of our service offerings and new contract wins primarily in the areas of security solutions and wireless data.

    Our Enterprise unit continued to experience an increase in demand for IP- based network solutions, particularly for IP virtual private network services. During the third quarter, our Enterprise unit renewed its service agreement with Desjardins Group, the largest integrated cooperative financial group in Canada. Under this eight-year contract valued at approximately $670 million, Bell will provide Desjardins with IP-based communications, payment and call centre services, a technological evolution plan to convert its approximate 1,500 retail branch offices, and an annual ICT services development plan.

    SMB

    Revenues generated from SMB customers increased this quarter and year-to- date as higher data, wireless and local and access revenues more than compensated for lower long distance and other revenues. Double-digit data revenue growth was fuelled by continued demand for high-speed Internet access service connections and strong growth in ICT sales driven mainly by higher value-added services (VAS) sales and cross-selling opportunities with companies acquired to enhance our virtual chief information officer (VCIO) strategy, while equipment sales remained relatively flat year-over-year. Despite intensifying competition, total VAS/VCIO revenues increased by 24% this quarter and by 27% year-to-date. Although long distance revenues continued to decrease year-over-year, largely as a result of lower minute volumes, competitive pricing pressures and a weakening of our pay-phone business brought about by increasing wireless and Internet substitution, the quarterly rate of decline has stabilized reflecting the impact of strategic product pricing. Local and access revenues increased in the quarter and were stable on a year-to-date basis, reflecting a slower decline in local line losses to alternative telephony providers as a result of our customer retention activities, and the favourable impact of recent price increases for basic local access. Lower other revenues can be attributed primarily to the sale of our U.S. conferencing solutions in the third quarter of 2005 and to a decrease in legacy voice equipment sales.

    Bell West

    Bell West continued to grow its business this quarter as data revenues increased year-over-year, due primarily to the launch of services on the Alberta SuperNet (a next-generation broadband access network), higher data equipment sales and continued growth in Bell West's Enterprise and SMB customer bases. As a result of an internal reorganization completed during the third quarter of 2006, wholesale service revenues associated with demand for local access lines to support Shaw Communications' (Shaw) Digital Phone service are now reflected in the results of our Other Bell Canada segment.

    Business Operating Income

    Business segment operating income in the third quarter of 2006 increased by 9.9% year-over-year to $223 million, mainly as a result of higher revenues, cost reductions and a shift away from less profitable hardware equipment contracts. Higher amortization expense and net benefits plans cost partly offset this increase. In addition, the negative margin impact from the ongoing shift of voice and data traffic to IP-based growth services and the loss of higher-margin legacy voice and data business due to competitive pricing pressures reduced operating income. However, on a year-to-date basis, operating income decreased by 10.1% to $576 million compared to the same period last year, due to lower gross profit as a result of the relatively greater loss of higher-margin legacy wireline business to IP substitution or the competition, relatively higher operating expenses, and increased amortization expense and net benefits plans cost.

    In our Enterprise unit, operating income decreased in the quarter and year-to-date, reflecting lower revenues due to competitive pricing pressures in long distance and legacy data, margin erosion from the shift in product mix towards IP-based services, the impact of customer contracts sales related to legacy point-of-sales systems in Q3 2005, as well as higher net benefits plans cost. This was offset partly by lower selling, general and administration expenses, and a decrease in labour costs driven primarily by workforce reductions.

    Our SMB unit reported solid operating income growth in the third quarter and first nine months of 2006. Year-over-year revenue growth and cost savings from sales force realignment, employee headcount reductions and other process transformation efficiency-related initiatives mitigated the margin erosion associated with the shift in sales from legacy wireline services to VAS/VCIO solutions. These year-over-year increases in the third quarter and year-to- date operating income were offset partly by higher operating expenses from recent business acquisitions, as well as higher net benefit plans cost.

    Bell West recorded higher operating income in both this quarter and the first nine months of 2006, due primarily to improved gross margins from revenue growth and lower operating expenses, offset partially by higher amortization expense now that the Alberta SuperNet is in service.

    Bell Aliant

    Bell Aliant revenues were $841 million in the quarter and $2,506 million year-to-date, reflecting increases of 1.8% and 0.9% respectively compared with the same periods last year, as growth in data and terminal sales and other revenues more than offset declining revenues from local and access and long distance services.

    Local and access services revenue decreased on a year-over-year basis both in the quarter and year-to-date. This resulted mainly from a 1.2% decline in the NAS customer base, reflecting competitive losses, the reduction in second lines as dial-up Internet customers continued to migrate to high-speed services, and the reduction in primary lines as customers adopt wireless and VoIP technologies. Long distance revenues also decreased year-over-year, due primarily to lower per-minute toll prices in the residential market, and lower overall minutes of usage.

    Double-digit data revenue growth in both the third quarter and first nine months of 2006 can be attributed mainly to a significant increase in high- speed Internet revenue resulting from year-over-year subscriber growth of 26%. Subscriber growth in the quarter resulted from competitive marketing offers, proactive management of dial-up customer migration, expansion of our service area, success in marketing our new home business Internet service and the continued popularity of the PC purchase program.

    Terminal sales and other revenue increased in the three and nine months ended September 30, 2006, compared with the same periods last year. The growth was attributable to sizeable new contracts for systems integration, application services and managed outsourcing, as well as to expansion of existing contracts resulting from our focus on key industry verticals in the enterprise market.

    Bell Aliant Operating Income

    Operating income at our Bell Aliant segment increased by 5.2% in Q3 2006 to $204 million from $194 million in the same quarter last year, due mainly to higher EBITDA and lower amortization expense. Higher restructuring and other costs, due mainly to the formation of Bell Aliant, partially offset the year- over-year increase. On a year-to-date basis, Bell Aliant operating income remained virtually unchanged at $572 million, compared with $573 million in 2005.

    Other Bell Canada Segment

    Other Bell Canada segment revenues of $393 million in Q3 2006 and $1,190 million in the first nine months of 2006, represented decreases of 9.9% and 3.2%, respectively, compared with the same three and nine-month periods in 2005. The year-over-year declines were due mainly to lower revenues in our Wholesale unit resulting from continued pressure on long distance revenues as a result of competitive pricing, the ongoing unfavourable impact on data revenues from customers migrating services onto their own network facilities, as well as a number of favourable impacts in 2005 which included:

    - fibre and access capacity sales in Q3 2005, and - the early termination of a cross-border facilities contract in Q2 2005.

    There was no negative year-over-year net impact on Other Bell Canada revenues in 2006 as the impact in 2005 from the CRTC's decision regarding Competitior Digital Network Services was greater than the impact from regulatory decisions rendered by the CRTC this year, which included a ruling with respect to rates we charge for switching and aggregation services to long distance service providers and a ruling related to the fees we charge to competitive local service providers for co-location in Bell Canada's switching offices.

    The year-over-year declines in Other Bell Canada revenues were partly offset by an increase in demand for access capacity. On a year-to-date basis, revenue from a contract to help restore telecommunications service to the areas affected in the United States in September 2005 by Hurricane Katrina also helped to mitigate the year-over-year decrease in revenues.

    Other Bell Canada Operating Income

    Operating income for the Other Bell Canada segment was nil this quarter and $116 million year-to-date, compared with $78 million and $275 million in the same respective periods last year. The decreases were due mainly to restructuring and other charges related to restructuring costs for the involuntary departure of employees and the associated relocation of employees and closing of real estate facilities no longer required as a result of the workforce reduction, as well as to transaction and other operational realignment costs associated with the formation of Bell Aliant. Excluding restructuring and other items, operating income decreased by 2.3% in Q3 2006 to $106 million, mainly reflecting lower revenues primarily as a result of certain sales that occurred in Q3 2005. Lower cost of goods sold due to lower domestic and international long distance traffic and a decreased volume of termination minutes stemming from reduced southbound traffic to the United States, as well as other cost reductions stemming from decreased headcount and our ongoing process and supply transformation initiatives partly offset the negative impacts on operating income. On a year-to-date basis, operating income excluding restructuring and other items increased by 13.0%, mainly as a result of reduced direct operating expenses as explained previously.

    Other BCE Segment Q3 Q3 % YTD YTD % 2006 2005 CHANGE 2006 2005 CHANGE ------------------------------------------------------------------------- Telesat 113 112 0.9% 351 357 (1.7%) Other 12 15 (20.0%) 42 50 (16.0%) ------------------------------------------------------------------------- Other BCE revenues 125 127 (1.6%) 393 407 (3.4%) ------------------------------------------------------------------------- -------------------------------------------------------------------------

    Other BCE segment revenues decreased 1.6% to $125 million in Q3 2006 and 3.4% to $393 million on a year-to-date basis, compared with the same periods in 2005.

    As of August 31, 2006 we have accounted for Bell Globemedia as a discontinued operation and no longer consolidate its financial results. Our remaining investment is accounted for at cost. Bell Globemedia was previously presented in the Other BCE segment.

    Telesat's revenues increased 0.9% to $113 million this quarter, due primarily to higher broadcast revenues, and increased revenue from Telesat's two-way broadband service, offset largely by non-recurring revenue on a sale in 2005 related to the installation and maintenance of an interactive distance learning network and by reduced business activity in South America. In the first nine months of 2006, Telesat's revenues decreased 1.7% to $351 million, due mainly to the sale of services in 2005 generated from its interactive distance learning network as well as to lower South American revenues.

    On September 18, 2006, Telesat announced that a preliminary prospectus and registration statement had been filed for an initial public offering of non-voting shares of Telesat Holding Inc. in Canada and the United States. Upon closing of the offering, Telesat Holding Inc. will be the parent company of Telesat Canada.

    In addition, during the third quarter of 2006, Bell Aliant collaborated with Telesat to launch a two-way broadband satellite service, offering download speeds ranging from 512 Kbps to 2 Mbps.

    Other BCE Operating Income

    Operating income for the Other BCE segment declined to negative $17 million in Q3 2006 and $1 million year-to-date from $4 million and $11 million in the same respective periods last year. The year-over-year decreases in both the third quarter and first nine months of 2006 were mainly the result of lower operating income at Telesat.

    Telesat's operating income decreased 26% to $32 million in Q3 2006 and 10.6% to $110 million year-to-date, due mainly to one-time special compensation costs related to senior executive changes made in September 2006 and higher amortization expense stemming from the launch of its Anik F1R satellite, which was placed into service during Q4 2005. These decreases were offset partly by lower operating expenses.

    Product Line Analysis Q3 Q3 % YTD YTD % REVENUES 2006 2005 CHANGE 2006 2005 CHANGE ------------------------------------------------------------------------- Local and access 1,292 1,371 (5.8%) 3,924 4,117 (4.7%) Long distance 458 513 (10.7%) 1,376 1,574 (12.6%) Wireless 912 798 14.3% 2,566 2,277 12.7% Data 1,022 1,001 2.1% 3,026 2,919 3.7% Video 289 251 15.1% 852 708 20.3% Terminal sales and other 366 388 (5.7%) 1,153 1,188 (2.9%) ------------------------------------------------------------------------- Total Bell Canada 4,339 4,322 0.4% 12,897 12,783 0.9% ------------------------------------------------------------------------- ------------------------------------------------------------------------- Local and Access

    Local and access revenues of $1,292 million in Q3 2006 and $3,924 million year-to-date, represent decreases of 5.8% and 4.7%, respectively, compared with the same periods in 2005, mainly as a result of higher NAS erosion and lower SmartTouch features revenue directly attributable to NAS losses. Local and access revenues were negatively impacted by several CRTC decisions, including a ruling that mandated a reduction in local rates in association with the Price Caps deferral account and a ruling with respect to rates we charge for switching and aggregation services to long distance service providers. In total, these regulatory rulings had an approximate $20 million impact on local and access revenues this quarter and $34 million year-to-date.

    NAS in service declined by 466,000, or 3.7%, since the third quarter of 2005, as a result of increased competition from cable operators for local telephone service, continuing losses to CLECs, wireline to wireless substitution, as well as from growth in high-speed Internet access that reduces the need for second telephone lines. The rate of NAS erosion reflected a higher level of local line losses than the previous year, as the major cable operators in our incumbent territories sustained their intensive marketing efforts and further expanded the footprint of their low-priced local telephony offerings across most of our Ontario and Quebec markets. This was offset partly by higher demand for local access lines from Shaw to offer VoIP services in Western Canada, a year-over-year increase in connection requests for telephone lines associated with the seasonal impact of residential moves and the return-to-school period, and an increase in customer winbacks following the CRTC's decision in April 2006 to reduce the waiting time before contacting lost customers from one year to three months. Despite this positive regulatory development, the CRTC's regulatory restrictions continue to place pressure on our local and access business with respect to bundling and packaging of local services with other non-regulated services and limitations on customer winback promotions.

    Long Distance

    Long distance revenues were $458 million in the quarter and $1,376 million in the first nine months of the year, reflecting year-over-year decreases of 10.7% and 12.6%, respectively, compared with the same periods in 2005. Lower long distance revenues affected all Bell Canada segments, due mainly to the impact of escalating substitution and continued NAS erosion. These year-over-year decreases were offset partly by an increase in the network charges to Residential and SMB customers which became effective on April 15, 2006, as well as by higher overseas and calling card per-minute rates, which helped maintain long distance revenues stable over the first two quarters of 2006. Overall, minute volumes increased slightly this quarter but decreased slightly year-to-date to 4,477 million and 13,609 million conversation minutes from 4,457 million and 13,669 million, respectively. As a result, ARPM decreased by $0.008 in both Q3 2006 and the first nine months of 2006 to reach $0.095 and $0.093, respectively, reflecting a decline in both domestic and overseas minute volumes, as well as competitive pricing pressures in all our markets.

    Wireless

    Gross wireless activations improved 2.5% this quarter to 367,000 from 358,000 gross activations in Q3 2005. This result reflected increased prepaid gross activations brought about by the strong performance of the Solo and Virgin Mobile brands particularly in the youth segment of the market. Prepaid gross activations accounted for 34% or 125,000 of total gross activations in the quarter, up 8.7% from the 115,000 achieved in Q3 2005. Gross postpaid activations in the third quarter remained relatively constant year-over-year at 242,000, compared with 243,000 last year, despite aggressive promotional offers from our competitors featuring a large number of zero-dollar handsets, heavily discounted rate-plans, and other incentives for the back-to-school period.

    On a year-to-date basis, we activated 1,050,000 new gross wireless customers, representing a 3.4% increase over the same period last year, comprised of 709,000 postpaid gross activations and 341,000 prepaid gross activations. This growth was fuelled by ongoing additions to our handset portfolio, promotional rate-plan incentives, our continued solid performance in both the Enterprise and SMB market segments, the growing contribution of subscribers from Solo and Virgin Mobile, our increased presence in Western Canada, the expanding presence of our EVDO wireless data network, as well as unique content deals and downloadable data services popular with the youth segment.

    Our postpaid churn rate for both the third quarter and first nine months of 2006 improved to 1.1% from 1.5% in the same periods last year. The decreases reflect the success of our retention activities and the strength of our value proposition, despite ongoing vigorous competition and tighter policies on the granting of customer discounts and hardware upgrades. The churn rates for 2005 were affected negatively by the cancellation of a number of non-paying customer accounts related largely to the residual impacts from our billing system conversion. Conversely, prepaid churn increased to 2.8% both this quarter and year-to-date from 1.6% and 1.8% in the three and nine months ended September 30, 2005, respectively, due mainly to the deactivation of a higher number of inactive, non-revenue-generating Bell Mobility customer accounts and impact of certain pricing actions taken in 2005. On a combined basis, due to the offsetting impacts of lower postpaid churn and higher prepaid churn, our blended churn rate for the third quarter and first nine months of 2006 remained unchanged year-over-year at 1.5% and 1.6%, respectively.

    As a result of a higher prepaid churn rate, our total wireless net activations decreased to 114,000 in Q3 2006 from 123,000 in Q3 2005. This was comprised of 94,000 new postpaid net activations, reflecting an 88% increase over the 50,000 achieved last year and 20,000 new prepaid customers, down from 73,000 in Q3 2005. Similarly, on a year-to-date basis, our 263,000 wireless net activations were 14.1% lower than the same period last year, despite higher total gross activations, due to a higher prepaid churn rate that resulted in a significantly higher number of deactivations. In the first nine months of 2006, postpaid rate plans accounted for 90% of total net activations, compared with 53% last year. Accordingly, as at September 30, 2006, our total number of cellular and PCS subscribers reached 5,704,000, representing a 9.0% increase over the past twelve months. Postpaid rate plans represented 75% of our total subscriber base at the end of the quarter, compared with 74% at the end of Q3 2005.

    In Q3 2006, we recorded the best quarterly revenue growth rate since the second quarter of 2004. Wireless service revenues grew 14.3% this quarter and 12.7% year-to-date to $912 million and $2,566 million, respectively, compared with the same periods last year. In each case, the combined impact of higher ARPU and a higher average number of subscribers drove the year-over-year improvement.

    Postpaid ARPU reached its highest level ever this quarter, increasing by $3 year over year to $66, while in the first nine months of the year postpaid ARPU improved by $4 over the same period last year to $64. The year-over-year improvements were due primarily to:

    - a shift in the subscriber acquisition mix towards higher ARPU postpaid customers, reflecting increased penetration of BlackBerry customers and other heavy users subscribing to higher-priced rate plans - the positive impact from price increases for certain services and features over the past year - higher data usage reflecting the continued growth of text and multimedia messaging services, wireless Internet access, downloadable ringtones, music and games - the continued popularity of our 'Fuel Me' bundled data offers and '10-4' push-to-talk service, and - an overall increase in minutes of use.

    These increases were partly offset by lower value-added service revenues and lower system access fee revenue as a result of the considerable number of customers subscribing to 'All in One' plans (which were discontinued in February 2006) where all service fees and a number of features are included as part of the monthly plan cost. On October 1, 2006, we increased our system access fee by $2 per month from $6.95 to $8.95.

    Prepaid ARPU also improved this quarter, increasing to $16 per month from $14 per month in Q3 2005. This result reflects increased penetration of Solo and Virgin Mobile customers in our prepaid subscriber base, who generate a higher than average ARPU, as well as higher overall voice and data usage. Year-to-date, prepaid ARPU increased $1 to $14 per month, despite the positive impact in the second quarter of 2005 from the recognition of a portion of deferred revenues related to unused prepaid minutes.

    As a result of both higher postpaid and prepaid ARPU, blended ARPU increased by $2 both this quarter and year-to-date to $53 and $51 per month, respectively, compared with the same periods in 2005.

    Data

    Overall data revenues increased 2.1% this quarter and 3.7% on a year-to- date basis to $1,022 million and $3,026 million, respectively, compared with the same periods last year. The year-over-year improvements were mainly the result of higher Internet ARPU, revenue from our PC Fusion program and an increase in the number of high-speed Internet access service connections, increased sales of IP-based connectivity and ICT solutions among Enterprise and SMB customers, reflecting revenues from companies acquired over the past year to enhance our product portfolio and create cross-selling opportunities, and the service launch of the Alberta SuperNet. However, data revenue growth in 2006 has been tempered by further decreases in legacy data revenues in our Business segment as a result of competitive pricing, as well as the ongoing rationalization of circuit networks by wholesale customers. Data revenues in 2005 were positively impacted by a number of items that did not recur this year, including the sale of customer contracts within our Enterprise unit in Q3 2005 related to legacy point-of-sale systems, fibre and access capacity sales in our Wholesale unit in Q3 2005 and the early termination of a wholesale cross-border facilities contract in Q2 2005, but were largely offset by the CRTC's CDN decision last year.

    The number of high-speed Internet subscribers increased by 90,000 this quarter and by 208,000 year-to-date, compared with 106,000 and 326,000 new net subscriber additions in the same periods last year, bringing our total subscriber count as at September 30, 2006 to 2,403,000. Although we experienced a year-over-year decline in new subscriber additions in the third quarter, this result was in line with our expectations as net activations in Q3 2005 were driven by our Basic Lite service offering in the Ontario market and by substantial footprint expansion. Our primary operating focus this quarter was to up-sell customers to higher-speed products in order to improve revenue growth, drive subscriber growth through expanded use of hardware offers such as our PC Fusion and LCD Monitor programs and reduce customer churn, which improved further in Q3 2006 to reach an all-time low. On a year- to-date basis, subscriber growth was affected by a decrease in demand from SMB customers and wholesale channels, as well as by continued aggressive price competition predominantly within our Quebec market where a major cable operator pursued a customer acquisition strategy based on selling multi- product bundles at discounted rates. In order to combat the aggressive competitive pricing conditions in Quebec, we launched a targeted marketing campaign during the second quarter of 2006, offering special promotional rates on our Basic and High-Speed Edition services for a limited time period.

    The combined impact from an extensive broadband access footprint and focused selling of lower priced services such as our Basic high-speed Internet service has helped to expand the overall high-speed market, stimulating high- speed service growth and accelerating the rate of erosion of dial-up Internet service. Total dial-up customers decreased to 531,000 at the end of the quarter from 621,000 at the end of Q3 2005. Our high-speed Internet access footprint in Ontario and Quebec reaches more than 85% of homes and business lines passed.

    Video See discussion under Residential segment. Terminal Sales and Other

    Terminal sales and other revenues were $366 million this quarter and $1,153 million year-to-date, down 5.7% and 2.9%, respectively, compared with the same periods in 2005. The year-over-year decreases mainly reflected reduced legacy voice equipment sales to SMB customers, the impact from a CRTC decision related to the fees we charge to competitive local service providers for co-location in Bell Canada's switching offices, and the one-time contribution to revenue in Q3 2005 from the sale of our U.S. conferencing solutions. This was offset partly by higher wireless equipment sales at Bell Mobility, higher video STB sales, higher telecommunications equipment sales associated with Bell Aliant's PC purchase program, as well as higher IT product sales at Bell Aliant's xwave division and Innovatia Inc. subsidiary.

    OTHER ITEMS Other (Expense) Income

    Other expense of $113 million in Q3 2006 represented a decrease of $114 million compared to other income of $1 million in Q3 2005. This decrease resulted mainly from a $108 million charge for premium costs on early redemption of Bell Aliant debt, $82 million of which was recorded as a result of the formation of Bell Aliant, a loss of $12 million that was realized on the exercise of a swaption issued by Bell Aliant partly offset by a $9 million gain on the acquisition of the Nortel shares by the Bell Canada pension fund and a $13 million charge in Q3 2005 related to the tax loss monetization program between Bell Canada and BCI.

    Other expense of $149 million in the first nine months of 2006 represented a decrease of $180 million compared to other income of $31 million reported for the same period in 2005. On a year-to-date basis, the decrease was further impacted by a $40 million charge for premium costs on early redemption of Bell Aliant debt in Q2 2006 as a result of the formation of Bell Aliant and a loss of $13 million that was realized in Q1 2006 on the exercise of a swaption issued by Bell Aliant. The year-to-date decrease was further impacted by a dilution gain of $39 million in Q2 2005 relating to our investment in TerreStar offset partly by a $20 million charge recorded in Q2 2005 related to the tax loss monetization program between Bell Canada and BCI.

    Interest Expense

    Interest expense increased 3.8% or $9 million to $247 million in Q3 2006, compared to Q3 2005 and by 0.4%, or $3 million, to $713 million on a year-to- date basis compared to the same period last year. This was a result of higher average debt levels in the first nine months of 2006, mainly from Bell Aliant's new debt issuances in the third quarter of 2006 of approximately $1.5 billion, net of repayments, partly offset by lower average interest expense from the refinancing of debt at lower rates.

    Income Taxes

    Income taxes decreased 53% or $94 million to $85 million in Q3 2006, compared to Q3 2005, due mainly to lower pre-tax earnings, the impact of the non-taxable portion of Bell Aliant's income and other adjustments to our estimated future tax liability partly offset by $39 million of savings in Q3 2005 resulting from the loss monetization program between Bell Canada and BCI. On a year-to-date basis, income taxes decreased by 32% or $195 million to $412 million for the first nine months of 2006. This decrease was further impacted by favourable audit settlements in the first quarter of 2006 and various income tax adjustments resulting from the decrease in corporate federal income tax rates and the elimination of the large corporation tax stemming from the 2006 federal budget made in the second quarter of 2006. This decrease was partly offset by $60 million of savings in Q2 2005 resulting from the loss monetization program between Bell Canada and BCI.

    Non-Controlling Interest

    Non-controlling interest decreased by 16.3% or $8 million to $41 million in Q3 2006, compared to Q3 2005 and by 16.8%, or $25 million, to $124 million on a year-to-date basis compared to the same period last year. On both a quarterly and year-to-date basis, this was mainly due to the non-controlling interest in the premium costs incurred by Bell Aliant on early redemption of long-term debt as a result of the formation of Bell Aliant and transaction costs associated with Bell Aliant, partly offset by higher net earnings at Bell Aliant.

    Discontinued Operations

    The net loss from discontinued operations of $22 million in Q3 2006 relates mainly to our share of Bell Globemedia's operating losses.

    On a year-to-date basis, the net gain from discontinued operations of $116 million was further impacted by our gain on disposition of CGI of $79 million, a gain of $52 million realized on the return of capital from BCI and operating income at Bell Globemedia. This was partly offset by a write-down of $17 million on our remaining investment in CGI.

    The net gain from discontinued operations of $15 million in Q3 2005 and $87 million on a year-to-date basis in 2005 relates to our share of both CGI and Bell Globemedia's operating income.

    FINANCIAL AND CAPITAL MANAGEMENT ------------------------ This section tells you how we manage our cash and capital resources to carry out our strategy and deliver financial results. It provides an analysis of our financial condition, cash flows and liquidity on a consolidated basis. ------------------------ CAPITAL STRUCTURE Q3 2006 Q4 2005 ------------------------------------------------------------------------- Debt due within one year 1,411 1,197 Long-term debt 13,063 11,819 Less: Cash and cash equivalents (2,293) (349) ------------------------------------------------------------------------- Total net debt 12,181 12,667 Non-controlling interest 2,222 2,898 Total shareholders' equity 13,071 14,721 ------------------------------------------------------------------------- Total capitalization 27,474 30,286 ------------------------------------------------------------------------- Net debt to capitalization 44.3% 41.8% ------------------------------------------------------------------------- Outstanding share data (in millions) Common shares 812.0 927.3 Stock options 24.9 27.3 ------------------------------------------------------------------------- -------------------------------------------------------------------------

    Our net debt to capitalization ratio was 44.3% at the end of Q3 2006, compared to 41.8% at the end of 2005. This was a result of a decrease in total shareholders' equity and a decrease in non-controlling interest partly offset by a decrease in net debt.

    Net debt decreased $486 million to $12,181 million in the first nine months of 2006 mainly due to:

    - free cash flow of $502 million - cash provided from discontinued operations of $2,095 million mainly relating to: - $665 million net proceeds from the sale of our investment in Bell Globemedia offset by the deconsolidation of Bell Globemedia's cash on hand of $35 million - Bell Globemedia's return of capital of $607 million as part of the recapitalization of Bell Globemedia - $849 million net proceeds from the sale of CGI offset by the deconsolidation of CGI's cash on hand of $81 million - BCI's return of capital of $156 million offset by BCE's contribution to BCI of $61 million in satisfaction of its obligation arising from last year's tax loss monetization - $23 million of cash generated from Bell Globemedia's operations partly offset by - $21 million incurred for the exercise of CGI warrants. This was partly offset by: - BCE's repurchase and cancellation of 40 million of its outstanding common shares for $1,108 million - Bell Aliant's redemption of preferred shares for $175 million - Bell Nordiq's redemption of preferred shares for $60 million - obligations of $247 million for additional capital leases - an increase in investments of $280 million - $225 million of costs relating to the formation of Bell Aliant.

    Non-controlling interest decreased by $676 million in the first nine months of 2006 due mainly to:

    - $279 million relating to the return of capital as part of the recapitalization of Bell Globemedia - $552 million relating to the deconsolidation of Bell Globemedia - Bell Aliant's redemption of preferred shares for $175 million - Bell Nordiq's redemption of preferred shares for $60 million

    partly offset by a $456 million increase in non-controlling interest at Bell Aliant as a result of our decreased ownership after the formation of the trust.

    Total shareholders' equity decreased $1,650 million to $13,071 million in the first nine months of 2006. This was mainly due to BCE Inc.'s repurchase of 40 million of its outstanding common shares for cancellation through a NCIB and the reduction of 75.8 million outstanding common shares by BCE Inc. in conjunction with a distribution of Bell Aliant trust units, by way of a return of capital, to holders of BCE Inc. common shares.

    CASH FLOWS The following table is a summary of the flow of cash into and out of BCE. Q3 Q3 YTD YTD 2006 2005 2006 2005 ------------------------------------------------------------------------- Cash flows from operating activities 1,602 1,569 3,862 3,778 Capital expenditures (760) (958) (2,198) (2,565) Other investing activities (3) 4 (14) 3 Cash dividends paid on common shares (294) (306) (901) (889) Cash dividends paid on preferred shares (21) (21) (62) (64) Cash dividends paid by subsidiaries to non-controlling interest (75) (46) (185) (143) ------------------------------------------------------------------------- Free cash flow 449 242 502 120 Business acquisitions (27) (55) (66) (177) Bell Aliant (152) - (225) - Increase in investments (161) (75) (280) (216) Decrease in investments - 1 64 5 Issue of common shares 16 12 18 25 Repurchase of common shares (114) - (1,108) - Net issuance (repayment) of debt instruments 1,574 (40) 1,211 328 Financing activities of subsidiaries with third parties - (21) (242) (59) Other financing activities (92) (15) (121) (47) Cash provided by discontinued operations 688 46 2,095 116 ------------------------------------------------------------------------- Net increase in cash and cash equivalents 2,181 95 1,848 95 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash from Operating Activities

    Cash from operating activities increased 2.1% or $33 million to $1,602 million in Q3 2006, compared to Q3 2005 due mainly to an increase in receipts from the securitization of accounts receivable of $48 million and improvements in working capital partly offset by payments of $62 million in relation to the pay equity settlement announced in Q2 2006 and an increase in income taxes paid resulting from a refund received in Q3 2005.

    Cash from operating activities increased by 2.2%, or $84 million, to $3,862 million in the first nine months of 2006 due mainly to:

    - improvements in working capital - an improvement in EBITDA of $61 million. This was partly offset by: - compensation payments of $67 million made to executives and other key employees further to the vesting of all restricted share units (RSUs) granted for a two-year performance period ending at the end of 2005, based on the achievement of specific operating objectives established at the outset of the program two years ago - a decrease of approximately $90 million in receipts from the securitization of accounts receivable. Free Cash Flow

    Our free cash flow this quarter was $449 million, an improvement of $207 million over free cash flow of $242 million in Q3 2005. This was mainly due to:

    - an increase in receipts from the securitization of accounts receivable of $48 million - decrease of $198 million in capital expenditures - an improvement in working capital.

    This was partly offset by payments of $62 million in relation to the pay equity settlement announced in Q2 2006 and an increase in income taxes paid in comparison to Q3 2005 which included a refund received in the third quarter.

    Free cash flow for the first nine months of 2006 was $502 million, an improvement of $382 million over free cash flow of $120 million for the same period last year. This was mainly due to a decrease of $367 million in capital expenditures and an increase in cash from operating activities, as described above partly offset by an increase in dividends paid of $12 million to BCE Inc. common shareholders resulting from the $0.03 quarterly increase in dividend per common share implemented in 2005.

    Capital Expenditures

    Capital expenditures for BCE were $760 million in Q3 2006 and $2,198 million in the first nine months of 2006, reflecting decreases of 21% and 14.3% respectively, compared with the same periods last year. As a percentage of revenues, capital expenditures decreased to 17.2% from 22% and to 16.7% from 19.6% for the same respective periods. Similarly, Bell Canada's capital expenditures decreased 18.1% this quarter to $715 million and by 15.3% to $2,020 million for the first nine months of 2006. As a result, Bell Canada's capital intensity declined 3.7 and 3.0 percentage points, respectively, to 16.5% and 15.7% compared with the same periods last year. The majority of capital spending this year has been focused on key strategic priorities within the growth areas of our business. The year-over-year decreases in spending at both BCE and Bell Canada reflected reduced expenditures on IT infrastructure and systems to support both our cost reduction program initiatives as well as customer contracts in the Business segment, the timing of spending associated with various strategic initiatives, reduced spending at Bell Aliant, lower expenditures related to wireless growth and capacity expansion, and the completion in the fourth quarter of 2005 of the Alberta SuperNet. The difference in capital expenditures between BCE and Bell Canada can be explained primarily by spending on satellite builds at Telesat.

    Cash Dividends Paid on Common Shares

    In the third quarter of 2006, we paid a dividend of $0.33 per common share which was equal to the dividend paid in Q3 2005. The decrease in total cash dividend paid of $12 million in Q3 2006 is a direct result of a decrease in the number of BCE Inc. common shares issued and outstanding as at the dividend declaration date as a result of our NCIB announced on February 1, 2006 and the reduction in the number of shares on July 10, 2006 made in conjunction with the distribution of Bell Aliant trust units to BCE Inc. shareholders.

    In the first nine months of 2006, the total cash dividends paid increased by $12 million over the comparable period for 2005. The previously described positive impact of the decrease in the number of BCE Inc. common shares issued and outstanding on cash dividends paid was offset by the decision in December 2004 by the board of directors of BCE Inc. to increase by 10% or $0.12 per common share the annual dividend on BCE Inc.'s common shares. The new dividend policy began with the quarterly dividends paid on April 15, 2005.

    Business Acquisitions

    We invested $27 million and $66 million, in Q3 2006 and the first nine months of 2006 respectively, in various business acquisitions.

    We invested $55 million in business acquisitions in Q3 2005 and $177 million in the first nine months of 2005. This consisted mainly of Bell Canada's acquisition of Nexxlink Technologies Inc. (Nexxlink) for $74 million and a number of other businesses.

    Bell Aliant

    Cash used for the payment of costs for the formation of Bell Aliant was $152 million in Q3 2006 and $225 million on a year-to-date basis. This included $60 million for Q3 2006 and $103 million on a year-to-date basis of transactions costs which relate mainly to investment banking, professional and consulting fees and $92 million for Q3 2006 and $122 million on a year-to-date basis of premium costs paid on the redemption, prior to maturity, of Bell Aliant debt.

    Increase in Investments

    Cash flows used for investments in Q3 2006 of $161 million increased $86 million from $75 million in Q3 2005. The activity in Q3 2006 relates mainly to our additional investment of US$84 million in Clearwire Corporation (Clearwire), a privately-held company that offers advanced IP-based wireless broadband communications services, in order to maintain our 12% interest in the company. The activity in Q3 2005 relates mainly to Telesat's increase in short-term investments of $63 million.

    In the first nine months of 2006, cash flows used for investments of $280 million increased $64 million from $216 million for the comparable period in 2005. The year-to-date activity was further impacted by Telesat's increase in short-term investments of $15 million. In Q1 2005, Bell Canada invested US$100 million to acquire an approximate 12% interest in Clearwire.

    Decrease in Investments

    Cash flows provided by investments decreased by $1 million in Q3 2006. On a year-to-date basis, there was an increase of $59 million mainly due to the sale of short-term investments of $64 million at Telesat on a year-to-date basis.

    Repurchase of Common Shares

    During the quarter, BCE Inc. purchased an additional 4.4 million common shares for a total cost of $114 million under its NCIB program. This brought the total number of common shares repurchased and cancelled as at September 30, 2006 to 40 million, representing approximately 90% of the total common shares targeted for repurchase, for a total cash outlay of $1,108 million. BCE Inc. commenced the NCIB program on February 1, 2006 with the intention to purchase and cancel approximately 5%, or 45 million, of its outstanding common shares over a twelve-month period.

    Debt Instruments

    We issued $1,574 million of debt, net of repayments, in Q3 2006. The increase in debt instruments consisted mainly of Bell Aliant's increased borrowings from its credit facilities of $955 million and net issuances of medium-term notes of $850 million. In addition, there were increased borrowings in notes payable and bank advances of $80 million, mainly at Bell Canada.

    This was partly offset by repayments which included $260 million in redemption of bonds and debentures at Bell Aliant.

    On a year-to-date basis in 2006, we issued $1,211 million of debt, net of repayments. Bell Aliant drew down $1,235 million on its credit facilities and issued $1,250 million in medium-term notes and there were increased borrowings in notes payable and bank advances of $245 million, mainly at Bell Canada.

    We had the following repayments in the first nine months of 2006: - Bell Canada repaid $463 million of debt - Bell Aliant redeemed $400 million of medium-term notes - Bell Aliant redeemed $385 million of bonds and debentures - Telesat repaid $150 million in notes payable - we made other repayments that included capital leases.

    In Q3 2005, we repaid $40 million of debt, net of issuances. The repayments included $150 million in debentures at Bell Canada and decreased borrowings in notes payable and bank advances of $55 million. The issuances consisted of $200 million in debentures at Bell Canada.

    On a year-to-date basis in 2005, we issued $328 million of debt, net of repayments. The issuances included $900 million in debentures at Bell Canada and $150 million in medium-term notes at Bell Aliant. The repayments included $750 million in debentures at Bell Canada.

    Cash Relating to Discontinued Operations

    Cash provided by discontinued operations was $688 million in Q3 2006. This consisted mainly of:

    - net cash proceeds of $665 million from the sale of our investment in Bell Globemedia - $59 million of cash generated from Bell Globemedia's operations.

    This was partly offset by the deconsolidation of Bell Globemedia's cash on hand of $35 million.

    On a year-to-date basis, cash provided by discontinued operations was $2,095 million. Cash provided by discontinued operations was further impacted by:

    - Bell Globemedia's return of capital of $607 million as part of the recapitalization of Bell Globemedia - net cash proceeds of $849 million from the sale of our investment in CGI, which was offset by the deconsolidation of CGI's cash on hand of $81 million - BCI's return of capital of $156 million offset by BCE's contribution to BCI of $61 million in satisfaction of its obligation arising from last year's tax loss monetization.

    This was partly offset by $36 million of losses from Bell Globemedia's operations and $21 million incurred for the exercise of CGI warrants.

    CREDIT RATINGS

    The table below lists BCE Inc.'s and Bell Canada's key credit ratings at October 31, 2006. On October 11, 2006, following the announcement of our intention to convert into an income trust, S&P(1) placed the ratings of BCE Inc. and Bell Canada on CreditWatch with negative implications; DBRS(2) placed the long-term debt and preferred shares ratings of BCE Inc. and Bell Canada under review with developing implications; Moody's(3) affirmed Bell Canada's ratings, but revised its outlook to negative from stable and placed BCE Inc.'s ratings under review for possible upgrade; and Fitch(4) affirmed the ratings of BCE Inc. and Bell Canada.

    BCE INC. S&P(1) DBRS(2) MOODY'S(3) FITCH(4) ------------------------------------------------------------------------- A-1 (low) / watch Commercial negative R-1 (low) / P-2 / under paper stable review - Long-term BBB+ / watch A (low) / Baa2 / under BBB+ / debt negative under review review stable Pfd-2 (low) / Preferred P-2 / watch under review - - shares negative ------------------------------------------------------------------------- ------------------------------------------------------------------------- BELL CANADA S&P(1) DBRS(2) MOODY'S(3) FITCH(4) ------------------------------------------------------------------------- A-1 (low) / Commercial watch R-1 (low) / P-2 / negative - paper negative stable Extendable commercial R-1 (low) / - - notes - stable Long-term A- / watch A / under Baa1 / BBB+ / debt negative review negative stable Subordinated BBB+ / watch BBB (high) / Baa2 / BBB / long-term negative under review negative stable debt Preferred P-2 / watch Pfd-2 / under - - shares negative review ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Standard & Poor's, a division of The McGraw-Hill Companies, Inc. (2) Dominion Bond Rating Services Limited (3) Moody's Investors Service, Inc. (4) Fitch Ratings Ltd. LIQUIDITY

    Our sources of liquidity and cash requirements remain substantially unchanged from those described in the BCE 2005 MD&A other than as described in the following section entitled Pension Funding.

    Pension Funding

    Further to the completion of new actuarial valuations, we now expect to contribute approximately $430 million to our defined benefit pension plans in 2006.

    The actuarial valuation for the Bell Canada pension plan for December 31, 2005 was completed in June 2006 and resulted in a solvency deficit of $827 million, which we are required to fund over the next five years starting in 2006. This is in addition to the annual funding of the current service cost of $180 million.

    The actuarial valuations for the Aliant pension plans for December 31, 2005 were completed in June 2006 and resulted in a solvency deficit of $210 million, which we are required to fund over the next five years, and a going concern deficit of $166 million, which we are required to fund over the next fifteen years. This is in addition to the funding of solvency deficits identified in previous years and the annual funding of the current service cost of $36 million.

    One-time pension funding relief measures introduced in the May 2006 Federal Budget would increase the funding period of solvency deficits from five to ten years if the proposed pension regulations are enacted. This would reduce the required contributions in 2006. However, there can be no assurance that such pension regulations will be enacted as proposed.

    On July 28, 2006, the Bell Canada pension fund acquired from us 14.9 million Nortel shares and 25 million CGI shares, which had an aggregate market value of $201 million. On October 23, 2006, the Bell Canada pension fund acquired from us our remaining 6.4 million CGI shares and other marketable securities, which had an aggregate market value of $83 million. The acquisitions reduce our cash contributions in 2006.

    Commitment under the CRTC Deferral Account Mechanism

    Based on recent proposals filed with the CRTC, our commitment under the deferral account mechanism has changed from that described in BCE Inc.'s 2006 second quarter MD&A dated August 1, 2006.

    On September 1, 2006, Bell Canada and Bell Aliant filed their proposals for clearing the accumulated balances in their deferral accounts. Bell Canada proposed allocating 5% of its estimated accumulated balance for accessibility initiatives with the remaining 95% of funds used to expand broadband services to unserved areas in rural and remote communities over a five-year period. Bell Aliant proposed allocating 5% of its accumulated balance to fund accessibility initiatives and referred to its proposal filed May 15, 2006 for clearing the remaining 95% of its accumulated balance. On September 11, 2006, the CRTC issued a letter indicating that it would establish a process to assess the Incumbent Local Exchange Carriers (ILEC) proposals. On September 28, 2006, the CRTC issued Telecom Decision 2006-64, in which it approved Bell Aliant's application to increase its annual Service Improvement Plan draw-down, further reducing its deferral account commitment.

    Bell Canada's accumulated deferral account balance at September 30, 2006 is estimated to be $479.3 million with an estimated future annualized commitment of $23.9 million. Bell Aliant's accumulated deferral account balance at September 30, 2006 is estimated to be $8 million with no estimated annualized commitment.

    Recent Developments in Legal Proceedings Lawsuits related to Teleglobe BNP PARIBAS (CANADA) LAWSUIT

    On August 16, 2006, the Court dismissed the defendants' motion challenging the Court's jurisdiction. An appeal has been filed by the defendants with the Ontario Court of Appeal regarding that decision.

    ASSUMPTIONS MADE IN THE PREPARATION OF FORWARD-LOOKING STATEMENTS AND RISKS THAT COULD AFFECT OUR BUSINESS AND RESULTS ------------------------ This section describes assumptions made by BCE in preparing forward- looking statements and general risks that could affect all BCE group companies and specific risks that could affect BCE Inc. and certain of the other BCE group companies. For a more complete description of assumptions made by BCE in preparing forward-looking statements and risks that could affect our business and results, please see the section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results contained in the BCE 2005 MD&A set out on pages 42 to 56 of the Bell Canada Enterprises 2005 Annual Report filed by BCE Inc. with the Canadian securities commissions (available on BCE Inc.'s site at http://www.bce.ca/ and on SEDAR at http://www.sedar.com/) and with the U.S. Securities and Exchange Commission (SEC) under Form 40-F (available on EDGAR at http://www.sec.gov/), as updated in the BCE 2006 First and Second Quarter MD&A and as further updated in this MD&A. Please also refer to the BCE 2005 AIF for a detailed description of: - the principal legal proceedings involving BCE; - certain regulatory initiatives and proceedings concerning the Bell Canada companies. Please see Recent Developments in Legal Proceedings, in the BCE 2006 First and Second Quarter MD&As, and in this MD&A, for a description of recent developments, since the BCE 2005 AIF, in the principal legal proceedings involving us. In addition, please see Risks that Could Affect Certain BCE Group Companies - Bell Canada Companies - Changes to Wireline Regulation in the Section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results in the BCE 2006 First and Second Quarter MD&As, and in this MD&A, for a description of recent developments, since the BCE 2005 AIF, in the principal regulatory initiatives and proceedings concerning the Bell Canada companies. ------------------------ ASSUMPTIONS MADE IN THE PREPARATION OF FORWARD-LOOKING STATEMENTS

    Forward-looking statements made in the BCE 2005 MD&A, in the BCE 2006 First and Second Quarter MD&As and in this MD&A are based on a number of assumptions that we believed were reasonable on the day we made the forward- looking statements and that, unless otherwise indicated in this MD&A or in the BCE 2006 First and Second Quarter MD&As, have not significantly changed as at the date of this MD&A. In the BCE 2005 MD&A, we outlined the principal assumptions that we made in the preparation of our forward-looking statements relating to BCE's expected financial and operational performance in 2006. These assumptions include:

    - assumptions about the Canadian economy related to GDP growth and a slight increase in the business prime rate and the Consumer Price Index - market assumptions related to: (i) growth in the overall Canadian telecommunications market, (ii) the continued decrease in the residential voice telecommunications market, (iii) the increase in wireline competition, and (iv) the growth in revenue for the Canadian wireless industry, the video market and the Internet market - operational and financial assumptions related to: (i) growth in wireless, video and high-speed Internet subscribers as well as ARPU for these services, (ii) the continued decrease in our network access services, (iii) cost savings, (iv) restructuring costs, (v) amortization expense, (vi) total net benefit plans cost, and (vii) Bell Canada's capital intensity - assumptions related to the proposed recapitalization of, and public offering of a minority stake in, Telesat.

    Please see Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results in the BCE 2005 MD&A, for a more complete description of the above-mentioned assumptions.

    UPDATES TO THE DESCRIPTION OF ASSUMPTIONS

    The following are significant updates to the description of assumptions set out in the section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results contained in the BCE 2005 MD&A as updated in the BCE 2006 First and Second Quarter MD&As. For ease of reference, the updates to the description of assumptions below have, where applicable, been presented under the same headings and in the same order contained in the section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results set out in the BCE 2005 MD&A.

    Operational and Financial Assumptions Financial

    On July 7, 2006, following the formation of Bell Aliant, some employees of Bell Canada and employees of Aliant became employed by Bell Aliant. Those employees stopped participating in and accruing benefits in the Bell Canada and Aliant pension plans and started participating and accruing benefits under new Bell Aliant pension plans. As a result, we remeasured the assets and obligations of these pension plans based on current market values and actuarial assumptions as of July 7, 2006. One of these assumptions is the discount rate, which we re-evaluated at 5.6% at July 7, 2006 (from 5.2% at December 31, 2005) to reflect the increase in long-term market interest rates since December 31, 2005.

    Mainly as a result of various income tax adjustments, resulting from the decrease in corporate federal income tax rates, the elimination of the large corporation tax stemming from the 2006 federal budget, and other adjustments to our estimated future tax liability, BCE's effective tax rate in 2006 is now expected to be approximately 25% rather than approximately 30% as previously anticipated.

    Assumptions Related to the Proposed Income Trust Conversion

    In making forward-looking statements concerning Bell Canada's proposed income trust conversion, we have assumed that the various conditions precedent to the Arrangement can be satisfied in accordance with their terms. Please refer to the section entitled Updates to the Description of Risks - Risks that Could Affect All BCE Group Companies - Risks Relating to the Arrangement below for more details.

    RISKS THAT COULD AFFECT OUR BUSINESS AND RESULTS

    A risk is the possibility that an event might happen in the future that could have a negative effect on the financial condition, results of operations or business of one or more BCE group companies. Part of managing our business is to understand what these potential risks could be and to minimize them where we can.

    The actual effect of any event on our business and results could be materially different from what we currently anticipate. In addition, the risks described below and elsewhere in this MD&A do not include all possible risks.

    In the BCE 2005 MD&A, we provided a detailed review of risks that could affect our financial condition, results of operations or business and that could cause actual results to differ materially from those expressed in our forward-looking statements. This detailed description of risks, as updated in the BCE 2006 First and Second Quarter MD&As, is further updated in this MD&A. The risks described in the BCE 2005 MD&A include risks associated with:

    - our ability to implement our strategies and plans in order to produce the expected benefits and growth prospects - general economic and market conditions and the level of consumer confidence and spending, and the demand for, and prices of, our products and services - the intensity of competitive activity from both traditional and new players, which is increasing following the introduction of new technologies that have reduced barriers to entry that existed in the industry, and its impact on our ability to retain existing, and attract new, customers, and on pricing strategies and financial results - our ability to transform our cost structure, improve productivity and contain capital intensity while maintaining quality of services - our ability to anticipate, and respond to, changes in technology, industry standards and client needs and migrate to and deploy new technologies, including VoIP, and offer new products and services rapidly and achieve market acceptance thereof - the availability and cost of capital required to implement our business plan and fund capital and other expenditures - our ability to find suitable companies to acquire or to partner with, to integrate the operations of acquired companies and to complete dispositions - the impact of pending or future litigation and of adverse changes in laws or regulations, including tax laws, or in how they are interpreted, or of adverse regulatory initiatives or proceedings, including decisions by the CRTC affecting our ability to compete effectively - the risk of litigation should BCE Inc. or Bell Canada stop funding a subsidiary or change the nature of its investment, or dispose of all or part of its interest, in a subsidiary - the risk of increased pension fund contributions - our ability to effectively manage labour relations, negotiate satisfactory labour agreements, including new agreements replacing expired labour agreements, while avoiding work stoppages, and maintain service to customers and minimize disruptions during strikes and other work stoppages - events affecting the functionality of our networks or of the networks of other telecommunications carriers on which we rely to provide our services - our ability to improve and upgrade, on a timely basis, our various IT systems and software on which many aspects of our businesses depend - our ability to complete the proposed recapitalization of, and public offering of a minority stake in, Telesat - stock market volatility - the risk that licences on which we rely to provide services might be revoked or not renewed when they expire - our ability to retain major customers - health concerns about radio frequency emissions - launch and in-orbit risks and the ability to obtain appropriate insurance coverage at favourable rates, concerning Telesat's satellites, certain of which are used by Bell ExpressVu to provide services.

    Please see Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results in the BCE 2005 MD&A for a more complete description of the above-mentioned risks.

    UPDATES TO THE DESCRIPTION OF RISKS

    The following are significant updates to the description of risks contained in the section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results contained in the BCE 2005 MD&A as updated in the BCE 2006 First and Second Quarter MD&As. For ease of reference, the updates to the description of risks below have, where applicable, been presented under the same headings and in the same order contained in the section entitled Assumptions Made in the Preparation of Forward-Looking Statements and Risks that Could Affect our Business and Results set out in the BCE 2005 MD&A.

    Risks That Could Affect All BCE Group Companies Liquidity

    On September 18, 2006, Telesat Holding Inc. and its shareholder BCE Inc. announced that a preliminary prospectus and a registration statement had been filed for a public offering of non-voting shares of Telesat Holding Inc. in Canada and the United States. Upon closing of the offering, Telesat Holding Inc. is to become the parent company of Telesat Canada. Telesat Holding Inc. and Telesat Canada are collectively referred to in this section as Telesat. Prior to completion of the offering, Telesat is expected to incur certain indebtedness the net proceeds of which, together with the net proceeds of the offering, are to be distributed to BCE Inc. BCE Inc.'s 2006 financial plan assumes completion of the above-mentioned public offering and recapitalization which, together, are expected to provide BCE Inc. proceeds of approximately $1 billion. However, these transactions will take several months to complete and they are subject to conditions including approval by various regulatory and governmental authorities, as well as BCE Inc. being satisfied that prevailing market conditions are conducive to allowing BCE Inc. to obtain a favourable and acceptable valuation in respect of Telesat. Accordingly, there can be no assurance that Telesat's proposed recapitalization and public offering will be completed. Telesat's inability to complete the proposed public offering and/or recapitalization would have an adverse effect on BCE Inc.'s liquidity.

    Pension Fund Contributions

    On October 23, 2006, the Bell Canada pension fund acquired from us 6.4 million CGI Group Inc. shares and other marketable securities, which had an aggregate market value of $83 million. The acquisitions reduce our cash contributions to the Bell Canada pension fund in 2006.

    Renegotiating Labour Agreements The following important collective agreements will expire in 2006: - the collective agreement between the Canadian Telecommunications Employees' Association (CTEA) and Bell Canada, representing approximately 700 communications sales employees will expire on December 31, 2006. - the collective agreements between the Communications, Energy and Paperworkers Union of Canada (CEP) and Expertech Network Installation Inc. representing approximately 240 clerical and 1,300 craft employees both will expire on November 30, 2006. Risks Relating To The Arrangement

    The completion of the proposed Arrangement is subject to a number of conditions including: (i) approval of the Arrangement by BCE Inc. and Bell Canada shareholders in accordance with applicable law and court orders granted in connection with the Arrangement, (ii) the receipt of all necessary governmental, regulatory and stock exchange approvals and other security holder approvals and other consents, (iii) dissent rights not being exercised in respect of more than a level of the outstanding common shares approved by the BCE Inc. Board, and (iv) there being no change with respect to the income tax laws or policies of Canada or to the telecommunications and other regulatory laws or policies of Canada that would have a material adverse effect on the transactions contemplated by the Arrangement. These conditions may not be satisfied, or may not be satisfied on terms satisfactory to BCE Inc. or Bell Canada, in which case the proposed Arrangement could be modified, restructured or terminated. In addition, the Boards of Directors of each of BCE Inc. and Bell Canada have the discretion to determine not to proceed with the Arrangement.

    Risks That Could Affect Certain Bce Group Companies Bell Canada Companies CHANGES TO WIRELINE REGULATION Decisions of Regulatory Agencies COMMITMENT UNDER THE CRTC DEFERRAL ACCOUNT MECHANISM

    On February 16, 2006, the CRTC issued Telecom Decision 2006-9, where it concluded on the ways that incumbent telephone companies should clear the accumulated balances in their deferral accounts. As required by the CRTC, on September 1, 2006, Bell Canada filed proposals with the CRTC to clear $479.3 million from its deferral account. If approved by the CRTC, the proposals would improve access to communications for persons with disabilities and extend broadband access to some 220,000 potential customers in 264 communities across Ontario and Quebec where it would not otherwise be made available on a commercial basis.

    Due to the nature and number of uncertainties which remain concerning the disposition of accumulated balances in the deferral accounts, we are unable to estimate the impact of the decision on our financial results at this time.

    PRICE CAP FRAMEWORK REVIEW

    On May 9, 2006, the CRTC issued Telecom Public Notice CRTC 2006-5 initiating a proceeding to establish the price cap framework to replace the existing framework that ends May 31, 2007. On July 10, 2006, Bell Canada, Bell Aliant and Saskatchewan Telecommunications filed a pricing framework proposal which reflects the dramatic changes that have taken place in the industry. The proposed framework would come into effect on June 1, 2007 and apply for a period of two years.

    The above-mentioned entities proposed that there should be no regulatory limits on price increases in areas where services are available over alternative facilities, allowing consumers and competition in these areas to drive market prices. In areas where alternative facilities are not available, the above-mentioned entities proposed that service prices remain subject to regulation with upward pricing capped, on average, at current levels. In keeping with both the recommendations of the Telecom Policy Review Panel issued in March 2006 and the recent draft policy direction for the CRTC outlined by the Minister of Industry, the proposed regulation would interfere with market forces to the least extent possible. The entities' evidence was subject to an interrogatory process as well as a public hearing which took place in October 2006. The CRTC intends to issue a decision on this proceeding by April 30, 2007.

    There is a risk that the CRTC may not accept the entities' proposals to rely on market forces to the maximum extent possible and may impose limitations on the Bell Canada companies' marketing flexibility, impeding their ability to respond to market forces.

    DECISION ON VOIP REGULATION

    On May 12, 2005, the CRTC released Telecom Decision 2005-28 which determined the way the CRTC will regulate VoIP services. In Order in Council P.C. 2006-305, dated May 4, 2006, the Governor in Council referred Decision 2005-28 back to the CRTC for reconsideration, directing the CRTC to complete its reconsideration by September 1, 2006.

    On September 1, 2006, the CRTC issued Telecom Decision CRTC 2006-53, reaffirming its findings in Decision 2005-28 concerning the regulation of VoIP services. Pursuant to section 12(7) of the Telecommunications Act, the Governor in Council, if it chooses to do so, has 90 days to vary or rescind the CRTC's findings. There is no assurance that the Governor in Council will rescind or vary the CRTC's findings in a manner favourable to us.

    FORBEARANCE FROM REGULATION OF LOCAL EXCHANGE SERVICES

    On April 6, 2006, the CRTC issued Telecom Decision CRTC 2006-15 which established a framework for the forbearance from regulation of local exchange services. The decision denied Bell Aliant's application for regulatory forbearance in 32 exchanges in Nova Scotia and Prince Edward Island. The denial of Bell Aliant's forbearance application in respect of the Halifax market is the subject of an appeal to the Federal Court of Appeal by Bell Aliant. The Federal Court of Appeal granted Bell Aliant leave to appeal the decision in an order dated September 22, 2006.

    On May 12, 2006, Bell Canada, Bell Aliant, Saskatchewan Telecommunications and TELUS Communications Company (TELUS) filed a petition to the Governor in Council requesting that the Minister of Industry recommend to the Governor in Council that Decision 2006-15 be referred back to the CRTC for reconsideration. Specifically, the companies requested that the CRTC be directed to reconsider the pre-forbearance, forbearance and post-forbearance rules in Decision 2006-15 in light of the conclusions and recommendations contained in the Telecom Policy Review Panel's Final Report issued in March 2006.

    On September 1, 2006, the CRTC issued Telecom Public Notice CRTC 2006-12 in which it is seeking comments regarding whether the "transitional" market share loss threshold of 20 percent as a precondition to the repeal of the winback rule and the market share forbearance criterion threshold of 25 percent established in Decision 2006-15 are appropriate.

    On October 5, 2006, TELUS applied to the CRTC to review and vary one of the forbearance criteria defined in Decision 2006-15. TELUS' application requests that the CRTC remove or amend the forbearance criteria related to meeting certain quality of service standards related to incumbent local exchange carriers' wholesale services.

    There is no guarantee that the outcomes in any of these proceedings will improve the likelihood or speed with which Bell Canada and Bell Aliant will be granted forbearance.

    OUR ACCOUNTING POLICIES

    We have prepared our consolidated financial statements according to Canadian GAAP. See Note 1 to the consolidated financial statements for more information about the accounting principles we used to prepare our financial statements.

    The key estimates and assumptions that management has made under these principles and their impact on the amounts reported in the financial statements and notes remain substantially unchanged from those described in the BCE 2005 MD&A.

    We have not had any significant changes in the accounting standards or our accounting policies other than those described in the BCE 2005 MD&A, except as noted below.

    Adoption of New Accounting Standard

    The CICA reissued section 3830 of the CICA Handbook as section 3831, Non- Monetary Transactions, which establishes standards for the measurement and disclosure of non-monetary transactions. It also includes criteria for defining 'commercial substance' that replace the criteria for defining 'culmination of the earnings process' in the former section. Adopting this section on January 1, 2006 did not have any material effect on our consolidated financial statements.

    CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30 (in $ millions, except share amounts) THREE MONTHS NINE MONTHS (unaudited) NOTE 2006 2005 2006 2005 ------------------------------------------------------------------------- Operating revenues 4,422 4,408 13,166 13,066 ------------------------------------------------------------------------- Operating expenses (2,582) (2,591) (7,610) (7,571) Amortization expense (786) (774) (2,332) (2,285) Net benefit plans cost 4 (118) (103) (388) (300) Restructuring and other items 5 (126) (31) (264) (31) ------------------------------------------------------------------------- Total operating expenses (3,612) (3,499) (10,594) (10,187) ------------------------------------------------------------------------- Operating income 810 909 2,572 2,879 Other (expense) income 6 (113) 1 (149) 31 Interest expense (247) (238) (713) (710) ------------------------------------------------------------------------- Pre-tax earnings from continuing operations 450 672 1,710 2,200 Income taxes (85) (179) (412) (607) Non-controlling interest (41) (49) (124) (149) ------------------------------------------------------------------------- Earnings from continuing operations 324 444 1,174 1,444 Discontinued operations 7 (22) 15 116 87 ------------------------------------------------------------------------- Net earnings 302 459 1,290 1,531 Dividends on preferred shares (17) (18) (52) (53) ------------------------------------------------------------------------- Net earnings applicable to common shares 285 441 1,238 1,478 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net earnings per common share - basic Continuing operations 0.39 0.46 1.28 1.51 Discontinued operations (0.03) 0.02 0.13 0.09 Net earnings 0.36 0.48 1.41 1.60 Net earnings per common share - diluted Continuing operations 0.39 0.46 1.28 1.51 Discontinued operations (0.03) 0.02 0.13 0.09 Net earnings 0.36 0.48 1.41 1.60 Dividends per common share 0.33 0.33 0.99 0.99 Average number of common shares outstanding - basic (millions) 818.8 927.0 878.2 926.6 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF DEFICIT FOR THE PERIOD ENDED SEPTEMBER 30 (in $ millions) THREE MONTHS NINE MONTHS (unaudited) NOTE 2006 2005 2006 2005 ------------------------------------------------------------------------- Balance at beginning of period (4,706) (5,005) (4,763) (5,432) Net earnings 302 459 1,290 1,531 Dividends declared on preferred shares (17) (18) (52) (53) Dividends declared on common shares (268) (306) (864) (918) Excess of purchase price over stated capital of common shares cancelled and related contributed surplus 8 (36) - (336) - Other (1) (1) (1) 1 ------------------------------------------------------------------------- Balance at end of period (4,726) (4,871) (4,726) (4,871) ------------------------------------------------------------------------- ------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEETS (in $ millions) SEPTEMBER DECEMBER (unaudited) NOTE 30 2006 31 2005 ------------------------------------------------------------------------- ASSETS Current assets Cash and cash equivalents 2,293 349 Accounts receivable 1,838 1,399 Other current assets 832 1,043 Current assets of discontinued operations 7 - 892 ------------------------------------------------------------------------- Total current assets 4,963 3,683 Capital assets 21,892 21,777 Other long-term assets 2,907 2,462 Indefinite-life intangible assets 2,903 2,899 Goodwill 2 5,484 5,966 Non-current assets of discontinued operations 7 44 3,851 ------------------------------------------------------------------------- Total assets 38,193 40,638 ------------------------------------------------------------------------- LIABILITIES Current liabilities Accounts payable and accrued liabilities 3,045 3,085 Interest payable 231 170 Dividends payable 310 343 Debt due within one year 1,411 1,197 Current liabilities of discontinued operations 7 1 828 ------------------------------------------------------------------------- Total current liabilities 4,998 5,623 Long-term debt 2 13,063 11,819 Other long-term liabilities 4,839 4,963 Non-current liabilities of discontinued operations 7 - 614 ------------------------------------------------------------------------- Total liabilities 22,900 23,019 ------------------------------------------------------------------------- Non-controlling interest 2 2,222 2,898 ------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Preferred shares 1,670 1,670 ------------------------------------------------------------------------- Common shareholders' equity Common shares 2, 8 13,555 16,806 Contributed surplus 2, 8 2,574 1,081 Deficit (4,726) (4,763) Currency translation adjustment (2) (73) ------------------------------------------------------------------------- Total common shareholders' equity 11,401 13,051 ------------------------------------------------------------------------- Total shareholders' equity 13,071 14,721 ------------------------------------------------------------------------- Total liabilities and shareholders' equity 38,193 40,638 -------------------------------------------------------------------------

    -------------------------------------------------------------------------

    BCE Inc.

    CONTACT: PRNewswire - - 11/01/2006




    Accelr8 Reports 2006 Results and Product Development Progress

    DENVER, Nov. 1 /PRNewswire/ -- Accelr8 Technology Corporation reported financial results for the fiscal year ended July 31, 2006. Total revenues were $212,701 as compared to $502,110 in 2005. Revenues declined due to the company's transition from direct product sales to royalty income solely from licensees of OptiChem(R) coated microarraying slides. Overall performance resulted in a net loss of $3,030,621 or $0.30 per share as compared to fiscal year 2005 which recorded a net loss $2,090,800 or $0.21 per share.

    "The 2006 fiscal year saw our transition to a complete Research and Development operation," said David Howson, president. "We now devote essentially all of our resources to the BACcelr8r(TM) development program. During the fiscal year and the subsequent quarter we achieved a number of key technical objectives. As a result, we have reduced our spending level from $1.1 million for outside engineering and have focused our internal staff on developing statistical data sets for the BACcelr8r's methods.

    "We now have two research systems working in our lab, and have completed design of 8-channel single-use analyzer cassettes for rapid bacterial identification. The cassette design represents a new level of sophistication in a disposable device that enables automated operation. Our automated image analysis has progressed to the point where we were able to conduct limited testing with blinded laboratory samples," noted Howson.

    "We've defined an early-release product that we call the BACcel(TM)-1.0. It will perform rapid, quantitative pathogen identification. Based on our testing, we believe that it will also identify organisms according to major antibiotic resistance categories. For example, most people have seen press reports about so-called 'superbug' infections by a kind of 'Staph' known medically as 'MRSA.' We have shown that our methods can identify whether a patient's Staph infection belongs to the MRSA category or the more easily treated type of Staph.

    "There are organisms, such as Pseudomonas, that are even more difficult than MRSA to identify and treat. We've developed analytical methods that categorize those as well. We plan to include these in the first clinical research versions of the BACcel-1.0. In clinical application, this capability could help the physician to avoid drugs that are most likely to fail in initial empiric therapy.

    "We have also started to present experimental evidence to the scientific and medical communities to support the BACcelr8r's novel operating principles. We have additional publications in the pipeline, and expect to expand this activity," Howson concluded.

    About Accelr8

    Accelr8 Technology Corporation (http://www.accelr8.com/) is a developer of innovative materials and instrumentation for advanced applications in medical diagnostics, basic research, drug discovery, and bio-detection. Accelr8 is developing a new diagnostic platform, the BACcelr8r(TM), based on its proprietary surface coatings, assay processing, and detection technologies. The company intends the BACcelr8r(TM) to become the world's first diagnostic system to provide bacterial identification and quantitation in 2 hours or less, and complete antibiotic resistance strain identification in 8 hours or less. Standard culturing typically delays lab results from one to three days, which is far beyond the short time window that physicians have available to assure adequate initial therapy for a life-threatening hospital acquired infection (HAI).

    Forward-Looking Statements

    Certain statements in this news release may be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements regarding future prospects and developments are based upon current expectations and involve certain risks and uncertainties that could cause actual results and developments to differ materially from the forward-looking statement, including those detailed in the company's filings with the Securities and Exchange Commission. Accelr8 does not undertake an obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events.

    Accelr8 Technology Corporation

    CONTACT: John Metzger of Metzger Associates, +1-303-786-7000, ext. 2202,
    john@metzger.com; or David Howson of Accelr8 Technology, +1-303-863-8088,
    david.howson@accelr8.com

    Web site: http://www.accelr8.com/




    LogicaCMG Study Unveils GBP3 Billion Consultancy 'Gap'

    LONDON, November 1 /PRNewswire/ --

    - New Study Finds That a Quarter of Consultancy Programmes are not Assessed Against Original Objectives

    British companies should be able to generate far greater value from their use of external consultants, according to a comprehensive study of buying attitudes published today.

    The research, commissioned by leading IT and business services company LogicaCMG, surveyed board level buyers of consultancy services among 100 leading UK businesses across a range of sectors. It found that while the use of consultants is both widespread and on the increase, some companies are showing a lack of sophistication in how they are selecting, managing, and measuring the performance of the consultancies they use.

    Sixty per cent of those questioned thought they were proactive and strategic buyers of consulting, but this claim was undermined by their detailed responses which showed a pattern of reactive and tactical buying of external short term consultancy services, indicating a significant gap between perception and reality.

    According to an assessment of their buying habits and use of consultants, only 40 per cent of the companies surveyed could be classified as mature buyers of consultancy with a strategic approach.

    This analysis of the research findings was mapped onto a diagram, The LogicaCMG Consultancy Quadrant, in order to examine possible causes and relationships between an organisation's strategic vision when it comes to employing consultants, and their maturity of buying process. The analysis identified four different types:

    - Rising Stars (10 per cent): buyers who are less mature in the way that they buy consulting services, but who manage their consultants strategically to give good business benefit from their work

    - Wise Owls (40 per cent): those who are experienced and effective buyers of consultancy, who use consultants for well constructed programmes of work that align with clearly defined corporate strategies

    - Aspirants (23 per cent): companies displaying reactive buying patterns, and using consultants for short-term tactical activities, often driven by external pressures such as regulatory compliance

    - Mid-life Crises (27 per cent): companies that are mature buyers of consultancy, but who are failing to learn from past experiences or lack of success measures and continue to hire consultants in a reactive manner, to solve problems more than for strategic programmes.

    Respondents expressed reservations about using larger consultancies, fuelled by a frustration that consultants from these firms can spend as much time looking for more work as they do undertaking the job they were hired to do. In addition, 61 per cent said they expected to pay extra for using a large consultancy simply because of the name and 50 per cent admitted to being deterred from using such consultants because of high profile failures and cost overruns.

    A key criteria for assessing whether companies are mature users of external consultants is if they measure the impact consultancy activity has on their business: one in 10 of those interviewed never do any measurement while only a third always do. The study also found that a significant number were not even employing basic measures such as comparing results with original objectives (25 per cent), or looking at whether the work was delivered on time (25 per cent).

    Relationships between respondents and their external consultancy providers are on a strong footing, according to the research, with a healthy appreciation of the benefits they can deliver. Respondents gave a mean score of 4.5 out of 5 (with 5 being a great benefit) for consultants' ability to focus on real actions and see them through, the same score for delivering value for money, and 72 per cent reported that real loyalty and trust had been built during their last engagement.

    Alan Russell, director of LogicaCMG's consulting division and the president of the Management Consultancies Association, said: "Our research indicated that many clients buy consulting services in the same way that they would purchase commodities, which suppresses the business value that a well-founded consulting assignment can bring. This situation may contribute to another finding, in that clients may not permit consultants to assist with the development of a strategic specification for their work, leading to a surprisingly high proportion of short-term or tactical engagements.

    "Consultancy suppliers in turn would be advised to change their approach, by having the flexibility to respond to the needs of clients in distress situations and accommodate the short term constraints that may impose. This will help them win the client's trust so that, in the longer term, they can act as an advisor to the client to introduce a more strategic approach that can deliver sustainable value and enhance business performance."

    To view further information about the research, including a copy of the LogicaCMG Consulting Quadrant, please visit http://www.logicacmg.com/uk/400004633

    About LogicaCMG

    LogicaCMG is a major international force in IT services. It employs 30,000 people across 36 countries. LogicaCMG's focus is on enabling its customers to build and maintain leadership positions using LogicaCMG's deep industry knowledge and its track record for successful delivery. The company provides business consulting, systems integration and IT and business process outsourcing across diverse markets including telecoms, financial services, energy and utilities, industry, distribution and transport and the public sector. Headquartered in Europe, LogicaCMG is listed on both the London Stock Exchange and Euronext (Amsterdam) (LSE:LOG; Euronext:LOG). More information is available at www.logicacmg.com/uk.

    LogicaCMG Plc

    Press contact: Simon Hill, Trimedia Communications for LogicaCMG, Tel: +44-207-025-7526, Email: simon.hill@trimediauk.com. Nicky Rich, LogicaCMG, Tel: +44-207-446-5384, Email: nicky.rich@logicacmg.com

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