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Offshore Systems International Reports Record Fiscal Third Quarter & Nine-Month Earnings & Revenue.

Business Editors

VANCOUVER, British Columbia--(BUSINESS WIRE)--Oct. 2, 2002

Offshore Systems International Ltd. (TSX: OSI), a marine electronic navigation company with a strong defense niche, today announced record operating results for its three and nine month periods ended August 31, 2002.

"In addition to achieving our eleventh successive profitable quarter we had strong revenue growth," said John Jacobson, President and CEO Offshore Systems International. "New business, including a major new order from the United States Coast Guard, continued to flow as interest in our technology grew among navies around the world."

Financial Highlights

During the fiscal third quarter of 2002, revenues increased 50% to $2.7 million (US$1.7 million) compared to $1.8 million in the same quarter last year. Net earnings increased to $536,535 or $0.02 per diluted share, from $120,512, or $0.00 a diluted share, in the year-earlier third quarter. All amounts are in Canadian dollars unless otherwise specified.

For the first nine months of 2002, revenues were up 84% to $9.8 million (US$6.2 million) compared to $5.3 million for the nine months ended August 31, 2001. Net earnings increased to $1.1 million or $0.04 per diluted share, from $144,100, or $0.01 a diluted share, in the first nine months of fiscal 2001.

Offshore Systems' order backlog at the end of the fiscal 2002 third quarter was in excess of $5.7 million versus $4.9 million the year earlier - an increase of 17%.

The Company's profitable growth helped to strengthen its balance sheet during the quarter. At August 31, 2002, the Company had working capital of $4.1 million compared to $2.8 million at November 30, 2001, OSI's year-end, including cash and cash equivalents of $2.2 million.

"Our cash position continues to strengthen, in fact, at the end of September, our cash and equivalents was just under $4 million," said Mr. Jacobson. "This positive cash flow trend allows us to confidently support our R&D activities and increase our business development initiatives."

Operational Highlights

In June, 2002, the U.S. Coast Guard placed an order for $2.2 million for Offshore Systems' ECPINS(R)-M systems and upgrades. The order represents follow-on business with the Coast Guard subsequent to Offshore's ECPINS(R) systems being installed earlier in the year on two of the Coast Guard's 'Polar-class' icebreakers.

In July 2002, the Company announced that it has received Type Approval of its ECPINS(R) product line as an International Maritime Organization standard Electronic Chart Display and Information Systems (ECDIS). The Type Approval was issued by the Federal Maritime and Hydrographic Agency of Germany, one of a small number of testing laboratories worldwide that are authorized to issue these certifications.

In the same month the Company announced that it completed the installation of its latest ECPINS-M system aboard Lockheed Martin's Sea SLICE advanced technology demonstration vessel. Developed by the United States Navy Office of Naval Research and the Naval Electronics & Surveillance Systems division of Lockheed Martin, Sea SLICE participated in the United States Navy's Fleet Battle Experiment - Juliet. The U.S. Navy's Fleet Battle Experiments are underway-exercises designed to evaluate new technology and new operational concepts for future development and deployment.

The Company

Founded in 1977, Offshore Systems designs, develops and markets the proprietary ECPINS(R) line of electronic chart navigation systems for ships. ECPINS helps to reduce the risk of navigation-related incidents by giving bridge crews a precise, real-time display of their position, course and speed, against a background of fixed obstacles and other navigational hazards. Offshore Systems has developed a strong market position in military navigation, and has ECPINS systems deployed with the United States Coast Guard, the Canadian Navy, the Royal Danish Navy and the United States Navy.

Information Concerning Forward-looking Statements

Statements in this News Release, to the extent not based on historical events, constitute forward-looking statements. Forward-looking statements include, without limitation, statements evaluating market and general economic conditions in the preceding sections, and statements regarding future-oriented costs and expenditures. Investors are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date thereof. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties with respect to the company include the effects of general economic conditions, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgements in the course of preparing forward-looking statements.

Offshore Systems International Ltd.
Selected Consolidated Financial Information (Unaudited)
(Canadian dollars - Canadian GAAP)

Statement of Earnings Information
 Three months ended Nine months ended
 August 31, 2002 August 31, 2002
 (unaudited) (unaudited)
 2002 2001 2002 2001
Revenue 2,697,781 1,802,300 9,810,751 5,323,630
Earnings for the period 536,535 120,512 1,115,852 144,100
Basic earnings per share 0.02 0.01 0.04 0.01
Fully diluted earnings per share 0.02 0.00 0.04 0.01

Balance Sheet Information August 31 November 30
 2002 2001
 (unaudited) (unaudited)
Cash and cash equivalents 2,163,797 2,037,625
Working capital 4,134,425 2,848,151
Current assets 8,939,066 6,022,312
Total assets 10,313,798 7,375,007
Current liabilities 4,804,641 3,174,161
Long term debt 212,211 371,484
Total liabilities 5,016,852 3,545,645
Shareholders' equity 5,296,946 3,829,362
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Publication:Business Wire
Date:Oct 2, 2002
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