/FIRST AND FINAL ADD - TO407 - MDS Inc./

  12. Segmented Information

                                             Three months to July 31, 2006
  -------------------------------------------------------------------------
          Pharmaceutical             Instru-     Diag-  Corporate
                Services  Isotopes     ments   nostics  and Other    Total
  -------------------------------------------------------------------------
  Net revenues   $   126   $    88   $    74   $    89   $     -   $   377
  Cost of
   revenues         (105)      (45)      (46)      (51)        -      (247)
  Selling,
   general and
   administration    (35)      (14)       (7)      (11)      (10)      (77)
  Research and
   development         -        (1)       (4)        -         -        (5)
  Depreciation and
   amortization       (9)       (4)       (5)       (2)        -       (20)
  Restructuring
   charges            (1)        -         -         -        (1)       (2)
  Other income
   (expense)           5         -         -         -         -         5
  Equity earnings
   (loss)              -         -         -         1         -         1
  -------------------------------------------------------------------------
  Operating
   income (loss) $   (19)  $    24   $    12   $    26   $   (11)  $    32
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Total assets   $   912   $   724   $   205   $   240   $   544   $ 2,625
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Capital
   expenditures  $    14   $     -   $     2   $     1   $     3  $     20
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------



                                             Three months to July 31, 2005
  -------------------------------------------------------------------------
          Pharmaceutical             Instru-     Diag-  Corporate
                Services  Isotopes     ments   nostics  and Other    Total
  -------------------------------------------------------------------------
  Net revenues   $   133   $    79   $    74   $    82   $     -   $   368
  Cost of
   revenues          (95)      (43)      (42)      (53)        -      (233)
  Selling,
   general and
   administration    (40)       (7)       (6)      (16)       (3)      (72)
  Research and
   development        (1)       (2)       (4)        -         1        (6)
  Depreciation and
   amortization       (8)       (4)       (2)       (4)        -       (18)
  Restructuring
   charges            (5)        -         -         -         -        (5)
  Other income
   (expense)          (8)        -         -         -         -        (8)
  Equity earnings
   (loss)              -         -         -         -         -         -
  -------------------------------------------------------------------------
  Operating
   income (loss) $   (24)  $    23   $    20   $     9   $    (2)  $    26
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Total assets   $ 1,000   $   799   $   228   $   307   $   452   $ 2,786
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Capital
   expenditures  $     9   $    23   $     1   $     -   $     9   $    42
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------


                                              Nine months to July 31, 2006
  -------------------------------------------------------------------------
          Pharmaceutical             Instru-     Diag-  Corporate
                Services  Isotopes     ments   nostics  and Other    Total
  -------------------------------------------------------------------------
  Net revenues   $   385   $   253   $   211   $   262   $     -   $ 1,111
  Cost of
   revenues         (295)     (128)     (128)     (153)        -      (704)
  Selling,
   general and
   administration    (98)      (42)      (15)      (34)      (29)     (218)
  Research and
   development         -        (2)      (10)        -         -       (12)
  Depreciation and
   amortization      (24)      (12)      (15)       (6)        -       (57)
  Restructuring
   charges            (1)        -         -        (1)       (3)       (5)
  Other income
   (expense)           5       (10)        -         -        (3)       (8)
  Equity earnings
   (loss)             (1)        -         -         2        (4)       (3)
  -------------------------------------------------------------------------
  Operating
   income (loss) $   (29)  $    59   $    43   $    70   $   (39)  $   104
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Capital
   expenditures  $    31   $     -   $     5   $     3   $     9   $    48
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------


                                              Nine months to July 31, 2005
  -------------------------------------------------------------------------
          Pharmaceutical             Instru-     Diag-  Corporate
                Services  Isotopes     ments   nostics  and Other    Total
  -------------------------------------------------------------------------
  Net revenues   $   408   $   229   $   213   $   249   $     -   $ 1,099
  Cost of
   revenues         (286)     (118)     (121)     (156)        -      (681)
  Selling,
   general and
   administration   (115)      (37)      (16)      (44)      (11)     (223)
  Research and
   development        (2)       (4)      (18)        -         2       (22)
  Depreciation and
   amortization      (22)      (11)       (9)       (8)       (1)      (51)
  Restructuring
   charges            (4)        -         -         -        (1)       (5)
  Other income
   (expense)          (8)        -         -         -         -        (8)
  Equity earnings
   (loss)              -         -         1         1         -         2
  -------------------------------------------------------------------------
  Operating
   income (loss) $   (29)  $    59   $    50   $    42  $    (11)  $   111
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  Capital
   expenditures  $    17   $    36   $     5   $     -  $     20   $    78
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  13. Financial Instruments

  The carrying amounts and fair values for all derivative financial
  instruments are as follows:

                                                             As at July 31
                                                  2006                2005
  -------------------------------------------------------------------------
                                    Carrying      Fair  Carrying      Fair
                                      amount     Value    Amount     Value
  -------------------------------------------------------------------------
  Asset (liability) position:
    Currency forward and option
      - asset                        $     1   $     4   $     4   $    10
    Currency forward and option
      - liabilities                  $    (1)  $    (1)  $    (2)  $    (2)
  Interest rate swap and
   option contracts                  $    (3)  $    (4)  $     -   $     -
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  As of July 31, 2006, the Company had outstanding foreign exchange
  contracts and options in place to sell up to US$105 million, and in
  certain circumstances up to US$158 million, at a weighted average
  exchange rate of C$1.1590 maturing over the next six months. The Company
  also had interest rate swap contracts that economically convert a
  notional amount of US$80 million of debt from a fixed to a floating
  interest rate.

  Foreign exchange options and interest rate swaps not eligible for hedge
  accounting are included in accounts payable and are marked to market each
  period.

  14. Income Taxes

  A reconciliation of expected income taxes to reported income tax expense
  is provided below. The effective rate for the quarter was 16%
  (2005 - 30%).

                                                   Three months to July 31
                                                            2006      2005
  -------------------------------------------------------------------------
  Expected income taxes expense at MDS's 35%
   (2005 - 35%) statutory rate                           $    11   $     8
  Increase (decrease) to tax expense as a result of:
    Benefit of tax losses previously not recognized           (4)       (4)
    Impact on federal tax rate decrease on future
     tax balances                                             (3)        -
    Other                                                      1         3
  -------------------------------------------------------------------------
  Reported income tax expense                            $     5   $     7
  -------------------------------------------------------------------------
  -------------------------------------------------------------------------

  15. Commitments

  As at October 31, 2005, MDS had a remaining five-year commitment of
  $211 million related to the outsourcing of the information technology
  infrastructure. During the quarter, MDS reached an agreement with the
  current service provider and has begun to transition these services to
  new providers. The Company has entered into contracts totaling
  $50 million over five years associated with these new agreements.

  During the quarter, the Company pledged a $15 million letter of credit in
  support of future site remediation costs for our Kanata facility.

  16. Comparative Figures

  Certain figures for the previous year have been reclassified to conform
  with the current year's financial statement presentation. In addition,
  segmented information for 2005 has been restated to reflect the
  discontinued operations reported.


DATASOURCE: MDS Inc.



CONTACT: PRNewswire - - 09/07/2006

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