Plans Non-Cash Write-Down for MAPLE Asset and MDS Pharma Services Goodwill

MDS Inc. (TSX: MDS; NYSE: MDZ), a leading provider of products and services to the global life-sciences markets, today provided an update for fiscal 2008 performance.

Based on preliminary information, MDS expects to report year-end fiscal 2008 net revenue in the range of $1,210 million to $1,220 million and adjusted EBITDA in the range of $148 million to $154 million. MDS’s fiscal 2008 net revenue guidance range was $1,230 million to $1,250 million and its adjusted EBITDA guidance range was $160 million to $170 million. The change in forecasted performance is due primarily to foreign exchange fluctuations, which include an embedded derivative charge, and soft demand in some segments of the Company’s North American customer base.

MDS also announced that it will incur a non-cash after-tax charge of approximately $260 million to write off the net book value of its MAPLE nuclear-reactor project asset. The Company also expects to take a non-cash write-down of MDS Pharma Services goodwill in the range of $270 million to $370 million, as a result of the decline in overall contract research organization stock market valuations, current economic uncertainty and the delay in profit recovery. These non-cash charges will result in a net loss below the Company’s 2008 guidance range.

As a result of these non-cash charges, certain debt covenants will restrict MDS from repurchasing shares for the foreseeable future.

“These two write-downs will have no impact on our cash position and our day-to-day operations at MDS Nordion and MDS Pharma Services,” said Stephen P. DeFalco, President and Chief Executive Officer, MDS Inc. “With respect to the MAPLE asset, we have determined that we are required to take a full write-down for MAPLE under applicable accounting rules, given the difficulty of projecting a specific outcome for any dispute of this nature. We continue to believe we have a strong case against AECL and the Government of Canada relating to the MAPLE agreement.”

Fourth Quarter 2008 Financial Results – Conference-Call Details

MDS will provide additional details on this announcement in conjunction with the Company’s release of its 2008 fourth-quarter financial results on Wednesday, December 17, 2008.

MDS will host a conference call for analysts to discuss fourth quarter and fiscal 2008 results on Wednesday, December 17, 2008 at 9:30 a.m. EST with Stephen P. DeFalco, President and Chief Executive Officer and Douglas Prince, Executive Vice-President, Finance and Chief Financial Officer. Interested parties may access the live Webcast of the conference call from the MDS website at www.mdsinc.com. Following the call, an audio archive and the presentation slides will be available on the Website in the “For Investors” section under “Webcasts & Presentations”.