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					A New Era


            Q3
            NORDION INC.
            INTERIM REPORT
            JULY 31, 2011
            (UNAUDITED)
For Immediate Release


                               Nordion Reports Third Quarter 2011 Financial Results

                     Nordion delivers strong performance from high margin products in the third quarter 2011

Nordion Highlights:

         Strong year-over-year TheraSphere® revenue growth of 58% to $11.5 million in third quarter 2011
         Cobalt-60 shipments up 74% year-over-year in third quarter 2011
         Meeting Mo-99 customer demand as expected following planned NRU reactor maintenance
          shutdown


Nordion reports in U.S. dollars unless otherwise specified


OTTAWA, CANADA – September 13, 2011 – Nordion Inc. (TSX: NDN) (NYSE: NDZ), a leading provider of
products and services to the global health sciences market, announced today third quarter 2011 revenues from
continuing operations of $66.8 million, up 39% from $47.9 million in the third quarter 2010. Income from
continuing operations, net of income taxes was $4.7 million ($0.07 earnings per share), compared with a loss from
continuing operations of $8.7 million ($0.13 loss per share) in the third quarter 2010.


“Nordion’s performance continued to be solid and steady in the third quarter,” said Mr. Steve West, Chief
Executive Officer, Nordion Inc. “We demonstrated consistent performance across our high margin products and
continue to focus on creating long-term value for our shareholders through disciplined financial management and
operational execution.”


Key Q3 2011 Events:
    On June 6, 2011, Nordion announced a three-year $75 million senior revolving credit facility.
    On June 9, 2011, Nordion announced the unveiling of the GammaFIT™, a new Flexible Irradiation
     Technology system.
    On June 16, 2011, Nordion announced it awarded the contract for the STOP-HCC and EPOCH
     TheraSphere Phase III clinical trials to contract research organization, Theorem Clinical Research (formerly
     Omnicare Clinical Research).

                                               Nordion Inc. Interim Report July 31, 2011
                                                                   1
      On June 16, 2011, the Atomic Energy Canada Limited’s National Research Universal (NRU) reactor returned
       to service after a 32-day planned maintenance shutdown.
      On July 25, 2011, Bracco Diagnostics Inc. (Bracco) issued a letter notifying customers that it had voluntarily
       discontinued the sale of CardioGen-82™ generators and recalled the units in the market due to two patients
       having received a higher radiation dose than expected.
      As of July 31, 2011, Nordion had repurchased 3.6 million Common shares at an aggregate cost of
       $40.5 million.


  Third Quarter 2011 Results
  The divested Belgian financial results are reported under discontinued operations in the current and comparative
  periods.


  Consolidated Financial Results
                                                              Three months ended July 31               Nine months ended July 31

(thousands of U.S. dollars, except when noted)                     2011                  2010             2011             2010
Revenues                                                $        66,807        $        47,902     $   200,027      $    140,359

Gross margin                                                        53%                      49%          53%               50%

Operating income (loss) from continuing
 operations                                             $          6,877       $      (16,645)     $    48,019      $   (106,229)

Income (loss) from continuing operations, net of
  income taxes                                          $          4,693       $        (8,701)    $    37,003      $    (98,233)

Loss from discontinued operations, net of
  income taxes                                          $        (8,814)       $        (6,363)    $   (27,057)     $   (149,449)

Net (loss) income                                       $        (4,121)       $      (15,064)     $     9,946      $   (247,682)

Basic earnings (loss) per share from continuing
  operations                                            $           0.07       $         (0.13)    $      0.56      $      (1.02)

Cash and cash equivalents                               $        69,038        $       121,294     $    69,038      $    121,294

Share buyback (thousands of shares)                                  720                       -         3,558            52,941

Weighted average number of Common shares
 outstanding – basic (thousands of shares)                       64,283                 67,237          65,461            96,626



      Consolidated revenue from continuing operations in the third quarter 2011 was $66.8 million, up
       $18.9 million or 39%, compared with the third quarter 2010. The increase was primarily due to increased
       revenues from reactor isotopes in the Medical Isotopes segment as a result of the NRU reactor resuming

                                                 Nordion Inc. Interim Report July 31, 2011
                                                                     2
     operations in August 2010, higher Targeted Therapies revenues primarily due to increased sales of
     TheraSphere, and increased shipments of Cobalt-60 (Co-60) in the Sterilization Technologies segment.
    Gross margin was 53%, compared with 49% in the third quarter of the previous fiscal year due to the strong
     performance of major high-margin products (Molybdenum-99 (Mo-99), TheraSphere and Co-60), while low-
     margin products declined or were relatively flat year-over-year.
    Operating income from continuing operations (before income taxes) in the third quarter 2011 was
     $6.9 million, up from a loss of $16.6 million in the third quarter 2010. Improved earnings across all segments
     and lower corporate selling, general and administrative expense contributed to the increase in operating
     income.

Segment Financial Results (with reconciliation to Net (loss) income)


                                                                          Three months ended July 31               Nine months ended July 31
(thousands of U.S. dollars, except per share amounts)                            2011          2010                      2011          2010
Revenues
 Medical Isotopes                                                    $            21,386    $        11,891    $        78,367    $     29,827
 Targeted Therapies                                                               13,301             14,872             45,465          42,086
 Sterilization Technologies                                                       32,120             21,139             76,195          68,446
Consolidated segment revenues from continuing
operations                                                           $           66,807     $        47,902    $       200,027    $    140,359

Segment earnings (loss)
 Medical Isotopes                                                    $             4,794    $          1,121   $         26,942   $       (226)
 Targeted Therapies                                                                2,123               3,118             10,445           8,750
 Sterilization Technologies                                                       15,311               7,780             31,660          29,178
 Corporate and Other                                                             (3,040)             (6,969)           (12,031)        (56,571)
Total segment earnings (loss)                                        $            19,188    $          5,050   $         57,016   $    (18,869)

 Depreciation and amortization                                                     5,446              7,223              16,025         21,869
 Gain on sale of investment                                                            -                  -             (1,691)               -
 Restructuring charges, net                                                           41              8,602                 576         60,045
 AECL arbitration and legal costs                                                  3,127              3,639               9,706           5,148
 Impairment of long-lived assets                                                       -                261                   -           1,632
 Change in fair value of embedded derivatives                                      3,697              1,970            (15,619)         (1,334)
Consolidated operating income (loss) from
continuing operations                                                $             6,877    $       (16,645)   $        48,019    $   (106,229)

Net interest income                                                                1,812              (150)               5,534          1,494
Equity loss                                                                            -               (58)               (128)          (656)
Income tax (expense) recovery                                                    (3,996)              8,152            (16,422)          7,158
Loss from discontinued operations net of income
taxes                                                                            (8,814)             (6,363)           (27,057)       (140,449)
Net (loss) income                                                    $           (4,121)    $       (15,064)   $          9,946   $   (247,682)




                                                        Nordion Inc. Interim Report July 31, 2011
                                                                            3
Medical Isotopes
Medical Isotopes revenue of $21.4 million in the third quarter 2011 increased by $9.5 million or 80% compared
with the third quarter 2010. Reactor isotopes revenue was $15.7 million and cyclotron isotopes revenue was
$5.7 million this quarter, compared with $3.2 million and $8.7 million, respectively, in the same period of the prior
year.


The year-over-year increase in reactor isotopes revenue was primarily due to the NRU reactor resuming
operations in August 2010 after a 15-month shutdown. Cyclotron isotopes revenue decreased in the third quarter
2011 compared with same period in 2010 as thallium-201, used as a substitute for Mo-99, declined due to the
availability of Mo-99 following the restart of the NRU reactor. The decrease was partially offset by revenue from
the sale of bulk Strontium-82 (Sr-82), the isotope used in the production of CardioGen-82 generators.


Targeted Therapies
Targeted Therapies revenue of $13.3 million in the third quarter 2011 decreased by $1.6 million or 11% compared
with the third quarter 2010. TheraSphere revenue was $11.5 million and Contract Services revenue was
$1.8 million, compared with $7.3 million and $7.6 million, in the same period in the prior year.


TheraSphere experienced strong growth of 58% in the third quarter of 2011 versus the third quarter of 2010. This
was partially offset by a significant decline in Contract Services revenue due to the interruption of CardioGen-82
manufacturing.


Sterilization Technologies
Sterilization Technologies revenue of $32.1 million in the third quarter 2011 increased by $11.0 million or 52%
compared with the third quarter 2010. Revenue from cobalt sales were $30.9 million in the third quarter, up
$13.2 million or 75% compared with the third quarter 2010, driven by a 74% increase in volumes shipped and a
positive impact of foreign exchange.


Corporate and Other
Corporate and Other recorded a loss of $3.0 million in the third quarter 2011, down $3.9 million or 56%
compared with the third quarter 2010. Corporate selling, general and administrative expenses were $2.6 million
and Other expenses, net was $0.4 million.


Discontinued Operations
Nordion recorded a loss from discontinued operations, net of income taxes of $8.8 million in the third quarter
2011, up $2.5 million or 39% compared with the third quarter 2010.
                                        Nordion Inc. Interim Report July 31, 2011
                                                            4
As part of the sale of MDS Analytical Technologies, Nordion’s joint venture partnership with Applied
Biosystems, a division of Life Technologies Corporations (Life), was dissolved. A disagreement had arisen
between Nordion and Life as to the appropriate treatment of certain inventory sold by the partnership to Applied
Biosystems prior to the dissolution of the joint venture partnership. As a result, Nordion recorded a pre-tax
settlement loss of approximately $9.5 million recorded in discontinued operations in third quarter 2011. This
settlement amount is required to be paid during Q4 2011.


Business Outlook Summary (for a more detailed Outlook please refer to Nordion’s third quarter fiscal
2011 Management Discussion & Analysis)


Medical Isotopes
Nordion expects Reactor isotopes revenue in the fourth quarter 2011 to be similar to the second quarter 2011.
While modest Mo-99 volume increases from new customers were generated in the third quarter, existing
customers continue to experience dampened demand.


The next scheduled public hearings for the relicensing of the NRU reactor are currently planned for the first week
of October 2011. The Company expects the decision to renew the five-year license of the NRU reactor (from
2011 to 2016) by October 31, 2011. On June 16, 2011, Nordion’s primary supplier of medical isotopes, AECL,
reported that the NRU reactor at Chalk River, Ontario, returned to services from a planned maintenance
shutdown, which lasted 32 days. Following the license renewal, in fiscal 2012, Nordion expects the NRU reactor
to undergo a planned maintenance shutdown similar to the one that took place fiscal 2011. Nordion does not
expect significant volumes of Mo-99 from its Russian partner, Isotope, during 2012 and does not expect to have
supply available to mitigate the impact of the planned NRU maintenance shutdown.


Cyclotron isotopes revenue are expected to decline to approximately $3.5 million in fourth quarter 2011 levels due
to the discontinuation of bulk Sr-82 sales during the voluntary recall of CardioGen-82.


Targeted Therapies
TheraSphere
For the full year of 2011, Nordion expects TheraSphere to grow above the 40% growth rate experienced in 2010.
The Company estimates that the global market for radioembolization microspheres has grown by approximately
20% over the last twelve months.




                                       Nordion Inc. Interim Report July 31, 2011
                                                           5
Phase III Trials Update
Nordion’s announced Phase III trials for primary liver cancer (STOP-HCC) and secondary liver cancer (EPOCH)
are in start-up phase with first patient enrolment expected in fourth quarter 2011 and the last patient visit
completed by late 2016. The overall cost of these trials is expected to be approximately $15.0 million to $20.0
million each over five years with $2.0 million to $3.0 million incurred for each trial in 2012.


These trials are expected to support global adoption and long-term growth of TheraSphere, as well as
reimbursement outside the U.S. Nordion has designed these trials to provide the data to support a submission to
the FDA to obtain full approval of the product in the U.S. In addition, data collected from these trials may
support the use of TheraSphere as a second line of treatment for primary and secondary liver cancer.


Contract Services
Nordion expects the overall financial performance of the Targeted Therapies segment to continue to be impacted
by Bracco’s recall of CardioGen-82 generators. The Company currently does not have specific guidance from
Bracco as to when manufacturing of CardioGen-82 generators is expected to resume. Therefore, the actual
duration of the interruption is not determinable at this time. Accordingly, Nordion has not planned for the return
of CardioGen-82 manufacturing until the latter part of fiscal 2012.


Sterilization Technologies
Nordion expects fourth quarter 2011 Co-60 shipments to be down slightly from third quarter 2011 and continues
to expect Co-60 volume for fiscal 2011 to be approximately equal to fiscal 2010. The Company is currently
building a production irradiator that is scheduled to be shipped to the U.S. late in fourth quarter 2011.


In third quarter 2011, Nordion announced the unveiling of the GammaFIT™, a new Flexible Irradiation
Technology system. While the Company plans to make GammaFIT commercially available in early fiscal 2012,
with its expected long sales cycle, it does not expect to ship any of these products during 2012. Therefore,
Nordion has not currently planned for revenue contribution from this product. This innovative new product
demonstrates Nordion’s continued strong commitment to the long-term growth of this business segment as the
Company believes the GammaFIT is a more financially accessible product that can open up new Co-60 markets,
particularly in Latin-America and Asia.


A full copy of Nordion’s third quarter 2011 Management’s Discussion and Analysis and the financial statements
and notes (unaudited) can be downloaded at www.nordion.com/investors/financial_results.asp.



                                          Nordion Inc. Interim Report July 31, 2011
                                                              6
Conference Call
Nordion will hold a conference call on Wednesday, September 14, 2011 at 10:00 am ET to discuss its third
quarter 2011 results. This call will be webcast live at www.nordion.com, and will be available after the call in
archived format at www.nordion.com/investors/webcasts_and_presentations.asp. To participate, please dial
1-866-223-7781 (toll-free North America) or 1-416-340-8018 (International).


About Nordion Inc.
Nordion Inc. (TSX: NDN) (NYSE: NDZ) is a global specialty health science company that provides market-
leading products used for the prevention, diagnosis and treatment of disease. We are a leading provider of medical
isotopes, targeted therapies and sterilization technologies that benefit the lives of millions of people in more than
60 countries around the world. Our products are used daily by pharmaceutical and biotechnology companies,
medical-device manufacturers, hospitals, clinics and research laboratories. Nordion has more than 500 highly
skilled employees in three locations. Find out more at www.nordion.com.


Caution Concerning Forward-Looking Statements
From time to time, we make written or oral forward-looking statements within the meaning of certain securities
laws, including under applicable Canadian securities laws and the “safe harbour” provisions of the United States
Private Securities Litigation Reform Act of 1995. This document contains forward-looking statements including
the strategy of the continuing businesses, as well as statements with respect to our beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. The words “may”, “could”, “should”, “would”, “outlook”,
“believe”, “plan”, “anticipate”, “estimate”, “project”, “expect”, “intend”, “indicate”, “forecast”, “objective”,
“optimistic”, and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and
specific, which give rise to the possibility that predictions, forecasts, projections and other forward-looking
statements will not be achieved. We caution readers not to place undue reliance on these statements as a number
of important factors could cause our actual results to differ materially from the beliefs, plans, objectives,
expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors
include, but are not limited to: management of operational risks; our ability to secure a reliable supply of raw
materials, particularly cobalt and critical medical isotopes; the effects of competition in the markets in which we
operate; our ability to manage long-term supply commitments; our reliance on one customer for the majority of
our sales of medical isotopes; our ability to maintain regulatory approval for the manufacturing, distribution and
sale of our products; the strength of the global economy, in particular the economies of Canada, the U.S., the
European Union, Asia, and the other countries in which we conduct business; the stability of global equity
markets; assets and liabilities that we retained from the businesses sold; obligations retained and projected
adjustments thereto; successful implementation of structural changes, including restructuring plans; our ability to
complete other strategic transactions and to execute them successfully; our ability to negotiate future credit
agreements, which may or may not be on terms favorable to us; the impact of the movement of the U.S. dollar
relative to other currencies, particularly the Canadian dollar and the euro; changes in interest rates in Canada, the
U.S., and elsewhere; the timing and technological advancement of new products introduced by us or by our
competitors; our ability to manage our research and development; the impact of changes in laws, trade policies
and regulations including health care reform, and enforcement thereof; regulatory actions; judicial judgments and
legal proceedings, including legal proceedings described in this document; our ability to maintain adequate
insurance; our ability to successfully realign our organization, resources and processes; our ability to retain key

                                        Nordion Inc. Interim Report July 31, 2011
                                                            7
personnel; our ability to have continued and uninterrupted performance of our information technology and
financial systems; our ability to compete effectively; the risk of environmental liabilities; new accounting standards
that impact the policies we use to report our financial condition and results of operations; uncertainties associated
with critical accounting assumptions and estimates; the possible impact on our businesses from third-party special
interest groups; our ability to negotiate and maintain collective-bargaining agreements for certain of our
employees; natural disasters; public health emergencies and pandemics; international conflicts and other
developments including those relating to terrorism; other risk factors described in section 5 of our AIF; and our
success in anticipating and managing these risks.

The foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking
statements to make decisions with respect to the Company, investors and others should carefully consider the
foregoing factors and other uncertainties and potential events. We do not undertake to update any forward-
looking statement, whether written or oral, that may be made from time to time by us or on our behalf, except as
required by law.

CONTACTS:
INVESTORS:
Ana Raman
(613) 595-4580
investor.relations@nordion.com

MEDIA:
Tamra Benjamin
(613) 592-3400 x. 1022
tamra.benjamin@nordion.com

SOURCE: Nordion




                                         Nordion Inc. Interim Report July 31, 2011
                                                             8
MANAGEMENT’S DISCUSSION AND ANALYSIS
September 13, 2011

In this Management’s Discussion and Analysis (MD&A), “we”, “Nordion”, and “the Company” refer to Nordion Inc., formerly MDS Inc.
In this MD&A, we explain Nordion’s results of operations and cash flows for the three and nine months ended July 31, 2011, and our
financial position as of July 31, 2011. You should read this MD&A in conjunction with our unaudited quarterly consolidated financial
statements and related note disclosures for the same period. We also refer you to Nordion’s fiscal 2010 financial reports, which include our
Annual Report, audited annual consolidated financial statements, MD&A, Form 40-F, and Annual Information Form (AIF). These
documents are available on Nordion’s website at www.nordion.com or at www.sedar.com and www.sec.gov.

Our MD&A is intended to enable readers to gain an understanding of Nordion’s current results of operations, cash flows and financial
position. To do so, we provide information and analysis comparing our results of operations, cash flows and financial position for the
current interim period with those of the preceding fiscal year. We also provide analysis and commentary that we believe will help investors
assess Nordion’s future prospects. Accordingly, certain sections of this report contain forward-looking statements that are based on our
current plans and expectations. These forward-looking statements are affected by risks and uncertainties that are discussed in this
document, as well as in our AIF, that could have a material impact on Nordion’s future prospects. We caution our readers that actual
events and results may vary materially from those anticipated in these forward-looking statements.

We have prepared our consolidated financial statements in accordance with accounting principles generally accepted in the United States of
America. Amounts are in thousands of United States (U.S.) dollars, except per share amounts and where otherwise noted.

Our business
Nordion is a global specialty health science company that provides market-leading products and services used for the prevention, diagnosis
and treatment of disease. Our operations are organized into three business segments: Medical Isotopes, Targeted Therapies, and
Sterilization Technologies, as well as certain corporate functions and activities reported as Corporate and Other.

Business Segment                     Description
Medical Isotopes                     The Medical Isotopes segment focuses on products used in the diagnosis and treatment of diseases,
                                     including cardiac and neurological conditions, and several types of cancer. According to the World
                                     Nuclear Association, over 10,000 hospitals worldwide use radioisotopes in medicine, and about 90%
                                     of the procedures are for diagnosis. We report our Medical Isotopes revenues as either Reactor-based
                                     or Cyclotron-based.

                                     We sell a breadth of isotopes, which our customers incorporate into products that are used in these
                                     medical procedures. Governments in the U.S., Canada, Europe and elsewhere in the world have
                                     recognized the benefits of medical procedures that help provide for early diagnosis of disease and
                                     generally support reimbursement of these procedures, which in turn encourages use by physicians and
                                     patients.

                                     Our sources of medical isotopes are nuclear reactors and cyclotrons. We purchase reactor-produced
                                     medical isotopes in an unfinished, non-purified form, and transport them to our facilities in Ottawa,
                                     Canada for further processing. Currently, our principal source of such isotopes is the Atomic Energy
                                     of Canada Limited (AECL) owned National Research Universal (NRU) reactor.

                                     We purify isotopes using our proprietary manufacturing processes to meet the regulatory requirements
                                     for incorporating active pharmaceutical ingredients into radiopharmaceuticals that are used to
                                     diagnose and treat numerous serious disease states, such as heart disease and cancer.

                                     Our primary product is the reactor-based molybdenum-99 (Mo-99). Technetium-99 (Tc-99m), which
                                     is obtained from the decay of Mo-99, is the most common radioisotope used in diagnosis, utilized in
                                     approximately 80% of nuclear medical procedures worldwide.

                                     We process and sell other Reactor isotopes including xenon-133 (Xe-133) (used in lung scans), iodine-
                                     131 (I-131) (used to treat hyperthyroidism, thyroid cancer and non-Hodgkin’s lymphoma), and iodine-
                                     125 (I-125) (used to treat prostate cancer).

                                     We manufacture and process Cyclotron isotopes such as iodine-123 (I-123), thallium-201 (Tl-201),
                                     and strontium-82 (Sr-82) at our facilities in Vancouver, Canada.


                                                   Nordion Inc. Interim Report July 31, 2011
                                                                       9
MANAGEMENT’S DISCUSSION AND ANALYSIS
Targeted Therapies           Targeted Therapies products primarily focus on the treatment of various cancers by targeting the
                             disease from within the body with a higher concentration of radiation directed to the tumor, thereby
                             minimizing both damage to surrounding healthy tissue and unpleasant side effects for the patient.
                             Leveraging our expertise and capabilities, we also sell services for radiopharmaceutical development
                             and provide clinical and commercial manufacturing. We report our Targeted Therapies revenues as
                             either TheraSphere® or Contract Manufacturing/Services.

                             Our main Targeted Therapies product is TheraSphere, a radioembolization therapy used in the
                             treatment of medium-to-advanced stage inoperable liver cancer. TheraSphere is a therapy that consists
                             of millions of small glass beads (20 to 30 micrometers in diameter) containing radioactive yttrium-90
                             (Y-90). The product is injected by physicians into the main artery of the patient's liver through a
                             catheter, which allows the treatment to be delivered directly to the tumor via blood vessels.

                             TheraSphere is approved in Europe, Canada, and parts of Asia and the Middle East. In Europe and
                             Russia it is indicated for use in the treatment of hepatic neoplasia and in Canada, parts of Asia and the
                             Middle East it is indicated for use in the treatment of hepatic neoplasia in patients who have
                             appropriately positioned arterial catheters. It is authorized under a humanitarian device exemption in
                             the U.S. and is indicated for use in the treatment of unresectable hepatocellular carcinoma (primary
                             liver cancer). TheraSphere is approved for reimbursement in the U.S., Germany, Italy, and Belgium.
                             In Q2 2011, the U.S. Food and Drug Administration (FDA), approved our clinical trial applications
                             for both primary liver cancer and secondary liver cancer. Phase III clinical trial start-up activities
                             began in Q3 2011. We are also planning the design and protocol for a randomized trial, in the subset
                             of primary liver cancer patients for which TheraSphere may provide the greatest benefit, which would
                             support our growth internationally.

                             We also provide contract manufacturing services, including the production of two commercially
                             available radiopharmaceuticals: Bexxar®*, a radiotherapeutic, for non-Hodgkin’s lymphoma for
                             GlaxoSmithKline, Inc. and CardioGen-82TM**, a cardiovascular Positron Emission Tomography
                             (PET) imaging agent, for Bracco Diagnostics, Inc. (part of Bracco Group). As described in the
                             “Recent business and corporate developments” of this MD&A, our manufacturing of CardioGen-82 is
                             currently interrupted.

                             * Bexxar is a trademark of GlaxoSmithKline.
                             ** CardioGen-82 is a trademark of Bracco Diagnostics.
Sterilization Technologies   Our Sterilization Technologies segment is focused on the prevention of disease through the
                             sterilization of medical products and devices, as well as food and consumer products. This business
                             segment also includes the design, construction, and maintenance of commercial gamma sterilization
                             systems. We report our Sterilization Technologies revenues as either Cobalt or Sterilization - Other.

                             We are the world's leading supplier of Cobalt-60 (Co-60), the isotope that produces the gamma
                             radiation required to destroy harmful micro-organisms. Co-60 is used in gamma sterilization
                             technologies for customers around the world. Approximately 40% of single use medical products
                             produced worldwide are sterilized using gamma sterilization technologies. These medical products
                             include disposable medical devices and supplies such as surgeon's gloves, syringes, sutures, and
                             catheters, as well as pharmaceuticals. Gamma sterilization is also used for disinfestations of fruits and
                             vegetables to meet international quarantine regulations, to sterilize cosmetic products and to enhance
                             the material properties of polymers.

                             We contract with power reactor sites in Canada and Russia to produce Co-60. We supply cobalt-59
                             (Co-59) targets to the reactor sites, which is converted to Co-60 in the reactor. The cobalt remains in
                             the reactor until the desired level of Co-59 to Co-60 conversion has occurred (from 18 to 30 months
                             in Canada and approximately 5 years in Russia). The Co-60 is then removed from the reactors (the
                             reactors in Canada must be shutdown for this to occur), disassembled, and shipped to our facility
                             where we process it into finished sources for sale to customers. When our customers purchase and
                             install Co-60, they need to shut down their production irradiator operations while the Co-60 is being
                             loaded into the irradiator. Therefore, we coordinate this process closely with our customers to
                             minimize disruption to their operations.



                                           Nordion Inc. Interim Report July 31, 2011
                                                              10
MANAGEMENT’S DISCUSSION AND ANALYSIS
                    Drawing on our expertise and capabilities, we also market and sell related equipment and services such
                    as commercial scale production irradiators. Delivery or construction of this equipment is usually
                    followed by an initial shipment of Co-60. A production irradiator is a warehouse-size unit that houses
                    Co-60 and processes the products to be sterilized.




                                 Nordion Inc. Interim Report July 31, 2011
                                                    11
MANAGEMENT’S DISCUSSION AND ANALYSIS
Recent business and corporate developments
Medical Isotopes
NRU Returns from its Maintenance Shutdown
On June 16, 2011, our primary supplier of medical isotopes, AECL, reported that the NRU reactor at Chalk River, Ontario, returned to
service from its planned maintenance shutdown, which lasted 32 days. The impact of the shutdown to our operations began May 26, 2011
and resulted in an interruption in the supply of medical isotopes, primarily Mo-99, during our third quarter (Q3) of 2011. Our production
and sales returned to service as expected and planned with our customers.

Targeted Therapies
CardioGen-82 Manufacturing Interruption Continues

In the second quarter (Q2) of 2011, our manufacturing of CardioGen-82 generators, a Bracco Diagnostics Inc. (“Bracco”) product, was
interrupted due to a manufacturing process change relating to component modifications with a third party supplier. As a result, we have
not manufactured CardioGen-82 generators since early Q2. We have partially mitigated the financial impact of this issue by the sale of bulk
Sr-82, the isotope used in the manufacturing of CardioGen-82 generators, to the other contract manufacturer of the CardioGen-82 product
and have recorded these sales of Sr-82 as Cyclotron revenue in our Medical Isotopes segment. However, sales of Sr-82 have ceased since
Bracco’s announcement further discussed below.

We had expected to resume manufacturing activities of CardioGen-82 during Q4 2011. However, late in Q3 2011, Bracco issued a letter to
customers that effective July 25, 2011, Bracco had voluntarily discontinued the sale of CardioGen-82 generators and recalled the units in
the market due to two patients having received a higher radiation dose than expected. The reason for the recall by Bracco is for a different
issue from the one that interrupted our CardioGen-82 manufacturing in Q2 2011.

We have received updates from Bracco regarding the recall, but we do not know the full scope or details of the current situation which is
being handled directly by Bracco with the FDA. Bracco is providing information to us periodically regarding its return to service plan and
consulting with us on elements of the plan that impact Nordion. We currently do not have specific guidance from Bracco at this time as to
when our manufacturing of CardioGen-82 generators is expected to resume. Therefore, the actual duration of our manufacturing outage
for CardioGen-82 is not determinable at this time. During this manufacturing outage, we expect there will be no demand for bulk Sr-82
until production of the CardioGen-82 generators resumes.

TheraSphere Phase III Trials

In the United States, TheraSphere is currently authorized by the FDA for use under a Humanitarian Device Exemption as a radiation
treatment for primary liver cancer or hepatocellular carcinoma. In March 2011, the FDA approved our clinical trial applications for both
primary liver cancer (approximately 400 patients at up to 40 sites around the world) and secondary or metastatic liver cancer (approximately
350 patients at up to 30 sites around the world).

On June 16, 2011, we announced that we had engaged Theorem Clinical Research (previously Omnicare Clinical Research), a full service
CRO to conduct these trials. Theorem will provide clinical trial implementation services which include clinical data management, statistical
analysis, monitoring, and administrative expertise to support the conduct of the studies.

The start-up activities of these trials began in Q3 2011 and are expected to be significantly larger than any of the clinical trial activities that
we have completed to-date resulting in a significant increase in our level of research and development (R&D) investment.

We are also planning the design and protocol for a randomized trial in the subset of primary liver cancer patients for which TheraSphere
may provide the greatest benefit that would provide randomized comparative data to support continued growth and market adoption in
the European market through a demonstrated competitive advantage. The trial is also expected to support our pursuit to expand
reimbursement in Europe and to provide a base for expansion into Asia.

Additional details of the Phase III trials are included in the “Strategy and outlook” section of this MD&A.

Sterilization Technologies
Innovative new Modular Irradiator technology unveiled
On June 9, 2011, we announced details of our new Flexible Irradiation Technology (GammaFITTM) modular irradiator system at the 2011
International Meeting on Radiation Processing (IMRP), the biennial gathering for members of the International Irradiation Association.
Our GammaFIT system is an industry innovation that deploys a modular design providing end users the flexibility to add to and configure
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MANAGEMENT’S DISCUSSION AND ANALYSIS
the irradiator to grow and change with their processing volume and needs. Because many smaller companies are discouraged from entering
the sterilization business due to the large initial capital investment in equipment, we believe the GammaFIT provides a more accessible
product that can open up new Co-60 markets for us, particularly in Latin-America and Asia.

We expect to make the GammaFIT system commercially available in early fiscal 2012.

Corporate and Other
Returns to Shareholders
In January 2011, we re-initiated a normal course issuer bid (NCIB), which was authorized by the Toronto Stock Exchange (TSX) to
purchase for cancellation up to 5,677,108 shares or 8% of our outstanding shares. As of July 31, 2011, we have repurchased a total of 3.6
million shares with an aggregate value of $40.5 million under this NCIB. We will continue to monitor and assess our cash requirements,
liquidity and access to capital in determining the final amount we repurchase.

On September 13, 2011, our Board of Directors declared a quarterly dividend at $0.10 per share to Nordion’s shareholders on record as of
September 23, 2011, which we expect will total approximately $6.4 million payable on October 1, 2011. This is the third quarterly dividend
of $0.10 per share our Board has declared during 2011.

New Credit Facility
On June 6, 2011, we entered into a $75.0 million senior revolving three year committed credit facility with the Toronto-Dominion Bank
(TD) and a select group of other financial institutions. Under the new credit facility, we are able to borrow both Canadian and U.S. dollars.
By entering into our new credit facility, cash held in account as security for letters of credit and letters of guarantee has been released and
made available for operations. The primary purpose of the new credit facility is for general corporate purposes. For further details on this
new credit facility, see the “Liquidity” section of this MD&A.

Arbitration with Life Technologies Corporations
As part of the sale of MDS Analytical Technologies completed in Q1 2010, our joint venture partnership with Applied Biosystems, a
division of Life Technologies Corporations (Life), was dissolved. A disagreement arose between the former partners (Nordion and Life) as
to the appropriate treatment of certain inventory sold by the partnership to Applied Biosystems prior to the dissolution of the joint venture
partnership. The arbitrator in the hearing recently ruled in favour of Life. As a result, we recorded a settlement loss of approximately $9.5
million in our results of discontinued operations for the three months ended Q3 2011. This settlement amount is required to be paid
during Q4 2011.




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MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial highlights

                                                                         Three months ended July 31                Nine months ended July 31
(thousands of U.S. dollars, except per share amounts)                          2011           2010                      2011           2010
Revenues
Medical Isotopes
 Reactor                                                                 $    15,695       $          3,199    $      63,178    $      9,705
 Cyclotron                                                                     5,691                  8,692           15,189          20,122
                                                                              21,386                 11,891           78,367          29,827
Targeted Therapies
 TheraSphere                                                                  11,529                   7,313          31,692          21,392
 Contract Services                                                             1,772                   7,559          13,773          20,694
                                                                              13,301                 14,872           45,465          42,086
Sterilization Technologies
 Cobalt                                                                       30,879                  17,630          68,857          63,627
 Sterilization - Other                                                         1,241                   3,509           7,338           4,819
                                                                              32,120                 21,139           76,195          68,446
Consolidated segment revenues from continuing
operations                                                               $    66,807       $         47,902    $     200,027    $    140,359

Segment earnings (loss)
 Medical Isotopes                                                        $     4,794       $           1,121   $       26,942   $       (226)
 Targeted Therapies                                                            2,123                   3,118           10,445           8,750
 Sterilization Technologies                                                   15,311                   7,780           31,660          29,178
 Corporate and Other                                                         (3,040)                 (6,969)         (12,031)        (56,571)
Total segment earnings (loss)                                            $    19,188       $           5,050   $       57,016   $    (18,869)

 Depreciation and amortization                                                 5,446                  7,223            16,025         21,869
 Gain on sale of investment                                                        -                      -           (1,691)               -
 Restructuring charges, net                                                       41                  8,602               576         60,045
 AECL arbitration and legal costs                                              3,127                  3,639             9,706           5,148
 Impairment of long-lived assets                                                   -                    261                 -           1,632
 Change in fair value of embedded derivatives                                  3,697                  1,970          (15,619)         (1,334)
Consolidated operating income (loss) from continuing
operations                                                               $     6,877       $        (16,645)   $      48,019    $   (106,229)

Basic earnings (loss) per share from continuing
operations                                                               $       0.07      $          (0.13)   $        0.56    $      (1.02)

Cash and cash equivalents                                                $    69,038       $        121,294    $      69,038    $    121,294




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MANAGEMENT’S DISCUSSION AND ANALYSIS
Financial Results Analysis
In this section, we provide detailed information and analysis regarding our performance for the three and nine months ended July 31, 2011
compared with the same periods in fiscal 2010.

Consolidated Financial Results
                                                               Three months ended July 31                                    Nine months ended July 31
                                                             % of                   % of                             % of                        % of
(thousands of U.S. dollars)                     2011    revenues          2010 revenues                 2011    revenues              2010 revenues
Revenues                                 $    66,807        100% $     47,902      100%          $   200,027        100%       $   140,359      100%
Costs and expenses
   Direct cost of revenues                    31,628         47%           24,474        51%          94,033         47%             70,215         50%
   Selling, general and administration        17,172         26%           25,403        53%          49,364         25%             74,115         53%
   Depreciation and amortization               5,446          8%            7,223        15%          16,025          8%             21,869         16%
   Restructuring charges, net                     41            -           8,602        18%             576            -            60,045         43%
   Change in fair value of embedded
    derivatives                                3,697           6%           1,970          4%        (15,619)        (8%)            (1,334)       (1%)
   Other expenses (income), net                1,946           3%         (3,125)        (6%)           7,629          4%            21,678        15%
Operating income (loss) from
   continuing operations                 $     6,877          10%    $   (16,645)      (35%)     $    48,019         24%       $   (106,229)      (76%)

 Interest expense                              (713)         (1%)         (2,633)        (5%)         (2,260)        (1%)            (4,439)       (3%)
 Interest income                               2,525           4%           2,483          5%           7,794          4%              5,933         4%
 Unrealized loss on equity                         -             -           (58)            -          (128)            -             (656)           -
 Income tax (expense) recovery               (3,996)         (6%)           8,152        17%         (16,422)        (8%)              7,158         5%
 Loss from discontinued operations,
   net of income taxes                        (8,814)       (13%)         (6,363)      (13%)         (27,057)       (14%)          (149,449)      (106%)
Net (loss) income                        $    (4,121)        (6%)    $   (15,064)      (31%)     $      9,946          5%      $   (247,682)      (176%)

Gross margin                                     53%                         49%                        53%                           50%
Capital expenditures from
  continuing operations                  $     1,152                 $     2,076                 $     2,854                   $     6,021
Total assets                             $   487,027                 $   560,100                 $   487,027                   $   560,100

Revenues
Revenues of $66.8 million for the three months ended Q3 2011 increased by $18.9 million or 39% compared with the same period in fiscal
2010. Revenues of $200.0 million for the nine months ended Q3 2011 increased by $59.7 million or 43% compared with the same period in
fiscal 2010. Excluding the impact of foreign exchange, revenues for the three and nine months ended Q3 2011 increased approximately
34% and 38% compared with the same periods in fiscal 2010, respectively.

The increase in revenue compared to the prior year was attributable to: i) the revenue from Reactor isotopes due to the return to
production of the NRU reactor in Q4 2010 from a shutdown that commenced in May 2009; ii) continued strong growth in TheraSphere
with year over year revenue growth for Q3 2011 of 58% and year-to-date growth of 48%; and iii) Co-60 revenue that was 75% higher for
Q3 2011, and 8% year-to-date, compared to the same periods in 2010, reflecting the lumpiness of the timing of Co-60 shipments. The
trends noted above related to our major products were expected by Nordion management and described in the Business Outlook section
of our Q2 2011 MD&A.

See further detailed analysis on revenues in the “Medical Isotopes”, “Targeted Therapies” and “Sterilization Technologies” sections of this MD&A.

Gross margin
Gross margins of 53% for the three and nine months ended Q3 2011 were higher by 4% and 3%, respectively, compared to the same
periods in fiscal 2010. Our overall gross margin was positively impacted by a heavier weighting of all of our major high-margin products –
Mo-99, TheraSphere, and Co-60 – due to their improved year-over-year performance, while majority of lower margin products declined or
were relatively flat year over year. In addition, during the shutdown of the NRU reactor in 2010, we maintained a certain level of direct
costs associated with our Medical Isotopes business, which negatively impacted gross margin in fiscal 2010. Finally, TheraSphere has a
relatively fixed cost over certain volumes such that incremental revenue has a positive impact on gross margin percentage.

See further detailed analysis on gross margin in the “Medical Isotopes”, “Targeted Therapies” and “Sterilization Technologies” sections of this
MD&A.


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MANAGEMENT’S DISCUSSION AND ANALYSIS
Costs and expenses
Selling, general and administration (SG&A)
SG&A expenses of $17.2 million and $49.4 million for the three and nine months ended Q3 2011 decreased by $8.2 million and $24.8
million, respectively, compared to the same periods in fiscal 2010. The decreases were largely due to lower compensation cost resulting
from workforce reductions, lower consulting and professional costs subsequent to the completion of our strategic repositioning, and lower
costs associated with transition services. SG&A expenses were also positively impacted by a favorable insurance adjustment of $1.5 million
in Q1 2011. Partially offsetting these decreases were Q3 2011 year-to-date legal costs of $9.7 million associated with the MAPLE
arbitration proceedings and the unfavorable foreign exchange impact on the strengthening of the Canadian dollar relative to the U.S. dollar.
The significant majority of our SG&A expenses are denominated in Canadian dollars.

Depreciation and amortization (D&A)
D&A expenses of $5.4 million and $16.0 million for the three and nine months ended Q3 2011 decreased by $1.8 million and $5.8 million,
respectively, compared to the same periods in fiscal 2010. The decreases were primarily due to corporate facility reductions subsequent to
the completion of our strategic repositioning, including accelerated amortization of leasehold improvements recorded in 2010 related to the
wind down of our former head office in Toronto, Canada.

Restructuring charges
The restructuring charges of $0.6 million for the nine months ended Q3 2011 primarily resulted from the extension of certain key
corporate employees retained offset by a recovery on previously accrued severances. For the same periods in fiscal 2010, significant
restructuring charges were recorded for the planned shutdown of the office space and workforce reduction relating to our corporate office
move from Toronto, Canada to Ottawa, Canada. We expect the remaining restructuring provision to be utilized in the first quarter of fiscal
2012.

Subsequent to July 31, 2011, we signed a lease termination agreement related to our office space in Toronto, Canada, which is effective on
September 30, 2011. Based on the terms of this termination agreement, a $4.2 million (C$4 million) termination payment will be made and
a restructuring recovery of approximately $1 million is currently expected in the fourth quarter of fiscal 2011.

Change in fair value of embedded derivatives
We have Russian supply contracts for Co-60 and Mo-99 that are denominated in U.S. dollars. This creates embedded derivatives as our
Canadian operation has Canadian dollars as its functional currency. At each period end, we mark-to-market any changes in the fair value of
the embedded derivatives and record these increases and decreases as gains and losses within operating income (loss). The long-term Mo-
99 supply agreement that we signed with our Russian partner Isotope in Q4 2010 has significantly increased our embedded derivative
exposure.

For the three months and nine months ended Q3 2011, we recorded a loss of $3.7 million and a gain of $15.6 million for the change in the
fair value of the embedded derivatives compared to a loss of $2.0 million and a gain of $1.3 million for the same periods in fiscal 2010,
respectively. The significant change in the fair value gain was primarily driven by changes in the U.S. to Canadian dollar exchange rate
during the period as well as changes in estimate for the notional supply amount.

Other expenses, net
Other expenses, net, of $1.9 million and $7.6 million for the three and nine months ended Q3 2011 included $1.7 million and $3.7 million
in R&D costs, respectively. Other expenses, net, for nine months ended Q3 2011 also included $5.5 million of foreign exchange losses,
which was partially offset by a $1.7 million gain on the sale of an available for sale investment in Q2 2011.

Other expenses, net, of $21.7 million for the nine months ended Q3 2010 was primarily a result of an approximately $27 million foreign
currency revaluation of the $450 million of proceeds from the sale of MDS Analytical Technologies that were held in a Canadian dollar
functional currency entity in U.S. dollars to fund the substantial issuer bid completed on March 29, 2010. The loss for the year was partially
offset by transition services income from the business sold in fiscal 2010.

Interest income (expense), net
Net interest income (expense) for the three and nine months ended Q3 2011 were $1.8 million and $5.5 million, respectively, compared to
$(0.2) million and $1.5 million for the same periods in fiscal 2010. The increase was primarily due to the interest accretion on our note
receivable from Celerion Inc. received from the sale of MDS Pharma Services Early Stage business in Q2 2010.




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MANAGEMENT’S DISCUSSION AND ANALYSIS
Income tax expense
Tax expenses for the three and nine months ended Q3 2011 was $4.0 million and $16.4 million on pre-tax income from continuing
operations of $8.7 million and $53.4 million, respectively. With an estimated tax rate of 28.8%, we expected tax expense of $2.5 million and
$15.4 million for the three and nine months ended July 31, 2011. However, discrete adjustments at different tax rates related to the change
in fair value of embedded derivatives and a partial release of valuation allowance on future tax assets related to foreign accrual property
losses, and other discrete adjustments resulted in an effective rate of 46.0% and 30.7% for the three and nine months ended July 31, 2011,
respectively.

Loss from discontinued operations, net of income taxes
The loss from discontinued operations of $27.1 million for the nine months ended Q3 2011 was primarily due to an unfavorable outcome
of the arbitration with Life in Q3 2011 as discussed in “Recent business and corporate developments” section of this MD&A, the sale of
MDS Nordion S.A. completed in Q2 2011, and certain tax adjustments and settlements relating to our discontinued operations of MDS
Pharma Services and MDS Analytical Technologies.

Losses from discontinued operations of $6.4 million and $149.5 million for the three and nine months ended Q3 2010, respectively, were
primarily driven by the substantial completion of our strategic repositioning including the sales of MDS Pharma Services Early Stage and
MDS Analytical Technologies during fiscal 2010.




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  MANAGEMENT’S DISCUSSION AND ANALYSIS
  Medical Isotopes
                                                                                          Three months ended July 31                                                    Nine months ended July 31
                                                                                          % of                 % of                                                     % of                % of
(thousands of U.S. dollars)                                                2011       revenues       2010 revenues                                       2011       revenues      2010 revenues
Revenues
 Reactor                                                          $ 15,695                   73%         $        3,199             27%         $ 63,178                   81%         $       9,705              33%
 Cyclotron                                                           5,691                   27%                  8,692             73%           15,189                   19%                20,122              67%
                                                                    21,386                  100%                11,891             100%           78,367                  100%                29,827             100%
Costs and expenses
  Direct cost of revenues                                           13,370                    63%                 6,958              59%          40,710                    52%               19,511              66%
  Selling, general and administration(a)                             3,310                    15%                 3,928              33%          10,560                    14%               10,766              36%
  Other (income) expenses, net                                        (88)                       -                (116)              (1%)            155                       -               (224)              (1%)
Segment earnings (loss)                                           $ 4,794                     22%        $        1,121                9%       $ 26,942                    34%        $       (226)              (1%)
  (a) Excludes AECL arbitration and legal costs of $3.1 million (2010 - $3.6 million) and $9.7 million (2010 - $5.1 million) for the three and nine months ended July 31, 2011, which are not included in the calculation
  of segment earnings.

  Revenues
  Revenues of $21.4 million for the three months ended Q3 2011 increased by $9.5 million or 80% compared to the same period in fiscal
  2010. For the nine months ended Q3 2011, revenues of $78.4 million increased by $48.5 million or 163% compared with the same period
  in fiscal 2010. The majority of Medical Isotopes revenues are denominated in U.S. dollars and, therefore, foreign exchange had a nominal
  impact on the revenue growth.

  Reactor products accounted for 73% of Q3 2011 Medical Isotopes revenue, while cyclotron-based products accounted for 27%.

  Reactor isotopes revenues increased significantly for the three and nine months ended Q3 2011, compared to the same periods in fiscal
  2010. The increase was primarily due to the return to service of the NRU reactor, which went out of service in May 2009 and did not
  resume production of medical isotopes until August 2010. While we had secured back-up supply for some of the NRU reactor produced
  isotopes (I-125, I-131, Xe-133), which helped to partially offset the negative impact of the reactor outage, no back-up supply was available
  for Mo-99, our largest revenue contributor. Reactor isotopes revenues reflect only two months of Mo-99 sales in Q3 2011 as the business
  was impacted by the one month planned maintenance shutdown of the NRU reactor, our main source of Mo-99 supply. We were able to
  source other Reactor isotopes from secondary suppliers in order to continue to supply our customers.

  Cyclotron isotopes revenues were lower by 35% and 25% for the three and nine months ended Q3 2011, respectively, compared to the
  same periods in fiscal 2010, driven mainly by a decrease in demand for Tl-201, which was used as a substitute for Mo-99 due to shortages
  resulting from the NRU reactor shutdown in fiscal 2010. Since the return to service of the NRU reactor and High Flux Reactor (HFR) in
  Petten, Netherlands, we have seen the demand for Tl-201 return to normal levels. The unfavorable effect of Tl-201 was partially offset by
  revenue from the sale of bulk Sr-82, the isotope used in the production of CardioGen-82 generators.

  Gross margin
  Gross margin of 37% for the three months ended Q3 2011 was 4% lower compared to the same period in fiscal 2010. The high cost of
  non-Mo-99 Reactor isotopes that we sourced from secondary suppliers during the planned NRU reactor maintenance shutdown negatively
  impacted overall gross margin by 3%. In addition, the mix of lower-margin Cyclotron isotopes products in 2011, including the sale of bulk
  Sr-82, compared to the sale of a relatively higher gross margin product in 2010, Tl-201, further contributed to overall lower gross margin.
  Finally, the strengthening of the Canadian dollar relative to the U.S. dollar negatively impacted the overall gross margin as a significant
  majority of our direct costs are denominated in Canadian dollars whereas the majority of revenues are denominated in U.S. dollars. These
  negative impacts were partially offset by overall increase in revenue from Mo-99.

  Gross margins of 48% for the nine months ended Q3 2011 were significantly higher than 34% for the same period in fiscal 2010, primarily
  due to the increase in revenue from Mo-99, a relatively higher gross margin product. In addition, gross margin in fiscal 2010 was negatively
  impacted by the higher cost of sourcing Reactor isotopes during the NRU reactor shutdown and the fixed direct costs that we maintained
  during the NRU shutdown.

  Selling, general and administration (SG&A)
  SG&A expenses for our Medical Isotopes segment of $3.3 million and $10.6 million for the three and nine months ended Q3 2011,
  respectively, remained relatively flat compared to $3.9 million and $10.8 million for the same periods in fiscal 2010 despite an increase from
  foreign exchange. A significant majority of our SG&A expenses are denominated in Canadian dollars.

  Other (income) expenses, net
  Other (income) expenses, net are primarily foreign exchange revaluation gains and losses for the three and nine months ended Q3 2011
  and 2010.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Targeted Therapies
                                                           Three months ended July 31                            Nine months ended July 31
                                                            % of                % of                            % of                 % of
(thousands of U.S. dollars)                      2011   revenues      2010 revenues                  2011   revenues      2010   revenues
Revenues
 TheraSphere                               $ 11,529          87%     $     7,313       49%     $   31,692       70%     $ 21,392          51%
 Contract Services                            1,772          13%           7,559       51%         13,773       30%       20,694          49%
                                             13,301         100%         14,872       100%         45,465      100%       42,086         100%
Costs and expenses
  Direct cost of revenues                       5,582        42%          7,602         51%      20,077         44%       21,607          51%
  Selling, general and administration           4,003        30%          3,215         22%      11,276         25%        9,044          22%
  Other expenses, net                           1,593        12%            937          6%       3,667          8%        2,685           6%
Segment earnings                           $    2,123        16%     $    3,118         21%    $ 10,445         23%     $ 8,750           21%

Revenues
Revenues of $13.3 million for the three months ended Q3 2011 decreased by $1.6 million or 11% compared to the same period in fiscal
2010. For the nine months ended Q3 2011, revenues of $45.5 million increased by $3.4 million or 8% compared to the same period in
fiscal 2010. Because the majority of our Targeted Therapies revenues are denominated in U.S. dollars, the impact of foreign exchange on
revenues was not significant.

For the three months and nine months ended Q3 2011, TheraSphere continued its strong performance with an increase in revenue of 58%
and 48%, respectively, compared to the comparative periods of 2010.

Offsetting the growth in TheraSphere was a significant decline in Contract Services revenue. For the three and nine months ended Q3
2011, Contract Services declined $5.8 million and $6.9 million, respectively, due primarily to decreases in revenues from the interruption of
CardioGen-82 manufacturing compared to the same periods in fiscal 2010. Since Q2 2011, we have not manufactured CardioGen-82 due
to several issues as described in the “Recent business and corporate developments” section of this MD&A.

The negative effect of the CardioGen-82 manufacturing interruption has been somewhat mitigated by the sale of bulk Sr-82, the isotope
used in the production of CardioGen-82 generators. We have reported the Sr-82 revenue is reported in our Medical Isotopes segment. As
described in the “Recent business and corporate developments” section of this MD&A, the revenue from bulk Sr-82 will not continue in
Q4 2011.

Gross margin
Gross margin for our Targeted Therapies segment of 58% and 56% for the three and nine months ended Q3 2011 was higher than 49%
for the same periods in fiscal 2010, respectively, primarily due to the growth in TheraSphere revenues. TheraSphere has a relatively fixed
cost over certain volumes such that incremental revenue has a positive impact on gross margin. However, gross margin in fiscal 2011 was
also negatively impacted by the manufacturing interruption of CardioGen-82 described above.

Selling, general and administration (SG&A)
SG&A expenses of $4.0 million and $11.3 million for the three and nine months ended Q3 2011 increased by $0.8 million and $2.2 million,
respectively, compared to the same periods in fiscal 2010. The increase was primarily driven by higher TheraSphere sales compensation
and consulting spending. Year over year, there was an unfavorable foreign exchange impact on the strengthening of the Canadian dollar
relative to the U.S. dollar. A significant majority of our SG&A expenses are denominated in Canadian dollars.

Other expenses, net
R&D expenses were slightly up by $0.7 million and $1.0 million for the three and nine months ended Q3 2011, respectively, compared to
the same periods in fiscal 2010 due to increased spending in preparation and initiation of TheraSphere clinical trials and the impact of
foreign exchange.




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MANAGEMENT’S DISCUSSION AND ANALYSIS
Sterilization Technologies
                                                                                         Three months ended July 31                                                       Nine months ended July 31
                                                                                         % of                 % of                                                      % of                  % of
(thousands of U.S. dollars)                                              2011        revenues       2010 revenues                                       2011        revenues       2010   revenues
Revenues
 Cobalt                                                      $        30,879                96%         $      17,630             83%          $     68,857                90%         $   63,627    93%
 Sterilization - Other                                                 1,241                 4%                 3,509             17%                 7,338                10%              4,819     7%
                                                                      32,120               100%               21,139             100%                76,195               100%             68,446   100%
Costs and expenses
  Direct cost of revenues                                             12,676                 39%                9,914              47%               33,246                 44%            29,097   42%
  Selling, general and administration                                  4,125                 13%                3,539              16%               10,968                 14%            10,377   15%
  Other expenses (income), net(a)                                          8                    -                (94)                 -                 321                    -            (206)      -
Segment earnings                                             $        15,311                 48%        $       7,780              37%         $     31,660                 42%        $   29,178   43%
(a) Excludes gain on investment of $nil and $1.7 million for the three and nine months ended July 31, 2011, respectively, which are not included in the calculation of segment earnings.


Revenues
Revenues of $32.1 million for the three months ended Q3 2011 increased by $11.0 million or 52% compared to the same period in fiscal
2010. For the nine months ended Q3 2011, revenues of $76.2 million increased by $7.7 million or 11%, compared to the same period in
fiscal 2010.

The majority of revenue for Sterilization Technologies is denominated in Canadian dollars so the strengthening Canadian dollar compared
to the U.S. dollar improves reported revenue. Excluding the impact of foreign exchange, revenues increased by 42% and 5% for the three
and nine months ended Q3 2011, respectively.

For the three months ended Q3 2011, Co-60 revenues increased by $13.2 million or 75% compared to the same period in fiscal 2010
driven by a 74% increase in volumes shipped as well as a positive effect of foreign exchange. As noted in our Q2 2011 MD&A, we
expected this large increase in Q3 2011 due to the timing of Co-60 source shipments. Co-60 revenue for the nine months ended Q3 2011
increased by $5.2 million or 8% compared to the same period in fiscal 2010.

For the three and nine months ended Q3 2011, revenues from Sterilization – Other decreased by $2.3 million or 65% and increased by $2.5
million or 52%, respectively, compared to the same periods in fiscal 2010 due primarily to the timing of the sales of production irradiators.

In fiscal 2011, as in prior years, the quarterly profile of revenues for Sterilization Technologies can vary significantly due to the timing of
our shipments to customers, as well as our sales of production irradiators. When our customers purchase and install Co-60, they need to
shut down their production irradiator operations while the Co-60 is being loaded into the irradiator. Therefore, we coordinate this process
closely with our customers to minimize disruption to their operations.

Gross margin
Gross margin for our Sterilization Technologies segment was 61% and 56% for the three and nine months ended Q3 2011, respectively,
compared to 53% and 58% for the same periods in fiscal 2010. The change in gross margin was primarily driven by fluctuations in the
level of Co-60 revenues, which have a higher margin relative to production irradiators.

Selling, general and administration (SG&A)
SG&A expenses for our Sterilization Technologies segment of $4.1 million and $11.0 million for the three and nine months ended Q3
2011, respectively, were $0.6 million higher for the same periods in fiscal 2010. There was an unfavorable foreign exchange impact on the
strengthening of the Canadian dollar relative to the U.S. dollar as a significant majority of our SG&A expenses are denominated in
Canadian dollars.

Other expenses (income), net
Other expenses (income), net are primarily foreign exchange revaluation gains and losses for the three and nine months ended Q3 2011
and 2010.




                                                                              Nordion Inc. Interim Report July 31, 2011
                                                                                                 20
MANAGEMENT’S DISCUSSION AND ANALYSIS
Corporate and Other
                                                                                                  Three months ended July 31                                              Nine months ended July 31

(thousands of U.S. dollars)                                                                                 2011                          2010                              2011                                    2010
Costs and expenses
  Selling, general and administration                                                        $            2,607           $            11,082               $             6,854                    $          38,780
  Other expenses (income), net(a)                                                                           433                        (4,113)                            5,177                               17,791
Segment loss                                                                                 $          (3,040)           $            (6,969)              $          (12,031)                    $        (56,571)
(a) Excludes impairment of long-lived assets of $nil (2010 - $0.3 million) and $nil (2010 - $1.6 million) for the three and nine months ended July 31, 2011, which are not included in the calculation of segment
earnings.


Selling, general and administration (SG&A)
We incurred Corporate SG&A expenses of $2.6 million and $6.9 million for the three and nine months ended Q3 2011, which decreased
by $8.5 million and $31.9 million, respectively, compared to the same periods in fiscal 2010. A significant majority of our SG&A expenses
are denominated in Canadian dollars. The decreased SG&A costs, despite an increase from foreign exchange, were primarily due to lower
compensation cost from workforce reductions, lower consulting and professional costs subsequent to the completion of our strategic
repositioning, and lower costs associated with transition services, which were substantially completed in fiscal 2010. SG&A expenses were
also positively impacted in Q1 2011 by a $1.5 million insurance adjustment.

Other expenses (income), net
Other expenses, net, increased by $4.5 million for the three months ended Q3 2011 compared to the same period in fiscal 2010 primarily
due to Transition Service Agreements (TSA) revenue recorded in Q3 2010. Other expenses, net, decreased by $12.6 million for the nine
months ended Q3 2011 compared to the same period in fiscal 2010. Significantly larger Other expenses, net, for the nine months ended Q3
2010 were primarily a result of the revaluation of the $450 million of proceeds from the sale of MDS Analytical Technologies that were
held in a Canadian dollar functional currency entity in U.S. dollars to fund the substantial issuer bid completed on March 29, 2010. This
was partially offset by TSA revenue recorded during the nine months ended Q3 2010.

Divestitures and discontinued operations
                                                                                                  Three months ended July 31                                              Nine months ended July 31

(thousands of U.S. dollars)                                                                                 2011                          2010                              2011                                    2010
Loss from discontinued operations, net of
income taxes                                                                             $              (8,814)           $            (6,363)              $         (27,057)                 $          (149,449)

We recorded a loss from discontinued operations, net of income taxes, of $8.8 million and $27.1 million for the three and nine months
ended Q3 2011, respectively, which primarily includes an unfavorable outcome of the arbitration with Life in Q3 2011 (as discussed in
“Recent business and corporate developments” section of this MD&A), the impact of the sale of MDS Nordion S.A. (discussed below),
and certain tax adjustments and settlements relating to our discontinued operations of MDS Pharma Services and MDS Analytical
Technologies.

For the three and nine months ended Q3 2010, our loss from discontinued operations, net of income taxes, of $6.4 million and $149.5
million, respectively, included the results of operations for MDS Pharma Services and MDS Analytical Technologies as well as our
divestiture activities during the period.

Sale of MDS Nordion S.A.
On March 31, 2011, we completed the sale of MDS Nordion S.A. in Belgium to Best Medical Belgium Inc. (Best Medical) for nominal
proceeds. Pursuant to the share purchase agreement (SPA) we signed in February 2011, we left cash of $18.5 million (€13 million) as capital
in the business. Best Medical acquired all of Nordion’s Belgian operations and the employees in Belgium, including related benefit and
pension plans, with the exception of the TheraSphere business. Best Medical also acquired the Belgian facilities, including current and
future decommissioning and waste disposal requirements.

In the second quarter of fiscal 2011 we recorded a total loss of $15.7 million on the sale of MDS Nordion S.A. including net working
capital and inventory adjustments of $2.8 million, which further reduced the sale price, and recognition of a non-cash unrealized foreign
currency translation gain of $4.6 million as the sale represented a substantial liquidation of the Company’s Belgian operations.

The decision to exit our Belgian operations is aligned with our strategy to optimize our product lines by reducing complexity, managing
costs and focusing on areas of our business that we believe can generate positive long-term returns.
                                                                              Nordion Inc. Interim Report July 31, 2011
                                                                                                 21
MANAGEMENT’S DISCUSSION AND ANALYSIS
Quarterly Financial Information
In this section, we provide a summary of selected financial information for each of the eight most recently completed quarters.

                                                                       Trailing four        July 31       April 30       January 31        October 31
(thousands of U.S. dollars, except per share amounts)                       quarters          2011           2011              2011             2010
Revenues from continuing operations
       Reactor                                                     $         86,280    $    15,695    $    21,862    $       25,621    $       23,102
       Cyclotron                                                             19,854          5,691          5,712             3,786             4,665
    Medical Isotopes                                                        106,134         21,386         27,574            29,407            27,767
       TheraSphere                                                           39,340         11,529         11,190             8,973             7,648
       Contract Services                                                     24,857          1,772          4,169             7,832            11,084
    Targeted Therapies                                                       64,197         13,301         15,359            16,805            18,732
       Cobalt                                                                98,029         30,879         19,628            18,350            29,172
       Sterilization-other                                                   13,276          1,241          5,697               400             5,938
    Sterilization Technologies                                              111,305         32,120         25,325            18,750            35,110
                                                                   $        281,636    $    66,807    $    68,258    $       64,962    $       81,609
Segment earnings (loss)
   Medical Isotopes                                                           36,610          4,794          9,738           12,410              9,668
   Targeted Therapies                                                         14,749          2,123          3,550            4,772              4,304
   Sterilization Technologies                                                 49,936         15,311          9,685            6,664             18,276
   Corporate and Other                                                      (21,569)        (3,040)        (7,797)          (1,194)            (9,538)
                                                                   $          79,726   $     19,188   $     15,176   $      22,652     $        22,710

Income from continuing operations                                  $         51,420    $     4,693    $      6,813   $       25,497    $       14,417
(Loss) income from discontinued operations,
   net of income taxes                                                      (25,802)        (8,814)       (14,291)          (3,952)             1,255
Net income (loss)                                                  $          25,618   $    (4,121)   $    (7,478)   $       21,545    $       15,672
Basic and diluted earnings (loss) per share
   - from continuing operations                                    $            0.78   $       0.07   $       0.11   $         0.38    $          0.22
   - from discontinued operations                                             (0.39)         (0.13)         (0.22)           (0.06)               0.02
Basic and diluted earnings (loss) per share                        $            0.39   $     (0.06)   $     (0.11)   $         0.32    $          0.24

                                                                       Trailing four        July 31       April 30       January 31        October 31
(thousands of U.S. dollars, except per share amounts)                       quarters          2010          2010              2010              2009
Revenues from continuing operations
       Reactor                                                     $         12,540    $     3,199    $      3,574   $        2,932    $        2,835
       Cyclotron                                                             25,125          8,692           6,593            4,837             5,003
    Medical Isotopes                                                         37,665         11,891          10,167            7,769             7,838
       TheraSphere                                                           27,033          7,313           7,595            6,484             5,641
       Contract Services                                                     28,849          7,559           6,010            7,125             8,155
    Targeted Therapies                                                       55,882         14,872          13,605           13,609            13,796
       Cobalt                                                                86,953         17,630          27,664           18,333            23,326
       Sterilization-other                                                    5,999          3,509             328              982             1,180
    Sterilization Technologies                                               92,952         21,139          27,992           19,315            24,506
                                                                   $        186,499    $    47,902    $     51,764   $       40,693    $       46,140
Segment (loss) earnings
   Medical Isotopes                                                         (1,202)           1,121           (96)           (1,251)            (976)
   Targeted Therapies                                                        12,830           3,118          1,870             3,762            4,080
   Sterilization Technologies                                                41,492           7,780         13,396             8,002          12,314
   Corporate and Other                                                     (64,380)         (6,969)       (37,314)          (12,288)          (7,809)
                                                                   $       (11,260)    $      5,050   $   (22,144)   $       (1,775)   $        7,609

Loss from continuing operations                                    $      (114,450)    $    (8,701)   $   (48,977)   $      (40,555)   $     (16,217)
Loss from discontinued operations,
   net of income taxes                                                    (191,890)         (6,363)       (40,794)         (102,292)         (42,441)
Net loss                                                           $      (306,340)    $   (15,064)   $   (89,771)   $     (142,847)   $     (58,658)
Basic and diluted loss per share
   - from continuing operations                                    $          (1.08)   $     (0.13)   $     (0.48)   $        (0.34)   $        (0.13)
   - from discontinued operations                                             (1.70)         (0.10)         (0.40)            (0.85)            (0.35)
Basic and diluted loss per share                                   $          (2.78)   $     (0.23)   $     (0.88)   $        (1.19)   $        (0.48)




                                                        Nordion Inc. Interim Report July 31, 2011
                                                                           22
MANAGEMENT’S DISCUSSION AND ANALYSIS
Sequential Financial Analysis
Revenues from continuing operations
Medical Isotopes
Medical Isotopes revenue declined 22% in Q3 2011 compared to Q2 2011. The decrease was primarily due to the planned NRU reactor
maintenance shutdown, which lasted from May 15 to June 16, 2011.

Reactor isotopes revenue of $15.7 million in Q3 2011 decreased by $6.2 million or 28% compared with Q2 2011 due to a lower volume of
Mo-99 sales during the NRU reactor maintenance shutdown.

In Q3 2011, Cyclotron isotopes revenue was relatively flat compared to Q2 2011. Both quarters benefited from sales of bulk Sr-82, the
isotope used in the production of CardioGen-82 generators.

Medical Isotopes results have been impacted by the return to service of the NRU reactor, which went out of service in May 2009 (Q3
2009) and did not resume production of medical isotopes until August 2010 (Q4 2010). While the NRU was down in 2009 and 2010,
Cyclotron revenue was higher driven mainly by an increase in demand for Tl-201, which is used as a substitute for Mo-99. Since the return
to service of the NRU reactor and High Flux Reactor (HFR) in Petten, Netherlands, we have seen the demand for Tl-201 return to normal
levels.

Targeted Therapies
Targeted Therapies revenue of $13.3 million in Q3 2011 decreased by $2.1 million or 13% compared to Q2 2011. This decline was wholly
in our Contract Services business, which began in Q2 2011 as discussed in the “Recent business and corporate developments” section of
this MD&A.

In Q3 2011, TheraSphere grew by 3% over Q2 2011. This continues the trend we have seen with this product in recent years of strong
growth in the first half of the fiscal year and a leveling out in the second half.

Targeted Therapies results have generally reflected the trend of continued strong growth for our TheraSphere product, as well as growth in
our Contract Services product, CardioGen-82, prior to the manufacturing interruption in Q2 2011.

Sterilization Technologies
Sterilization Technologies revenues of $32.1 million in Q3 2011 increased by $6.8 million or 27% compared to Q2 2011.

Increased Co-60 shipments in Q3 2011, with revenues up 57% compared to Q2 2011, resulted in our highest Co-60 revenue quarter in
more than two years. While Co-60 revenues can vary significantly quarter-to-quarter due to the timing of our shipments to customers, the
shipments are well planned between Nordion and our customers and are forecast several months in advance.

The strong Co-60 sales in Q3 2011 were partially offset by the decline in Sterilization-other because of the production irradiator revenue
that had been recognized in Q2 2011.

Segment earnings (loss)
Medical Isotopes
Medical Isotopes segment earnings of $4.8 million in Q3 2011 decreased by $4.9 million or 51% compared to Q2 2011. This is primarily
due to a lower volume of Mo-99 as a result of the one-month planned maintenance shutdown of the NRU reactor, providing less coverage
of the fixed costs in the business segment. In addition, gross margins in Reactor isotopes were negatively impacted as we sourced non-Mo-
99 isotopes from more expensive secondary suppliers in order to continue supplying our customers.

Quarter-to-quarter Medical Isotopes segment earnings were impacted by the costs of maintaining our infrastructure related to Reactor
isotopes production while the NRU reactor was down in 2009 and 2010. Generally, our Reactor isotopes products have higher gross
margins than the Cyclotron isotopes products.

Targeted Therapies
Targeted Therapies segment earnings of $2.1 million in Q3 2011 decreased by $1.4 million or 40% compared to Q2 2011. The decrease in
earnings is primarily due to a continued decline in our Contract Services business as discussed above. We are also beginning to see a small
impact on segment earnings from the start-up of clinical trial activities.


                                                   Nordion Inc. Interim Report July 31, 2011
                                                                      23
MANAGEMENT’S DISCUSSION AND ANALYSIS
Quarter-to-quarter Targeted Therapies segment earnings are impacted by the mix of TheraSphere and Contract Services as TheraSphere
generally has a higher gross margin than our Contract Services, and by the level of spending on TheraSphere clinical trials.

Sterilization Technologies
Sterilization Technologies segment earnings of $15.3 million in Q3 2011 increased by $5.6 million or 58% compared to Q2 2011. This is
due to increased Co-60 volume.

Quarter-to-quarter Sterilization Technologies segment earnings are impacted by the mix of Co-60, a high gross margin product, with
Sterilization – Other, which includes our shipments of production irradiators. The irradiators, while important to future growth in Co-60
sales, are a relatively lower margin product than Co-60.

Corporate and Other
Corporate and Other segment loss of $3.0 million in Q3 2011 decreased by $4.8 million compared to Q2 2011 primarily due to foreign
exchange losses in Q2 2011 of $4.2 million. SG&A expenses also decreased by $0.5 million in Q3 2011 because of the costs in Q2 2011 for
additional professional services related to the sale of our Fleurus operations.

Quarter-to-quarter Corporate and Other segment results have been impacted by our strategic repositioning, which is now substantially
complete, and our continued focus on achieving an optimal level of corporate G&A spend.

Other items that have affected the quarter-to-quarter comparability of the income (loss) from continuing operations include:

Embedded derivative gains and losses:

Results for the quarters beginning in fiscal 2011 reflect after-tax embedded derivative gains and losses that are significantly higher than
previous quarters due to the increased U.S. to Canadian dollar exchange rate exposure from Russian supply contracts for Mo-99 entered
into in Q4 2010.

    Q3 2011: $3.7 million loss
    Q2 2011: $0.7 million gain comprised of a $39.0 million gain related to currency movement in the quarter offset by a $38.3 million loss
     related to a reduction in the notional amount of product expected over the life of the contracts.
    Q1 2011: $18.6 million gain
    Q4 2010: $8.5 million gain

After-tax restructuring charges related to the strategic repositioning:

    Q4 2010: $2.0 million
    Q3 2010: $6.0 million
    Q2 2010: $14.0 million
    Q1 2010: $23.0 million
    Q4 2009: $8.0 million

Share buybacks:

Earnings per share amounts were impacted by the number of Common shares repurchased and cancelled under the substantial issuer bid in
Q3 2010, and the normal course issuer bid during the nine months ended Q3 2011.




                                                               Nordion Inc. Interim Report July 31, 2011
                                                                                  24
MANAGEMENT’S DISCUSSION AND ANALYSIS
Liquidity and capital resources
Cash flows
We have summarized our cash flows from operating, investing and financing activities, as reflected in our consolidated statements of cash
flows, in the following table:

                                                                           Three months ended July 31         Nine months ended July 31
(thousands of U.S. dollars)                                                         2011        2010                 2011         2010
Cash provided by (used in) continuing operating activities                 $       8,551 $     11,986         $    13,953 $    (47,426)
Cash provided by (used in) continuing investing activities                        18,866        (659)              17,793      (27,236)
Cash (used in) provided by continuing financing activities                     (13,659)             2            (52,825)     (671,071)
Cash (used in) provided by discontinued operations                               (8,210)     (22,223)            (38,040)       561,224
Effect of foreign exchange rate changes on cash and cash equivalents               (402)      (1,389)               5,355         7,600
Net increase (decrease) in cash and cash equivalents during the period     $       5,146 $   (12,283)         $ (53,764) $ (176,909)

Continuing operating activities
Cash provided by our operating activities for the three months ended Q3 2011 was $8.6 million compared to $12.0 million for the same
period in fiscal 2010. We earned income from continuing operations of $4.7 million for Q3 2011, which includes a non-cash change in the
fair value of embedded derivative assets of a $3.7 million loss. In Q3 2011, our accounts receivable increased by $7.3 million due to a
higher level of sales in the last month of the quarter, our accounts payable and accrued liabilities decreased $4.4 million due mainly to the
timing of various payments from operations as well as $1.3 million for final post-closing payout related to the sale of MDS Nordion S.A.,
and our inventories decreased by $4.7 million primarily driven by the timing of our sale and receipt of Co-60.

Cash provided by our operating activities for the nine months ended Q3 2011 was $14.0 million compared to $47.4 million of cash used in
the same period in fiscal 2010. We earned income from continuing operations of $37.0 million for the nine months ended Q3 2011, which
includes a non-cash change in the fair value of embedded derivative assets of a $15.6 million gain. During the nine months ended Q3 2011,
our accounts payable and accrued liabilities decreased by $25.3 million primarily due to $12.2 million for final post-closing settlements
payouts relating to the sales of MDS Analytical Technologies and MDS Pharma Services Early Stage businesses. During the nine months
ended Q3 2011, our inventories increased by $10.3 million. In Q1 2011, we also paid out $6.5 million for fiscal 2010 annual incentive
payments. In Q2 2011, we also received $1.3 million in cash dividends from our equity investment in Lumira Capital Corp.

Continuing investing activities
There was an increase in cash of $18.9 million in investing activities for the three months ended Q3 2011 compared with $0.7 million of
cash used in the same period in fiscal 2010. Our activities in Q3 2011 primarily represent a release of restricted cash of $20.0 million that
mainly relates to restricted cash previously held as collateral to secure letters of credit, which are now secured by our new credit facility.
This increase in cash was partially offset by capital asset additions of $1.2 million. Our activities in Q3 2010 consisted of $2.1 million for
capital asset additions offset by a $1.4 million decrease in restricted cash.

There was an increase in cash of $17.8 million provided by investing activities for the nine months ended Q3 2011 compared with $27.2
million of cash we used in the same period in fiscal 2010. During the nine months ended Q3 2011, we had a significant decrease in
restricted cash of $19.0 million, which as noted above was primarily related to restricted cash previously held as collateral to secure letters
of credit and $1.7 million cash sale proceeds for our available for sale investment in Q2 2011, partially offset by capital asset additions of
$2.9 million. During the nine months ended Q3 2010, restricted cash increased by $21.4 million mainly as a result of the cancellation of the
old credit facility we had in place. We also purchased capital assets of $6.0 million.

Continuing financing activities
We used cash of $13.7 million for financing activities for the three months ended Q3 2011 compared with $nil for the same period in fiscal
2010. In Q3 2011, we repurchased Common shares for $7.2 million through the NCIB initiated in January 2011 and paid $6.4 million of
cash dividends declared in June 2011.

We used cash of $52.8 million for financing activities for the nine months ended Q3 2011 compared with $671.1 million we used in the
same period in fiscal 2010. During the nine months ended Q3 2011, we repurchased and cancelled Common shares for $39.9 million and
paid $12.9 million of cash dividends declared in January and June 2011. During the nine months ended Q3 2010, we completed the
substantial issuer bid for a total cost of $450.0 million and repaid a $221.4 million of the outstanding principal for our senior unsecured
notes and certain capital lease obligations.

Discontinued operations activities
For the three and nine months ended Q3 2011, we used cash of $8.2 million and $38.0 million, respectively. Our discontinued operations
activities were primarily driven by $22.2 million cash outflows related to the divestiture of MDS Nordion S.A. in Belgium, including an

                                                    Nordion Inc. Interim Report July 31, 2011
                                                                       25
MANAGEMENT’S DISCUSSION AND ANALYSIS
$18.5 million capital infusion, as well as the $4.6 million operating loss incurred prior to the completion of the sale. These cash outflows
were partially offset by $1.4 million of cash proceeds from the sale of our MDS Pharma Services building in Phoenix, Arizona.

Cash of $561.2 million provided by discontinued operations during the nine months ended Q3 2010 was primarily due to the net proceeds
received for the sale of the MDS Analytical Technologies.

Summary of cash flow activities for the three months ended Q3 2011

Our operations and other operating working capital changes used a net cash outflow of $6.7 million in Q3 2011.

Other primary cash inflows in Q3 2011, excluding those associated with our product revenues included:
     $20.0 million of mainly restricted cash held as collateral to secure letters of credit released upon our new credit facility being
         available;
     $3.5 million of payments from AECL related to a note receivable; and,
     $6.8 million of net tax refunds.

With these cash inflows, and our cash on hand, we used cash in the following activities in Q3 2011:
     $7.2 million in share buyback under NCIB;
     $6.4 million of cash dividends paid;
     $2.4 million pension plan contributions;
     $1.3 million for final post closing settlement relating to the sale of MDS Nordion S.A.; and,
     $1.2 million capital asset additions.

Liquidity
                                                                                                   July 31        October 31
(thousands of U.S. dollars)                                                                          2011              2010          Change
Cash and cash equivalents                                                                 $        69,038     $      122,802          (44%)
Current ratio(a)                                                                                       2.6                2.3           13%
(a) Excludes current assets and current liabilities related to discontinued operations.

Our cash and cash equivalents of $69.0 million as of July 31, 2011 was $53.8 million lower than the $122.8 million we had as of October
31, 2010. As we discussed in the Cash flows section above, the decrease was primarily due to our $39.9 million share buyback under the
NCIB, $22.2 million related to our divestiture of MDS Nordion S.A., $12.2 million paid for final post-closing settlements payouts relating
to our sales of MDS Analytical Technologies and MDS Pharma Services Early Stage businesses, $12.9 million of cash dividends paid, as
well as the $6.5 million we paid for fiscal 2010 annual incentive payments. The decrease in cash and cash equivalents was partially offset by
$10.3 million of cash received on the AECL note receivable, $12.1 million net tax refunds, $1.7 million of cash proceeds from the sale of
our available for sale investment, $1.4 million of cash proceeds received for the sale of our MDS Pharma Services building in Phoenix,
Arizona, $1.3 million cash dividends from our equity investment, and the $2.0 million of TSA receivables collected from certain buyers of
our divested businesses.

Our current ratio as of July 31, 2011, was 2.6 compared with 2.3 as of October 31, 2010. The change is mainly due to the reclassification
of restricted cash previously in Other long-term assets as well as increase in inventories and embedded derivative assets as discussed in
previous sections.

Prior to entering into our new credit facility in June 2011, we had credit facilities in place, expressly for letters of credit and letters of
guarantee. Under the terms of the facilities, cash for the full amount of the outstanding letters of credit and letters of guarantee was held in
account as security, which represented restricted cash and was not available for operations. As of July 31, 2011, our restricted cash of $13.5
million (October 31, 2010 - $32.4 million) included $8.1 million of funds for insurance liabilities and $5.0 million of cash proceeds held in
escrow related to the sale of MDS Pharma Services Phase II-IV.

New credit facility
On June 6, 2011, we entered into a $75.0 million senior revolving three year committed credit facility with The Toronto-Dominion Bank
(TD) and a select group of other financial institutions. Each material subsidiary of Nordion jointly and severally guaranteed the obligations
of the borrower to the lenders. The loan agreement includes customary positive, negative and financial covenants. The bank is granted a
floating and fixed charges over the assets of the borrower and guarantors including, but not limited to, accounts receivable, inventory and
real property.

Under the new credit facility, we are able to borrow Canadian and US dollars by the way of Canadian dollar prime rate loans, US dollar
base rate loans, US dollar Libor loans, the issuance of Canadian dollar banker’s acceptances and letters of credit in Canadian and US
                                                                  Nordion Inc. Interim Report July 31, 2011
                                                                                     26
MANAGEMENT’S DISCUSSION AND ANALYSIS
dollars. Letters of credit shall not exceed $50.0 million and the TD will make available a swingline of $7.5 million. The credit facility is
payable in full on the day falling three years after the closing date; provided that the term of the credit facility may be extended on mutual
agreement of the lenders for successive subsequent periods of one year.

Concurrent with entering into our new credit facility, we no longer have our cash held in account as security for outstanding letters of
credit. The new credit facility is primarily for general corporate purposes.

Pension
For funding purposes, we are required by regulation to update our actuarial valuation of our major defined benefit pension plan as of
January 1, 2011. Based on this actuarial valuation completed in Q3 2011, we expect annual funding requirements of approximately $11
million, including approximately $3 million of current service cost contributions, in each of the next five years in order to reduce the
projected solvency deficit. For nine months ended Q3 2011, we funded $6.1 million in cash contributions. We have also funded the
solvency deficit via letters of credit starting in Q3 2011, which will accrete up to $4.4 million by the end of calendar year 2011. The deficit
has arisen due to falling real interest rates where the pension liabilities increased more than the increase in the value of pension assets. The
actual funding requirements over the five-year period will be dependent on subsequent annual actuarial valuations. These amounts are
estimates, which may change with actual investment performance, changes in interest rates, any pertinent changes in government
regulations, and any voluntary contributions. We may be able to issue letter of credits to meet the above funding requirements.

In addition, we retained a defined benefit pension plan associated with MDS Pharma Services Early Stage. The current estimated under-
funded status based on the latest actuarial valuation completed is approximately $3 million.

Future liquidity requirements
We believe that cash on hand, cash flows generated from operations, and new borrowings if needed, will be sufficient to meet the
anticipated requirements for operations, capital expenditures, R&D expenditures including trials for TheraSphere, pension funding,
retained obligations from the sold businesses, litigation costs including the MAPLE arbitration, contingent liabilities including FDA
settlements and approximately $9.5 million Life arbitration settlement, and restructuring costs including anticipated $4.2 million lease
termination payment relating to our office space in Toronto, Canada. The FDA liability and restructuring reserves are $8.4 million and $7.4
million, respectively, as of July 31, 2011. At this time, we do not anticipate any issues in collecting amounts owed to us with respect to the
notes receivable from AECL.

Contractual obligations
Subsequent to the sale of Early Stage, we have retained litigation claims and other costs associated with the U.S. FDA’s review of our
discontinued bioanalytical operations and certain other contingent liabilities in Montreal, Canada. We have also retained certain liabilities
related to pre-closing matters, a defined benefit pension plan for U.S. employees, and lease obligations for our Montreal, Canada facility, as
well as two office locations in King of Prussia, Pennsylvania, and Bothell, Washington. We have estimated the cost of future lease
payments, net of expected sublease revenue, where applicable, to be approximately $2.6 million. Under certain circumstances, we may be
required to assume additional liabilities that could result in future cash payments.

Indemnities and guarantees
In connection with our various divestitures, we agreed to indemnify buyers for actual future damage suffered by the buyers related to
breaches, by us, of representations and warranties contained in the purchase agreements. In addition, we have retained certain existing and
potential liabilities arising in connection with such operations related to periods prior to the closings. To mitigate our exposure to certain of
these potential liabilities, we maintain errors and omissions insurance and other insurance. We are not able to make a reasonable estimate
of the maximum potential amount that we could be required to pay under these indemnities. We have not made any significant payments
under these types of indemnity obligations in the past; however, we have had early discussions with buyers related to certain indemnities
provided.

Arbitration with Life Technologies Corporations
As discussed in “Recent business and corporate developments” section of this MD&A, we are required to pay an estimated arbitration
settlement obligation of approximately $9.5 million to Life in Q4 2011.

Capitalization
Our long-term debt of $47.3 million as of July 31, 2011, is primarily a non-interest-bearing Canadian government loan maturing in 2015,
which we have fully secured with a long-term financial instrument that we have included in “Other long-term assets” in our consolidated
statements of financial position.

Our shareholders’ equity as of July 31, 2011, was $313.3 million compared with $337.6 million as of October 31, 2010. The decrease
reflects positive net income of $9.9 million offset by a charge of $25.7 million related to our NCIB due to share buyback costs in excess of
$14.2 million carrying value of the Common shares. During the nine months ended Q3 2011, we repurchased 3,558,243 of our Common
shares for an aggregate purchase price of $40.5 million.
                                                    Nordion Inc. Interim Report July 31, 2011
                                                                       27
MANAGEMENT’S DISCUSSION AND ANALYSIS
Off-balance sheet arrangements
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance or
special purpose entities, which are established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow
or limited purposes. We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect
on the financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity or capital expenditures or
capital resources that are material to investors other than operating leases and derivative instruments.

Derivative instruments
As of July 31, 2011, we held no derivatives designated as fair value, cash flow or net investment hedges.

As of July 31, 2011, we identified certain embedded derivative assets with a fair value of $24.6 million (October 31, 2010 - $10.5 million)
and embedded derivative liabilities with a fair value of $0.4 million (October 31, 2010 - $2.0 million), which have a total notional amount of
over $300 million (October 31, 2010 - $700 million). During the three and nine months ended Q3 2011, we recorded $3.7 million loss and
a $15.6 million gain for the change in the fair value of the embedded derivatives, respectively, compared to $2.0 million loss and $1.3
million gain for the same periods in fiscal 2010.

Litigation
MAPLE
We are involved in an arbitration related to the MAPLE Facilities and an associated lawsuit with AECL and the Government of Canada.
AECL and the Government of Canada unilaterally announced in fiscal 2008 their intention to discontinue the development work on the
MAPLE Facilities. At the same time, AECL and the Government of Canada also publicly announced that they would continue to supply
medical isotopes from the current NRU reactor, and would pursue a license extension of the NRU reactor operations past its current
expiry date of October 31, 2011. On July 8, 2008, we served AECL with a notice of arbitration proceedings seeking an order to compel
AECL to fulfill its contractual obligations under an agreement entered into with AECL in February 2006 (the 2006 Agreement) to
complete the MAPLE Facilities and, in the alternative and in addition to such order, seeking significant monetary damages. In the lawsuit,
we are claiming $1.7 billion (C$1.6 billion) in damages from AECL and the Government of Canada. Our current emphasis is on arbitration
proceedings, which continue broadly along the planned schedule. We continue to expect hearings for the arbitration to extend into the later
part of calendar year 2011 and we expect a decision from the panel thereafter. Under the arbitration provisions, the parties have limited
appeal rights as to matters of law. In addition to the legal proceedings initiated by us against AECL and the Government of Canada, we are
currently exploring supply alternatives to mitigate the lack of supply from AECL, for both the long-term supply of reactor-based medical
isotopes and isotopes produced by other modalities. We have also urged the Government of Canada and AECL to consult with
international experts and obtain their assistance toward activating the MAPLE Facilities project.

Bioequivalence studies
During fiscal 2009, we were served with a Complaint related to repeat study costs and mitigation costs of $10 million and lost profits of
$70 million. This action relates to certain bioequivalence studies carried out by our former MDS Pharma Services business unit at our
Montreal, Canada facility from January 1, 2000, to December 31, 2004. We maintain reserves in respect of repeat study costs as well as
errors and omissions insurance. We have assessed this claim and have accrued amounts related to the direct costs associated with the repeat
study costs in our FDA provision. We have not made a specific provision related to the claim for lost profit, other than insurance
deductible liabilities. We have filed an Answer and intend to vigorously defend this action.

During fiscal 2009, we were served with a Statement of Claim related to repeat study and mitigation costs of $5.2 million (C$5 million) and
loss of profit of $31.4 million (C$30 million). This action relates to certain bioequivalence studies carried out by our former MDS Pharma
Services business unit at our Montreal, Canada facility from January 1, 2000, to December 31, 2004. We maintain reserves in respect of
repeat study costs as well as errors and omissions insurance. We have assessed this claim and have accrued amounts related to the direct
costs associated with the repeat study costs in our FDA provision. We have not made a specific provision related to the claim for lost
profit, other than insurance deductible liabilities. We have filed a Statement of Defence and intend to vigorously defend this action.




                                                   Nordion Inc. Interim Report July 31, 2011
                                                                      28
MANAGEMENT’S DISCUSSION AND ANALYSIS
Strategy and outlook
Our business strategy is to maximize the value of our core business, to drive commercial excellence through optimizing, leveraging and
building on our product lines and capabilities, and to cultivate sustainable growth through disciplined investment.

Business outlook

Medical Isotopes
Reactor Isotopes
We continue to work with our existing customers and potential new customers to secure additional sales of medical isotopes and increase
our global market share of Mo-99.

Since the return to service of the NRU reactor in August 2010, we have received reliable supply from AECL. The planned maintenance
shutdown of the NRU reactor in Q3 2011 went as scheduled and we resumed supplying our customers as planned. We expect the NRU
reactor to undergo a shutdown for a similar period during 2012 for annual planned maintenance activities as established by the AECL
agreement with the Canadian Nuclear Safety Commission (CNSC) in 2010.

In 2010, the AECL and CNSC established a revised multiyear protocol for the licensing renewal of the NRU reactor. We expect the five-
year license renewal decision by October 31, 2011, which would extend the NRU reactor license from 2011 to 2016. The next scheduled
public hearings are currently planned for the first week of October 2011.

Securing reliable long-term supply of medical isotopes remains a priority for us. We continue to work with our Russian partner, Isotope, to
further strengthen our supply chain reliability by bringing online this important back up supply of Mo-99 for our customers. While we
expect to receive additional samples and initial commercial shipments, we are not expecting significant volumes of Mo-99 from Isotope
during 2012 and do not expect to have supply available to mitigate the impact of the planned NRU maintenance shutdown in 2012. In
addition, we continue to pursue the arbitration proceeding to compel AECL to complete the MAPLE reactors, as discussed in the
“Litigation” section of this MD&A.

For Q4 2011, we expect Reactor isotopes revenue to be similar to Q2 2011. While modest Mo-99 volume increases from new customers
were generated in Q3 2011, existing customers continue to experience dampened demand.

Cyclotron Isotopes
We expect Q4 2011 Cyclotron isotopes revenue to decline to approximately $3.5 million as the sales of bulk Sr-82 have ceased because of
the CardioGen-82 recall issue described in the “Recent business and corporate developments” section of this MD&A.

Targeted Therapies
TheraSphere
Our TheraSphere revenue grew by 58% in Q3 2011 compared with Q3 2010, due to continued increasing adoption in North America and
Europe as a result of the product’s perceived efficacy, and reimbursement and insurance coverage. In fiscal 2011, we continue to invest to
increase acceptance in existing markets, as well as enter into new markets globally. Considering the growth in the three quarters of 2011
and current trends, we expect TheraSphere growth for the full year of fiscal 2011 to be above the 40% growth we achieved last year. We
estimate that the global market for radioembolization microspheres has grown by approximately 20% over the last twelve months.

We have announced two Phase III clinical trials for TheraSphere . The first is for primary liver cancer (STOP-HCC) and second is for
secondary liver cancer (EPOCH). These trials support global adoption and long-term growth of TheraSphere, as well as reimbursement
outside the U.S. TheraSphere is currently authorized by the U.S. FDA under a Humanitarian Device Exemption as a radiation treatment
for primary liver cancer or hepatocellular carcinoma. We have designed these trials to provide the data to support a submission to the FDA
to obtain full approval of the product in the U.S. In addition, data collected from these trials may support the use of TheraSphere as a
second line of treatment for primary and secondary liver cancer.

Our STOP-HCC and EPOCH trials are in start-up phase with first patient enrolment expected by the end of calendar 2011 and the last
patient visit completed by late 2016. The overall cost of these trials is expected to be approximately $15 million to $20 million each over
five years with $2 million to $3 million incurred for each trial in 2012.

We are also planning the design and protocol for a randomized trial in the subset of primary liver cancer patients for which TheraSphere
may provide the greatest benefit. This trial would provide randomized comparative data to demonstrate TheraSphere’s competitive
advantage in the treatment of liver cancer patients with Portal Vein Thrombosis (PVT). We expect this data would enable us to build on
the strong growth and adoption in the European market, to provide strong scientifically-supported comparative data aligned with world-
renowned key opinion leaders’ efforts in TheraSphere adoption, and to provide a base for expansion into Asia. The trial is also expected to

                                                   Nordion Inc. Interim Report July 31, 2011
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MANAGEMENT’S DISCUSSION AND ANALYSIS
support our pursuit to expand reimbursement in Europe. We expect to enrol the first patient into this trial during the second half of
calendar 2012 with the overall cost and timelines of this trial in a similar range as those of our STOP-HCC and EPOCH trials.

Our current estimate of the cost of the three clinical trials (STOP-HCC, EPOCH and HCC/PVT) in fiscal 2012 is $6 million to $8 million.

Contract Manufacturing/Services
We expect the overall financial performance of our Targeted Therapies segment to continue to be impacted by the Bracco recall of
CardioGen-82 generators. We began manufacturing CardioGen-82 in 2009 and by mid-2010, it had become our main Contract
Manufacturing product contributing $1.0 million to $2.0 million per quarter to gross margin contribution in the 12 months before the
manufacturing interruption in Q2 2011. As described in the “Recent business and corporate developments” section of this MD&A, Bracco
voluntarily recalled the product July 25, 2011. We currently do not have specific guidance from Bracco as to when our manufacturing of
CardioGen-82 generators is expected to resume. Therefore, the actual duration of our manufacturing outage for CardioGen-82 is not
determinable at this time. At the present time, we have not planned for the return of CardioGen-82 manufacturing until the latter part of
fiscal 2012.

Sterilization Technologies
Cobalt
As with previous years, the timing of quarterly revenues for Sterilization Technologies will vary due to the timing of shipments of Co-60
and production irradiators to our customers. When our customers purchase and install Co-60, they need to shut down their production
irradiator operations while the Co-60 is being loaded into the irradiator. Therefore, we coordinate this process closely with our customers
to minimize disruption to their operations.

In Q4 2011, we expect Co-60 shipments to be down slightly from Q3 2011 and continue to expect Co-60 volume for fiscal 2011 to be
approximately equal to fiscal 2010.

Sterilization – Other
We are currently building a production irradiator that is scheduled to be shipped into the U.S. late in Q4 2011.

We have not currently planned for revenue contribution from our recently announced GammaFIT product. While we plan to make
GammaFIT commercially available in early fiscal 2012, with its expected long sales cycle, we do not expect to ship any of these products
during 2012. This innovative new product demonstrates our continued strong commitment to the long-term growth of this business
segment as we believe the GammaFIT is a more financially accessible product that can open up new Co-60 markets for us, particularly in
Latin-America and Asia.

Financial outlook
Deferred tax assets and liabilities
As of Q3 2011, we reported $87.6 million of net deferred tax assets comprised of R&D tax credits and other tax carryovers arising from
our Canadian operations. Our deferred tax assets have increased by $1.2 million during Q3 2011 due to fewer Investment Tax Credits
being utilized against current taxes payable and a decrease in our future tax liability arising from the change in fair value of embedded
derivatives. These tax assets are available to reduce our cash income taxes in the future. The recognition of these assets is based on our
earnings outlook and our view that we can utilize these tax assets in the foreseeable future. If those future profitability expectations
significantly decline, we will be required to write-off some portion, if not all, of these deferred tax assets.

Cash outlook
We ended Q3 2011 with $69.0 million in cash and cash equivalents, $13.5 million of restricted cash, a note receivable from AECL with a
carrying value of $15.9 million, and essentially no debt. Our outstanding debt of $47.3 million primarily consists of a $47.2 million loan
from the Government of Canada, which is fully defeased by a funded financial instrument issued by a major Canadian bank. In Q4 2011,
we continue to expect to generate positive cash flow from operations primarily as a result of continued profitability. For fiscal 2011, we do
not expect to pay significant cash taxes or interest expense and our capital expenditure levels are expected to be below $10 million, which is
approximately our average spend over the past three years.

In Q3 2011, we established a $75.0 million, three-year credit facility. Under the terms of this new credit facility, $20.0 million of cash used
as collateral became available for operations.

Our activities associated with our strategic repositioning are largely complete. As discussed in “Recent business and corporate
developments” section of this MD&A, we are required to pay an arbitration settlement obligation of approximately $9.5 million to Life in
Q4 2011. We also have estimated remaining restructuring outflows of $4.8 million within fiscal 2011 including the termination of our
former corporate office lease in Toronto, Canada as discussed in the “Financial Results Analysis” section of this MD&A. Offsetting these

                                                    Nordion Inc. Interim Report July 31, 2011
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MANAGEMENT’S DISCUSSION AND ANALYSIS
amounts are $5.0 million of our restricted cash relates to an escrow amount associated with the Phase II-IV business we sold, which we
expect to be released in Q4 2011. We also currently have accounts receivable due to us from buyers of $3.7 million.

Based on preliminary estimates for our defined benefit pension plan and our plan for future decommissioning of our Ottawa, Canada
facilities required by the Canadian Nuclear Safety Commission, we may be required to issue letters of credit or make funding payments
related to these obligations. We currently expect that we may have approximately an $11 million funding requirement in each of the next
five years for our pension plan that we may fund in cash or by issuing a letter of credit for a portion of the funding requirement. A letter
of credit is generally required for the estimated future decommissioning costs and our estimate of the future costs has increased by
approximately $16 million to approximately $31 million from our previous submission. We have recorded the present value of the $31
million estimated future decommissioning costs in our current financial statements.

We have received the required regulatory approvals to allow us to purchase up to approximately 8% of our 67.2 million outstanding shares
as at January 12, 2011. To date, under the NCIB we announced in January 2011, we have repurchased 3.6 million shares, which represent
63% of regulatory approved shares, with an aggregate value of $40.5 million. We expect to continue our repurchases during Q4 2011,
however, we continue to monitor and assess our cash requirements, liquidity and access to capital in determining the final amount we
repurchase. On September 13, 2011, our Board of Directors declared a quarterly dividend at $0.10 per share to Nordion’s shareholders on
record as of September 23, 2011, which we expect will total approximately $6.4 million payable on October 1, 2011. This is the third
quarterly dividend of $0.10 per share our Board has declared during 2011.




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MANAGEMENT’S DISCUSSION AND ANALYSIS
Accounting and control matters
Recent accounting pronouncements
On April 16, 2010, the FASB issued ASU No. 2010-13, “Stock Compensation (Topic 718), Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (ASU 2010-13), which clarifies that a share-based
payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity
securities trades must not be considered to contain a market, performance or service condition. An entity should not classify such an award
as a liability if it otherwise qualifies for classification in equity. ASU 2010-13 is effective for fiscal years beginning on or after December 15,
2010 and for interim periods within those fiscal years and is to be applied prospectively. We plan to adopt ASU 2010-13 on November 1,
2011 and do not expect it to have a significant impact on our consolidated financial statements.

In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value
Measurements” (ASU 2010-06), which provides amendments that clarify existing disclosures and requires new disclosures related to fair value
measurements. In particular, ASU 2010-06 requires more disaggregated information on each class of assets and liabilities and further
disclosures on transfers between levels 1 and 2 and activity in level 3 fair value measurements. ASU 2010-06 is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the disclosures about activity in level 3 fair value measurements,
which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. We plan to adopt
ASU 2010-16 on November 1, 2011 and do not expect it to have a significant impact on our consolidated financial statements.

In December 2010, the FASB issued ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or
Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force)” (ASU 2010-28). ASU 2010-28 addresses how companies should
test for goodwill impairment when the book value of a reporting entity is zero or negative. For reporting units with zero or negative
carrying amounts, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill
impairment exists. ASU 2010-28 is effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal
years. We plan to adopt ASU 2010-28 on November 1, 2011 and do not expect it to have a significant impact on our consolidated financial
statements.

Disclosure controls and procedures
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to
senior management, including the Chief Executive Officer (CEO) and the Chief Financial Officer (CFO), on a timely basis so that
appropriate decisions can be made regarding public disclosure. We, including the CEO and CFO, have evaluated the effectiveness of our
disclosure controls and procedures as defined in the rules of the U.S. Securities and Exchange Commission and the Canadian Securities
Administrators. Based on that evaluation, we, including the CEO and CFO, have concluded that, as a result of the material weakness
described below in our report on internal control over financial reporting, disclosure controls and procedures were not effective as of July
31, 2011.

Internal control over financial reporting
As a result of our internal control assessment during the preparation of our 2010 annual consolidated financial statements, we concluded
that we had not maintained effective controls over financial reporting related to our accounting for income taxes for historical transactions.
Specifically, we did not complete a process of evaluating our accounting and reporting of our income tax accounts based on the complex
transactions of prior years, particularly considering the reduced size and scope of our Company which has resulted in a significantly
reduced level of materiality.

During Q3 2011, we have continued to monitor our accounting and reporting for our income tax accounts related to the complex
transactions of prior years. We have identified those issues on which we need to focus our remediation efforts and are progressing on the
resolution of these issues in accordance with our plan. We intend to continue our efforts to strengthen and enhance our disclosure
controls and procedures and internal control over this identified area of deficiency until the material weakness is fully remediated.




                                                     Nordion Inc. Interim Report July 31, 2011
                                                                        32
MANAGEMENT’S DISCUSSION AND ANALYSIS
Caution regarding forward-looking statements
From time to time, we make written or oral forward-looking statements within the meaning of certain securities laws, including under
applicable Canadian securities laws and the “safe harbour” provisions of the United States Private Securities Litigation Reform Act of
1995. This document contains forward-looking statements including the strategy of the continuing businesses, as well as statements with
respect to our beliefs, plans, objectives, expectations, anticipations, estimates and intentions. The words “may”, “could”, “should”,
“would”, “outlook”, “believe”, “plan”, “anticipate”, “estimate”, “project”, “expect”, “intend”, “indicate”, “forecast”, “objective”,
“optimistic”, and words and expressions of similar import, are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, which give rise to the
possibility that predictions, forecasts, projections and other forward-looking statements will not be achieved. We caution readers not to
place undue reliance on these statements as a number of important factors could cause our actual results to differ materially from the
beliefs, plans, objectives, expectations, anticipations, estimates and intentions expressed in such forward-looking statements. These factors
include, but are not limited to: management of operational risks; our ability to secure a reliable supply of raw materials, particularly cobalt
and critical medical isotopes; the effects of competition in the markets in which we operate; our ability to manage long-term supply
commitments; our reliance on one customer for the majority of our sales of medical isotopes; our ability to maintain regulatory approval
for the manufacturing, distribution and sale of our products; the strength of the global economy, in particular the economies of Canada,
the U.S., the European Union, Asia, and the other countries in which we conduct business; the stability of global equity markets; assets and
liabilities that we retained from the businesses sold; obligations retained and projected adjustments thereto; successful implementation of
structural changes, including restructuring plans; our ability to complete other strategic transactions and to execute them successfully; our
ability to negotiate future credit agreements, which may or may not be on terms favorable to us; the impact of the movement of the U.S.
dollar relative to other currencies, particularly the Canadian dollar and the Euro; changes in interest rates in Canada, the U.S., and
elsewhere; the timing and technological advancement of new products introduced by us or by our competitors; our ability to manage our
research and development; the impact of changes in laws, trade policies and regulations including health care reform, and enforcement
thereof; regulatory actions; judicial judgments and legal proceedings, including legal proceedings described in this document; our ability to
maintain adequate insurance; our ability to successfully realign our organization, resources and processes; our ability to retain key
personnel; our ability to have continued and uninterrupted performance of our information technology and financial systems; our ability to
compete effectively; the risk of environmental liabilities; new accounting standards that impact the policies we use to report our financial
condition and results of operations; uncertainties associated with critical accounting assumptions and estimates; the possible impact on our
businesses from third-party special interest groups; our ability to negotiate and maintain collective-bargaining agreements for certain of our
employees; natural disasters; public-health emergencies and pandemics; international conflicts and other developments including those
relating to terrorism; other risk factors described in our AIF; and our success in anticipating and managing these risks.

The foregoing list of factors that may affect future results is not exhaustive. When relying on our forward-looking statements to make
decisions with respect to the Company, investors and others should carefully consider the foregoing factors and other uncertainties and
potential events. We do not undertake to update any forward-looking statement, whether written or oral, that may be made from time to
time by us or on our behalf, except as required by law.




                                                    Nordion Inc. Interim Report July 31, 2011
                                                                       33
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
[UNAUDITED]                                                                                                                  July 31       October 31
(thousands of U.S. dollars, except share amounts)                                                                              2011             2010
ASSETS
Current assets
Cash and cash equivalents                                                                                              $     69,038    $      122,802
Accounts receivable                                                                                                          38,474            40,471
Notes receivable (Notes 7(b) and 7(c))                                                                                       18,126            16,976
Inventories (Note 4)                                                                                                         36,880            26,583
Income taxes recoverable                                                                                                      2,669            10,883
Current portion of deferred tax assets                                                                                        6,106             6,105
Other current assets (Note 5)                                                                                                28,598            12,336
Assets of discontinued operations (Note 3)                                                                                      706            11,721
Total current assets                                                                                                        200,597           247,877

Property, plant and equipment, net                                                                                          103,090           110,274
Deferred tax assets                                                                                                          81,541            80,725
Long-term investments (Note 6)                                                                                                1,473             4,051
Other long-term assets (Note 7)                                                                                             100,326           111,029
Total assets                                                                                                           $    487,027    $      553,956
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable                                                                                                       $     12,569    $       13,969
Accrued liabilities (Note 8)                                                                                                 54,641            78,057
Current portion of long-term debt (Note 9)                                                                                    4,262             4,050
Current portion of deferred revenue                                                                                           4,631             7,542
Liabilities of discontinued operations (Note 3)                                                                               5,223            24,052
Total current liabilities                                                                                                    81,326           127,670

Long-term debt (Note 9)                                                                                                      43,060            40,100
Deferred revenue                                                                                                              7,020             9,431
Other long-term liabilities                                                                                                  42,313            39,166
Total liabilities                                                                                                           173,719           216,367

Shareholders’ equity
Common shares at par – Authorized shares: unlimited; Issued: 63,738,619 and 67,238,253,
respectively; Outstanding: 63,680,010 and 67,238,253, respectively (Note 11)                                                 259,619          273,859
Treasury shares, at cost – 58,609 and nil shares, respectively (Note 11)                                                       (607)                -
Additional paid-in capital                                                                                                    82,763           81,909
Accumulated deficit                                                                                                        (213,276)        (192,539)
Accumulated other comprehensive income                                                                                       184,809          174,360
Total shareholders’ equity                                                                                                   313,308          337,589
Total liabilities and shareholders’ equity                                                                             $     487,027   $      553,956

Commitments and contingencies (Note 21)
The accompanying notes form an integral part of these consolidated financial statements.




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                                                                                              34
CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]                                                                                    Three months ended July 31          Nine months ended July 31
(thousands of U.S. dollars, except per share amounts)                                               2011            2010                2011           2010
Revenues                                                                                     $    66,807   $       47,902        $   200,027 $      140,359

Costs and expenses
 Direct cost of revenues                                                                             31,628            24,474          94,033         70,215
 Selling, general and administration                                                                 17,172            25,403          49,364         74,115
 Depreciation and amortization                                                                        5,446              7,223         16,025         21,869
 Restructuring charges (Note 13)                                                                         41              8,602            576         60,045
 Change in fair value of embedded derivatives (Note 12)                                               3,697              1,970       (15,619)         (1,334)
 Other expenses (income), net (Note 14)                                                               1,946            (3,125)          7,629         21,678
Total costs and expenses                                                                             59,930            64,547        152,008         246,588

Operating income (loss) from continuing operations                                                    6,877           (16,645)         48,019       (106,229)
Interest expense                                                                                      (713)            (2,633)        (2,260)         (4,439)
Interest income                                                                                       2,525              2,483          7,794           5,933
Equity loss (Note 6(b))                                                                                   -               (58)          (128)           (656)
Income (loss) from continuing operations before income
taxes                                                                                                  8,689          (16,853)         53,425       (105,391)
Income tax expense (recovery) (Note 15)                                                                3,996           (8,152)         16,422         (7,158)
Income (loss) from continuing operations                                                               4,693           (8,701)         37,003        (98,233)
Loss from discontinued operations, net of income taxes                                               (8,814)           (6,363)       (27,057)       (149,449)
Net (loss) income                                                                            $       (4,121)     $    (15,064)   $      9,946   $   (247,682)

Basic and diluted earnings (loss) per share (Note 10)
 - from continuing operations                                                                $          0.07     $      (0.13)   $       0.56   $      (1.02)
 - from discontinued operations                                                                       (0.13)            (0.10)         (0.41)          (1.55)
Basic and diluted (loss) earnings per share                                                  $        (0.06)     $      (0.23)   $       0.15   $      (2.57)

The accompanying notes form an integral part of these consolidated financial statements




                                                                          Nordion Inc. Interim Report July 31, 2011
                                                                                             35
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
                                                                                      Three months ended                     Nine months ended
[UNAUDITED]                                                                                       July 31                                July 31
(thousands of U.S. dollars)                                                             2011         2010                     2011         2010
Net (loss) income                                                                  $ (4,121) $   (15,064)              $     9,946 $ (247,682)
Foreign currency translation                                                         (3,238)       (4,497)                  22,864      196,952
Reclassification of realized foreign currency translation gain on divestitures             -             -                 (4,629)     (42,122)
Unrealized gain on net investment hedge, net of tax of $nil
        (2010 - $nil) and $nil (2010 - $nil), respectively                                 -             -                       -          2,400
Realized gain on net investment hedge due to divestitures, net of
       tax of $nil (2010 - $nil) and $nil (2010 - $16,271), respectively                   -             -                       -       (130,367)
Unrealized (loss) gain on available-for-sale assets, net of tax of $nil
      (2010 - $18) and $(82) (2010 – $22), respectively                                    -         (104)                      1             181
Reclassification of realized gain on available-for-sale assets, net of tax of $nil
      (2010 - $nil) and $180 (2010 - $nil), respectively                                   -             -                 (1,512)               -
Reclassification of realized loss on derivatives designated as cash
      flow hedges, net of tax of $nil (2010 - $nil) and $nil
      (2010 - $nil), respectively                                                          -             -                       -             51
Pension liability adjustments, net of tax of $nil (2010 - $nil)
       and $nil (2010 - $(1,247)), respectively                                            -            35                   1,616           1,709
Repurchase and cancellation of Common shares                                         (1,595)             -                 (7,891)       (106,852)
Other comprehensive (loss) income                                                    (4,833)       (4,566)                  10,449        (78,048)
Comprehensive (loss) income                                                        $ (8,954) $   (19,630)              $   20,395    $   (325,730)

The accompanying notes form an integral part of these consolidated financial statements.




                                                                           Nordion Inc. Interim Report July 31, 2011
                                                                                              36
CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                             Three months ended            Nine months ended
[UNAUDITED]                                                                                                                   July 31                      July 31
(thousands of U.S. dollars)                                                                                       2011         2010             2011        2010
Operating activities
Net (loss) income                                                                                          $    (4,121)    $   (15,064)   $      9,946 $   (247,682)
Loss from discontinued operations, net of income taxes                                                          (8,814)         (6,363)       (27,057)     (149,449)
Income (loss) from continuing operations                                                                          4,693         (8,701)         37,003      (98,233)
Adjustments to reconcile net income (loss) to cash provided by (used in)
  operating activities relating to continuing operations (Note 16):
  Items not affecting current cash flows                                                                          3,922          7,780          10,460        57,420
  Changes in operating assets and liabilities                                                                      (64)         12,907        (33,510)       (6,613)
Cash provided by (used in) operating activities of continuing operations                                          8,551         11,986          13,953      (47,426)
Cash used in operating activities of discontinued operations
                                                                                                                 (8,210)       (21,634)       (18,436)      (70,495)
Cash provided by (used in) operating activities                                                                     341         (9,648)        (4,483)     (117,921)
Investing activities
Purchase of property, plant and equipment                                                                       (1,152)         (2,076)        (2,854)       (6,021)
Decrease (increase) in restricted cash                                                                          20,018            1,417         18,969      (21,353)
Proceeds on sale of long term investments                                                                             -               -          1,678           138
Cash provided by (used in) investing activities of continuing operations                                        18,866            (659)         17,793      (27,236)
Cash (used in) provided by investing activities of discontinued operations                                            -            (89)       (18,411)      633,210
Cash provided by (used in) investing activities                                                                 18,866            (748)          (618)      605,974
Financing activities
Repayment of long-term debt                                                                                           -           (24)                -    (221,426)
Issue of shares                                                                                                       -             26                -          355
Payment of cash dividends                                                                                       (6,440)              -        (12,880)             -
Repurchase and cancellation of Common shares                                                                    (7,219)              -        (39,945)     (450,000)
Cash (used in) provided by financing activities of continuing operations                                       (13,659)              2        (52,825)     (671,071)
Cash used in financing activities of discontinued operations                                                          -          (500)          (1,193)      (1,491)
Cash used in financing activities                                                                              (13,659)          (498)        (54,018)     (672,562)

Effect of foreign exchange rate changes on cash and cash equivalents                                              (402)         (1,389)          5,355        7,600
Net increase (decrease) in cash and cash equivalents during the period                                            5,146        (12,283)       (53,764)     (176,909)
Cash and cash equivalents, beginning of period                                                                   63,892        133,577         122,802       298,203
Cash and cash equivalents, end of period                                                                   $     69,038    $   121,294    $     69,038 $     121,294

   The accompanying notes form an integral part of these consolidated financial statements.




                                                                          Nordion Inc. Interim Report July 31, 2011
                                                                                             37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

1.   Basis of presentation
The unaudited consolidated financial statements of Nordion Inc. (Nordion or the Company) have been prepared in accordance with
United States (U.S.) generally accepted accounting principles (GAAP) and follow the same accounting policies and methods of application
disclosed in the Company’s audited annual consolidated financial statements for the year ended October 31, 2010, except as disclosed in
Note 2.

The preparation of the consolidated financial statements in conformity with GAAP requires management to make use of estimates and
assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities, and the reported
amounts of revenues and expenses. Actual results may differ from those estimates. In management’s opinion, the unaudited consolidated
financial statements contain all normal recurring adjustments necessary for a fair presentation of the interim results reported. The year-end
consolidated balance sheet data was derived from audited financial statements, but do not include all of the annual disclosures required by
GAAP. These consolidated financial statements should be read in conjunction with the Company’s audited annual consolidated financial
statements for the year ended October 31, 2010.


2.   Changes in significant accounting policies and recent accounting pronouncements
(a) Significant accounting policies
On November 1, 2010, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No.
2010-17, “Revenue Recognition (Topic 605), Milestone Method of Revenue Recognition” (ASU 2010-17), which establishes a revenue recognition
model for contingent consideration that is payable upon the achievement of an uncertain future event, referred to as a milestone. The
scope of ASU 2010-17 is limited to research or development arrangements and requires an entity to record the milestone payment in its
entirety in the period received if the milestone meets all of the necessary criteria to be considered substantive. Entities are not precluded
from making an accounting policy election to apply another appropriate accounting policy that results in the deferral of some portion of
the arrangement consideration. The adoption of ASU 2010-17 did not have a material impact on the Company’s consolidated financial
statements.

On November 1, 2010, the Company adopted ASU No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest
Entities” (formerly, SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”) (ASU 2009-17) to improve financial reporting by
enterprises involved with variable interest entities. The adoption of ASU 2009-17 did not have a material impact on the Company’s
consolidated financial statements.

On November 1, 2010, the Company adopted ASU No. 2009-13, “Revenue Recognition (Topic 605), Multiple - Deliverable Revenue Arrangements, a
consensus of EITF 08-01, Revenue Arrangements with Multiple Deliverables” (ASU 2009-13), which modifies the fair value requirements of ASC
subtopic 605-25, “Revenue Recognition - Multiple Element Arrangements” by providing principles for allocation of consideration among its
multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. An estimated
selling price method is introduced for valuing the elements of a bundled arrangement if vendor-specific objective evidence or third-party
evidence of selling price is not available, and significantly expands related disclosure requirements. The adoption of ASU 2009-13 did not
have a material impact on the Company’s consolidated financial statements.

Clinical Trial Expenses
In conjunction with the start-up activities in Q3 2011 related to the Phase III TheraSphere® trials, the Company implemented it’s
accounting policy regarding clinical trial expenses. Other current assets and Other long-term assets include any clinical trial prepayments
made to the clinical research organization (CRO). Research and development expenses include clinical trial expenses associated with CRO.
The invoicing from CRO for services rendered can lag several months. We accrue the cost of services rendered in connection with CRO
activities based on our estimate of site management, monitoring costs, and project management costs and record them in accrued liabilities.
We maintain regular communication with our CRO to gauge the reasonableness of our estimates. Differences between actual clinical trial
expenses and estimated clinical trial expenses recorded have not been material and are adjusted for in the period in which they become
known.

(b) Recent accounting pronouncements
On April 16, 2010, the FASB issued ASU No. 2010-13, “Stock Compensation (Topic 718), Effect of Denominating the Exercise Price of a Share-Based
Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades” (ASU 2010-13), which clarifies that a share-based
payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity
securities trades must not be considered to contain a market, performance or service condition. An entity should not classify such an award
as a liability if it otherwise qualifies for classification in equity. ASU 2010-13 is effective for fiscal years beginning on or after December 15,


                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

2010 and for interim periods within those fiscal years and is to be applied prospectively. The Company plans to adopt ASU 2010-13 on
November 1, 2011 and it is not expected to have a significant impact on the Company’s consolidated financial statements.

In January 2010, the FASB issued ASU No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value
Measurements” (ASU 2010-06), which provides amendments that clarify existing disclosures and requires new disclosures related to fair value
measurements. In particular, ASU 2010-06 requires more disaggregated information on each class of assets and liabilities and further
disclosures on transfers between levels 1 and 2 and activity in level 3 fair value measurements. ASU 2010-06 is effective for interim and
annual reporting periods beginning after December 15, 2009, except for the disclosures about activity in level 3 fair value measurements,
which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company plans
to adopt ASU 2010-06 for level 3 fair value measurements on November 1, 2011. In May 2011, the FASB also issued ASU no. 2011-04,
“Fair Value Measurement and Disclosures (Topic 820), Amendments to Achieve Common Fair Value Measurements and Disclosure Requirements in
U.S. GAAP and IFRS,” which amends Topic 820, “Fair Value Measurements and Disclosures,” to converge the fair value measurement
guidance in U.S. generally accepted accounting principles and International Financial Reporting Standards. ASU 2011-04 clarifies the
application of existing fair value measurement requirements, changes certain principles in Topic 820 and requires additional fair value
disclosures. ASU 2011-04 is effective for annual periods beginning after December 15, 2011, and the Company plans to adopt ASU 2011-
04 on November 1, 2012. ASU 2010-06 and ASU 2011-04 are not expected to have a significant impact on the Company’s consolidated
financial statements.

In December 2010, the FASB issued ASU No. 2010-28, “When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units
with Zero or Negative Carrying Amounts (a consensus of the FASB Emerging Issues Task Force)” (ASU 2010-28). ASU 2010-28
addresses how companies should test for goodwill impairment when the book value of a reporting entity is zero or negative. For reporting
units with zero or negative carrying amounts, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than
not that a goodwill impairment exists. ASU 2010-28 is effective for fiscal years beginning after December 15, 2010 and for interim periods
within those fiscal years. The Company plans to adopt ASU 2010-28 on November 1, 2011 and it is not expected to have a significant
impact on the Company's consolidated financial statements.

In June 2011, the FASB issued ASU No. 2011-05, “Comprehensive Income (Topic 220) - Presentation of Comprehensive Income.” (ASU 2010-05),
which amends Topic 220, “Comprehensive Income,” to require that all nonowner changes in stockholders’ equity be presented in either a
single continuous statement of comprehensive income or in two separate but consecutive statements. Additionally, ASU 2011-05 requires
entities to present, on the face of the financial statements, reclassification adjustments for items that are reclassified from other
comprehensive income to net income in the statement or statements where the components of net income and the components of other
comprehensive income are presented. The option to present components of other comprehensive income as part of the statement of
changes in stockholders’ equity was eliminated. ASU 2011-05 is effective for annual periods beginning after December 15, 2011. The
Company plans to adopt ASU 2011-05 on November 1, 2012 and it is not expected to have a significant impact on the Company’s
consolidated financial statements.

3.   Divestitures and Discontinued Operations
Sale of MDS Nordion S.A.
On March 31, 2011, the Company completed the sale of MDS Nordion S.A. in Belgium to Best Medical Belgium Inc. (Best Medical) for
nominal proceeds. Pursuant to its share purchase agreement (SPA) signed in February 2011, Nordion left cash of $18.5 million (€ 13
million) as capital in the business. Best Medical acquired all of Nordion’s Belgian operations and the employees in Belgium, including
related benefit and pension plans, with the exception of the TheraSphere® business. Best Medical also acquired the Belgian facilities,
including current and future decommissioning and waste disposal requirements.

The Company recorded a total loss of $15.7 million on the sale of MDS Nordion S.A. in the second quarter of fiscal 2011 including net
working capital and inventory adjustments of $2.8 million and recognition of a non-cash unrealized foreign currency translation gain of
$4.6 million as the sale represented a substantial liquidation of the Company’s Belgian operations. The loss on the sale primarily relates to
future losses and cash flow demands of MDS Nordion S.A., that were not accruable under GAAP, and their recognition is only triggered as
a result of the sale. In May 2011, the Company finalized the loss on sale without any significant closing adjustments to the amount
recorded in the second quarter of fiscal 2011. 




                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

The following table details the loss on sale of MDS Nordion S.A.:
 Proceeds                                                                                                                                                 $                   nominal
 Capital infusion in cash                                                                                                                                                     (18,478)
 Working capital and inventory adjustments                                                                                                                                      (2,753)
 Net negative proceeds                                                                                                                                                         (21,231)
 Net liabilities disposed of                                                                                                                                                      3,212
 Release of unrealized translation gain in accumulated other comprehensive income                                                                                                 4,629
 Release of unrealized actuarial loss of defined benefit pension in accumulated other comprehensive income                                                                      (1,616)
 Transaction costs and other accruals                                                                                                                                             (649)
 Loss on sale of MDS Nordion S.A.                                                                                                                         $                   (15,655)

The following table details the net assets (liabilities) of MDS Nordion S.A. disposed of:
 Accounts receivable                                                                                                                                          $                  4,451
 Inventories                                                                                                                                                                     3,386
 Property, plant and equipment, net                                                                                                                                              1,472
 Other assets                                                                                                                                                                      255
 Accounts payable and accrued liabilities                                                                                                                                      (7,677)
 Other liabilities                                                                                                                                                             (5,099)
 Net liabilities                                                                                                                                              $                (3,212)

Discontinued operations
The following table details the assets and liabilities of discontinued operations:
                                                                                                                                          July 31(a)                    October 31(b)
                                                                                                                                            2011                             2010
Accounts receivable                                                                                                          $                 585            $               6,053
Inventories                                                                                                                                       -                           2,488
Property, plant and equipment, net                                                                                                                -                           2,800
Other assets                                                                                                                                   121                              380
Assets of discontinued operations                                                                                            $                 706            $              11,721

Accounts payable and accrued liabilities                                                                                     $                 3,293          $                17,709
Long-term debt                                                                                                                                   619                            2,318
Deferred tax liabilities                                                                                                                         167                              166
Other liabilities                                                                                                                              1,144                            3,859
Liabilities of discontinued operations                                                                                       $                 5,223          $                24,052
(a) Represents the assets and liabilities remaining after the sales of MDS Nordion S.A. and MDS Pharma Services Early Stage (Early Stage).
(b) Represents the assets and liabilities of MDS Nordion S.A. and remaining assets and liabilities after the sale of Early Stage.

The following table details the operating results of the Company’s discontinued operations:
                                                                                                                                                   Three months ended July 31
                                           MDS                                  MDS                           MDS Analytical
                                         Nordion S.A.                       Pharma Services                    Technologies                                        Total

                                     2011               2010             2011              2010             2011                 2010                  2011                    2010
Revenues                      $                -   $        4,405    $            -   $             -   $           -    $                -    $                  -       $        4,405
Costs and other expenses                       -            7,259               (4)             3,190           9,757                    49                   9,753               10,498
Impairment of long-lived
  assets                                       -            6,737                 -                 -               -                      -                                        6,737
Operating (loss) gain                          -          (9,591)                 4           (3,190)         (9,757)                   (49)             (9,753)                 (12,830)
Gain on the sale of
  discontinued operations                      -                -                 -               523               -               1,676                           -              2,199
Other, net(a)                                  -             (34)                 -             (150)               -                   -                           -              (184)
Income tax (expense)
   recovery                                 (24)              374            (994)              3,113           1,957                   965                       939              4,452
(Loss) gain from
discontinued operations,
net of income taxes           $             (24)   $      (9,251)    $       (990)    $           296   $     (7,800)    $          2,592      $          (8,814)         $       (6,363)




                                                              Nordion Inc. Interim Report July 31, 2011
                                                                                 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

                                                                                                                                                      Nine months ended July 31
                                           MDS                                    MDS                             MDS Analytical
                                         Nordion S.A.                         Pharma Services                      Technologies                                  Total

                                     2011               2010              2011               2010               2011                2010               2011                2010
Revenues                       $           7,914    $     14,152      $            -   $        67,556      $          -    $          80,201     $         7,914      $    161,909
Costs and other expenses                  12,497          22,984               1,313           110,567             9,659               83,877              23,469           217,428
Impairment of long-lived
  assets                                       -             6,737                 -              12,111               -                    -                    -            18,848
Operating loss                           (4,583)          (15,569)           (1,313)            (55,122)         (9,659)              (3,676)             (15,555)          (74,367)
(Loss) gain on the sale of
  discontinued operations               (15,655)                 -                 -            (61,046)               -                6,914             (15,655)          (54,132)
Equity earnings(b)                             -                 -                 -                   -               -               14,867                    -            14,867
Other, net(a)                               (74)              (95)                 4               (179)               -             (26,657)                 (70)          (26,931)
Income tax recovery
   (expense)                                 722             1,270           (1,814)              7,132            5,315             (17,288)                 4,223          (8,886)

Loss from discontinued
operations, net of
income taxes                   $        (19,590)    $     (14,394)    $      (3,123)   $       (109,215)    $    (4,344)    $        (25,840)     $       (27,057)     $   (149,449)

(a) All of the interest on the senior unsecured notes was allocated to discontinued operations as the Company repaid its senior unsecured notes following the completion of
the sale of MDS Analytical Technologies in the first quarter of fiscal 2010. As part of the redemption of the senior unsecured notes, the Company made a make-whole
payment of $23.3 million, which was included in interest expense in fiscal 2010.

(b) MDS Analytical Technologies included two joint ventures, AB/MDS and PKI/Sciex. Under the terms of these joint venture arrangements, the Company provided
manufacturing, research and development and administrative support for the joint venture partnerships on an outsourced service provider basis. All costs, including selling,
general and administration expenses, incurred by the Company for direct materials, labor, travel, consulting, and other related expenses, were billed to the joint ventures at
cost and recorded as revenue. The Company did not recognize any profits from the sales to the joint ventures as the amounts were billed without any markups. The joint
ventures realized net income when products and services were sold to a third-party customer. The Company recorded its share of realized profits from the joint ventures as
equity earnings, which is included in “Loss from discontinued operations, net of income taxes”.

Arbitration with Life Technologies Corporations
As part of the sale of MDS Analytical Technologies completed in Q1 2010, our joint venture partnership with Applied Biosystems, a
division of Life Technologies Corporations (Life), was dissolved. A disagreement has arisen between the former partners (Nordion and
Life) as to the appropriate treatment of certain inventory sold by the partnership to Applied Biosystems prior to the dissolution of the joint
venture partnership.

The arbitration hearing of this matter occurred in July 2011, which resulted in recording of a settlement accrual of $9.5 million (Note 8(b))
and loss from discontinued operations of $6.8 million, net of $2.7 million tax recovery for the three months ended July 31, 2011.


4.   Inventories
                                                                                                                                                July 31               October 31
                                                                                                                                                   2011                     2010
Raw materials and supplies                                                                                                      $               35,927     $              26,211
Work-in-process                                                                                                                                   1,042                     1,141
Finished goods                                                                                                                                    1,709                     1,002
                                                                                                                                                38,678                    28,354
Allowance for excess and obsolete inventory                                                                                                     (1,798)                   (1,771)
Inventories                                                                                                                     $               36,880     $              26,583


5.   Other Current Assets
As of July 31, 2011, other current assets include embedded derivative assets of $24.6 million (October 31, 2010 ― $10.5 million) (Note 12)
as well as prepaid expenses and other of $4.0 million (October 31, 2010 ― $1.8 million).




                                                                Nordion Inc. Interim Report July 31, 2011
                                                                                   41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

6.   Long-Term Investments
                                                                                                               July 31            October 31
                                                                                                                  2011                 2010
Investment in Celerion(a)                                                                                $       1,473     $           1,464
Investment in Lumira Capital Corp.(b)                                                                                -                 1,030
Other long-term investments(c)                                                                                       -                 1,557
Long-term investments                                                                                    $       1,473     $           4,051

(a) Investment in Celerion, Inc. (Celerion)
On March 5, 2010, as part of the consideration for the sale of Early Stage, Nordion received approximately 15% of the total common stock
of Celerion assuming the conversion of all the outstanding preferred stock and issuance and exercise of permitted stock options. The
outstanding preferred stock of Celerion are voting, all owned by third parties, convertible into common stock on a 1:1 basis, subject to
certain adjustments, and are subordinated to the Note (Note 7(c)). Nordion’s ability to transfer its Celerion equity and the Note is subject
to the consent of Celerion, which is controlled by third-party investors who collectively hold a majority of the outstanding Celerion equity
and have no restrictions on selling their interests. These third-party investors also have majority representation on the Board of Directors
of Celerion. This investment in Celerion is recorded at cost and has a fair value of $1.5 million as of July 31, 2011. The fair value has been
determined based on an estimate of the fair value of the business sold using proceeds on sale and a discounted future cash flow model
using cost of equity of comparable companies adjusted for risk.

Pursuant to applicable U.S. accounting rules, a business entity may be subject to consolidation if it is determined to be a variable interest
entity (VIE) and if the reporting entity is the primary beneficiary. The Company has determined that Celerion is a VIE but Nordion is not
the primary beneficiary and, therefore, consolidation is not required. The Company continues to assess any reconsideration events and
monitor the status of its relationship with Celerion. The fair value of the Company’s investment in Celerion and the Note (Note 7(c)) is
currently estimated to be $21.1 million in aggregate. The Company’s maximum exposure to loss is limited to the carrying value of the Note
and its investment in Celerion.

(b) Investment in Lumira Capital Corp. (Lumira)
Long-term investments include an investment in Lumira, an investment fund management company, which has long-term investments in
development-stage enterprises that have not yet earned significant revenues from their intended business activities or established their
commercial viability. Nordion does not have any significant involvement in the day-to-day operations of Lumira other than to obtain its
share of earnings and losses. The Company reported equity loss of $nil (2010 ― $0.1 million) and $0.1 million (2010 ― $0.7 million) for the
three and nine months ended July 31, 2011, respectively, from the investment in Lumira. The Company’s exposure to losses is limited to its
investment of $nil (October 31, 2010 ― $1.0 million). During the second quarter of fiscal 2011, the Company received $1.3 million in cash
dividends from Lumira which reduced its investment to $nil with the remaining $0.4 million included in dividend income.

(c) Other long-term investments
During the second quarter of fiscal 2011, the Company disposed of its available for sale investment in a marketable equity security for cash
proceeds of $1.7 million.


7.   Other Long-Term Assets
                                                                                                                July 31           October 31
                                                                                                                   2011                2010
Restricted cash(a)                                                                                       $       13,469    $          32,439
Financial instrument pledged as security on long-term debt(b)                                                   43,037                39,986
Long-term notes receivable(c)                                                                                    21,592               27,186
Pension assets (Note 19)                                                                                         16,706                8,944
Goodwill                                                                                                          2,641                2,474
Other(d)                                                                                                          2,881                    -
Other long-term assets                                                                                   $     100,326     $         111,029

(a) Restricted cash
As of July 31, 2011, restricted cash includes $5.0 million (October 31, 2010 ― $5.0 million) of cash proceeds held in escrow related to the
sale of MDS Pharma Services Phase II-IV and $8.1 million (October 31, 2010 ― $10.0 million) of funds for insurance liabilities.




                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

(b) Financial instrument pledged as security on long-term debt
The financial instrument pledged as security on long-term debt is classified as held to maturity and is not readily tradable as it defeases the
long-term debt from the Government of Canada related to the construction of the MAPLE Facilities. The effective annual interest rate is
7.02% and it is repayable semi-annually over 15 years commencing October 2, 2000. The carrying value as of July 31, 2011 is $47.2 million
(October 31, 2010 ― $43.9 million), of which $4.2 million (October 31, 2010 ― $3.9 million) is included in notes receivable in the
consolidated statements of financial position. As of July 31, 2011, the fair value is $55.6 million (October 31, 2010 ― $52.4 million), which
has been determined using a discounted cash flow model, in which future cash flows are discounted to present value using the current
market borrowing rate pertaining to the remaining life of the receivable.

(c) Long-term notes receivable

Atomic Energy of Canada Limited (AECL)
In fiscal 2006, as a result of a comprehensive mediation process that resulted in an exchange of assets between the Company and AECL
related to the MAPLE Facilities, a long-term note receivable of $38.0 million after discounting, was received by the Company. This non-
interest bearing note receivable is repayable monthly over four years commencing November 1, 2008. The long-term note receivable is net
of an unamortized discount based on an imputed interest rate of 4.45%. The carrying value of the long-term note receivable as of July 31,
2011 is $15.9 million (October 31, 2010 ― $24.0 million), of which $13.9 million (October 31, 2010 ― $13.1 million) is included in notes
receivable in the consolidated statements of financial position. As of July 31, 2011, the fair value is $17.3 million (October 31, 2010 ― $25.7
million), which has been determined using a discounted cash flow model, in which future cash flows are discounted to present value using
the current market borrowing rate pertaining to the remaining life of the receivable. All scheduled monthly payments due have been
received.

Celerion
On March 5, 2010, as part of the consideration for the sale of Early Stage, the Company received the Note with a principal amount of
$25.0 million issued by Celerion, which has a five-year term and bears interest at 4% per annum. Celerion can elect to add the interest to
the principal amount of the Note. The Note is partially secured with a second-lien interest in certain real estate of Celerion. As part of the
sale of Early Stage, the Company also signed a TSA that allowed Celerion to pay for the first three months of TSA services, to a maximum
of $1.8 million, by increasing the principal amount of the Note. The carrying value of the Note as of July 31, 2011 is $19.6 million
(October 31, 2010 – $16.2 million). The fair value of the Note as of July 31, 2011 is $19.6 million, which includes $6.8 million of accreted
interest. The fair value has been determined based on discounted cash flows using market rates for secured debt and cost of equity of
comparable companies adjusted for risk and any increase in principal amount related to the TSA and interest payments. The Note is being
accreted up to its face value using an effective interest rate of 8% for secured cash flows and 28% for unsecured cash flows.

(d) Other
Includes the long-term portion of the TheraSphere® clinical trials’ prepayment, the deferred charges relating to the credit facility and other
long-term receivables and assets.


8.   Accrued Liabilities
                                                                                                               July 31           October 31
                                                                                                                 2011                 2010
Employee-related accruals (Note 17)                                                                      $      6,379     $          11,166
FDA provision(a)                                                                                                8,402                 8,620
Captive insurance liability                                                                                     5,065                 6,402
Restructuring provision (Note 13)                                                                               3,634                 7,356
AECL revenue share and waste disposal                                                                           3,370                 6,677
Accrued transaction costs and closing adjustments for divestitures and discontinued
  operations                                                                                                    1,971                 13,470
Other(b)                                                                                                       25,820                 24,366
Accrued liabilities                                                                                      $     54,641     $           78,057

(a) The FDA provision was established in fiscal 2007 to address certain U.S. Food and Drug Administration (FDA) issues related to the
Company’s discontinued bioanalytical operations in its Montreal, Canada, facilities. Although the bioanalytical operations were part of
MDS Pharma Services, Nordion has retained this potential liability following the sale of Early Stage. The Company may, where
appropriate, reimburse clients who have incurred or will incur third party audit costs or study re-run costs to complete the work required
by the FDA and other regulators. Management regularly updates its analysis of this critical estimate based on all currently available

                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

information. Based on this analysis, the Company recorded payments of $nil (2010 ― $7.4 million) and $0.2 million (2010 ― $11.7 million)
for the three and nine months ended July 31, 2011, respectively. As of July 31, 2011, management believes that the remaining provision of
$8.4 million (October 31, 2010 ― $8.6 million) is sufficient to cover any agreements reached with clients for study audits, study re-runs, and
other related costs. Included in this potential liability are amounts for two legal claims the Company has been served with related to repeat
study costs (Note 22).

(b) Other includes the settlement accrual for the arbitration with Life (Note 3), derivative liabilities, royalties, tax reassessments and
various miscellaneous payables.


9.    Long-Term Debt
                                                                                                                   July 31         October 31
                                                                                              Maturity                2011               2010
Total long-term debt                                                                       2011 to 2015    $        47,322     $      44,150
Current portion of long-term debt                                                                                  (4,262)            (4,050)
Long-term debt                                                                                             $        43,060     $      40,100

As of July 31, 2011, debt includes a non-interest-bearing Canadian government loan with a carrying value of $43.0 million (October 31,
2010 ― $43.9 million) discounted at an effective interest rate of 7.02% and repayable at C$4.0 million (US$4.2 million) per year with the
remaining balance due April 1, 2015. The fair value of this financial instrument is $55.5 million (October 31, 2010 ― $53.1 million), which
has been determined using a discounted cash flow model, in which future cash flows are discounted to present value using the current
market borrowing rate pertaining to the remaining life of the related receivable. A long-term financial instrument has been pledged as full
security for the repayment of this debt (Note 7(b)).

On June 6, 2011, the Company entered into a $75.0 million unsecured senior revolving three year committed credit facility with the
Toronto Dominion Bank (TD) and a select group of other financial institutions for general corporate purposes. The loan agreement
includes customary positive, negative and financial covenants. Under the new credit facility, the Company is able to borrow Canadian and
U.S. dollars by the way of Canadian dollar prime rate loans, U.S. dollar base rate loans, U.S. dollar LIBOR loans, the issuance of Canadian
dollar banker’s acceptances and letters of credit in Canadian and U.S. dollars. The credit facility is payable in full in three years from the
closing date on June 6, 2014; however, the term of the credit facility may be extended on mutual agreement of the lenders for successive
subsequent periods. As of July 31, 2011, no amounts were drawn and outstanding, except for $21.3 million (October 31, 2010 - $nil) of the
outstanding letters of credit issued under this credit facility.


10. Earnings Per Share
The following table illustrates the reconciliation of the denominator in the computations of the basic and diluted earnings per share:
                                                                                                  Three months ended          Nine months ended
                                                                                                              July 31                    July 31
(number of shares in thousands)                                                                     2011         2010          2011         2010
Weighted average number of Common shares outstanding – basic                                      64,160       67,237        65,282       96,626
Impact of stock options assumed exercised                                                            123             -          179             -
Weighted average number of Common shares outstanding – diluted                                    64,283       67,237        65,461       96,626
Basic and diluted earnings (loss) per share from continuing operations                       $       0.07 $     (0.13)   $      0.56 $     (1.02)
Basic and diluted loss per share from discontinued operations                                $     (0.13) $     (0.10)   $    (0.41) $     (1.55)


11. Share Capital
As of July 31, 2011 the authorized share capital of the Company consists of unlimited Common shares. The Common shares are voting
and are entitled to dividends if and when declared by the Company’s Board of Directors.




                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

Summary of share capital
                                                                                                                                        Common Shares
(number of shares in thousands)                                                                                                     Number            Amount
Balance as of October 31, 2010                                                                                                        67,238 $         273,859
Repurchased                                                                                                                             (59)             (607)
Cancelled                                                                                                                            (3,499)          (14,240)
Balance as of July 31, 2011                                                                                                           63,680 $         259,012

In January 2011, the Company announced a re-initiation of a normal course issuer bid (NCIB), which was authorized by the Toronto Stock
Exchange (TSX) to purchase for cancellation up to 5,677,108 Common shares. The Company repurchased 3,558,243 common shares for a
total cost of $40.5 million, of which 3,499,634 shares were cancelled during the nine months ended July 31, 2011. The remaining 58,609
common shares recorded as Treasury shares were cancelled subsequent to July 31, 2011.

In January and June 2011, the Company also declared quarterly dividends at $0.10 per share, which were paid on April 1, and July 5, 2011
for each in the amount of $6.4 million to the Company’s shareholders of record on March 17 and July 17, 2011, respectively.


12. Financial Instruments and Financial Risk
Derivative instruments
The Company uses short-term foreign currency forward exchange contracts to hedge the revaluations of the foreign currency balances,
which have not been designated as hedges. The Company has also identified embedded derivatives in certain of its supply contracts as a
result of the currency of the contract being different from the functional currency of the parties involved. Changes in the fair value of the
embedded derivatives are recognized in the consolidated statements of operations.

The following table provides the fair value of all Company derivative instruments:
                                                                                                                                          July 31                 October 31
                                                                                                                                            2011                         2010
                                                                                                                                      Fair Value                   Fair Value
Assets
Embedded derivatives(a)                                                                                                      $              24,576        $            10,520
Liabilities
Embedded derivatives(a)                                                                                                      $                  391       $             1,955
(a) As of July 31, 2011 and October 31, 2010, total notional amounts for the Company’s certain supply contracts identified for embedded derivatives were approximately over
$300 million and $700 million, respectively.

The following table summarizes the activities of the Company’s derivative instruments:
                                                                       Three months ended July 31                                         Nine months ended July 31
                                                                               2011         2010                                              2011            2010
Unrealized gain recorded in OCI relating to net investment
  hedge (a)                                                            $          -    $        -                                    $                -       $       (2,400)
Reclassification of realized gain recorded in OCI relating to net
  investment hedge                                                     $          -    $        -                                    $                -       $     (146,638)
Unrealized loss (gain) for embedded derivatives recorded in
  change in fair value of embedded derivatives (b)                     $      3,697    $    1,970                                    $      (15,619)          $       (1,334)
(a)   No ineffectiveness was recorded in income for the three and nine months ended July 31, 2011 and 2010 relating to the net investment hedge.
(b)   Excludes unrealized loss for embedded derivatives related to the discontinued operations of $nil (2010 ― $nil) and $nil (2010 ― $0.5 million) for the three and nine
      months ended July 31, 2011, respectively.

Credit risk
Certain of the Company’s financial assets, including cash and cash equivalents, are exposed to credit risk. The Company may, from time to
time, invest in debt obligations and commercial paper of governments and corporations. Such investments are limited to those issuers
carrying an investment-grade credit rating. In addition, the Company limits the amount that is invested in issues of any one government or
corporation.

The Company is also exposed, in its normal course of business, to credit risk from its customers. As of July 31, 2011, accounts receivable is
net of an allowance for uncollectible accounts of $0.1 million (October 31, 2010 ― $0.1 million).

                                                               Nordion Inc. Interim Report July 31, 2011
                                                                                  45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

Credit risk on financial instruments arises from the potential for counterparties to default on their contractual obligations to the Company.
The Company is exposed to credit risk in the event of non-performance, but does not anticipate non-performance by any of the
counterparties to its financial instruments. The Company limits its credit risk by dealing with counterparties that are considered to be of
high credit quality. In the event of non-performance by counterparty, the carrying value of the Company’s financial instruments represents
the maximum amount of loss that would be incurred.

Valuation methods and assumptions for fair value measurements
Cash and cash equivalents, accounts receivable, notes receivable, income taxes recoverable, accounts payable, accrued liabilities, and
income taxes payable have short periods to maturity and the carrying values contained in the consolidated statements of financial position
approximate their estimated fair value.

Fair value hierarchy
The fair value of the Company’s financial instruments is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. The fair value of financial instruments is determined by reference
to quoted market prices for the same financial instrument in an active market (Level 1). If Level 1 fair values are not available, the
Company uses quoted prices for identical or similar instruments in markets which are non-active, inputs other than quoted prices that are
observable and derived from or corroborated by observable market data such as quoted prices, interest rates, and yield curves (Level 2), or
valuation techniques in which one or more significant inputs are unobservable (Level 3).

The following table discloses the Company’s financial assets and liabilities measured at fair value on a recurring basis:
                                                                                                                                         As of July 31, 2011
Description                                                                      Level 1                 Level 2                 Level 3              Total
Cash equivalents                                                          $         100       $                      $                      $            100
Derivative assets (Note 5)                                                $                   $            2,558     $            22,018    $        24,576
Derivative liabilities (Note 8(b))                                        $                   $              391     $                      $            391

                                                                                                                                      As of October 31, 2010
Description                                                                      Level 1                 Level 2                 Level 3               Total
Cash equivalents                                                          $       7,600       $                -     $                 -     $         7,600
Available for sale (Note 6(c))                                            $       1,557       $                -     $                 -     $         1,557
Derivative assets (Note 5)                                                $            -      $                6     $            10,514     $        10,520
Derivative liabilities (Note 8(b))                                        $            -      $            1,955     $                 -     $         1,955

The following table presents the changes in the Level 3 fair value category:
                                                                                                                     Three months ended July 31, 2011
                                                                            Net Realized/
                                                                           Unrealized Gains
                                                                          (Losses) included in             Purchases, Sales,       Transfers in        As of
                                                    As of April 30                                             Issuance and         and/or out        July 31
Description                                                  2011         Earnings          Other         (Settlements), net         of Level 3         2011
Derivative assets (Note 5)                          $       24,489    $       - $       (2,471) $                        -   $               -    $   22,018

                                                                                                                         Three months ended July 31, 2010
                                                                            Net Realized/
                                                                           Unrealized Gains
                                                                          (Losses) included in             Purchases, Sales,       Transfers in        As of
                                                    As of April 30                                             Issuance and         and/or out        July 31
Description                                                  2010         Earnings          Other         (Settlements), net         of Level 3         2010
Asset backed commercial paper                       $       11,449    $         - $        (99) $                        -   $               -    $   11,350




                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

                                                                                                                            Nine months ended July 31, 2011
                                                                                Net Realized/
                                                                               Unrealized Gains
                                                             As of            (Losses) included in             Purchases, Sales,        Transfers in          As of
                                                        October 31                                                 Issuance and          and/or out          July 31
Description                                                   2010            Earnings        Other           (Settlements), net          of Level 3           2011
Derivative assets (Note 5)                          $       10,514        $         - $      11,504   $                     -       $                   $    22,018

                                                                                                                            Nine months ended July 31, 2010
                                                                                Net Realized/
                                                                               Unrealized Gains
                                                                              (Losses) included in         Purchases, Sales,         Transfers in            As of
                                                        As of October                                          Issuance and         and/or out of           July 31
Description                                                    31 2009         Earnings     Other         (Settlements), net             Level 3              2010
Asset backed commercial paper                           $        10,713       $    - $        637         $             -       $              -    $       11,350


13. Restructuring Charges
The Company has undertaken a number of restructuring activities given its strategic repositioning activities in fiscal 2010 and 2009.

The restructuring charges of $0.1 million (2010 - $8.6 million) and $0.6 million (2010 - $60.0 million) for the three and nine months ended
July 31, 2011, respectively, were primarily for the extension of certain key corporate employees retained. The provision for contract
cancellation charges represents future rent payments, net of estimated sublease revenue, related to the Company’s former corporate office
space in Toronto, Canada. Subsequent to July 31, 2011, the Company signed a lease termination agreement effective on September 30,
2011. Based on the terms of this termination agreement, a $4.2 million (C$4 million) termination payment will be made and a restructuring
recovery of approximately $1.0 million is currently expected in the fourth quarter of fiscal 2011.

As of July 31, 2011, the restructuring provision of $7.4 million (October 31, 2010 ― $11.5 million) is included in accrued liabilities (Note 8)
and other long-term liabilities in the consolidated statements of financial position. The fiscal 2010 restructuring activities have been
substantially completed and the majority of the remaining restructuring provision is expected to be utilized in fiscal 2011.

The table below provides an analysis of the Company’s restructuring activities related to its continuing operations until July 31, 2011.
                                                                                                                                      Balance
                                                                                                         Cumulative                       as of
                                           Expenses                                                       Activities                    July 31
                                                                                                                       Non-
                                2011             2010         2009                Total                 Cash            Cash               2011
Workforce
reductions            $          412 $          42,161 $ 9,306 $                 51,879 $           (48,867) $         (996) $            2,016
Contract
cancellation charges             164             7,175            -               7,339               (3,328)          1,386             5,397
Other                               -           13,195            -              13,195             (13,181)             (14)                 -
Restructuring
  charges             $          576 $          62,531 $ 9,306 $                 72,413 $           (65,376) $            376 $           7,413




                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

14. Other Expenses (Income), Net
                                                                                        Three months ended July 31                        Nine months ended July 31
                                                                                               2011          2010                               2011          2010
Research and development                                                          $           1,651 $          950                 $           3,680 $        2,753
Write-down of investments and other long-term assets                                              -            261                                 -          1,632
Gain on sale of investment                                                                        -              -                           (1,691)              -
Foreign exchange (gain) loss                                                                  (190)           (39)                             5,492         29,881
Other(a)                                                                                        485        (4,297)                               148       (12,588)
Other expenses (income), net                                                      $           1,946 $      (3,125)                 $           7,629 $       21,678
 (a) Included in other is TSA revenue of $nil (2010 ― $5.3 million) and $0.5 million (2010 ― $12.0 million) for the three and nine months ended July 31, 2011, respectively,
relating to the sales of MDS Pharma Services Phase II-IV, Central Labs and Early Stage.



15. Income Taxes
With the completion of the strategic repositioning, management has been able to apply an estimated annual effective tax rate in calculating
the quarterly income tax expense of the Company beginning with the three-month period ended January 31, 2011. The annual effective tax
rate is based upon the facts and circumstances known at each interim period. On a quarterly basis, the estimated annual effective tax rate is
revised as appropriate based upon changed facts and circumstances, if any, as compared to those forecasted at the beginning of the fiscal
year and each interim period thereafter.

For the three and nine months ended July 31, 2011, the Company recognized tax expense (recovery) of $4.0 million (2010 – $(8.2) million)
and $16.4 million (2010 - $(7.2) million) on pre-tax income (loss) from continuing operations of $8.7 million (2010 – $(16.9) million) and
$53.4 million (2010 – $(105.4) million), respectively, which represents an effective tax rate of 46.0% (2010 – 48.4%) and 30.7% (2010 –
6.8%). The tax expense and related effective tax rate on continuing operations was determined by applying an estimated annual effective
tax rate of 28.8% to pre-tax income and then recognizing various discrete tax items. Discrete tax items primarily include adjustments for
the differential between the current and deferred tax rate of 3.2% on the change in fair value of embedded derivatives offset by
adjustments to the reserves for uncertain tax positions and for a partial release of the valuation allowance.

Income tax expense for the three and nine months ended July 31, 2011 was reported by calculating a full and complete provision for
income taxes for the period. Prior to the completion of the strategic repositioning in fiscal 2010, the complex and diverse operations of the
Company prevented any reasonable estimation of an annual effective tax rate for those prior periods.


16. Supplementary Cash Flow Information
Items not affecting cash flows comprise the following:
                                                                                          Three months ended July 31                  Nine months ended July 31
                                                                                               2011            2010                         2011          2010
Depreciation and amortization                                                      $          5,446 $          7,224                $     16,025 $       21,870
Stock option compensation                                                                       326               45                         834          2,473
Deferred income taxes                                                                         (372)          (5,253)                       3,595          2,257
Equity loss, including cash distribution of $nil
 (2010 - $3,034) and $951 (2010 - $3,034), respectively                                              -                    3,086                  1,079                  3,684
Change in fair value of embedded derivatives                                                     3,697                    1,969               (15,619)                (1,335)
Write-down of investments and other long-term assets                                                 -                      260                      -                  1,631
Foreign currency transactional loss                                                                444                    (316)                  1,521                28,040
Other including foreign currency translation adjustments                                       (5,619)                      765                  3,025                (1,200)
                                                                                   $             3,922      $             7,780     $           10,460      $         57,420




                                                               Nordion Inc. Interim Report July 31, 2011
                                                                                  48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

Changes in operating assets and liabilities comprise the following:
                                                                                   Three months ended July 31     Nine months ended July 31
                                                                                         2011           2010             2011         2010
Accounts receivable                                                           $       (7,320) $        19,608   $       1,681 $       9,377
Inventories                                                                             4,746           (501)        (10,297)       (5,210)
Other current assets and long term assets                                                 835           2,573           2,121         6,647
Accounts payable and accrued liabilities                                              (4,418)         (4,004)        (25,349)         (916)
Income taxes                                                                            6,480         (2,916)           2,942      (17,647)
Deferred income and other long-term obligations                                         (387)         (1,853)         (4,608)         1,136
                                                                              $          (64) $        12,907   $    (33,510) $     (6,613)


17. Stock-Based Compensation
Stock option plan
Stock-based compensation expense related to the Company’s stock option plan for the nine months ended July 31, 2011 is $0.8 million
(2010 ― $3.3 million), of which $0.8 million (2010 ― $nil) is included in selling, general and administration expenses and $nil (2010 ― $2.5
million) is in restructuring charges (Note 13) in “Income (loss) from continuing operations”, and $nil (2010 ― $0.8 million) is included in
“Loss from discontinued operations, net of income taxes”.

During the three and nine months ended July 31, 2011, the Company granted 764,300 (2010 – 1,164,000) and 808,700 (2010 – 1,164,000)
C$ stock options, respectively, at a weighted average exercise price of $10.32 (2010 - C$9.65). All options granted in fiscal 2011 have a
seven year term and either become exercisable ratably (a graded-vesting schedule) over a three-year period (764,300 options) or vest 100%
after three years from the grant date (44,400 options).

The fair value of C$1.83 per share for the stock options granted during the nine months ended July 31, 2011 was determined using Black-
Scholes model based on the following assumptions:
                                                                                                                                     2011
Risk-free interest rate                                                                                                         1.94 %
Expected dividend yield                                                                                                         3.75 %
Expected volatility                                                                                                             0.30
Expected time to exercise (years)                                                                                               3.64

Incentive plans
Deferred share units (DSU)
During the three and nine months ended July 31, 2011, the Company granted 3,756 (2010 – nil) and 83,709 (2010 – nil) DSU to senior
executive officers of the Company, which vest 100% after three years from the grant date. Vesting is time based and not dependent on a
performance measure. Vested DSU are payable upon termination of employment and will be settled in cash equal to the number of vested
units multiplied by the five-day average closing TSX share price up to and including the termination date. The Company records
compensation expense and the corresponding liability each period based on vested units and changes in the market price of Common
shares.

The DSU expense for the nine months ended July 31, 2011 is $0.1 million (2010 ― $nil), which is included in selling, general and
administration expenses in “Income (loss) from continuing operations”.

Mid-term incentive plans
The MTIP (income) expense for the nine months ended July 31, 2011 is $(0.1) million (2010 ― $9.9 million), of which $(0.1) million (2010
― $nil) is included in selling, general and administration expenses and $nil (2010 ― $5.4 million) is included in restructuring charges (Note
13) in “Income (loss) from continuing operations”, and $nil (2010 ― $4.5 million) is included in “Loss from discontinued operations, net
of income taxes”.




                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

18. Accumulated Other Comprehensive Income
                                                                                                                       July 31     October 31
                                                                                                                          2011          2010
Accumulated other comprehensive income, net of income taxes, beginning of period                             $        174,360    $    259,424
Foreign currency translation gain                                                                                      22,864         203,227
Reclassification of realized foreign currency translation gain on divestitures                                        (4,629)        (42,122)
Unrealized gain on net investment hedges, net of tax of $nil and $nil, respectively                                          -          2,400
Realized gain on net investment hedge, net of tax of $nil and $16,271, respectively                                          -      (130,367)
Unrealized gain on available-for-sale assets, net of tax of $(82) and $(123), respectively                                   1            485
Reclassification of realized gain on available-for-sale assets, net of tax of $180 and $nil, respectively              (1,512)              -
Pension liability adjustments, net of tax of $nil and $2,532, respectively                                               1,616       (11,869)
Repurchase and cancellation of Common shares                                                                           (7,891)      (106,852)
Other                                                                                                                        -             34
Accumulated other comprehensive income, net of income taxes, end of period                                   $        184,809    $    174,360


19. Employee Benefits
The Company sponsors various post-employment benefit plans including defined benefit and contribution pension plans, retirement
compensation arrangements, and plans that provide extended health care coverage to retired employees.

Defined benefit pension plans
All plans are funded and the Company uses an October 31st measurement date for its plans. The components of net periodic pension cost
for these plans are as follows:
                                                                   Three months ended July 31           Nine months ended July 31
                                                                          2011                 2010              2011            2010
 Service cost                                                  $           694 $                 553 $          2,050 $          1,659
 Interest cost                                                           3,212                3,191             9,498            9,571
 Expected return on plan assets                                        (4,269)              (4,015)          (12,623)         (12,044)
 Recognized actuarial loss                                                   65                  108              194              323
 Net periodic benefit cost                                     $         (298) $               (163) $          (881) $          (491)

The most recent actuarial valuation for the Nordion pension plan for funding purposes was as of January 1, 2011. Based on this actuarial
valuation, the Company expects funding requirements of approximately $11 million, including approximately $3 million of current service
cost contributions, in each of the next five years to fund the solvency deficit. This is primarily a result of a decline in real interest rates
although asset values have increased. The actual funding requirements over the five-year period will be dependent on subsequent annual
actuarial valuations. These amounts are estimates, which may change with actual investment performance, changes in interest rates, any
pertinent changes in government regulations, and any voluntary contributions.

The Company’s defined benefit pension liability in Belgium was assumed by Best Medical upon the completion of the sale of MDS
Nordion S.A. (Belgium) on March 31, 2011 (Note 3) and, accordingly, is reported as discontinued operations.

Other benefit Plans
Other benefit plans include a supplemental retirement arrangement, a retirement/termination allowance and post-retirement benefit plans,
which include contributory health and dental care benefits and contributory life insurance coverage. All non-pension post-employment
benefit plans are unfunded.

The cost of other post-employment benefit plans is $0.2 million (2010 - $0.1 million) and $0.6 million (2010 - $0.5 million) for the three
and nine months ended July 31, 2011, respectively.


20. Segmented Information
Nordion operates as a global life sciences company with three business segments: Medical Isotopes, Targeted Therapies and Sterilization
Technologies. These segments are organized predominantly around the products and services provided to customers identified for the
businesses. Segmented information has been restated for prior years to conform to the new basis of segmentation.



                                                             Nordion Inc. Interim Report July 31, 2011
                                                                                50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. There are no
significant inter-segment transactions. Segmented earnings are computed by accumulating the segment’s operating income, interest costs,
other expenses and foreign exchange translations. The corporate segment results include the incremental cost of corporate overhead in
excess of the amount allocated to the other operating segments, as well as certain other costs and income items that do not pertain to a
business segment. Management does not track or allocate assets on a business segment basis. Accordingly, assets and additions to assets
are not disclosed on a business segment basis in the following financial information. Related expenses, such as depreciation, are allocated
to each segment and reported appropriately herein.

The information presented below is for continuing operations.
                                                                                                                                 Three months ended July 31, 2011
                                                                           Medical             Targeted            Sterilization            Corporate
                                                                           Isotopes           Therapies           Technologies              and Other            Total
Revenues                                                             $       21,386       $      13,301       $          32,120         $              -   $    66,807
Direct cost of revenues                                                      13,370               5,582                  12,676                                 31,628
Selling, general and administration(a)                                        3,310               4,003                   4,125                 2,607           14,045
Other (income) expense, net                                                    (88)               1,593                       8                   433            1,946
Segment earnings (loss)                                              $        4,794       $       2,123       $          15,311         $     (3,040)      $    19,188
Depreciation and amortization                                                 1,678               2,211                   1,557                     -            5,446
Restructuring charges, net                                                                                                                                          41
AECL arbitration and legal costs                                                                                                                                 3,127
Change in fair value of embedded derivatives                                                                                                                     3,697
Operating income from continuing operations                                                                                                                $     6,877
(a) excludes AECL arbitration and legal costs of $3.1 million

                                                                                                                                   Three months ended July 31, 2010
                                                                         Medical           Targeted            Sterilization            Corporate
                                                                         Isotopes         Therapies           Technologies              and Other                Total
Revenues                                                         $        11,891      $       14,872      $             21,139      $              -       $     47,902
Direct cost of revenues                                                    6,958               7,602                     9,914                     -             24,474
Selling, general and administration(a)                                     3,928               3,215                     3,539               11,082              21,764
Other (income) expense, net(b)                                             (116)                 937                      (94)               (4,113)            (3,386)
Segment earnings (loss)                                          $         1,121      $        3,118      $              7,780      $        (6,969)       $      5,050
Depreciation and amortization                                              1,071               1,656                     1,043                 3,453              7,223
Restructuring charges, net                                                                                                                                        8,602
AECL arbitration and legal costs                                                                                                                                  3,639
Impairment of long-lived assets                                                                                                                                     261
Change in fair value of embedded derivatives                                                                                                                      1,970
Operating loss from continuing operations                                                                                                                  $   (16,645)
(a) excludes AECL arbitration and legal costs of $3.6 million
(b) excludes impairment of long-lived assets of $0.3 million

                                                                                                                                   Nine months ended July 31, 2011
                                                                           Medical             Targeted            Sterilization            Corporate
                                                                           Isotopes           Therapies           Technologies              and Other            Total
Revenues                                                             $       78,367       $     45,465        $         76,195          $           -      $   200,027
Direct cost of revenues                                                      40,710             20,077                  33,246                      -            94,033
Selling, general and administration(a)                                       10,560             11,276                  10,968                  6,854            39,658
Other expense, net(b)                                                           155              3,667                     321                  5,177             9,320
Segment earnings (loss)                                              $       26,942       $     10,445        $         31,660          $    (12,031)      $     57,016
Depreciation and amortization                                                 5,129              6,312                   4,546                     38            16,025
Gain on sale of investment                                                                                                                                      (1,691)
Restructuring charges, net                                                                                                                                          576
AECL arbitration and legal costs                                                                                                                                  9,706
Change in fair value of embedded derivatives                                                                                                                   (15,619)
Operating income from continuing operations                                                                                                                $     48,019
(a) excludes AECL arbitration and legal costs of $9.7 million
(b) excludes gain on sale of investment of $1.7 million



                                                                Nordion Inc. Interim Report July 31, 2011
                                                                                   51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

                                                                                                                             Nine months ended July 31, 2010
                                                                        Medical          Targeted            Sterilization       Corporate
                                                                        Isotopes        Therapies           Technologies         and Other             Total
Revenues                                                         $        29,827    $      42,086    $             68,446    $           -   $       140,359
Direct cost of revenues                                                   19,511           21,607                  29,097                -            70,215
Selling, general and administration(a)                                    10,766            9,044                  10,377           38,780            68,967
Other (income) expense, net(b)                                             (224)            2,685                   (206)           17,791            20,046
Segment (loss) earnings                                          $         (226)    $       8,750    $             29,178    $    (56,571)   $      (18,869)
Depreciation and amortization                                              3,224            4,874                   3,441           10,330            21,869
Restructuring charges, net                                                                                                                            60,045
AECL arbitration and legal costs                                                                                                                        5,148
Impairment of long-lived assets                                                                                                                         1,632
Change in fair value of embedded derivatives                                                                                                          (1,334)
Operating loss from continuing operations                                                                                                    $     (106,229)
(a) excludes AECL arbitration and legal costs of $5.1 million
(b) excludes impairment of long-lived assets of $1.6 million


21. Commitments and Contingencies
Retained liabilities related to Early Stage
Subsequent to the sale of Early Stage, Nordion has retained litigation claims and other costs associated with the U.S. FDA’s review of the
Company’s bioanalytical operations (Note 8) and certain other contingent liabilities in Montreal, Canada. Nordion has also retained certain
liabilities related to pre-closing matters, a defined benefit pension plan for certain U.S. employees, and lease obligations for the Montreal
facility as well as two office locations in King of Prussia, Pennsylvania and Bothell, Washington. The cost of future lease payments offset
by expected sublease revenue, where applicable, is estimated at approximately $2.6 million.

Indemnities and guarantees
In connection with various divestitures that the Company underwent, Nordion has agreed to indemnify various buyers for actual future
damage suffered by the buyers related to breaches, by Nordion, of representations and warranties contained in the purchase agreements. In
addition, Nordion has retained certain existing and potential liabilities arising in connection with such operations related to periods prior to
the closings. To mitigate Nordion’s exposure to these potential liabilities, the Company maintains errors and omissions and other
insurance. Nordion is not able to make a reasonable estimate of the maximum potential amount that the Company could be required to
pay under these indemnities. The Company has not made any significant payments under these types of indemnity obligations in the past,
however, the Company has had discussions with buyers related to certain indemnities provided.


22. Litigation
During fiscal 2009, the Company was served with a Complaint related to repeat study and mitigation costs of $10 million and lost profits of
$70 million. This action relates to certain bioequivalence studies carried out by the Company’s former MDS Pharma Services business unit
at the Montreal, Canada facility from January 1, 2000, to December 31, 2004. The Company maintains reserves in respect of repeat study
costs as well as errors and omissions insurance. Nordion has assessed this claim and has accrued amounts related to the direct costs
associated with the repeat study costs in the FDA provision (Note 8). No specific provision has been recorded related to the claim for lost
profit, other than insurance deductible liabilities included in accrued liabilities. The Company has filed an Answer and intends to vigorously
defend this action.

During fiscal 2009, the Company was served with a Statement of Claim related to repeat study and mitigation costs of $5.2 million
(C$5 million) and loss of profit of $31.4 million (C$30 million). This action relates to certain bioequivalence studies carried out by the
Company’s former MDS Pharma Services business unit at the Montreal, Canada facility from January 1, 2000, to December 31, 2004. The
Company maintains reserves in respect of repeat study costs as well as errors and omissions insurance. Nordion has assessed this claim and
has accrued amounts related to the direct costs associated with the repeat study costs in the FDA provision (Note 8). No specific provision
has been recorded related to the claim for lost profit, other than insurance deductible liabilities included in accrued liabilities. The Company
has filed a Statement of Defence and intends to vigorously defend this action.

The Company is involved in an arbitration related to the MAPLE Facilities and an associated lawsuit with AECL and the Government of
Canada. AECL and the Government of Canada unilaterally announced in fiscal 2008 their intention to discontinue the development work
on the MAPLE Facilities. At the same time, AECL and the Government of Canada also publicly announced that they would continue to
supply medical isotopes from the current NRU reactor, and would pursue a license extension of the NRU reactor operations past its

                                                                Nordion Inc. Interim Report July 31, 2011
                                                                                   52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
[All amounts in thousands of U.S. dollars, except where noted]
[Unaudited]

current expiry date of October 31, 2011. On July 8, 2008, Nordion served AECL with a notice of arbitration proceedings seeking an order
to compel AECL to fulfill its contractual obligations under an agreement entered into with AECL in February 2006 (the 2006 Agreement)
to complete the MAPLE Facilities and, in the alternative and in addition to such order, seeking significant monetary damages. In the
lawsuit, Nordion is claiming $1.7 billion (C$1.6 billion) in damages from AECL and the Government of Canada. Nordion’s current
emphasis is on arbitration proceedings which continue broadly along the planned schedule. Due to changes in scheduling, the Company
now expects hearings for the arbitration to extend into the later part of calendar year 2011 and expects a decision from the panel thereafter.
Under the arbitration provisions, the parties have limited appeal rights as to matters of law. In addition to the legal proceedings initiated by
Nordion against AECL and the Government of Canada, the Company is currently exploring supply alternatives to mitigate the lack of
supply from AECL, for both the long-term supply of reactor-based medical isotopes and isotopes produced by other modalities. The
Company has also urged the Government of Canada and AECL to consult with international experts and obtain their assistance toward
activating the MAPLE Facilities project.


23. Comparative Figures
Certain figures for the prior period have been reclassified to conform to the current period’s consolidated financial statements presentation.




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