Pason Systems Inc. reports third quarter earnings



    Stock Exchange: TSX
    Symbol: PSI

    CALGARY, Nov. 7 /CNW/ - Pason Systems Inc. ("Pason" or "the Company")
today announced its results for the nine-month period ended September 30,
2007.

    
    PERFORMANCE DATA

    -------------------------------------------------------------------------
                            Three Months Ended             Nine Months Ended
                                  September 30,                 September 30,
                      2007      2006    Change      2007      2006    Change
    -------------------------------------------------------------------------
    (000s, except
     per share data)
     (unaudited)        ($)       ($)       (%)       ($)       ($)       (%)

    Revenue         60,974    63,520        (4)  175,891   178,954        (2)
    Earnings        15,649    17,701       (12)   39,549    49,453       (20)
      Per share
       - basic        0.20      0.23       (13)     0.50      0.64       (22)
      Per share
      - diluted       0.19      0.22       (14)     0.49      0.62       (21)
    Cash flow from
     operations(1)  28,601    29,768        (4)   77,304    82,633        (6)
      Per share
       - basic        0.36      0.38        (5)     0.97      1.06        (8)
      Per share
       - diluted      0.35      0.37        (5)     0.96      1.03        (7)
    Capital
     expenditures   21,896    13,886        58    57,602    46,797        23
    Working
     capital        61,080    55,481        10    61,080    55,481        10
    Total assets   283,596   247,813        14   283,596   247,813        14
    Shareholders'
     equity        257,490   214,089        20   257,490   214,089        20
    Common shares
     outstanding
     (No.)
      Basic         79,963    78,143         2    79,395    77,673         2
      Diluted       81,352    80,639         1    80,447    80,305         -
    Shares
     outstanding
     end of
     period         80,009    78,474         2    80,009    78,474         2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) For the purposes of cash flow per share calculations, cash flow is
        defined as earnings adjusted for depreciation and amortization,
        stock-based compensation expense and future income taxes. This
        definition is not a recognized measure under Canadian generally
        accepted accounting principles, and accordingly, may not be
        comparable to measures used by other companies.
    

    PRESIDENT'S MESSAGE

    Operations Review

    Revenue for the three months ended September 30, 2007 decreased 4% from
the prior year to $61.0 million, net earnings declined 12% to $15.6 million
and earnings per diluted share were $0.19 versus $0.22 in 2006. A plethora of
issues in Canada, including low natural gas prices, concern over Alberta
royalties, a weakening US dollar and a reduction in activity from trust
producers, have resulted in dramatically reduced drilling despite record high
oil prices. The negative environment in Canada was offset by steady industry
activity in the United States, allowing our U.S. business unit to post record
third quarter profits.
    In Canada, our segment operating profit was $6.1 million for the quarter
compared to $14.1 million recorded in 2006. Revenue declined 21%, consistent
with the 25% drop in Canadian industry drilling days. Unfortunately, our
operating profit declined a greater 57% because most of our field expenses are
fixed in the short-term. We have reduced our field technician base by about
10% through normal attrition, but expect the remainder of this group to be
fully utilized with either higher rig counts in the fourth quarter or greater
pursuit of service rig opportunities. Our revenue per industry drilling day
increased to $764 for the quarter versus $739 a year ago. While revenue from
all of our major products was down due to the decline in industry days,
year-over-year revenue from new products such as the Electronic Service
Recorder (ESR) and the H(2) S/LEL monitor increased to $1.5 million in the
nine-month period.
    United States segment operating profit rose 13% to $15.4 million, up from
$13.7 million last year. Our revenue per U.S. industry drilling day also
improved to $201 compared to $182 in 2006, which represents a fairly modest
10% gain when converted to Canadian dollars, but a much more significant
increase of 18% in U.S. currency. Our rental revenue for the quarter grew 17%
over 2006, exceeding the 6% jump in industry drilling days, due to the
continuing growth in the number of rigs with some Pason instrumentation
presence, which now stands at 53% of all active U.S. land-based rigs. While we
do not foresee any increase, although possibly even a small decline, in U.S.
rig count over the next year, we continue to believe that Pason can gain
market share. We now have reasonable coverage of field technicians across most
of the U.S. basins, and as a result, our rate of hiring new field service
staff has slowed, allowing us to benefit from more leverage and greater margin
on our field service structure. Margin from geological services was
$1.1 million compared to $2.1 million in the third quarter a year ago. Cost
cutting activities by our customers this season led to a 25% decrease in
manned logging days, while only reducing our unmanned logging days by 7%.
There clearly appears to be a shift by customers from manned services to lower
priced semi-manned or unmanned geological services where we are the industry
leader.
    International segment operating profit improved 68% to $1.8 million from
$1.1 million in 2006, with our South American operations continuing to lead
the way where we are now active in all oil producing countries, except
Venezuela. Our AutoDriller and new ESR continue to be well received in these
countries. In Mexico, our activity and that of non-national drilling
contractors has been flat for over a year, but we do expect an increase in
activity in 2008. In Australia, we are now up to ten rigs and looking to
expand into New Zealand and Papua New Guinea.

    Outlook

    The market in Canada is extremely unusual with layoffs in the face of
record oil prices. Clearly part of this is due to the fact that 70% of
Canadian conventional production revenue comes from natural gas so that oil
price gains have a muted effect. Another negative aspect in the third quarter
was uncertainty over Alberta government royalty review intentions. Now that
their plans have recently been announced, for better or worse, some operators
may come back into the market knowing what the new rules of the game are. It
is also obvious that Canada has become a very high cost producer and
significant capital has moved to other producing countries. However, the
Canadian oilfield services market is creative and will adapt. Pason continues
to address the high cost of providing trained field specialists and is moving
to handle the data acquisition and communications needs for virtually all
services at the wellsite, which will lead to more remote management with Pason
playing a central role. To capitalize on these needs, we continue to invest in
the expansion of our R&D department, despite the current declining Canadian
revenues. Our strong balance sheet and cash position facilitates this
capability.
    In the United States, our focus is more like that of Canada three to five
years ago. We have a continuing push to improve our operational capabilities
and seek to expand our product suite and overall presence on an increasing
share of the U.S. drilling rigs. We believe that the work we are currently
doing on new products in Canada along with further strengthening our
operations in the U.S. will lead to a significant profit jump when activity
levels improve in the next cycle.


    On behalf of the Board of Directors,

    (signature)

    Jim Hill
    President & Chief Executive Officer

    November 7, 2007


    Third Quarter Conference Call

    Pason will be conducting a conference call for interested analysts,
brokers, investors and media representatives to review its third quarter
results at 9:00 a.m. (Calgary time) on Thursday, November 8, 2007. The
conference call dial-in number is 1-866-249-1964. Seven-day replay:
1-877-289-8525 and enter 21245876 followed by the number sign.

    Pason Systems Inc. is the world's largest provider of rental oilfield
instrumentation systems that are designed and manufactured for use on
land-based drilling and service rigs. Pason offers a tightly integrated
package of complex services, including data acquisition, wellsite reporting
software, remote communications and Internet information management tools.
    Pason's common shares trade on the Toronto Stock Exchange under the
symbol PSI. Additional information on Pason, including the Interim Report to
Shareholders which includes the Management Discussion and Analysis for the
period ended September 30, 2007 is available on the website at www.pason.com.

    Certain information regarding the Company contained herein may constitute
    forward-looking statements under applicable securities laws. Such
    statements are subject to known or unknown risks and uncertainties that
    may cause actual results to differ materially from those anticipated or
    implied in the forward-looking statements.


    
    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
    As at                            September 30, December 31, September 30,
                                             2007         2006          2006
    -------------------------------------------------------------------------
    (000s) (unaudited)                         ($)          ($)           ($)

    Assets
    Current
      Cash                                 22,368       21,857        11,428
      Accounts receivable                  58,748       70,173        68,354
      Prepaid expenses                      2,575        1,816         2,245
      Income taxes                          1,489            -             -
    -------------------------------------------------------------------------
                                           85,180       93,846        82,027
    Investment                              3,000        3,000         3,000
    Capital assets                        193,083      171,458       160,142
    Deferred development costs              2,333        2,556         2,644
    -------------------------------------------------------------------------
                                          283,596      270,860       247,813
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current
      Accounts payable and accrued
       liabilities                         24,100       22,256        21,759
      Income taxes                              -        7,192         4,787
      Dividend payable                          -        5,903             -
    -------------------------------------------------------------------------
                                           24,100       35,351        26,546
    Future income taxes                     2,006        4,300         7,178
    -------------------------------------------------------------------------
                                           26,106       39,651        33,724
    -------------------------------------------------------------------------
    Shareholders' Equity
    Share capital                          48,730       38,085        36,038
    Contributed surplus                     9,580        7,130         6,169
    Accumulated other comprehensive
     income (Note 1)                      (30,738)     (10,353)      (15,289)
    Retained earnings                     229,918      196,347       187,171
    -------------------------------------------------------------------------
                                          257,490      231,209       214,089
    -------------------------------------------------------------------------
                                          283,596      270,860       247,813
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS

    -------------------------------------------------------------------------
                               Three Months Ended          Nine Months Ended
                                     September 30,              September 30,
                                2007         2006         2007          2006
    -------------------------------------------------------------------------
    (000s, except per share
     data) (unaudited)            ($)          ($)          ($)           ($)

    Revenue
      Rental revenue          57,520       59,035      165,693       167,856
      Geological services      3,454        4,485       10,198        11,098
    -------------------------------------------------------------------------
                              60,974       63,520      175,891       178,954
    -------------------------------------------------------------------------
    Expenses
      Rental services         17,728       17,477       54,547        46,222
      Geological services      2,324        2,335        6,826         6,443
      Manufacturing and
       distribution            1,725        1,485        6,405         6,823
      Research and
       development             2,345        2,043        6,492         6,119
      Administration           1,983        1,519        5,723         4,602
      Stock-based
       compensation            1,176        1,221        3,981         3,300
      Interest                    42           84          105           588
      Depreciation and
       amortization           11,629        9,874       35,331        28,366
    -------------------------------------------------------------------------
                              38,952       36,038      119,410       102,463
    -------------------------------------------------------------------------
    Earnings before income
     taxes                    22,022       27,482       56,481        76,491
    -------------------------------------------------------------------------
    Income taxes
      Current                  6,226        8,809       18,489        25,524
      Future                     147          972       (1,557)        1,514
    -------------------------------------------------------------------------
                               6,373        9,781       16,932        27,038
    -------------------------------------------------------------------------
    Earnings                  15,649       17,701       39,549        49,453
    Retained earnings,
     beginning of period     214,269      169,470      196,347       141,608
    Dividends                      -            -       (5,978)       (3,890)
    -------------------------------------------------------------------------
    Retained earnings, end
     of period               229,918      187,171      229,918       187,171
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share
     (Note 2)
      Basic                     0.20         0.23         0.50          0.64
      Diluted                   0.19         0.22         0.49          0.62
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                               Three Months Ended         Nine Months Ended
                                     September 30,              September 30,
                                2007         2006         2007          2006
    -------------------------------------------------------------------------
    (000s) (unaudited)
     (Note 1)
                                  ($)          ($)          ($)           ($)
    Earnings                  15,649       17,701       39,549        49,453
    Other comprehensive
     income, net of tax       (9,599)        (374)     (20,385)       (3,764)
    -------------------------------------------------------------------------
    Total comprehensive
     income                    6,050       17,327       19,164        45,689
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                               Three Months Ended          Nine Months Ended
                                     September 30,              September 30,
                                2007         2006         2007          2006
    -------------------------------------------------------------------------
    (000s) (unaudited)
     (Note 1)                     ($)          ($)          ($)           ($)
    Accumulated other
     comprehensive income,
     beginning of period     (21,139)           -      (10,353)            -
    Reclassification from
     foreign currency
     translation adjustment        -      (14,915)           -       (11,525)
    Other comprehensive
     income, net of tax       (9,599)        (374)     (20,385)       (3,764)
    -------------------------------------------------------------------------
    Accumulated other
     comprehensive income,
     end of period           (30,738)     (15,289)     (30,738)      (15,289)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                               Three Months Ended          Nine Months Ended
                                     September 30,              September 30,
                                2007         2006         2007          2006
     ------------------------------------------------------------------------
    (000s) (unaudited)            ($)          ($)          ($)           ($)

    Cash flows related to
     the following
     activities:
    Operating
      Earnings                15,649       17,701       39,549        49,453
      Adjustments for
       non-cash items:
        Depreciation and
         amortization         11,629        9,874       35,331        28,366
        Stock-based
         compensation          1,176        1,221        3,981         3,300
        Future income taxes      147          972       (1,557)        1,514
    -------------------------------------------------------------------------
                              28,601       29,768       77,304        82,633
      Changes in non-cash
       working capital        (3,383)      (2,219)        (138)       (2,793)
    -------------------------------------------------------------------------
                              25,218       27,549       77,166        79,840
    -------------------------------------------------------------------------
    Financing
      Issue of common shares
       under the stock option
       plan                    1,825        2,207        9,114         5,832
      Repayment of non-
       revolving term credit
       facility                    -       (7,143)           -       (10,000)
      Payment of dividends         -            -      (11,881)       (3,890)
    -------------------------------------------------------------------------
                               1,825       (4,936)      (2,767)       (8,058)
    -------------------------------------------------------------------------
    Investing
      Additions to capital
       assets                (22,561)     (13,425)     (57,388)      (45,428)
      Deferred development
       costs, net of
       investment tax
       credits received          665         (461)        (214)       (1,369)
      Parts transfer to
       contract
       manufacturers          (9,500)           -      (15,487)            -
      Proceeds on disposal
       of capital assets          56           68          103           229
      Changes in non-cash
       working capital         2,019       (9,572)        (902)       (7,327)
    -------------------------------------------------------------------------
                             (29,321)     (23,390)     (73,888)      (53,895)
    -------------------------------------------------------------------------
    Net (decrease) increase
     in cash and cash
     equivalents              (2,278)        (777)         511        17,887
    Cash and cash
     equivalents, beginning
     of period                24,646       12,205       21,857        (6,459)
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period                22,368       11,428       22,368        11,428
    -------------------------------------------------------------------------
    Represented by:
      Cash                    22,368       11,428       22,368        11,428
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

    Nine Months Ended September 30, 2007 and 2006

    (000s, except per share data) (unaudited)

    1.  Significant Accounting Policies

        These interim consolidated financial statements have been prepared in
        accordance with the same accounting policies and methods of
        computation as those outlined in the annual audited financial
        statements. These interim consolidated financial statements do not
        include all disclosures normally provided in annual financial
        statements and should be read in conjunction with the Company's
        audited annual financial statements for the year ended December 31,
        2006.

        Significant Accounting Changes

        (a)   Beginning in fiscal 2007, the Company adopted the new
              Section 1530 "Comprehensive Income" standard issued by the
              Canadian Institute of Chartered Accountants. This section
              introduces comprehensive income, which is comprised of earnings
              and other comprehensive income (OCI). OCI represents changes in
              shareholders' equity during a period from transactions with
              non-owner sources and includes unrealized foreign currency
              translation gains and losses on self-sustaining foreign
              operations, which is the only component of Pason's OCI. This
              new section has been applied retroactively and all comparative
              financial statements have been restated accordingly.

              The cumulative changes in the unrealized foreign currency
              translation gains and losses that were previously disclosed in
              shareholders' equity under the caption foreign currency
              translation adjustment have been reclassified to another
              component of shareholders' equity called accumulated other
              comprehensive income, which represents the cumulative amounts
              of OCI.

        (b)   In the first quarter of 2007, the Company changed its
              depreciation policy on certain capital assets. Rental
              equipment, which was previously depreciated on a unit-of-use
              method, is now depreciated on a declining-balance method at an
              annual rate of 20% with no residual value. The full impact of
              this change on a retroactive basis was measured and the Company
              concluded that the differences arising from the comparison of
              the old to new method were immaterial to the overall
              consolidated financial statements. Consequently, the Company
              has not restated any prior period.

              Certain comparative figures have been reclassified to conform
              to the current year's presentation and to record the effect of
              the retroactive application of the new accounting change in
              comprehensive income noted above.

    2.  Share Capital

        Authorized
           Unlimited number of common shares
           Unlimited number of preferred shares, issuable in series

        Issued
           Common shares
        ---------------------------------------------------------------------
                                                        Shares        Amount
        ---------------------------------------------------------------------
                                                          (No.)           ($)
        Balance, December 31, 2006                      78,738        38,085
          Exercise of stock options                      1,271         9,114
          Contributed surplus adjustment on exercise
           of stock options                                  -         1,531
        ---------------------------------------------------------------------
        Balance, September 30, 2007                     80,009        48,730
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Stock Option Plan

        At September 30, 2007, 5,295 stock options were outstanding for
        common shares at exercise prices ranging from $2.99 to $17.75 per
        share, expiring between 2007 and 2011 as follows:

        ---------------------------------------------------------------------
                                    2007                       2006
        ---------------------------------------------------------------------
                                         Weighted                   Weighted
                                          Average                    Average
                               Share     Exercise        Share      Exercise
                             Options        Price      Options         Price
        ---------------------------------------------------------------------
                                (No.)          ($)        (No.)           ($)
        Outstanding,
         beginning of
         period                6,889        10.84        7,110          7.92
          Granted                125        14.94        1,014         16.53
          Exercised           (1,271)        7.17       (1,429)         4.08
          Forfeited             (448)       14.05         (527)        10.62
        ---------------------------------------------------------------------
        Outstanding, end
         of period             5,295        11.54        6,168          9.99
        ---------------------------------------------------------------------
        Exercisable, end
         of period             2,559         8.88        2,174          6.27
        ---------------------------------------------------------------------
        Available for grant,
         end of period         2,706                     1,679
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        All options are issued at market price and vest over three years.
        Options issued prior to November 2004 expire five years after the
        date of issuance. Effective November 2004 through October 2006,
        options granted expire three years and 60 days after issuance.
        Effective November 2006, options granted expire three years and six
        months after issuance.

        The following table summarizes information about stock options
        outstanding at September 30, 2007:

        ---------------------------------------------------------------------
                       Options Outstanding             Options Exercisable
        ---------------------------------------------------------------------
                              Weighted
        Range                  Average   Weighted                   Weighted
        of        Options    Remaining    Average                    Average
        Exercise     Out-  Contractual   Exercise  Exercisable      Exercise
        Prices   standing         Life      Price      (Vested)        Price
        ---------------------------------------------------------------------
        ($)        (No.)      (Years)          ($)        (No.)           ($)
        2.99 -
         7.25     1,137         1.08         5.32        1,137          5.32
        7.26 -
         13.50    1,635         1.15        10.12          865          9.39
        13.51 -
         17.75    2,523         1.99        15.27          557         15.35
        ---------------------------------------------------------------------
                  5,295         1.53        11.54        2,559          8.88
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company is authorized to issue a maximum of 30,000 shares under
        its stock option plan, of which 26,518 options have been granted,
        5,295 options are outstanding, 4,956 options have been cancelled and
        8,437 options are available for issue at September 30, 2007. The
        total number of options outstanding must not exceed 10% of the total
        common shares outstanding.

        Stock options issued to employees and directors have been accounted
        for using the fair value method and recorded as stock-based
        compensation expense of $3,981 (2006 - $3,300) in the consolidated
        statement of earnings, using the following weighted average
        assumptions:

        ---------------------------------------------------------------------
                                                          2007         2006
        ---------------------------------------------------------------------

        Fair value of stock options ($)                   3.90          4.20
        Forfeiture rate (%)                              16.77         17.00
        Risk-free interest rate (%)                       4.10          3.65
        Expected option life (years)                      3.14          3.13
        Expected volatility (%)                          31.98         32.01
        Annual dividends per share (%)                    1.00          1.00
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Amounts recorded to contributed surplus relating to the fair value of
        stock options expensed and subsequent reduction for options exercised
        are as follows:

        ---------------------------------------------------------------------
                                                                      Amount
                                                                          ($)
        ---------------------------------------------------------------------

        Contributed Surplus
        Balance, December 31, 2006                                     7,130
          Stock-based compensation expense for the period              3,981
          Stock options exercised                                     (1,531)
        ---------------------------------------------------------------------
        Balance, September 30, 2007                                    9,580
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


    3.  Segmented Information

        The Company operates in three geographic segments within one industry
        segment. Rental services are provided in Canada, the United States
        and internationally (South America, Mexico and Australia). The
        amounts related to each segment are as follows:

        ---------------------------------------------------------------------
                                           United       Inter-
                              Canada       States     national         Total
        ---------------------------------------------------------------------
                                  ($)          ($)          ($)           ($)
        Three Months Ended
         September 30, 2007
        Revenue from external
         customers            24,433       34,408        2,133        60,974
        Depreciation and
         amortization          5,420        5,823          386        11,629
        Operating costs       12,928       13,156          (78)       26,006
        ---------------------------------------------------------------------
        Segment operating
         profit                6,085       15,429        1,825        23,339
        -------------------------------------------------------
        Interest                                                          42
        Corporate expenses                                                99
        Stock-based
         compensation                                                  1,176
        Income taxes                                                   6,373
                                                                    ---------
        Earnings                                                      15,649
        ---------------------------------------------------------------------
        Capital expenditures  11,773        6,038        4,085        21,896
        ---------------------------------------------------------------------

        Three Months Ended
         September 30, 2006
        Revenue from external
         customers            31,056       30,963        1,501        63,520
        Depreciation and
         amortization          4,822        4,797          255         9,874
        Operating costs       12,096       12,472          158        24,726
        ---------------------------------------------------------------------
        Segment operating
         profit               14,138       13,694        1,088        28,920
        -------------------------------------------------------
        Interest                                                          84
        Corporate expenses                                               133
        Stock-based
         compensation                                                  1,221
        Income taxes                                                   9,781
                                                                    ---------
        Earnings                                                      17,701
        ---------------------------------------------------------------------
        Capital expenditures   5,095        8,359          432        13,886
        ---------------------------------------------------------------------



        ---------------------------------------------------------------------
                                           United       Inter-
                              Canada       States     national         Total
        ---------------------------------------------------------------------
                                  ($)          ($)          ($)           ($)

        Nine Months Ended
         September 30, 2007
        Revenue from external
         customers            70,721       99,669        5,501       175,891
        Depreciation and
         amortization         17,825       16,535          971        35,331
        Operating costs       38,024       40,770          807        79,601
        ---------------------------------------------------------------------
        Segment operating
         profit               14,872       42,364        3,723        60,959
        -------------------------------------------------------
        Interest                                                         105
        Corporate expenses                                               392
        Stock-based
         compensation                                                  3,981
        Income taxes                                                  16,932
                                                                    ---------
        Earnings                                                      39,549
                                                                    ---------
        Capital assets       108,021       69,708       15,354       193,083
        ---------------------------------------------------------------------
        Capital expenditures  23,531       25,967        8,104        57,602
       ----------------------------------------------------------------------

        Nine Months Ended
         September 30, 2006
        Revenue from external
         customers            92,408       82,393        4,153       178,954
        Depreciation and
         amortization         14,874       12,737          755        28,366
        Operating costs       35,552       33,335          894        69,781
        ---------------------------------------------------------------------
        Segment operating
         profit               41,982       36,321        2,504        80,807
        -------------------------------------------------------
        Interest                                                         588
        Corporate expenses                                               428
        Stock-based
         compensation                                                  3,300
        Income taxes                                                  27,038
                                                                    ---------
        Earnings                                                      49,453
                                                                    ---------
        Capital assets        97,018       57,209        5,915       160,142
        ---------------------------------------------------------------------
        Capital expenditures  15,344       29,072        2,381        46,797
        ---------------------------------------------------------------------

    





For further information:

For further information: Pason Systems Inc., Jim Hill, President and
CEO, Phone: (403) 301-3401, Fax: (403) 301-3499, E-mail: jim.hill@pason.com;
Jim Glasspoole, Chief Financial Officer, Phone: (403) 692-3840, Fax: (403)
301-3411, E-Mail: jim.glasspoole@pason.com


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