RDM Corporation Reports First Quarter Results



    ITMS(R) Exceeds 10,000 End User Locations

    Toronto Stock Exchange Symbol: RC

    WATERLOO, ON, Feb. 6 /CNW/ - RDM Corporation (TSX: RC), a leading
provider of solutions for the electronic commerce and payment processing
markets, today reported its financial results for the three month period ended
December 31, 2007.

    
    Q1 2008 Highlights

    -   Transaction volumes for RDM's Image & Transaction Management System
        (ITMS(R)) averaged 2.1 million items per week during the first
        quarter of fiscal 2008, compared to 995,000 items per week a year
        earlier, and 1,755,000 items per week during Q4 2007.

    -   ITMS(R) end user locations increased from 8,400 to 10,000 during the
        first quarter of 2008.

    -   Total revenues were $7.1 million in the first quarter of fiscal 2008,
        compared to $11.7 million from the first quarter of fiscal 2007 when
        the Company made record scanner shipments to address an order
        backlog.

    -   Digital Imaging segment revenues were $5.8 million, compared to
        $10.6 million in Q1 2007.

    -   Gross profit was $2.8 million or 39% of revenues, compared to
        $4.5 million or 38% of revenues a year earlier.

    -   Net earnings were $1,000 or $0.00 per share in Q1 2008, compared to
        $1.3 million or $0.06 per share in the previous year's first quarter.

    -   Cash and equivalents grew to $18.0 million at December 31, 2007, from
        $17.4 million three months earlier.

    -   The Company shipped 10,700 proprietary scanner units in the first
        quarter of 2008, compared to 20,400 in the first quarter of 2007, and
        11,800 in the fourth quarter of 2007.
    

    "Momentum continues to build in our ITMS(R) business. We added two more
bank partners and passed the milestone of 10,000 end user locations. On an
absolute basis, sequential growth in our average transaction volume, which
exceeded the Q4 2007 average by 345,000 items per week, was the largest in the
company's history," said Douglas Newman, President and CEO of RDM Corporation.
"We faced other challenges in the first quarter, however, particularly a shift
in foreign exchange rates that impacted our reported revenues by more than
$1 million compared to the same period last year. Our results also suffered in
comparison to an exceptionally strong first quarter a year ago, when we
shipped a record number of scanners to address a major order backlog from
fiscal 2006."
    Mr. Newman continued: "Our outlook for the long-term growth of our
business remains as bullish as ever. Remote deposit services are steadily
being deployed and several of our bank distributors have ambitious deployment
plans for 2008. It is, however, difficult to predict over the short term the
timing of certain customer implementations and orders. Given the present
economic environment, our current expectation is that we will achieve total
revenue growth of 10-to-15% in fiscal 2008."

    Financial Review

    RDM recorded revenues of $7.1 million in the three months ended
December 31, 2007, a decrease of $4.6 million from the comparable period of
fiscal 2007. Approximately $1.1 million of the decrease in reported revenue
was attributable to the rapid appreciation over the past year of the Canadian
dollar compared to the U.S. dollar, the currency in which virtually all of the
Company's revenues are generated. Of the remaining difference, a large portion
is attributable to a year-over-year decrease in proprietary scanner shipments.
In the first quarter of 2007 the Company shipped 20,400 scanners, a record
number, as it addressed a significant order backlog. In the four subsequent
quarters scanner shipments have ranged between 10,000 and 12,000 units,
reaching 10,700 units in Q1 2008. Scanners continue to comprise the majority
of RDM's total revenues, and the majority of revenues in the Digital Imaging
segment, which also includes ITMS revenue. In the first quarter of 2008 the
Company also recognized $610,000 of non-recurring revenue in its Digital
Imaging results.
    Revenues in the Electronic Payments Solutions segment, comprised of
custom development projects for government agencies and financial institution
customers, were $739,000 in Q1 2008, a 16% increase from $635,000 a year
earlier. The Quality Assurance segment, comprised of quality control products
sold to commercial check printers and processors, generated revenues of
$563,000, up 9% from $518,000 in Q1 2007. Results in the two smaller segments
were in line with management expectations, and both segments made a positive
contribution to operating income.
    Gross profit was $2.8 million in Q1 2008 compared to $4.5 million in the
first quarter of last year, representing a decline of 38%, approximately the
same as the decrease in revenue. Expressed as a percentage of revenue, gross
margin was 39% in Q1 2008 compared to 38% a year earlier, as the negative
impact of exchange rates was offset by higher margins earned on the $610,000
of non-recurring revenue.
    Sales and marketing expense increased 14% to $1.1 million from
$1.0 million in Q1 2007, as sales and marketing efforts were focused on
signing new ITMS banks and preparing for the introduction of a batch scanner.
Research and development expenses increased by 5% to $1.0 million as the
Company continued to invest in new product development. General and
administration expenses decreased to $389,000 from $512,000 in Q1 2007.
    Net earnings were $1,000 in Q1 2008, or $0.00 per share, compared to
$1.3 million or $0.06 per share in the first quarter of 2007. RDM had
21,235,326 common shares outstanding at December 31, 2007.
    Operating activities provided $1.1 million of cash flow in the first
quarter of 2008, compared to $2.0 million a year earlier. Cash and equivalents
were $18.0 million at December 31, 2007, compared to $17.4 million at
September 30, 2007.

    Conference Call and Annual Meeting

    RDM will be hosting a conference call to discuss the Company's first
quarter financial results on February 6, 2008 at 9:00 a.m. EST. Dial-in
numbers are 416-644-3416 or 1-800-731-5319. RDM's Annual and Special Meeting
of Shareholders will be held at 4:30 p.m. that same day at the TSX Broadcast
Centre, 130 King Street West, Toronto, Ontario. Both events will be webcast
live and archived at www.rdmcorp.com.
    Detailed financial results and management's discussion and analysis for
the first quarter of fiscal 2008 will be filed at www.sedar.com.

    About RDM Corporation

    RDM Corporation is headquartered in Waterloo, Ontario and trades on the
Toronto Stock Exchange under the symbol RC. RDM is a leading provider of
specialized software and hardware products for electronic payment processing.
RDM has pioneered electronic cheque conversion systems and web-based image and
transaction management services for banks, retailers, payment processors and
government agencies. RDM's Image & Transaction Management System (ITMS(R)) is
an industry leading e-check processing solution whereby transaction
information can be remotely captured and processed electronically from
distributed locations, freeing up significant customer float time and
significantly reducing costs associated with returned checks. For further
information, visit RDM's website at www.rdmcorp.com.

    This news release contains forward-looking statements. Forward-looking
statements are based on estimates and assumptions made by RDM in light of its
experience and its perception of historical trends, current conditions and
expected future developments, as well as other factors that RDM believes are
appropriate in the circumstances. Many factors could cause RDM's actual
results, performance or achievements to differ materially from those expressed
or implied by forward-looking statements. Risk factors relating to RDM are
discussed in the Risks and Uncertainties section of RDM's Annual Information
Form and year-end Management's Discussion and Analysis. These factors should
be considered carefully, and readers should not place undue reliance on RDM's
forward-looking statements. RDM has no intention and undertakes no obligation
to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

    
                               RDM CORPORATION
                         Consolidated Balance Sheets
                 (Amounts In Canadian Dollars, In Thousands)

    -------------------------------------------------------------------------
                                                   December 31, September 30,
                                                          2007          2007
                                                     Unaudited       Audited
    -------------------------------------------------------------------------
    Assets:

    Current assets:
      Cash and cash equivalents                       $ 17,998      $ 17,418
      Accounts receivable                                5,714         6,365
      Other receivable                                     497           503
      Inventories                                        5,889         4,720
      Investment tax credit receivable                   1,496         1,451
      Other                                              1,153         1,843
    -------------------------------------------------------------------------
    Total current assets                                32,747        32,300

    Furniture and equipment                              2,316         2,011
    Intangible assets                                      229           235
    -------------------------------------------------------------------------
    Total assets                                      $ 35,292      $ 34,546
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity:

    Current liabilities:
      Accounts payable and accrued liabilities        $  5,169      $  4,587
      Future income tax liability                          210           210
      Deferred revenue                                     396           427
    -------------------------------------------------------------------------
    Total current liabilities                            5,775         5,224

    Future income tax liability                             97            32

    Shareholders' equity:
      Share capital                                     27,978        27,978
      Contributed surplus                                1,048           927
      Retained earnings                                    402           401
      Share purchase loans                                  (8)          (16)
    -------------------------------------------------------------------------
    Total shareholders' equity                          29,420        29,290
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity        $ 35,292      $ 34,546
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                               RDM CORPORATION
              Consolidated Statements of Operations and Deficit
    (Amounts in Canadian Dollars, In Thousands, Except Per Share Amounts)

                                                       Three months ended
                                                           December 31
                                                        2007         2006
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Revenue                                           $  7,071      $ 11,746
    Cost of revenue                                      4,281         7,276
    -------------------------------------------------------------------------
    Gross profit                                         2,790         4,470

    Operating expenses:
      Sales and marketing                                1,145         1,001
      Research and development                           1,014           969
      General and administration                           389           512
      Depreciation and amortization                        187           162
      Stock-based compensation                             121            75
      Foreign exchange loss                                 70           288
      Interest income                                     (202)          (39)
    -------------------------------------------------------------------------
                                                         2,724         2,968
    -------------------------------------------------------------------------
    Earnings before taxes                                   66         1,502

    Future income tax expense                               65           208
    -------------------------------------------------------------------------

    Net earnings and comprehensive earnings                  1         1,294

    Retained earnings (Deficit), beginning of year         401        (5,356)
    -------------------------------------------------------------------------

    Retained earnings (Deficit), end of period        $    402      $ (4,062)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Earnings per share - basic and diluted            $   0.00      $   0.06
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                               RDM CORPORATION
                    Consolidated Statements of Cash Flows
                 (Amounts in Canadian Dollars, In Thousands)

                                                       Three months ended
                                                           December 31
                                                        2007         2006
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net Earnings                                    $      1      $  1,294
      Items not involving cash:
        Amortization of furniture and equipment            179           156
        Amortization of intangible assets                    8             6
        Stock based compensation                           121            75
        Future income taxes                                 65           208
      Change in non-cash operating working capital         684           225
    -------------------------------------------------------------------------
    Cash provided by operations                          1,058         1,964

    Financing:
      Issuance of share capital                              -           964
      Repayment of share purchase loans                      8             8
    -------------------------------------------------------------------------
    Cash provided by financing activities                    8           972

    Investing:
      Purchase of furniture and equipment                 (484)         (193)
      Additions to intangible assets                        (2)           (4)
    -------------------------------------------------------------------------
    Cash used in investing activities                     (486)         (197)

    -------------------------------------------------------------------------
    Increase in cash and cash equivalents                  580         2,739
    Cash and cash equivalents, beginning of year        17,418         6,174
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period          $ 17,998      $  8,913
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Douglas Newman, Chief Executive Officer, RDM
Corporation, (519) 746-8483 ext. 340 phone, (519) 746-3317 fax,
dnewman@rdmcorp.com; James Merwin, Chief Financial Officer, RDM Corporation,
(519) 746-8483 ext. 284 phone, (519) 746-3317 fax, jmerwin@rdmcorp.com

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