RDM Corporation Reports First Quarter Results



    Toronto Stock Exchange Symbol: RC

    WATERLOO, ON, Feb. 5 /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, 2008.

    
    Q1 2009 Highlights

        -  Total revenues were $7.1 million in the first quarter of fiscal
           2009, unchanged from $7.1 million in the first quarter of last
           year.
        -  Revenues in the Payment Processing Services segment doubled to
           $2.2 million in Q1 2009, compared to $1.1 million a year earlier.
        -  Transaction volumes for RDM's Image & Transaction Management
           System (ITMS(R)) averaged 3.3 million items per week during the
           first quarter, compared to 2.1 million items per week a year
           earlier, and 3.1 million items per week during Q4 2008.
        -  ITMS(R) end user locations increased from 14,900 to 15,900 during
           the first quarter of 2009.
        -  RDM added five additional bank distributors and seven new
           independent sales organizations (ISOs) during the quarter.
        -  RDM shipped 7,700 proprietary scanners during the quarter,
           compared to 10,700 units in Q1 2008.
        -  Gross profit was $2.9 million or 42% of revenues, compared to $2.7
           million or 38% of revenues in the first quarter of 2008.
        -  Net loss was $1.6 million or $0.08 per share (fully diluted) in Q1
           2009, compared to net earnings of $1,000 or $0.00 per share in Q1
           2008, and is due primarily to a foreign exchange loss on the
           forward contracts.
        -  Cash and equivalents of $17.3 million at December 31, 2008, is
           virtually unchanged from $17.4 million three months earlier.
    

    "We made progress on some of our top strategic priorities in the first
quarter during a time of significant macroeconomic instability," said Douglas
Newman, President and CEO of RDM Corporation. "Our recurring revenue ITMS
business grew sequentially on every measure: end user locations, transaction
volume, and the number of bank and ISO distribution partners. We continued to
invest in future growth, and still remained cash flow neutral even as scanner
sales softened. We remain cautious about the near-term outlook in our market
and are positioning the company to withstand the current economic uncertainty,
and to benefit when rapid growth in the remote deposit capture space resumes."

    Financial Review

    RDM recorded revenues of $7.1 million in the three months ended December
31, 2008, unchanged from the $7.1 million of revenues generated in the first
quarter of the prior fiscal year. The strengthening of the U.S. dollar over
the past year resulted in a $1.4 million favourable impact on reported
revenues. A $1.1 million revenue increase in the Payment Processing Services
segment, driven by growth in ITMS transaction volumes and end users as well as
the currency exchange rate shift, offset revenue decreases in the Company's
other three operating segments. Revenues in the Digital Imaging Products
segment decreased by $0.8 million to $3.9 million due to a decrease in scanner
shipments and the absence of $610,000 of non-recurring licensing revenue
recorded in the first quarter of 2008. The Electronic Payments Solutions
segment and the Quality Assurance segment, which represented a combined 14% of
total revenues in the first quarter, each generated revenues of approximately
$0.5 million, compared to $0.7 million and $0.6 million, respectively, in the
first quarter of 2008.
    Gross profit increased to $2.9 million in the first quarter of 2009 from
$2.7 million a year earlier. Expressed as a percentage of revenues, gross
margin was 42%, compared to 38% in the Q1 2008. Increased margins were due to
the favourable impact of exchange rates and a change in product mix to include
a higher proportion of payment processing recurring revenue. Gross profit in
the Payment Processing Services segment grew to $911,000 in the first quarter
from $223,000 a year earlier. The segment generated an operating loss of
$651,000, compared to a loss of $840,000 in Q1 2008. This improvement in
operating earnings was realized even as the Company invested an additional
$420,000 in sales and marketing efforts focused on signing new ITMS banks and
ISO resellers.
    Sales and marketing expense increased $280,000 to $1.4 million, with
efforts focused primarily on the rapidly growing Payment Processing Services
segment. Research and development expenses increased $57,000 to $1.1 million
as the Company continued to invest in new product development. General and
administration expenses increased $89,000 to $478,000, due in part to the
launch of Simply Deposit including legal and credit management costs.
    RDM recognized a $1.5 million foreign exchange loss in the first quarter
of 2009 due to the impact of a dramatic shift in exchange rates during the
quarter on forward contracts held by the Company for hedging purposes.
Primarily as a result of this exchange loss, net earnings declined by $1.6
million compared to one year earlier. Net loss was $1.6 million or $0.08 per
share (fully diluted) in Q1 2009, compared to net earnings of $1,000 or $0.00
per share in Q1 2008.
    RDM repurchased 190,400 shares in the first quarter under its Normal
Course Issued Bid. At December 31, 2008, the Company had 21.2 million common
shares outstanding.

    Conference Call

    RDM will be hosting a conference call to discuss the Company's first
quarter financial results on February 5, 2009 at 9:00 a.m. ET. Dial-in numbers
are 416-644-3415 or 1-800-732-0232. The call will be webcast live and archived
at www.rdmcorp.com. Detailed financial results and Management's Discussion and
Analysis will be filed on 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 check conversion systems and web based image and
transaction management services for banks, retailers, payment processors and
government agencies as well as print quality control and image quality systems
for a variety of global customers. 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,
                                                          2008          2008
                                                     Unaudited       Audited
    -------------------------------------------------------------------------
    Assets:

    Current assets:
      Cash and cash equivalents                       $ 17,264      $ 17,421
      Accounts receivable                                4,660         4,929
      Inventories                                        5,904         6,325
      Investment tax credit receivable                   1,748         1,703
      Other                                                963         1,087
    -------------------------------------------------------------------------
    Total current assets                                30,539        31,465

    Furniture and equipment                              2,955         2,893
    Intangible assets                                      305           278
    -------------------------------------------------------------------------
    Total assets                                      $ 33,799      $ 34,636
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity:

    Current liabilities:
      Accounts payable and accrued liabilities        $  5,607      $  4,945
      Deferred revenue                                     841           631
    -------------------------------------------------------------------------
    Total current liabilities                            6,448         5,576
    -------------------------------------------------------------------------

    Future income tax liability                            127           201

    Shareholders' equity:
      Share capital                                     28,178        28,338
      Contributed surplus                                1,306         1,162
      Retained earnings (deficit)                       (2,260)         (641)
    -------------------------------------------------------------------------
    Total shareholders' equity                          27,224        28,859
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity        $ 33,799      $ 34,636
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                                       Three months ended
                                                           December 31
                                                        2008         2007
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Revenue                                           $  7,087      $  7,071
    Cost of revenue                                      4,139         4,411
    -------------------------------------------------------------------------
    Gross profit                                         2,948         2,660

    Operating expenses:
      Sales and marketing                                1,425         1,145
      Research and development                           1,071         1,014
      General and administration                           478           389
      Depreciation and amortization                         60            57
      Stock-based compensation                             144           121
      Foreign exchange loss                              1,448            70
      Interest income                                      (59)         (202)
    -------------------------------------------------------------------------
                                                         4,567         2,594
    -------------------------------------------------------------------------
    Earnings (loss) before income taxes               $ (1,619)     $     66

    Income tax expense                                       -            65
    -------------------------------------------------------------------------

    Net earnings (loss) and comprehensive
     earnings (loss)                                    (1,619)            1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Earnings (loss) per share - basic and diluted     $  (0.08)     $   0.00
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                                       Three months ended
                                                           December 31
                                                        2008         2007
                                                    (unaudited)   (unaudited)
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
      Net Earnings (loss)                             $ (1,619)     $      1
      Items not involving cash:
        Amortization of furniture and equipment            212           179
        Amortization of intangible assets                   12             8
        Stock based compensation                           144           121
        Future income taxes                                (74)           65
      Change in non-cash operating working capital       1,641           684
    -------------------------------------------------------------------------
    Cash provided by operations                            316         1,058

    Financing:
      Repayment of share purchase loans                      -             8
    -------------------------------------------------------------------------
    Cash provided by financing activities                    -             8

    Investing:
      Repurchase of share capital                         (160)            -
      Purchase of furniture and equipment                 (274)         (484)
      Additions to intangible assets                       (39)           (2)
    -------------------------------------------------------------------------
    Cash used in investing activities                     (473)         (486)

    -------------------------------------------------------------------------
    Increase (decrease) in cash and cash equivalents      (157)          580
    Cash and cash equivalents, beginning of year        17,421        17,418
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period          $ 17,264      $ 17,998
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





For further information:

For further information: Douglas Newman, President and CEO, RDM
Corporation, (519) 746-8483 ext. 340 phone, (519) 746-3317 fax,
dnewman@rdmcorp.com; James Merwin, CFO, RDM Corporation, (519) 746-8483 ext.
284 phone, (519) 746-3317 fax, jmerwin@rdmcorp.com

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RDM Corporation

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