RDM Corporation reports record revenues and earnings in fiscal 2007



    Toronto Stock Exchange Symbol: RC

    Company achieves 39% revenue growth

    WATERLOO, ON, Nov. 26 /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 and twelve-month
periods ended September 30, 2007.

    
    Fiscal 2007 Financial Highlights

    -   Total revenues were $33.9 million in fiscal 2007, an increase of 39%
        from $24.3 million in 2006.
    -   The Digital Imaging segment, which represented 85% of revenues, grew
        by 69% to $28.7 million of revenues.
    -   Gross profit was $13.5 million or 40% of revenues, compared to
        $10.0 million or 41% of revenues in 2006.
    -   Net earnings were $5.8 million or $0.26 per share (fully diluted) in
        2007, compared to $2.1 million or $0.10 per share in the previous
        year. Approximately $2.7 million of 2007 earnings or $0.13 per share
        were attributable to a gain on the sale of RDM's minority stake in
        Xign Corporation.
    -   Cash and equivalents grew to $17.4 million at September 30, 2007,
        from $6.2 million one year earlier.

    Fiscal 2007 Operating Highlights

    -   Transaction volumes for RDM's Image & Transaction Management System
        (ITMS) averaged 1,755,000 items per week during the fourth quarter of
        2007 and exited the year at 2,081,000 items, compared to 792,000
        items per week in Q4 2006.
    -   Ten new bank distributors were signed during the year, bringing the
        total to 25 banks.
    -   ITMS end user locations increased to 8,400 from 3,300 at the start of
        the year.
    -   Shipments of proprietary scanner units grew to 55,000 in 2007,
        compared to 34,000 the prior year.
    -   Product announcements included the CaptureOne (tm) batch scanner
        which is co-branded with Epson Corporation, and a new version of ITMS
        Web Client.
    

    "A 39% increase in revenues and the second year in a row of record
earnings are a great testament to the employees of RDM who have worked with
great dedication and creativity over the past 12 months," said Douglas Newman,
President and CEO of RDM Corporation. "RDM continues to be one of the leaders
in remote deposit capture and we have established a great foundation for long
term growth. Industry estimates are that only 2% of U.S. businesses are using
RDC with the potential for 5 million seat deployments over the next five
years."
    Mr. Newman continued: "RDM is well positioned with our positive cash flow
and cash in the bank to take advantage of acquisition and consolidation
opportunities as they arise in our industry. We expect our revenue growth
rates to continue at the same pace as over the past two years. Over the next
year, gross margins may be impacted by fluctuation in the exchange rate
between the Canadian and U.S. dollar. At current exchange rates, gross margins
achieved are likely to be similar to those of Q4 2007."

    Financial Review

    RDM's revenues grew year-over-year by $9.6 million or 39% to
$33.9 million in fiscal 2007. As RDM generates virtually all of its revenues
in U.S. dollars, the Company was negatively impacted by the continued
strengthening of the Canadian dollar during 2007.
    The revenue increase was attributable to strong growth in the Digital
Imaging segment, which comprises both scanner sales and the ITMS transaction
revenue. Digital Imaging revenues grew by 69% to $28.7 million from
$17.0 million in 2006, driven by increasing adoption of remote deposit capture
services. The vast majority of Digital Imaging revenues were derived from
scanner sales, which increased to 54,000 units from 34,000 units in 2006.
Management anticipates continued volatility of units shipped on a quarterly
basis, but expects to see an upward trend in scanner sales over the longer
term.
    Revenues in the Electronic Payments Solutions segment, comprised of
custom development projects for government agencies and financial institution
customers, were $3.2 million in 2007 compared to $5.5 million the previous
year. The Quality Assurance segment, comprised of quality control products
sold to commercial check printers and processors, generated revenues of
2.0 million, compared to $1.8 million in 2006. Results in the two smaller
segments were in line with management expectations, and both segments made a
positive contribution to operating income.
    Gross profit grew by $3.5 million or 35% to $13.5 million in fiscal 2007.
Expressed as a percentage of revenue, gross margin was 40% in 2007 compared to
41% last year, with the change attributable to business mix.
    Sales and marketing expense increased 44% to $4.2 million, due to higher
investment in sales activities related to the rapidly growing Digital Imaging
segment, a focus on signing new ITMS banks, and marketing activities to
prepare for the introduction of a batch scanner. Research and development
expenses, net of investment tax credits, were unchanged at $3.0 million, as
the Company continued to invest in Digital Imaging new product development.
General and administration expenses increased 33% to $2.1 million as a result
of increased regulatory compliance requirements, staff recruiting, SAS 70
audit fees and insurance due to the growth of the Company.
    In 2007 RDM recorded a $2.7 million gain on sale of long term investment
related to the sale of its minority interest in Xign Corporation. The Company
recorded a $657,000 foreign exchange gain in 2007 compared to a $168,000 loss
the prior year. Income tax expense for the year was $1.2 million, compared to
a tax recovery of $784,000 in 2006. Net earnings of $5.8 million, or $0.26 per
share (fully diluted), represented significant growth compared to $2.1 million
or $0.10 per share in 2006.
    Operating activities provided $2.4 million of cash flow in 2007, compared
to $0.9 million in 2006. Investing activities provided $7.6 million of cash,
comprised primarily of proceeds from the sale of the Company's minority
interest in Xign Corporation. Cash and equivalents were $17.4 million at
September 30, 2007.

    Fourth Quarter Review

    RDM recorded revenues of $7.5 million in the three month period ended
September 30, 2007, an increase of 3.5% from $7.2 million in the fourth
quarter of 2006. (Revenue growth expressed in U.S. dollars was approximately
11%.) Gross margin was 39% in the quarter compared to 41% a year earlier.
Operating expenses were $2.0 million, compared to $2.1 million in Q4 2006.
    Net earnings were $636,000 or $0.03 per share in the fourth quarter of
2007, compared to $1.6 million or $0.08 per share in the comparable period of
last year. Q4 2007 earnings were positively impacted by the recognition of
$666,000 of federal investment tax credits as a reduction to R&D expense, (and
by a $215,000 exchange gain). In the fourth quarter of 2006 earnings were
positively impacted by the recognition of $264,000 of investment tax credits,
and by the recognition of an $850,000 future tax asset.

    Conference Call

    RDM will be hosting a conference call to discuss the Company's year-end
2007 financial results on November 26, 2007 at 9:00 a.m. EST. Dial-in numbers
are 416-644-3419 or 1-800-732-6179. A live audio webcast of the call will be
available at www.rdmcorp.com. Detailed financial results and management's
discussion and analysis 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)

    At September 30                                            2007     2006
    -------------------------------------------------------------------------
    Assets:

    Current assets:
      Cash and cash equivalents                             $17,418  $ 6,174
      Accounts receivable                                     6,365    5,743
      Other receivable                                          503        -
      Inventories                                             4,720    3,919
      Investment tax credit receivable                        1,451      623
      Future income tax asset                                     -      400
      Other                                                   1,843      266
    -------------------------------------------------------------------------
    Total current assets                                     32,300   17,125

    Long-term investment                                          -    6,379
    Furniture and equipment                                   2,011    1,727
    Intangible assets                                           235      196
    Future income tax asset                                       -      450
    -------------------------------------------------------------------------
    Total assets                                            $34,546  $25,877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity:

    Current liabilities:
      Accounts payable and accrued liabilities              $ 4,587  $ 3,607
      Future income tax liability                               210        -
      Deferred revenue                                          427      433
    -------------------------------------------------------------------------
    Total current liabilities                                 5,224    4,040

    Future income tax liability                                  32        -

    Commitments

    Shareholders' equity:
      Share capital                                          27,978   26,461
      Contributed surplus                                       927      781
      Retained earnings (Deficit)                               401   (5,356)
      Share purchase loans                                      (16)     (49)
    -------------------------------------------------------------------------
    Total shareholders' equity                               29,290   21,837

    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity              $34,546  $25,877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Years ended September 30                                   2007     2006
    -------------------------------------------------------------------------

    Revenue                                                 $33,922  $24,340
    Cost of revenue                                          20,374   14,339
    -------------------------------------------------------------------------
    Gross profit                                             13,548   10,001

    Operating expenses:
      Sales and marketing                                     4,210    2,930
      Research and development                                3,048    3,100
      General and administration                              2,058    1,542
      Depreciation and amortization                             690      911
      Stock-based compensation                                  421      273
      Foreign exchange loss (gain)                             (657)     168
      Gain on sale of long term investment                    2,707)       -
      Interest                                                 (441)    (195)
    -------------------------------------------------------------------------
                                                              6,622    8,729
    -------------------------------------------------------------------------

    Earnings before taxes                                     6,926    1,272

    Income taxes expense (recovery):
    Current                                                      77       66
    Future                                                    1,092     (850)
    -------------------------------------------------------------------------
                                                              1,169     (784)
    -------------------------------------------------------------------------
    Net earnings and comprehensive earnings                   5,757    2,056
    -------------------------------------------------------------------------

    Deficit, beginning of year                               (5,356)  (7,412)
    -------------------------------------------------------------------------

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

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share - basic                              $  0.27  $  0.10
                       - diluted                            $  0.26  $  0.10
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

    Years ended September 30                                   2007     2006
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operations:

    Net Earnings                                            $ 5,757  $ 2,056
    Items not involving cash:
      Amortization of furniture and equipment                   657      886
      Amortization of intangible assets                          33       25
      Stock based compensation                                  421      273
      Future income taxes                                     1,092     (850)
      Gain of sale of long term investment                   (2,707)       -
    Change in non-cash operating working capital             (2,871)  (1,477)
    -------------------------------------------------------------------------
    Cash provided by operations                               2,382      913

    Financing:

    Issuance of share capital                                 1,242      259
    Repayment of share purchase loans                            33       66

    -------------------------------------------------------------------------
    Cash provided by financing activities                     1,275      325

    Investing:

    Proceeds from sale of long term investment                8,600        -
    Purchase of furniture and equipment                        (941)    (420)
    Additions to intangible assets                              (72)    (110)

    -------------------------------------------------------------------------
    Cash provided by (used in) investing activities           7,587     (530)
    Increase in cash and cash equivalents                    11,244      708
    Cash and cash equivalents, beginning of year              6,174    5,466
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of year                  $17,418  $ 6,174
    -------------------------------------------------------------------------
    





For further information:

For further information: Jeff Codispodi, Investor Relations, The Equicom
Group Inc., (416) 815-0700 ext. 261 phone, (416) 815-0080 fax,
jcodispodi@equicomgroup.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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RDM Corporation

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