RDM Corporation Reports Second Quarter Financial Results

Toronto Stock Exchange Symbol: RC

WATERLOO, ON, April 30 /CNW/ - RDM Corporation (TSX: RC), a leading developer of specialized software and hardware products for electronic payment processing, today reported its financial results for the three month period ended March 31, 2010.

"In the second quarter we made progress on all of our key metrics - including scanner sales, ITMS end user locations, and number of channel partners - but our overall financial results were suppressed by the impact of shifting exchange rates," said Douglas Newman, President and CEO of RDM Corporation. "We are focused on achieving the right balance between managing short-term costs and ensuring we are well positioned to capitalize on what I continue to believe is a significant long-term opportunity in the remote deposit capture space."

    
    Q2 2010 Highlights

    -   Total revenues were $5.2 million in the second quarter of fiscal
        2010, compared to $5.8 million in the second quarter of 2009.
    -   Payment Processing Services segment revenues, which are recurring in
        nature, were $2.3 million in Q2 2010, compared to $2.6 million a year
        earlier.
    -   Transaction volumes for RDM's Image & Transaction Management System
        (ITMS(R)) averaged 3.6 million items per week during the second
        quarter, comparable to the Q2 2009 volumes, and up from 3.5 million
        items per week in the first quarter of 2010.
    -   ITMS end user locations increased from 18,100 to 18,500 during the
        second quarter.
    -   RDM added four additional bank distributors and three new independent
        sales organizations (ISOs) during the quarter.
    -   The Company shipped 7,500 proprietary scanners in the second quarter,
        compared to 4,200 a year earlier.
    -   Gross profit was $1.9 million or 37% of revenues, compared to $2.6
        million or 45% of revenues in the second quarter of 2009.
    -   Net loss was $0.9 million or $0.04 per share in Q2 2010, consistent
        with the second quarter of last year. The Q2 2010 net loss included a
        $0.4 million restructuring charge.
    -   Cash and equivalents were $16.1 million at March 31, 2010, compared
        to $16.2 million at December 31, 2009.
    -   In April, the company announced a new generation of document
        scanners. RDM Connect(TM) offers, in an affordable compact check
        scanner, all of the features and sophistication of an expensive large
        batch check scanner.


    Financial Review

    Operating Results by Segment
    For the Three Months Ended March 31, 2010

      (In thousands     Payment     Digital   Electronic
       of Canadian   Processing     Imaging      Payment    Quality
       dollars)        Services    Products    Solutions  Assurance    Total
                  -----------------------------------------------------------
      Revenue            $2,319      $2,583          $87       $258   $5,247
      Gross profit         $952        $753          $21       $187   $1,913
      Gross profit
       percentage           41%         29%          24%        72%      37%


    Operating Results by Segment
    For the Three Months Ended March 31, 2009

      (In thousands     Payment     Digital   Electronic
       of Canadian   Processing     Imaging      Payment    Quality
       dollars)        Services    Products    Solutions  Assurance    Total
                  -----------------------------------------------------------
      Revenue            $2,596      $2,435         $522       $229   $5,782
      Gross profit       $1,233        $926         $262       $152   $2,573
      Gross profit
       percentage           48%         38%          50%        66%      45%
    

RDM generated total revenues of $5.2 million in the three months ended March 31, 2010, a decrease of $0.5 million from the second quarter of the previous year. The majority of the decrease was attributable to a $1.0 million impact from a shift in currency exchange rates over the past year, partially offset by an increase in scanner sales.

Payment Processing Services segment revenues of $2.3 million represented a decrease of $277,000 from a year earlier, as the positive impact of growth in ITMS end user locations was offset by the effect of exchange rates. Revenues in the Digital Imaging Products segment increased $148,000 to $2.6 million, driven by an increase in scanner sales, and in particular by sales of the EC7500(R) scanner. The Electronic Payments Solutions segment and the Quality Assurance segment, which represented a combined 7% of total revenues for the quarter, generated revenues of $87,000 and $258,000, respectively, compared to $522,000 and $229,000, respectively, in Q2 2009.

Gross profit of $1.9 million in Q2 2010 was down from $2.6 million in the second quarter of the previous year. Expressed as a percentage of revenues, the overall gross margin was 37%, compared to 45% a year earlier. Decreased margins were due to the impact of exchange rates.

Sales and marketing expense was $0.9 million in Q2 2010, a decrease of $0.3 million or 24% from the previous year when the Company made a significant investment in signing new channel partners and launching Simply Deposit(TM). Research and development expenses increased 10% to $1.2 million as the Company continued to invest in new product development including the RDM Connect(TM) scanner and new ITMS functionality such as accounts receivable integration. General and administration expenses increased 6% to $456,000.

Net loss was $0.9 million in the second quarter of 2010, or $0.04 per share, compared to a net loss of $0.9 million or $0.04 per share a year earlier. The Q2 2010 results include a $0.4 million restructuring charge incurred due to staffing reductions made during the quarter. Foreign exchange represented a gain of $288,000 in the second quarter of 2010 compared to a loss of $563,000 in Q2 2009.

RDM repurchased 17,000 shares during the second quarter under its Normal Course Issuer Bid. At March 31, 2010, the Company had 20.75 million common shares outstanding.

Conference Call

RDM will be hosting a conference call to discuss the Company's second quarter results on April 30, 2010 at 9:00 a.m. EDT. Dial-in numbers are 647-427-7450 or 1-888-231-8191. 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 more 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)

    -------------------------------------------------------------------------
                                                    March 31,   September 30,
                                                        2010            2009
                                                   Unaudited         Audited
    -------------------------------------------------------------------------
    Assets:

    Current assets:
      Cash and cash equivalents                     $ 16,047        $ 15,718
      Accounts receivable                              4,315           4,123
      Inventories                                      3,066           3,409
      Investment tax credit receivable                 1,402           1,770
      Other                                            2,019           2,039
    -------------------------------------------------------------------------
    Total current assets                              26,849          27,059

    Furniture and equipment                            3,521           3,275
    Intangible assets                                    351             288
    -------------------------------------------------------------------------
    Total assets                                    $ 30,721        $ 30,622
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity:

    Current liabilities:
      Accounts payable and accrued liabilities      $  4,526        $  3,062
      Deferred revenue                                   440             498
    -------------------------------------------------------------------------
    Total current liabilities                          4,966           3,560
    -------------------------------------------------------------------------

    Future income tax liability                          201             201

    Shareholders' equity:
      Share capital                                   27,596          27,639
      Contributed surplus                              2,019           1,886
      Retained earnings (deficit)                     (4,061)         (2,664)
    -------------------------------------------------------------------------
    Total shareholders' equity                        25,554          26,861
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity      $ 30,721        $ 30,622
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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


                                  Three months ended        Six months ended
                                         March                   March
                                    2010        2009        2010        2009
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    -------------------------------------------------------------------------
    Revenue                    $   5,247   $   5,782   $  10,950   $  12,870
    Cost of revenue                3,334       3,209       6,780       7,341
    -------------------------------------------------------------------------
    Gross Profit                   1,913       2,573       4,170       5,529

    Operating expenses
     (income):
      Sales and marketing            928       1,221       1,997       2,646
      Research and development     1,208       1,094       2,390       2,165
      General and administration     456         430       1,010         916
      Depreciation and
       amortization                   49          62          96         122
      Stock-based compensation        58         113         133         257
      Foreign exchange loss
       (gain)                       (288)        563        (460)      2,011
      Interest Income                 (9)        (45)        (18)       (104)
      Restructuring                  419           -         419           -
    -------------------------------------------------------------------------
                                   2,821       3,446       5,567       8,013
    -------------------------------------------------------------------------
    Loss before income taxes        (908)       (865)     (1,397)     (2,484)

    Income Tax expense                 -           -           -           -
    -------------------------------------------------------------------------
    Net loss and
     comprehensive loss             (908)       (865)     (1,397)     (2,484)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net loss per share
     - basic and diluted         $ (0.04)    $ (0.04)    $ (0.07)    $ (0.12)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                               RDM CORPORATION
                      Statement of Shareholder's Equity
                 (Amounts in Canadian Dollars, In Thousands)

    -------------------------------------------------------------------------
                                                       Retained
                                Share  Contributed     earnings
                              capital      surplus     (deficit)       Total
    -------------------------------------------------------------------------
    Balance as at
     September 30, 2008      $ 28,338     $  1,162     $   (641)    $ 28,859

    Net loss and
     comprehensive loss             -            -       (2,484)      (2,484)
    Repurchase of share
     capital                        -          257            -          257
    Stock-based compensation        -            -            -            -
    -------------------------------------------------------------------------
    Balance as at
     March 31, 2009          $ 28,005     $  1,419     $ (3,125)    $ 26,299
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Balance as at
     September 30, 2009      $ 27,639     $  1,886     $ (2,664)    $ 26,861

    Net loss and
     comprehensive loss             -            -       (1,397)      (1,397)
    Repurchase of share
     capital                      (43)           -            -          (43)
    Stock-based compensation        -          133            -          133
    -------------------------------------------------------------------------
    Balance as at
     March 31, 2010          $ 27,596     $  2,019     $ (4,061)    $ 25,554
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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


                                  Three months ended        Six months ended
                                         March                   March
                                    2010        2009        2010        2009
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    -------------------------------------------------------------------------

    Cash provided by (used in):

    Operations:
    Net loss
    Items not involving cash:  $    (908)  $    (865)  $  (1,397)  $  (2,484)
      Amortization of
       furniture and
       equipment                     259         237         538         449
      Amortization of
       intangible assets               9          11          17          23
      Stock-based compensation        58         113         133         257
      Future income taxes              -           -           -         (74)
    Change in non-cash
     operating working capital       673         756       1,945       2,397
    -------------------------------------------------------------------------
    Cash provided by
     operations                       91         252       1,236         568

    Investing:
      Repurchase of share
       capital                       (15)       (173)        (43)       (333)
      Purchase of furniture
       and equipment                (140)       (458)       (784)       (732)
      Additions to intangible
       assets                        (40)        (21)        (80)        (60)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                     (195)       (652)       (907)     (1,125)

    Increase (decrease)
     in cash and cash
     equivalents                    (104)       (400)        329        (557)
    Cash and cash
     equivalents,
     beginning of period          16,151      17,264      15,718      17,421
    -------------------------------------------------------------------------
    Cash and cash
     equivalents,
     end of period              $ 16,047    $ 16,864    $ 16,047    $ 16,864
    -------------------------------------------------------------------------

    Supplementary cash
     flow information:
      Non-cash furniture
      and equipment additions
      included in accounts
      payable                   $    587    $      -    $      -    $      -
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

SOURCE RDM Corporation

For further information: For further information: Douglas Newman, President and CEO, RDM Corporation, (519) 746-8483, 340 Office, (519) 746-3317 Fax, DNewman@rdmcorp.com; James Merwin, CFO & Vice President, Corporate Development, RDM Corporation, (519) 746-8483, 284 Office, (519) 746-3317 Fax, JMerwin@RDMCorp.com

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