RDM Corporation reports second quarter results



    Toronto Stock Exchange Symbol: RC

    - 34% revenue growth drives 182% increase in net earnings -

    WATERLOO, ON, April 27 /CNW/ - RDM Corporation (TSX: RC), a leading
provider of specialized software and hardware products for electronic payment
processing, today reported its financial results for the three month period
ended March 31, 2007.

    
    Q2 2007 Highlights

    -   Total revenues were $7.9 million in the second quarter of fiscal
        2007, an increase of 34% from $5.9 million in Q2 2006.
    -   The Digital Imaging segment, which represented over 80% of revenues,
        grew by $2.7 million in the second quarter to $6.5 million of
        revenues.
    -   Transaction volumes for RDM's Image & Transaction Management System
        (ITMS) averaged 1,271,000 items per week during the second quarter,
        compared to 618,000 items per week a year earlier, and
        995,000 items per week in Q1 2007.
    -   ITMS end user locations increased from 4,100 to 5,100 during the
        second quarter of 2007.
    -   Gross profit was $3.4 million or 43% of revenues in the second
        quarter, compared to $2.6 million or 44% of revenues a year earlier.
    -   Net earnings were $587,000 or $0.03 per share, compared to $208,000
        or $0.01 per share in the previous year's second quarter.

    Subsequent Events

    -   Subsequent to quarter-end, RDM announced Capture One, which was
        jointly developed with Epson Corporation. Capture One is a batch
        scanner and is designed for the emerging eCheck market which includes
        Remote Deposit Capture (ARC, BOC, Check 21, and Image Exchange) and
        Branch Automation. Capture One is powered by RDM's MICR Imaging and
        processing technologies.
    -   The Company also announced that its RDM SYNERGY all-in-one POS
        payment solution will be distributed as part of the Back Office
        Capture solution by ProfitStars, a division of Jack Henry &
        Associates Inc., and that it had received Class B certification from
        Chase Paymentech which opens new distribution channels for RDM
        SYNERGY.
    -   Also subsequent to the quarter, RDM announced that the shareholders
        and Board of Directors of Xign Corporation have signed an agreement
        to sell Xign. Upon completion of the transaction RDM expects cash
        proceeds of at least $9.0 million. The sale of RDM's minority
        interest in Xign is expected to result in a one-time gain of $0.12 to
        $0.18 per share, and will enable the Company to redeploy capital to
        growth opportunities.
    

    "We recorded solid growth in the second quarter, particularly in our core
Digital Imaging segment," said Douglas Newman, President and CEO of RDM
Corporation. "Scanner shipments remained strong during the quarter, however,
as expected, did not equal our first quarter's exceptionally high shipment
volumes which contained an unusually large backlog from the previous quarter.
ITMS processing volumes continue to grow significantly and we are in the midst
of executing contracts to enable two additional banks to use ITMS as their
remote deposit solution. We are also excited about the potential for the
recent hardware product announcements to favourably impact our sales in future
periods."

    Financial Review

    RDM's revenues of $7.9 million in the three months ending March 31, 2007
represented growth of $2.0 million or 34% over the same period of 2006. The
increase was attributable to growth in the Digital Imaging segment, which
encompasses both scanner sales and the ITMS transaction revenue. Digital
Imaging revenues grew by $2.7 million or 71% from a year earlier, driven by
increasing adoption of remote deposit capture services. On a year-to-date
basis, total revenues were $19.6 million in the first six months of fiscal
2007, compared to $10.9 million in the comparable period of 2006.
    As disclosed in the Company's first quarter 2007 materials, scanner
production levels were elevated in the first quarter as the Company worked
through an order backlog that had built up as a result of strong demand. The
Company shipped 20,000 scanners in the first quarter, of which 5,000 were
attributable to orders not filled in the prior quarter. Second quarter 2007
scanner volume of 12,000 units are more representative of the current period's
demand, and compares to 8,000 units a year earlier.
    Revenues in the Electronic Payments Solutions segment, comprised of
custom development projects for government agencies and financial institution
customers, were $775,000 in the quarter compared to $1.6 million a year
earlier. The Quality Assurance segment, comprised of quality control products
sold to commercial check printers and processors, generated revenues of
$594,000, compared to $502,000 in Q2 2006. Results in the two smaller segments
were in line with management expectations, and both segments made a positive
contribution to operating income in the quarter.
    Gross profit grew by $0.7 million or 28% to $3.4 million. Expressed as a
percentage of revenue, gross margin declined from 44% to 43% due to changes in
the business mix.
    Sales and marketing expense grew 42% to $901,000 in Q2 2007 as a result
of increased sales efforts and activities associated with the Company's
rapidly growing Digital Imaging segment. While revenues have grown
significantly, costs have been well managed and the Company recorded modest
year-over-year decreases in general and administration, research and
development, and depreciation and amortization expenses. Interest and other
income improved by $85,000 primarily due to higher cash balances and better
interest rates. Total operating expenses increased only marginally to
$2.5 million from $2.4 million a year earlier.
    RDM's earnings from operations grew to $887,000 in the second quarter of
2007, from $208,000 in Q2 2006. The Company recognized a $300,000 income tax
expense in the quarter, compared to no tax expense in the same period of 2006.
Net earnings of $587,000, or $0.03 per share, represented 182% growth compared
to $208,000 or $0.01 per share in the second quarter of 2006.
    Operating activities generated $1.3 million of cash flow in the quarter,
compared to $1.8 million in Q2 2006. Cash and equivalents increased
$1.1 million during the quarter to $10.1 million. This balance does not
include the impact of the sale of the Company's minority interest in Xign
Corporation, which was announced April 18, 2007 and is expected to contribute
approximately $9.0 million of cash proceeds by the end of RDM's current fiscal
year.

    Conference Call

    RDM will be hosting a conference call to discuss the Company's second
quarter 2007 financial results on April 27, 2007 at 9:00 a.m. EDT. Dial-in
numbers are 416-644-3419 or 1-800-731-6941. A live audio webcast of the call
will be available at www.rdmcorp.com. Detailed financial results and MD&A will
be available at www.sedar.com by April 30, 2007.

    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)

                                                   March 31,    September 30,
                                                       2007             2006
                                                 (Unaudited)        (Audited)
    -------------------------------------------------------------------------
    Assets:

    Current assets:
      Cash and cash equivalents                    $ 10,062         $  6,174
      Accounts receivable                             5,125            5,743
      Inventories                                     4,792            3,919
      Investment tax credit receivable                  713              623
      Future income tax asset                           342              400
      Other                                             233              266
    -------------------------------------------------------------------------
    Total current assets                             21,267           17,125

    Long-term investment                              6,379            6,379
    Furniture and equipment                           2,053            1,923
    Future income tax asset                               -              450
    -------------------------------------------------------------------------
    Total assets                                   $ 29,699         $ 25,877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity:

    Current liabilities:
      Accounts payable and accrued liabilities     $  4,176         $  3,607
      Deferred revenue                                  489              433
    -------------------------------------------------------------------------
    Total current liabilities                         4,665            4,040


    Shareholders' equity:
      Share capital                                  27,524           26,461
      Contributed surplus                             1,018              781
      Deficit                                        (3,475)          (5,356)
      Share purchase loans                              (33)             (49)
    -------------------------------------------------------------------------
    Total shareholders' equity                       25,034           21,837
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity     $ 29,699         $ 25,877
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                 Three months ended        Six months ended
                                       March 31                March 31
                                   2007        2006        2007        2006
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    -------------------------------------------------------------------------
    Revenue                     $  7,882    $  5,897    $ 19,628    $ 10,907
    Cost of revenue                4,520       3,278      11,797       6,330
    -------------------------------------------------------------------------
    Gross Profit                   3,362       2,619       7,831       4,577

    Operating expenses:
      Sales and marketing            901         636       1,902       1,260
      Research and development       942       1,021       1,910       1,854
      General and
       administration                496         518       1,009         795
      Depreciation and
       amortization                  177         221         339         434
      Stock-based compensation        95          66         170         116
      Interest and other            (136)        (51)        112         (80)
    -------------------------------------------------------------------------
                                   2,475       2,411       5,442       4,379
    -------------------------------------------------------------------------
    Earnings from operations         887         208       2,389         198
    Current income taxes             300           -         508           -
    -------------------------------------------------------------------------
    Net earnings (loss)         $    587    $    208    $  1,881    $    198
    Deficit, beginning
     of period                  $  4,062    $ (7,422)   $ (5,356)   $ (7,412)
    -------------------------------------------------------------------------
    Deficit, end of period      $  3,475    $ (7,214)   $  3,475    $ (7,214)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share -
     basic and diluted          $   0.03    $   0.01    $   0.09    $   0.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                 Three months ended        Six months ended
                                       March 31                March 31
                                   2007        2006        2007        2006
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operations:

    Net earnings                $    587    $    208    $  1,881    $    198
    Items not involving cash:
      Amortization                   177         221         339         434
      Stock-based compensation        95          66         170         116
      Future income taxes            300           -         508
    Change in non-cash operating
     working capital                  88       1,288         313          73
    -------------------------------------------------------------------------
    Cash provided by operations    1,247       1,783       3,211         821

    Financing:

    Issuance of share capital,
     net of issue costs              166         190       1,130         210
    Repayment of share purchase
     loans                             8          25          16          36
    -------------------------------------------------------------------------
    Cash provided by financing
     activities                      174         215       1,146         246

    Investing:

    Purchase of furniture
     and equipment                  (272)        (98)       (469)       (228)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                     (272)        (98)       (469)       (228)

    Increase in cash               1,149       1,900       3,888         839
    Cash and cash equivalents,
     beginning of period           8,913       4,405       6,174       5,466
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period              $ 10,062    $  6,305    $ 10,062    $  6,305
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





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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