RDM Corporation reports second quarter results



    Toronto Stock Exchange Symbol: RC

    WATERLOO, ON, May 1 /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 March 31,
2009.

    
    Q2 2009 Highlights

    -   Total revenues were $5.8 million in the second quarter of fiscal
        2009, compared to $6.8 million in the second quarter of 2008.
    -   Payment Processing Services segment revenues, which are recurring in
        nature, were $2.6 million in Q2 2009, compared to $1.4 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, compared to 2.5 million items per week a year earlier, and
        3.3 million items per week during Q1 2009.
    -   ITMS(R) end user locations grew from 15,900 to 17,000 during the
        second quarter.
    -   RDM added three additional bank distributors and 12 new independent
        sales organizations (ISOs) during the quarter.
    -   Gross profit was $2.6 million or 45% of revenues, compared to
        $2.5 million or 37% of revenues in the second quarter of 2008.
    -   Net loss was $0.9 million or $0.04 per share (fully diluted) in Q2
        2009 which was due largely to a $0.6 million foreign exchange loss.
        This compares to a net loss of $0.3 million or $0.01 per share in Q2
        2008.
    -   Operating activities generated $252,000 of positive cash flow, while
        $652,000 of cash was used for capital expenditures and the repurchase
        of shares. Cash and equivalents at March 31, 2009 were $16.9 million,
        compared to $17.3 million at the end of the prior quarter.
    

    "I am encouraged by the continued momentum of our recurring revenue ITMS
business," said Douglas Newman, President and CEO of RDM Corporation. "Despite
the difficult economic environment, our average transaction volumes and total
end user locations are both up nearly 50% compared to the prior year. We
recently reached an important milestone by processing one million transactions
in a single day."
    Mr. Newman continued: "Overall results for the quarter were suppressed by
disappointing scanner sales caused by the economic downturn. We plan to be
prudent in managing our costs during this time of uncertainty, but our
priority is to position the Company to capitalize on the long-term remote
deposit capture opportunity, which I believe remains compelling."

    Financial Review

    RDM generated total revenues of $5.8 million in the three months ended
March 31, 2009, a decrease of $1.0 million from the second quarter of fiscal
2008. The strengthening of the U.S. dollar during the quarter resulted in a
$1.1 million favourable impact on reported revenues. Payment Processing
Services segment revenues increased by $1.2 million or 81% to $2.6 million,
driven by growth in ITMS transaction volumes and end users as well as the
change in currency exchange rates. Revenues in the Digital Imaging Products
segment decreased by $1.8 million to $2.4 million due to a reduction in
scanner shipments. The Electronic Payments Solutions segment and the Quality
Assurance segment, which represented a combined 13% of total revenues in the
second quarter, generated revenues of $0.5 million and $0.2 million,
respectively, compared to $0.8 million and $0.4 million, respectively, in the
second quarter of 2008.
    Gross profit increased to $2.6 million in the second quarter of 2009 from
$2.5 million in the comparable period of fiscal 2008. Expressed as a
percentage of revenues, gross margin was 45%, compared to 37% in the Q2 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 $1.2 million in the second quarter from $465,000 a year earlier. The
segment generated an operating loss of $162,000, compared to a loss of
$655,000 in Q2 2008. This improvement in operating earnings was realized even
as the Company invested an additional $248,000 in sales and marketing efforts
focused on signing new ITMS banks and ISO resellers.
    Total sales and marketing expense increased $70,000 to $1.2 million in Q2
2009, with efforts focused primarily on the rapidly growing Payment Processing
Services segment. Research and development expenses increased $149,000 to $1.1
million as the Company continued to invest in new product development. General
and administration expenses decreased $68,000 to $430,000.
    RDM recognized a $563,000 foreign exchange loss in the second quarter of
2009, an increase of $350,000 compared to the amount recognized a year
earlier. The foreign exchange loss was due to the impact of a shift in
exchange rates during the quarter on forward contracts held by the Company as
economic hedges, partially offset by a gain in U.S. denominated monetary
assets.
    Net loss was $865,000 in the second quarter of 2009, or $0.04 per share,
compared to a net loss of $269,000 or $0.01 per share a year earlier. RDM
repurchased 254,000 shares in the second quarter under its Normal Course
Issuer Bid. At March 31, 2009, the Company had 20.9 million common shares
outstanding.

    Conference Call

    RDM will be hosting a conference call to discuss the Company's second
quarter financial results on May 1, 2009 at 9:00 a.m. EDT. Dial-in numbers are
416-644-3419 or 1-800-731-6941. 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)

    -------------------------------------------------------------------------
                                                         March     September
                                                        31, 2009    30, 2008
                                                       Unaudited    Audited
    -------------------------------------------------------------------------
    Assets:

    Current assets:
      Cash and cash equivalents                        $  16,864   $  17,421
      Accounts receivable                                  4,811       4,929
      Inventories                                          5,313       6,325
      Investment tax credit receivable                     1,669       1,703
      Other                                                  817       1,087
    -------------------------------------------------------------------------
    Total current assets                                  29,474      31,465

    Furniture and equipment                                3,176       2,893
    Intangible assets                                        315         278
    -------------------------------------------------------------------------
    Total assets                                       $  32,965   $  34,636
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities and shareholders' equity:

    Current liabilities:
      Accounts payable and accrued liabilities         $   5,915   $   4,945
      Deferred revenue                                       624         631
    -------------------------------------------------------------------------
    Total current liabilities                              6,539       5,576

    Future income tax liability                              127         201

    Shareholders' equity:
      Share capital                                       28,005      28,338
      Contributed surplus                                  1,419       1,162
      Retained earnings (deficit)                         (3,125)       (641)
    -------------------------------------------------------------------------
    Total shareholders' equity                            26,299      28,859
    -------------------------------------------------------------------------
    Total liabilities and shareholders' equity         $  32,965   $  34,636
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                               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                   March
                                  2009        2008        2009        2008
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    -------------------------------------------------------------------------
    Revenue                    $   5,782   $   6,823   $  12,870   $  13,894
    Cost of revenue                3,209       4,286       7,341       8,700
    -------------------------------------------------------------------------
    Gross Profit                   2,573       2,537       5,529       5,194

    Operating expenses:
      Sales and marketing          1,221       1,151       2,646       2,295
      Research and development     1,094         945       2,165       1,959
      General and administration     430         498         916         887
      Depreciation and
       amortization                   62          61         122         116
      Stock-based compensation       113         136         257         257
      Foreign exchange loss
       (gain)                        563         213       2,011         284
      Interest Income                (45)       (128)       (104)       (331)
    -------------------------------------------------------------------------
                                   3,446       2,876       8,013       5,476
    -------------------------------------------------------------------------
    Earnings (loss) before
     income taxes                   (865)       (339)     (2,484)       (273)
    Future Income Tax expense
     (recovery)                        -         (70)          -           5
    -------------------------------------------------------------------------
    Net earnings (loss) and
     comprehensive earnings (loss)  (865)       (269)     (2,484)       (268)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings (loss) per share
     - basic and diluted       $   (0.04)  $   (0.01)  $   (0.12)  $   (0.01)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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

                                 Three months ended       Six months ended
                                       March                   March
                                  2009        2008        2009        2008
                              (Unaudited) (Unaudited) (Unaudited) (Unaudited)
    -------------------------------------------------------------------------
    Cash provided by (used in):

    Operations:
      Net earnings (loss)
      Items not involving
       cash:                   $    (865)  $    (269)  $  (2,484)  $    (268)
        Amortization of
         furniture and equipment     237         165         449         344
        Amortization of
         intangible assets            11          11          23          19
        Stock-based compensation     113         136         257         257
        Future income taxes            -         (70)        (74)         (5)
      Change in non-cash
       operating working capital     756         489       2,397       1,173
    -------------------------------------------------------------------------
    Cash provided by (used in)
     operations                      252         462         568       1,520

    Financing:
      Issuance of share capital;
       net of issue costs              -         321           -         321
      Repayment of share
       purchase loans                  -           8           -          16
    -------------------------------------------------------------------------
    Cash provided by financing
     activities                        -         329           -         337

    Investing:
      Repurchase of share capital   (173)          -        (333)          -
      Purchase of furniture and
       equipment                    (458)       (883)       (732)     (1,367)
      Additions to intangible
       assets                        (21)        (56)        (60)        (58)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                     (652)       (939)     (1,125)     (1,425)

    Increase (decrease) in cash
     and cash equivalents           (400)       (148)       (557)        432
    Cash and cash equivalents,
     beginning of period          17,264      17,998      17,421      17,418
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period             $  16,864   $  17,850   $  16,864   $  17,850
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    





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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