The DATA Group Income Fund announces first quarter results for 2009



    
    HIGHLIGHTS
    ----------

    Q1 2009
    -------
    -   First quarter ("Q1") 2009 Revenues of $90.4 million, Q1 Gross Profit
        of $23.1 million, Q1 Net Income of $2.8 million
    -   Q1 Cash Available for Distribution of $6.2 million or $0.264 per unit
        and Cash Distributions of $6.8 million or $0.290 per unit (see
        Table 4 and "Non-GAAP Measures" below)
    -   Q1 Payout Ratio of 109.9% (See Table 4 below)
    -   Q1 Adjusted EBITDA of $9.1 million (See Table 3 and "Non-GAAP
        Measures" below)
    -   On February 12, 2009, disposed of our Hemmingford, Québec property
        for gross proceeds of $0.7 million
    

    BRAMPTON, ON, May 7 /CNW/ - The DATA Group Income Fund (TSX: DGI.UN)
("the Fund") today announced financial and operating results for the first
quarter ended March 31, 2009.
    The Fund owns directly and indirectly all of the outstanding partnership
units of The Data Group Limited Partnership (the "Data Group") and all of the
outstanding shares of the Data Group's general partner, Data Business Forms
Limited.
    The Data Group is a leading provider of total document management
solutions, including printed products, and operates as three segments. DATA
East and West (which provided approximately 90% of total revenues for the
first quarter of 2009) sells a broad range of printed products and document
management services directly to end users. Sundog (which provided
approximately 6% of total revenues for the first quarter of 2009) is a
commercial printer specializing in the production of high-quality annual
reports, marketing materials and event tickets. Multiple Pakfold (which
provided approximately 4% of total revenues for the first quarter of 2009)
sells forms and labels to independent brokers and resellers.

    FORWARD-LOOKING STATEMENTS

    Certain statements in this press release constitute "forward-looking"
statements that involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance, objectives or
achievements of the Fund and/or the Data Group, or industry results, to be
materially different from any future results, performance, objectives or
achievements expressed or implied by such forward-looking statements. When
used in this press release, words such as "may", "would", "could", "will",
"expect", "anticipate", "estimate", "believe", "intend", "plan", and other
similar expressions are intended to identify forward-looking statements. These
statements reflect the Fund's current views regarding future events and
operating performance, are based on information currently available to the
Fund, and speak only as of the date of this press release. These
forward-looking statements involve a number of risks, uncertainties and
assumptions and should not be read as guarantees of future performance or
results, and will not necessarily be accurate indications of whether or not
such performance or results will be achieved. Many factors could cause the
actual results, performance or achievements of the Fund and the Data Group to
be materially different from any future results, performance or achievements
that may be expressed or implied by such forward-looking statements. The
principal assumptions and risks that the Fund made or took into account in the
preparation of these forward-looking statements include the impact of the
current uncertainty in domestic and global economic conditions on the Data
Group's businesses; the Data Group's ability to grow its sales or even
maintain historical levels of its sales of product and services including
printed business documents; increases in the costs of paper and other raw
materials used by the Data Group; the Data Group's ability to maintain
relationships with its customers; the accuracy of estimated synergies in
respect of expected cash flows, cost savings and profitability from the
combination of the former Data Business Forms Limited and Relizon Canada Inc.
("Relizon Canada") businesses; the risk that any savings, growth prospects or
other synergies from the combination of those businesses will not be fully
realized or will take longer to realize than expected; competition from
competitors supplying similar products and services; and the application of
recent changes to the income tax treatment of certain income trusts, such as
the Fund, which will subject the Fund to tax commencing in 2011 (assuming the
Fund complies with the "normal growth guidelines" contained in such changes),
and the effect of those proposed changes on the trading price of the Fund's
units. Additional factors are discussed elsewhere in this press release and
under the heading "Risks and Uncertainties" in the Fund's management's
discussion and analysis ("MD&A") and in the Fund's other publicly available
disclosure documents, as filed by the Fund on SEDAR (www.sedar.com). Should
one or more of these risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements prove incorrect, actual results may
vary materially from those described in this press release as intended,
planned, anticipated, believed, estimated or expected. Unless required by
applicable securities law, the Fund does not intend and does not assume any
obligation to update these forward-looking statements.

    NON-GAAP MEASURES

    This press release includes certain non-GAAP measures as supplementary
information. When used in this press release, EBITDA means earnings before
interest, taxes, depreciation and amortization, and Adjusted EBITDA for the
three months ended March 31, 2009 means EBITDA adjusted for gains on
cancellation of convertible debentures. The Fund believes that, in addition to
net income (loss), EBITDA and Adjusted EBITDA are useful supplemental measures
in evaluating the performance of the Data Group and/or the Fund. Cash
available for distribution means cash provided by (used in) operating
activities increased by, or reduced for, maintenance capital expenditures,
purchases of convertible debentures, changes in non-cash working capital and
other non-cash items. Specifically, the Fund views cash available for
distribution as a measure generally used by Canadian income funds, investors
and management as an indicator of financial performance. EBITDA, Adjusted
EBITDA and cash available for distribution are not earnings or cash flow
measures recognized by Canadian generally accepted accounting principles
("GAAP") and do not have any standardized meanings prescribed by GAAP.
Therefore, EBITDA, Adjusted EBITDA and cash available for distribution are
unlikely to be comparable to similar measures presented by other issuers.
    Investors are cautioned that EBITDA and Adjusted EBITDA should not be
construed as an alternative to net income (loss) determined in accordance with
GAAP as indicators of the Data Group's or the Fund's performance, nor is cash
available for distribution an alternative to cash flows from operating,
investing and financing activities determined in accordance with GAAP as
measures of liquidity and cash flows. For a reconciliation of net income to
Adjusted EBITDA, see Table 3 below. For a reconciliation of cash provided by
operating activities to cash available for distribution, see Table 4 below.

    
    Table 1   The following table sets out selected historical financial
              information for the periods noted.

    Consolidated Financial Information
    -------------------------------------------------------------------------
    For the periods ended March 31,                   Jan, 1 to     Jan 1 to
     2009 and 2008                                    March 31      March 31
    (in thousands of dollars, except                    2009          2008
     per unit amounts, unaudited)                         $             $
    -------------------------------------------------------------------------
    Revenues                                            90,417       101,026
    Cost of revenues                                    67,275        72,639
    -------------------------------------------------------------------------
    Gross profit                                        23,142        28,387

    Selling, general and administrative expenses        15,928        18,254
    Gain on cancellation of convertible debentures          (2)            -
    Amortization of intangible assets                    2,649          2744
    -------------------------------------------------------------------------
    Income before interest and income taxes              4,567         7,389
    -------------------------------------------------------------------------

    Interest expense on long-term debt                   1,436         1,598
    -------------------------------------------------------------------------
    Income before income taxes                           3,131         5,791
    -------------------------------------------------------------------------

    Future income tax expense                              334           200
    -------------------------------------------------------------------------
    Net income for the period                            2,797         5,591
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted income per unit                     0.12          0.24
    Number of units outstanding                     23,490,592    23,490,592

    Consolidated Balance Sheet Information
    Current assets                                     113,537       114,477
    Current liabilities                                 49,466        50,600

    Total assets                                       345,507       374,770
    Total long-term liabilities                        128,451       127,251

    Unitholders' equity                                167,590       196,919
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Table 2   The following table sets out selected historical financial
              information by business segment for the periods noted.

    Consolidated Financial Information
    -------------------------------------------------------------------------
    For the periods ended March 31                    Jan 1 to      Jan 1 to
     2009 and 2008                                    Mar. 31,      Mar. 31,
    (in thousands of dollars, except                    2009          2008
     percentage amounts, unaudited)                       $             $
    -------------------------------------------------------------------------

    Revenues
      DATA East and West                                82,381        91,579
      Sundog                                             5,331         6,478
      Multiple Pakfold                                   3,710         4,045
      Intersegment                                      (1,005)       (1,076)
    -------------------------------------------------------------------------
                                                        90,417       101,026
    -------------------------------------------------------------------------

    Gross profit
      DATA East and West                                21,228        26,048
      Sundog                                             1,478         1,932
      Multiple Pakfold                                     436           407
    -------------------------------------------------------------------------
                                                        23,142        28,387
    -------------------------------------------------------------------------

    Gross profit, as a percentage of revenues
      DATA East and West                                 25.8%         28.4%
      Sundog                                             27.7%         29.8%
      Multiple Pakfold                                   11.8%         10.1%
    -------------------------------------------------------------------------
                                                         25.6%         28.1%
    -------------------------------------------------------------------------

    Selling, general and administrative expenses        15,928        18,254
    -------------------------------------------------------------------------
    As a percentage of revenues                          17.6%         18.1%
    -------------------------------------------------------------------------

    Adjusted EBITDA (see Table 3)                        9,096        12,204
    -------------------------------------------------------------------------
    Adjusted EBITDA margin, as a percentage of
     revenues                                            10.1%         12.1%
    -------------------------------------------------------------------------

    Net income                                           2,797         5,591
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Table 3   The following table provides a reconciliation of net income to
              Adjusted EBITDA for the periods noted. See "Non-GAAP Measures".

    Adjusted EBITDA Reconciliation
    -------------------------------------------------------------------------
    For the periods ended March 31,                   Jan. 1 to     Jan. 1 to
     2009 and 2008                                    Mar. 31,      Mar. 31,
    (in thousands of dollars, unaudited)                2009          2008
                                                          $             $
    -------------------------------------------------------------------------
    Net income for the period                            2,797         5,591
    -------------------------------------------------------------------------
    Net interest expense on long-term debt               1,436         1,598
    Depreciation of property, plant and equipment        1,882         2,071
    Gain on cancellation of convertible debentures          (2)            -
    Amortization of intangible assets                    2,649         2,744
    Future income tax expense                              334           200
    -------------------------------------------------------------------------
    Adjusted EBITDA                                      9,096        12,204
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    


    RESULTS OF OPERATIONS

    THE DATA GROUP INCOME FUND

    Revenues

    For the quarter ended March 31, 2009, the Fund recorded revenues of $90.4
million, a decrease of $10.6 million or 10.5% compared with the same period in
2008. The decrease, before intersegment revenues, was the result of a $9.2
million decrease in the Data East and West segment, a $1.1 million decrease in
the Sundog segment and $0.3 million decrease in the Multiple Pakfold segment.
A more detailed discussion of the results of operations of each of the Fund's
reporting segments is set out below.

    Cost of Revenues and Gross Profit

    For the quarter ended March 31, 2009, cost of revenues decreased to $67.3
million from $72.6 million for the same period in 2008. Gross profit for the
quarter ended March 31, 2009 was $23.1 million, which represented a decrease
of $5.3 million or 18.5% from $28.4 million for the same period in 2008. The
net decrease in gross profit was attributable to a $4.8 million decrease in
the DATA East and West segment and a $0.5 million decrease in the Sundog
segment. Gross profit as a percentage of revenues decreased to 25.6% for the
quarter ended March 31, 2009 compared to 28.1% for the same period in 2008.
The net decrease in gross profit for 2009 resulted from gross profit decreases
in the DATA East and West and Sundog segments offset by an improvement in
gross profit in the Multiple Pakfold segment.

    Selling, General and Administrative Expenses

    Selling, general and administrative ("SG&A") expenses, including
administrative expenses of the Fund, for the quarter ended March 31, 2009
decreased $2.3 million to $15.9 million compared to $18.3 million in the same
period of 2008. SG&A expenses for the three months ended March 31, 2009
decreased as the result of the Data Group's on-going productivity improvements
initiatives. As a percentage of revenues, these costs were 17.6% of revenues
for the quarter ended March 31, 2009 compared to 18.1% of revenues for the
same period in 2008.

    Asset sale

    During the quarter ended March 31, 2009, the Data Group completed the
sale of its Hemmingford, Québec property, for gross proceeds of $0.7 million
and recorded a pre-tax gain on disposal of $0.1 million.

    Adjusted EBITDA

    For the quarter ended March 31, 2009, Adjusted EBITDA was $9.1 million,
or 10.1% of revenues. Adjusted EBITDA for the quarter ended March 31, 2009
decreased $3.1 million or 25.5% from the same period in the prior year and the
Adjusted EBITDA margin for the quarter, as a percentage of revenues, decreased
from 12.1% of revenues in 2008 to 10.1% of revenues in 2009.

    Interest Expense

    Net interest expense on long-term debt relating to the Data Group's
credit facilities and the Fund's $34.8 million aggregate principal amount of
outstanding Convertible Debentures was $1.5 million for the quarter ended
March 31, 2009 compared to $1.6 million for the same period in 2008.

    Income Taxes

    The Fund reported income before income taxes of $3.1 million and a future
income tax expense of $0.3 million for the quarter ended March 31, 2009. The
future income tax expense was due to a change in estimates of future reversals
of temporary differences and changes to substantively enacted income tax
rates. The Fund reported income before income taxes of $5.8 million and a
future income tax expense of $0.2 million for the quarter ended March 31,
2008. The future income tax expense was due to a change in estimates of future
reversals of temporary differences.

    Net Income

    Net income for the quarter ended March 31, 2009 was $2.8 million compared
to a net income of $5.6 million for the quarter ended March 31, 2008. The
decrease in comparable profitability was due to the factors discussed above.

    DATA EAST AND WEST

    Revenues at the Data Group's DATA East and West segment for the three
months ended March 31, 2009 decreased $9.2 million or 10.0% to $82.4 million
from $91.6 million for the same period in the prior year.
    Revenues for the three months ended March 31, 2009 decreased due to a
significant decline in revenues in Eastern Canada due to lower spending from
customers in the financial, government and direct mail industries as a result
of general poor economic conditions.
    For the quarter ended March 31, 2009, gross profit decreased $4.8 million
to $21.2 million from $26.0 million for the same period in 2008. Gross profit
as a percentage of revenues for the quarter ended March 31, 2009 decreased to
25.8% from 28.4% for the same period in 2008. The decrease in gross profit as
a percentage of revenues during the quarter ended March 31, 2009 was due to
lower revenues as discussed above. This segment continues to be focused upon
improving productivity and efficiencies in the operation of its equipment.

    SUNDOG

    Revenues at the Data Group's Sundog segment for the quarter ended March
31, 2009 decreased $1.1 million to $5.3 million from $6.5 million in 2008. The
decrease in revenues for the three months ended March 31, 2009 was a result of
continued weaker local market demand for commercial printing in Alberta and
increased competition in that market. In addition, current poor economic
conditions continue to negatively affect demand for commercial printing in
that market, primarily marketing materials.
    For the quarter ended March 31, 2009, gross profit decreased $0.4 million
to $1.5 million from $1.9 million for the same period in 2008. Gross profit as
a percentage of revenues for the quarter ended March 31, 2009 decreased to
27.7% from 29.8% for the same period in 2008. The overall decrease in gross
profit was due to the revenue shortfall for the three months ended March 31,
2009 as noted above.

    MULTIPLE PAKFOLD

    Revenues at the Data Group's Multiple Pakfold segment for the quarter
ended March 31, 2009 decreased $0.3 million or 8.3% to $3.7 million from $4.0
million in 2008.
    The decline in revenues for the three months ended March 31, 2009 was
attributable to the weak economic conditions, which have resulted in a decline
in quoting activity, smaller order quantities and extended reorder cycles.
    Gross profit was $0.4 million for the quarters ended March 31, 2009 and
2008, respectively. Gross profit as a percentage of revenues for the quarter
ended March 31, 2009 was 11.8% compared to 10.1% for the same period in 2008.
The improvement in the gross profit as a percentage of revenues is due to the
initiatives undertaken in 2008 to improve operating efficiencies.

    
    Table 4   The following table provides a reconciliation of cash provided
              by operating activities to cash available for distribution for
              the periods noted. See "Non-GAAP Measures".

    Cash Available for Distribution Reconciliation
    -------------------------------------------------------------------------
    For the periods ended March 31,                   Jan. 1 to     Jan. 1 to
     2009 and 2008                                    Mar. 31,      Mar. 31,
    (in thousands of dollars, except percentages        2009          2008
     and per unit amounts, unaudited)                     $             $
    -------------------------------------------------------------------------
    Cash provided by operating activities                9,922        11,697
    Capital adjustments
      Maintenance capital expenditures(1)               (1,139)         (746)
      Purchase of convertible debentures                    (6)            -

    Other adjustments including discretionary items:
      Changes in non-cash working capital(2)            (2,692)         (813)
      Other(3)                                             107           106
    -------------------------------------------------------------------------
    Cash available for distribution                      6,192        10,244
    -------------------------------------------------------------------------
    Distributions to unitholders(4)                      6,805         6,805
    -------------------------------------------------------------------------
    Excess (shortfall) of cash available for
     distribution over actual distributions               (613)        3,439
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per unit(5)
    -------------------------------------------------------------------------
      Cash available for distribution per unit(5)        0.264         0.436
    -------------------------------------------------------------------------
      Distributions to unitholders per unit(5)           0.290         0.290
    -------------------------------------------------------------------------
      Excess (shortfall) of cash available for
       distribution per unit over actual
       distributions per unit(5)                        (0.026)        0.146
    -------------------------------------------------------------------------
    Payout ratio(6)                                     109.9%         66.4%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Notes:

    (1) Maintenance capital expenditures are additions, replacements or
        improvements to property, plant and equipment to maintain the Data
        Group's business operations. These expenditures involve the
        replacement of printing and digital equipment, computers and
        software, and leasehold improvements.
    (2) Cash provided by operating activities has been adjusted for changes
        in non-cash working capital so as to remove the impact of timing
        differences in cash receipts and cash disbursements, which generally
        reverse themselves but can vary significantly across quarters.
    (3) Includes other amounts that do not reflect the ongoing operations of
        the Data Group's business.
    (4) Distributions are in respect of the distributions declared.
    (5) Per unit calculations are based upon the number of units outstanding
        at the end of each period consistent with the number of units upon
        which distributions are declared or paid and not the weighted average
        number of units outstanding. As at March 31, 2009 and 2008,
        23,490,592 units were outstanding.
    (6) The payout ratio represents the distributions paid or declared to
        unitholders as a percentage of the cash available for distribution,
        in each case for the relevant period.
    

    CASH AVAILABLE FOR DISTRIBUTION

    See Table 4 above for a reconciliation of cash provided by operating
activities to cash available for distribution for the three month periods
ended March 31, 2009 and 2008, respectively. For the quarter ended March 31,
2009, the Fund generated $6.2 million or $0.264 per unit of cash available for
distribution compared to $10.2 million or $0.436 per unit for the same period
in 2008. Cash available for distribution for the quarter ended March 31, 2009
was calculated by deducting from cash provided by operating activities of $9.9
million, maintenance capital expenditures of $1.1 million and changes in
non-cash working capital of $2.7 million, respectively, and adding back other
non-cash items of $0.1 million. Cash available for distribution for the
quarter ended March 31, 2008 was calculated by deducting from cash provided by
operating activities of $11.7 million, maintenance capital expenditures of
$0.7 million and changes in non-cash working capital of $0.8 million,
respectively, and deducting other non-cash items of $0.1 million. See Table 4
above for a breakdown of these figures for the three months ended March 31,
2009 and 2008, respectively.
    For the quarter ended March 31, 2009, the Fund declared distributions of
$6.8 million or $0.290 per unit. Actual distributions exceeded cash available
for distribution by $0.6 million or $0.026 per unit for the quarter ended
March 31, 2009. During the quarter ended March 31, 2009, the Data Group made
cash payments of $1.2 million for the restructuring costs accrued as part of
the purchase price accounting for the Relizon Canada acquisition and for the
related integration costs, consisting primarily of severance payments and
moving costs and accrued restructuring provisions related to severance costs
incurred as part of the Data Group's on-going productivity improvement
initiatives charged to restructuring expense in 2008. These cash payments were
funded by cash generated from operations and net proceeds from asset
dispositions. The restructuring and integration costs paid during the quarter
have been deducted in determining cash available for distribution.
    For the quarter ended March 31, 2008, the Fund declared distributions of
$6.8 million or $0.290 per unit. Actual distributions exceeded cash available
for distribution by $3.4 million or $0.146 per unit for the quarter ended
March 31, 2008. During the quarter ended March 31, 2008, the Data Group made
cash payments of $1.1 million for the restructuring costs accrued as part of
the purchase price accounting for the Relizon Canada acquisition and for the
related integration costs, consisting primarily of severance payments and
moving costs. These cash payments were funded by cash generated from
operations. The restructuring and integration costs paid during the quarter
have been deducted in determining cash available for distribution. Cash
available for distribution for the quarter ended March 31, 2008 increased
despite the payment of these restructuring and integration costs during the
quarter. See Table 4 above for a breakdown of these figures for the three
months ended March 31, 2009 and 2008, respectively.

    INVESTING ACTIVITIES

    Capital expenditures for the quarter ended March 31, 2009 of $1.1 million
related primarily to maintenance capital expenditures which were financed by
cash flow from operations and net proceeds from asset dispositions. During the
three months ended March 31, 2009, the Data Group sold its former Hemmingford,
Québec facility for gross proceeds of $0.7 million.

    FINANCING ACTIVITIES

    For the quarter ended March 31, 2009, the Fund paid or declared aggregate
cash distributions of $6.8 million to its unitholders.

    NORMAL COURSE ISSUER BID

    Pursuant to a Notice of Intention to Make a Normal Court Issuer Bid (the
"Notice") dated February 12, 2009, the Fund commenced a normal course issuer
bid ("NCIB") to purchase up to a maximum of $2,833,200 aggregate principal
amount of its outstanding Convertible Debentures, representing 10% of the
public float of Convertible Debentures outstanding as of February 3, 2009. As
of March 31, 2009, the Fund had $34,824,000 aggregate principal amount of
Convertible Debentures outstanding. Purchases under the NCIB were permitted to
commence on the TSX on February 18, 2009 and will terminate on the earlier of
February 7, 2010, the date the Fund completes its purchases pursuant to the
Notice filed with the Toronto Stock Exchange (the "TSX") and the date of
notice by the Fund of termination of the bid. Convertible Debentures purchased
under the NCIB will be cancelled. Purchase and payment for the Convertible
Debentures will be made by the Fund in accordance with the rules and policies
of the TSX and the price that the Fund will pay for any Convertible Debentures
acquired by it will be at the market price of the Convertible Debentures at
the time of acquisition. As at the date hereof, $8,000 aggregate principal
amount of Convertible Debentures have been purchased under the NCIB. Purchases
made by the Fund pursuant to the NCIB occur when management believes that the
market price of the Fund's Convertible Debentures at certain times may be
attractive and that the purchase of Convertible Debentures would be an
appropriate use of corporate funds in light of potential benefits to remaining
unitholders.

    OUTLOOK

    Many of the Data Group's customers are being impacted by poor economic
conditions affecting the broader market and those economic conditions have
negatively affected the Data Group's cash flows and results of operations.
Current and future conditions in the domestic and global economies remain
uncertain. As a result, it is difficult to estimate the level of growth or
contraction for the economy as a whole. It is even more difficult to estimate
growth or contraction in various parts, sectors and regions of the economy,
including the many different markets in which the Data Group participates.
Because all components of the Data Group's budgeting and forecasting are
dependent upon estimates of growth or contraction in the markets it serves and
demand for its products and services, the prevailing economic uncertainties
render estimates of future income and expenditures very difficult to make.
Adverse changes have occurred as a result of poor economic conditions,
wavering consumer confidence, unemployment, declines in stock markets,
contraction of credit availability, declines in real estate values, and other
factors affecting economic conditions generally. These changes have negatively
affected the sales of the Data Group's products and services, increased
exposure to losses from bad debts, increased the cost and decreased the
availability of financing, and may increase costs associated with
manufacturing and distributing products or delivering services to the Data
Group's customers and negatively affect the Data Group's ability to meet
financial ratios and financial condition tests under its existing bank
facility. The Fund expects this economic environment to continue for at least
the near term.
    In light of economic conditions, the Fund's Board of Trustees will
closely monitor the Fund's cash available for distribution and its payout
ratio.
    The Data Group will continue to review its operations and undertake
restructuring initiatives to maintain a competitive cost structure. These
initiatives may result in the further consolidation of facilities, and the
Data Group may incur additional severance costs, accelerated further
depreciation expense, impairment charges related to property, plant and
equipment, goodwill, and costs attributable to the termination of contracts
for leases, supplier arrangements and other contractual obligations.
    The Fund expects that the SIFT rules will, all other things being equal,
likely result in a reduction of cash available for distribution from the Fund
commencing in 2011. With respect to the limitations on equity unit issuances
under the guidelines that accompanied those tax changes, the Fund believes
that it should be able to fund its currently identified growth plan without
exceeding its "normal growth". However, with the current uncertainty in the
capital markets resulting from the tax changes, there can be no assurance that
sufficient capital to fund further acquisitions or expansion projects will be
available on terms acceptable to the Fund, or at all.
    The Fund's Board of Trustees has determined that there are no current
economic benefits associated with an early conversion from a SIFT trust to a
taxable entity not subject to the SIFT rules. There is meaningful value in the
interim period and the Fund therefore has no current intention to make
significant changes to its structure during this period without compelling
reasons to do otherwise. The Minister of Finance has released legislation to
permit the conversion from a SIFT trust to a taxable entity not subject to the
SIFT rules without any adverse material consequences for the SIFT trust and
its investors. The Fund, with input from external legal and financial
advisors, will continue to closely monitor developments in this area and
expects to make further decisions over time with a view to maximizing value
for the Fund's unitholders, including what the Fund's Board of Trustees
determines will be the optimal structure post-2010. The Fund will also
continue to closely monitor its payout ratio over the 2009 to 2010 period,
continuing to take into account the current and anticipated performance of the
Data Group and its business and the Fund's cash available for distribution
during this period.
    Sales of some of the Data Group's products are subject to seasonal
fluctuations in demand. Certain elements of the gift card and direct mail
businesses and the buying pattern of certain major customers of the Data Group
generate higher revenues and profit in the fourth quarter than the other three
quarters.
    The Data Group will continue to fund necessary maintenance capital
expenditures by utilizing cash flow from operations.
    The Data Group will continue its strategic focus on being the leading
document management service provider in Canada, concentrating on providing
high value-added products and services. The Data Group will also selectively
pursue acquisition opportunities within its existing business segments.

    
    About The DATA Group Income Fund
    --------------------------------
    
    The DATA Group Income Fund owns a 100% interest in The DATA Group Limited
Partnership ("The DATA Group"). The DATA Group is a leading provider of
document management solutions including printed products. Founded in 1959, the
Data Group operates numerous facilities in 11 regions across Canada and has a
leading market share in the total document management services segment.
    Additional information relating to The DATA Group Income Fund is
available on the System for Electronic Document Analysis and Retrieval (SEDAR)
at www.sedar.com and www.datagroupincomefund.com.


    
    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    (in thousands of dollars, unaudited)              March 31,  December 31,
                                                        2009        2008
                                                          $           $
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash and cash equivalents                         14,112        11,492
      Accounts receivable                               40,873        47,106
      Inventories                                       51,005        47,583
      Prepaid expenses and other current assets          7,547         7,684
                                                   --------------------------
                                                       113,537       113,865

    Property, plant and equipment                       38,623        39,909
    Goodwill                                           141,206       141,206
    Intangible assets                                   52,141        54,790
                                                   --------------------------
                                                       345,507       349,770
                                                   --------------------------
                                                   --------------------------
    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities          33,980        32,224
      Accrued restructuring and integration
       provisions                                        2,445         3,627
      Income taxes payable                               4,022         4,022
      Deferred revenue                                   6,750         7,861
      Distributions payable                              2,269         2,269
                                                   --------------------------
                                                        49,466        50,003

    Revolving bank facility                             70,000        70,000
    Convertible debentures                              34,361        34,327
    Future income taxes                                  8,780         8,446
    Deferred gain                                        1,676         1,724
    Unfavourable lease obligation                        1,113         1,142
    Deferred lease inducement                              950           980
    Pension obligations                                  9,408         9,680
    Post-employment and post-retirement benefits         2,163         2,150
                                                   --------------------------
                                                       177,917       178,452
                                                   --------------------------
    Unitholders' Equity
    Units                                              215,336       215,336
    Conversion options                                     897           898
    Accumulated other comprehensive loss                  (778)       (1,059)
    Deficit                                            (47,865)      (43,857)
                                                   --------------------------
                                                       167,590       171,318
                                                   --------------------------
                                                       345,507       349,770
                                                   --------------------------
                                                   --------------------------



    CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    (in thousands of dollars, except per                For the     For the
     unit amounts, unaudited)                            three       three
                                                         months      months
                                                         ended       ended
                                                        March 31,   March 31,
                                                          2009        2008
                                                            $           $
    -------------------------------------------------------------------------
    Revenues                                            90,417       101,026

    Cost of revenues (including depreciation of
     $1,806 and $1,939, respectively)                   67,275        72,639
                                                   --------------------------

    Gross profit                                        23,142        28,387
                                                   --------------------------

    Expenses
      Selling, commissions and expenses                  8,801        10,187
      General and administration expenses
       (including depreciation of $76 and $132,
       respectively)                                     7,127         8,067
      Gain on cancellation of convertible debentures        (2)            -
      Amortization of intangible assets                  2,649         2,744
                                                   --------------------------
                                                        18,575        20,998
                                                   --------------------------

    Income before interest and income taxes              4,567         7,389
                                                   --------------------------

    Interest expense on long-term debt
     (net of interest income of $40 and
      $108, respectively)                                1,436         1,598
                                                   --------------------------

    Income before income taxes                           3,131         5,791
                                                   --------------------------


    Future income tax expense                              334           200
                                                   --------------------------

    Net income for the period                            2,797         5,591
                                                   --------------------------
                                                   --------------------------

    (Gain) loss on cash flow hedges                       (281)          703
                                                   --------------------------

    Comprehensive income for the period                  3,078         4,888
                                                   --------------------------
                                                   --------------------------

    Basic income per unit                                 0.12          0.24
                                                   --------------------------

    Diluted income per unit                               0.12          0.24
                                                   --------------------------

    Units outstanding                               23,490,592    23,490,592
                                                   --------------------------
                                                   --------------------------



    CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
    -------------------------------------------------------------------------
    (in thousands of                           Accumulated
     dollars, unaudited)                           other
                                                  compre-             Total
                                                  hensive              Unit-
                                     Conversion    income            holders'
                              Units    options     (loss)   Deficit   Equity
                                 $         $           $         $         $
    -------------------------------------------------------------------------
    Balance as at
     December 31, 2007       215,336       898       (66)  (23,507)  192,661

    Accounting policy
     change                        -         -         -     6,175     6,175

                            -------------------------------------------------
    Balance as at
     January 1, 2008         215,336       898       (66)  (17,332)  198,836

    Distributions declared         -         -         -    (6,805)   (6,805)

    Loss on cash flow
     hedges                        -         -      (703)        -      (703)

    Net income for the
     period                        -         -         -     5,591     5,591

                            -------------------------------------------------
    Balance as at
     March 31, 2008          215,336       898      (769)  (18,546)  196,919
                            -------------------------------------------------
                            -------------------------------------------------



    Balance as at
     December 31, 2008       215,336       898    (1,059)  (43,857)  171,318

    Distributions declared         -         -         -    (6,805)   (6,805)

    Cancellation of
     convertible debentures        -        (1)        -         -        (1)

    Gain on cash flow
     hedges                        -         -       281         -       281

    Net income for
     the period                    -         -         -     2,797     2,797

                            -------------------------------------------------
    Balance as at
     March 31, 2009          215,336        897     (778)  (47,865)  167,590
                            -------------------------------------------------
                            -------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (in thousands of dollars, unaudited)                For the     For the
                                                         three       three
                                                         months      months
                                                         ended       ended
                                                        March 31,   March 31,
                                                          2009        2008
                                                            $           $
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    -------------------------------------------------------------------------
    Net income for the period                            2,797         5,591
    Items not involving cash
      Depreciation of property, plant and equipment      1,882         2,071
      Amortization of intangible assets                  2,649         2,744
      Pension expense                                      230           503
      Contributions made to pension plans                 (502)         (303)
      Loss (gain) on disposal of property, plant and
       equipment                                          (105)          136
      Gain on cancellation of convertible debentures        (2)            -
      Accretion of convertible debentures                   41            42
      Amortization of deferred gain                        (48)          (48)
      Unfavourable lease obligation                        (29)          (27)
      Amortization of lease inducement                     (30)          (31)
      Post-employment and post-retirement benefits          13             6
      Future income tax expense                            334           200
                                                   --------------------------
                                                         7,230        10,884
    Changes in non-cash items relating to operating
     activities                                          2,692           813
                                                   --------------------------
                                                         9,922        11,697
                                                   --------------------------

    Investing activities
    -------------------------------------------------------------------------
    Purchase of property, plant and equipment           (1,139)         (746)
    Proceeds on disposal of property, plant and
     equipment                                             648             2
                                                   --------------------------
                                                          (491)         (744)
                                                   --------------------------
    Financing activities
    -------------------------------------------------------------------------
    Repurchase of convertible debentures                    (6)            -
    Distributions to unitholders                        (6,805)       (6,805)
                                                   --------------------------
                                                        (6,811)       (6,805)
                                                   --------------------------
    Increase in cash and cash equivalents during
     the period                                          2,620         4,148
    -------------------------------------------------------------------------
    Cash and cash equivalents - beginning of period     11,492         5,315
    -------------------------------------------------------------------------
    Cash and cash equivalents - end of period           14,112         9,463
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow information
      Interest paid                                        676           818
    





For further information:

For further information: Mr. David Odell, President and CEO, The Data
Group Limited Partnership, Tel: (905) 791-3151; Mr. Paul O'Shea, Chief
Financial Officer, The Data Group Limited Partnership, Tel: (905) 791-3151

Organization Profile

THE DATA GROUP INCOME FUND

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