The Data Group Income Fund announces second quarter results for 2008



    
    HIGHLIGHTS
    ----------

    -   Q2 Revenues of $ 93.7 million, Q2 Gross Profit of $25.9 million and
        Q2 Net Income of $4.0 million
    -   Q2 Cash Available for Distribution of $8.2 million or $0.349 per unit
        and Cash Distributions of $6.8 million or $0.290 per unit (see Table
        4 and "Non-GAAP Measures" below)
    -   Q2 Payout Ratio of 83.2% (See Table 4 below)
    -   Q2 EBITDA of $10.7 million (see Table 3 and "Non-GAAP Measures"
        below)
    -   YTD Revenues of $ 194.8 million, YTD Gross Profit of $54.3 million
        and YTD Net Income of $9.6 million
    -   YTD Cash Available for Distribution of $18.4 million or $0.785 per
        unit and Cash Distributions of $13.6 million or $0.580 per unit (see
        Table 4 and "Non-GAAP Measures" below)
    -   YTD Payout Ratio of 73.9% (See Table 4 below)
    -   YTD EBITDA of $22.9 million (see Table 3 and "Non-GAAP Measures"
        below)
    -   On June 12, 2008, disposed of our Medicine Hat, Alberta property for
        gross proceeds of $1.8 million.
    

    BRAMPTON, ON, Aug. 8 /CNW/ - The DATA Group Income Fund (TSX: DGI.UN)
("the Fund") today announced financial and operating results for the second
quarter ended June 30, 2008.
    "During the quarter we continued to harvest the cost savings from our
integration and restructuring activities in 2007. In addition, we have
continued the process of reviewing products and services which generate low
margins which has contributed to lower revenues in the quarter. We experienced
our second success in our efforts to sell real estate assets we acquired
through the Relizon Canada acquisition. On June 12, 2008, we completed the
sale of the Medicine Hat, Alberta property, for which we received gross
proceeds of $1.8 million. Cash available for distribution during the quarter
was $8.2 million or $0.349 per unit with a payout ratio of 83.2%. Cash
available for distribution during the six month period was $18.4 million or
$0.785 per unit with a payout ratio of 73.9%," said David Odell, President and
Chief Executive Officer.
    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 revenue for the
second quarter of 2008) sells a broad range of printed products and document
management services directly to end users. Sundog (which provided
approximately 6% of total revenue for the second quarter of 2008) 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 revenue for the second quarter of 2008)
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 that the Fund made in the preparation of these
forward-looking statements include the ability of management to achieve over
$10.0 million per annum in pre-tax operating and other synergies and cost
savings, and other benefits expected to be realized, and the timing and net
present value thereof, based on the achievement of operational synergies from
restructuring, integration and other initiatives relating to the combination
of the respective businesses previously carried on by Data Business Forms
Limited and Relizon Canada Inc. ("Relizon Canada"); the accuracy of estimated
synergies in respect of expected cash flows, cost savings and profitability
from the combination of the Data Business Forms Limited and 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; the Data Group's ability to grow its sales or
even maintain historical levels of its sales of 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;
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 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 means
EBITDA adjusted for non-cash inventory fair value allocation charges, goodwill
impairment charges, and pension plan curtailment gains. The Fund believes
that, in addition to net income, 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, non-cash interest expense,
maintenance capital expenditures, changes in non-cash working capital, other
non-cash items, special pension contributions, partnership conversion costs
and cash income taxes. 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 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 and investors
are cautioned that cash available for distribution is not 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 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        Apr. 1      Apr. 1      Jan. 1      Jan. 1
    June 30, 2008 and 2007         to          to          to          to
    (in thousands of dollars,    Jun. 30,    Jun. 30,    Jun. 30,    Jun. 30,
    except per unit amounts,      2008        2007        2008        2007
    unaudited)                      $           $           $           $
    -------------------------------------------------------------------------
    Revenues                      93,733      97,201     194,759     201,197
    Cost of revenues              67,785      71,818     140,424     148,213
    -------------------------------------------------------------------------
    Gross profit                  25,948      25,383      54,335      52,984

    Selling, general and
     administrative expenses      17,330      17,793      35,584      36,575
    Integration costs                  -       2,363           -       3,419
    Amortization of
     intangible assets             2,744       2,411       5,488       4,822
    -------------------------------------------------------------------------
    Income before interest
     and income taxes              5,874       2,816      13,263       8,168
    -------------------------------------------------------------------------

    Interest expense on
     long-term debt                1,471       1,565       3,069       3,107
    -------------------------------------------------------------------------
    Income before income taxes     4,403       1,251      10,194       5,061

    Future income tax expense        400       9,746         600       9,746
    -------------------------------------------------------------------------
    Net income (loss)
     for the period                4,003      (8,495)      9,594      (4,685)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic income per unit           0.17       (0.36)       0.41       (0.20)
    Diluted income per unit         0.17       (0.36)       0.41       (0.20)
    Number of units
     outstanding              23,490,592  23,475,659  23,490,592  23,475,659

    Consolidated Balance
     Sheet Information

    Current assets               116,392     103,290     116,392     103,290
    Current liabilities           49,285      55,319      49,285      55,319

    Total assets                 371,130     377,493     371,130     377,493
    Total long-term liabilities  127,400     127,373     127,400     127,373

    Unitholders' equity          194,445     194,801     194,445     194,801
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    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        Apr. 1      Apr. 1      Jan. 1      Jan. 1
    June 30, 2008 and 2007         to          to          to          to
    (in thousands of dollars,    Jun. 30,    Jun. 30,    Jun. 30,    Jun. 30,
    except percentage amounts,    2008        2007        2008        2007
    unaudited)                      $           $           $           $
    -------------------------------------------------------------------------
    Revenues
      DATA East and West          85,160      87,642     176,739     180,878
      Sundog                       5,650       6,734      12,128      13,645
      Multiple Pakfold             3,962       4,245       8,007       9,587
      Intersegment                (1,039)     (1,420)     (2,115)     (2,913)
    -------------------------------------------------------------------------
                                  93,733      97,201     194,759     201,197
    -------------------------------------------------------------------------

    Gross profit
      DATA East and West          23,939      22,750      49,987      47,015
      Sundog                       1,653       2,294       3,585       4,764
      Multiple Pakfold               356         339         763       1,205
    -------------------------------------------------------------------------
                                  25,948      25,383      54,335      52,984
    -------------------------------------------------------------------------

    Gross profit, as a
     percentage of revenues
    -------------------------------------------------------------------------
      DATA East and West           28.1%       26.0%       28.3%       26.0%
      Sundog                       29.3%       34.1%       29.6%       34.9%
      Multiple Pakfold              9.0%        8.0%        9.5%       12.6%
    -------------------------------------------------------------------------
                                   27.7%       26.1%       27.9%       26.3%
    -------------------------------------------------------------------------

    Selling, general and
     administrative expenses      17,330      17,793      35,584      36,575
    -------------------------------------------------------------------------
    As a percentage of revenues    18.5%       18.3%       18.3%       18.2%
    -------------------------------------------------------------------------

    EBITDA (Table 3)              10,668       7,396      22,872      17,368
    -------------------------------------------------------------------------
    EBITDA margin, as a
     percentage of revenues        11.4%        7.6%       11.7%        8.6%
    -------------------------------------------------------------------------

    Net income (loss)              4,003      (8,495)      9,594      (4,685)
    -------------------------------------------------------------------------


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

    EBITDA Reconciliation
    -------------------------------------------------------------------------
    For the periods ended        Apr. 1      Apr. 1      Jan. 1      Jan. 1
    June 30, 2008 and 2007         to          to          to          to
                                 Jun. 30,    Jun. 30,    Jun. 30,    Jun. 30,
    (in thousands of dollars,     2008        2007        2008        2007
    unaudited)                      $           $           $           $
    -------------------------------------------------------------------------
    Net income (loss) for
     the period                    4,003      (8,495)      9,594      (4,685)
    -------------------------------------------------------------------------
    Net interest expense on
     long-term debt                1,471       1,565       3,069       3,107
    Depreciation of property,
     plant and equipment           2,050       2,169       4,121       4,378
    Amortization of
     intangible assets             2,744       2,411       5,488       4,822
    Provision for future
     income taxes                    400       9,746         600       9,746
    -------------------------------------------------------------------------
    EBITDA                        10,668       7,396      22,872      17,368
    -------------------------------------------------------------------------
    


    RESULTS OF OPERATIONS

    THE DATA GROUP INCOME FUND

    Revenues

    For the quarter ended June 30, 2008, the Fund recorded revenues of
$93.7 million, a decrease of $3.5 million or 3.6% compared with the same
period in 2007. The decrease, before intersegment revenues, was the result of
a $2.5 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. For the six months ended June 30, 2008, the Fund recorded
revenues of $194.8 million, a decrease of $6.4 million or 3.2% compared with
the same period in 2007. The decrease, before intersegment revenues, is the
result of a $4.1 million decrease in the DATA East and West segment, a
$1.5 million decrease in the Sundog segment and a $1.6 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 June 30, 2008, cost of revenues decreased to
$67.8 million from $71.8 million for the same period in 2007. Gross profit for
the quarter ended June 30, 2008 was $25.9 million, which represented an
increase of $0.6 million or 2.2% from $25.4 million for the same period in
2007. The increase in gross profit was attributable to a $1.2 million increase
in the DATA East and West segment, resulting substantially from the realized
cost savings from the Data Group's restructuring activities and the shipment
of goods for new sales contracts secured in the fourth quarter of 2007. The
gross profit as a percentage of revenues increased to 27.7% for the quarter
ended June 30, 2008 compared to 26.1% for the same period in 2007. This
increase in gross profit for 2008 resulted from the new sales contracts, cost
savings realized from the Data Group's restructuring, the review and
elimination of products and services which generate low margins, and offset by
a gross profit decrease in the Sundog segment. For the six months ended June
30, 2008, cost of revenues decreased to $140.4 million from $148.2 million for
the same period in 2007. Gross profit for the six months ended June 30, 2008
was $54.3 million, which represented an increase of $1.4 million or 2.5% from
$53.0 million in the same period of 2007. The gross profit as a percentage of
revenue increased to 27.9% for the six months ended June 30, 2008 to 26.3% for
the same period in 2007.

    Selling, General and Administrative Expenses and Integration Costs

    Selling, general and administrative ("SG&A") expenses, including
administrative expenses of the Fund, for the quarter ended June 30, 2008
decreased $0.5 million to $17.3 million compared to $17.7 million in the same
period of 2007. As a percentage of revenues, these costs were 18.5% of
revenues for the quarter ended June 30, 2008 compared to 18.3% of revenues for
the same period in 2007. For the quarter ended June 30, 2008, the Data Group
incurred $0.3 million of severance costs included in SG&A related to the
on-going productivity improvement initiatives. SG&A expenses for the six
months ended June 30, 2008 decreased by $1.0 million to $35.6 million compared
to $36.5 million in the same period of 2007. SG&A expenses for the six months
ended June 30, 2008 were lower due to cost savings realized from the Data
Group's restructuring. For the six months ended June 30, 2008, the Data Group
incurred $0.3 million of severance costs included in SG&A related to the
on-going productivity improvement initiatives. For the quarter ended June 30,
2007, the Data Group incurred $2.4 million of costs related to the integration
of the former Data Business Forms Limited and Relizon Canada businesses, which
primarily consisted of severance and moving expenses incurred in connection
with the restructuring announced by the Fund on March 1, 2007. Those
integration costs were attributable primarily to the DATA East and West
segment, by virtue of the fact that the operations of the former Relizon
Canada business now form part of that segment. The balance of those
integration costs were attributable to the Multiple Pakfold segment. For the
six months ended June 30, 2007 the Data Group incurred $3.4 million of costs
related to the integration of the former Data Business Forms Limited and
Relizon Canada businesses, which primarily consisted of severance and moving
expenses incurred in connection with the restructuring announced by the Fund
on March 1, 2007.

    EBITDA

    For the quarter ended June 30, 2008, EBITDA was $10.7 million, or 11.4%
of revenues. EBITDA for the quarter ended June 30, 2008 increased $3.3 million
or 44.2% from the same period in the prior year and the EBITDA margin for the
quarter, as a percentage of revenues, increased from 7.6% of revenues in 2007
to 11.4% of revenues in 2008. For the six months ended June 30, 2008, EBITDA
was $22.9 million or 11.7% of revenues. EBITDA for the six months ended June
30, 2008 increased $5.5 million or 31.7% from the same period in the prior
year and the EBITDA margin for the six month period, as a percentage of
revenues, increased from 8.6% of revenues in 2007 to 11.7% of revenues in
2008.

    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
Convertible Debentures was $1.5 million for the quarter ended June 30, 2008
compared to $1.6 million for the same period in 2007. Net interest expense on
long-term debt was $3.1 million for the six months ended June 30, 2008 and
2007, respectively.
    Interest income of $0.1 million and $0.2 million earned during the three
and six month periods ended June 30, 2008, respectively, were consistent with
the applicable prior periods. This interest income was substantially related
to the cash and cash equivalents held by the Data Group.

    Income Taxes

    The Fund reported income before income taxes of $4.4 million and a future
income tax expense of $0.4 million for the quarter ended June 30, 2008. The
net future income tax liability of $7.3 million represents estimated temporary
differences at June 30, 2008 that are expected to reverse starting in fiscal
year 2011. The future income tax expense was due to a change in estimates of
future reversals of temporary differences. The Fund reported income before
income taxes of $1.3 million and a future income tax expense of $9.7 million
for the quarter ended June 30, 2007. On June 22, 2007, Bill C-52, which
contained the SIFT rules (described below under the heading "Outlook"), became
law. As a result, under GAAP the Fund commenced accounting for tax changes
during the quarter ended June 30, 2007 and recorded a net long-term future
income tax liability of $9.3 million with a corresponding amount of
$9.7 million recognized in the Fund's consolidated statement of income and
comprehensive income.
    The Fund reported income before income taxes of $10.2 million and a
future income tax expense of $0.6 million for the six months ended June 30,
2008. The future income tax expense was due to a change in estimates of future
reversals of temporary differences. The Fund reported income before income
taxes of $5.1 million and a future income tax expense of $9.7 million for the
six months ended June 30, 2007 related to the change in tax law described
above.

    Net Income (Loss)

    Net income for the quarter ended June 30, 2008 was $4.0 million compared
to a net loss of $8.5 million for the quarter ended June 30, 2007. Net income
for the six months ended June 30, 2008 was $9.6 million compared to a net loss
of $4.7 million for the six months ended June 30, 2007. The increase 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 June 30, 2008 decreased $2.4 million or 2.8% to $85.2 million
from $87.6 million for the same period in the prior year. Revenues for the six
months ended June 30, 2008 decreased $4.1 million or 2.3% to $176.7 million
from $180.9 million for the same period in the prior year.
    The decrease in revenues for the three and six months ended June 30, 2008
was due to the Data Group's determination, following a strategic review that
commenced in 2007, to eliminate from its customer offering certain low margin
products and services previously manufactured and provided by the segment. In
addition, there have been declines in revenues earned from traditional
business forms and direct mail. A factor in the decline in traditional forms
revenues has been a decrease in revenues from small to medium sized customers
and an increased focus on the revenues from these customers will be undertaken
in the second half of 2008. The segment continued to experience increases in
sales of variable imaging and fulfillment warehousing services as a result of
contracts signed in the fourth quarter of 2007.
    For the quarter ended June 30, 2008 gross profit increased $1.2 million
to $23.9 million from $22.8 million for the same period of 2007. The gross
profit as a percentage of revenues for the quarter ended June 30, 2008
increased to 28.1% from 26.0% for the same period in 2007. The increase in the
gross profit as a percentage of revenues during the quarter ended June 30,
2008 was due to the integration and restructuring initiatives completed in
2007, which resulted in lower labour and overhead costs. In addition, the
increase in the gross profit as a percentage of revenues during the quarter
was due to the elimination from the segment's customer offering certain low
margin products and services previously manufactured and provided by the
segment. This segment continues to be focused upon improving productivity and
efficiencies in the operation of the equipment transferred between locations
in connection with that restructuring. In the second quarter of 2008, these
initiatives gave rise to the severance costs noted in Selling, General and
Administrative Expenses and Integration Costs above.
    For the six months ending June 30, 2008 gross profit increased
$3.0 million to $50.0 million from $47.0 million in the same period of 2007.
The gross profit as a percentage of revenues for the six months ended June 30,
2008 increased to 28.3% from 26.0% for the same period in 2007. The increase
in the gross profit as a percentage of revenues during the six months ended
June 30, 2008, was due to the integration and restructuring initiatives
completed in 2007, which resulted in lower labour and overhead costs. In
addition, the increase in the gross profit as a percentage of revenues during
the six month period was due to the elimination from the segment's customer
offering certain low margin products and services previously manufactured and
provided by the segment. This segment continues to be focused upon improving
productivity and efficiencies in the operation of the equipment transferred
between locations in connection with that restructuring as noted above.

    SUNDOG

    Revenues at the Data Group's Sundog segment for the quarter ended June
30, 2008 decreased $1.1 million to $5.7 million from $6.7 million in 2007.
Revenues for the six months ending June 30, 2008 decreased $1.5 million to
$12.1 million from $13.6 million for the same period in the prior year. The
decrease in revenues continues to be due to continued weaker local market
demand for commercial printing in Alberta and increased competition in that
market. In addition, economic conditions appear to be affecting demand for
commercial print, primarily marketing materials.
    For the quarter ended June 30, 2008, gross profit decreased $0.6 million
to $1.7 million from $2.3 million for the same period in 2007. The gross
profit as a percentage of revenues for the quarter ended June 30, 2008
decreased to 29.3% from 34.1% for the same period in 2007. For the six months
ended June 30, 2008, gross profit decreased $1.2 million to $3.6 million from
$4.8 million in the same period of 2007. The gross profit as a percentage of
revenues for the six months ended June 30, 2008 decreased to 29.6% from 34.9%
for the same period in 2007. The overall decrease in gross profit was due to
the revenue shortfall noted above. During the fourth quarter of 2007, the Data
Group strengthened Sundog's sales management, added new sales representatives
and tightened cost controls, all of which were expected to help mitigate the
impact of current market conditions on Sundog's results of operations. The
expected impact has not yet materialized due to continued weak market
conditions.

    MULTIPLE PAKFOLD

    Revenues at the Data Group's Multiple Pakfold segment for the quarter
ended June 30, 2008 decreased $0.2 million or 6.7% to $4.0 million from
$4.2 million in 2007. Revenues for the six months ended June 30, 2008
decreased $1.6 million or 16.5% to $8.0 million from $9.6 million for the same
period in the prior year.
    The decline in revenues for the three and six months ended June 30, 2008
were attributable to the loss of business in the Ontario and Quebec market as
a result of the integration and restructuring activities in 2007, which
disrupted Multiple Pakfold's operations and adversely affected the segment's
ability to meet customer delivery requirements. The Data Group believes that
it has resolved those operational difficulties and that revenues should
improve as Multiple Pakfold demonstrates to its customers that it is able to
meet their delivery requirements. The Data Group continues to believe that
management changes made in the fourth quarter of 2007 and in the first quarter
of 2008 will lead to improved results of operations at Multiple Pakfold in
2008.
    Gross profit was $0.4 million and $0.3 million for the quarters ended
June 30, 2008 and 2007, respectively. The gross profit as a percentage of
revenues for the quarter ended June 30, 2008 was 9.0% compared to 8.0% for the
same period in 2007. For the six months ended June 30, 2008, gross profit
decreased $0.4 million to $0.8 million from $1.2 million for the same period
of 2007. The gross profit as percentage of revenues for the six months ended
June 30, 2008 was 9.5% compared to 12.6% for the same period in 2007. The
decline was due to the revenue losses noted above.

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

    
    Cash Available for Distribution Reconciliation
    -------------------------------------------------------------------------
    For the periods ended        Apr. 1      Apr. 1      Jan. 1      Jan. 1
    June 30, 2008 and 2007         to          to          to          to
    (in thousands of dollars,    Jun. 30,    Jun. 30,    Jun. 30,    Jun. 30,
    except percentages and per    2008        2007        2008        2007
    unit amounts, unaudited)        $           $           $           $
    -------------------------------------------------------------------------
    Cash provided by
     operating activities         11,294       9,093      22,991      12,632
    Capital adjustments
      Maintenance capital
       expenditures(1)              (721)     (1,618)     (1,467)     (2,752)

    Other adjustments including
     discretionary items:
      Changes in non-cash
       working capital and
       other(2)                   (2,392)     (3,120)     (3,099)      1,836
    -------------------------------------------------------------------------
    Cash available for
     distribution                  8,181       4,355      18,425      11,716
    -------------------------------------------------------------------------
    Distributions to
     unitholders(3)                6,805       6,801      13,610      13,602
    -------------------------------------------------------------------------
    Excess (shortfall) of cash
     available for distribution
     over actual distributions     1,376      (2,446)      4,815      (1,886)
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Per unit(4)

    Cash available for
     distribution per unit(4)      0.349       0.186       0.785       0.500
    -------------------------------------------------------------------------
    Distributions to
     unitholders per unit(4)       0.290       0.290       0.580       0.580
    -------------------------------------------------------------------------
    Excess (shortfall) of cash
     available for distribution
     per unit over actual
     distributions per unit        0.059      (0.104)      0.205      (0.080)
    -------------------------------------------------------------------------
    Payout ratio(5)                83.2%      156.2%       73.9%      116.1%
    -------------------------------------------------------------------------

    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 and other items 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 and the impact of cash payments related to the restructuring
        liabilities assumed in the acquisition of Relizon Canada.
    (3) Distributions are in respect of the distributions declared.
    (4) Per unit calculations are based upon the number of units outstanding
        at the end of each month consistent with the number of units upon
        which distributions are declared and paid and not the weighted
        average number of units outstanding. As at June 30, 2008,
        23,490,592 units were outstanding and 23,475,659 units were
        outstanding as at June 30, 2007.
    (5) The payout ratio represents the percentage of distributions declared
        to unitholders divided by the cash available for distribution.
    

    CASH AVAILABLE FOR DISTRIBUTION

    For the quarter ended June 30, 2008, the Fund generated $8.2 million or
$0.349 per unit of cash available for distribution compared to $4.4 million or
$0.186 per unit for the same period in 2007. Cash available for distribution
for the quarter ended June 30, 2008 was calculated by deducting the changes in
non-cash working capital and other non-cash items of $2.4 million and
deducting maintenance capital expenditures of $0.7 million from cash provided
by operating activities of $11.3 million. Cash available for distribution for
the quarter ended June 30, 2007 was calculated by deducting the changes in
non-cash working capital and other non-cash items of $3.1 million and
deducting maintenance capital expenditures of $1.6 million from cash provided
by operating activities of $9.1 million.
    For the six months ended June 30, 2008, the Fund generated $18.4 million
or $0.785 per unit of cash available for distribution compared to
$11.7 million or $0.500 per unit in the prior year. Cash available for
distribution for the six months ended June 30, 2008 was calculated by
deducting the changes in non-cash working capital and other non-cash items of
$3.1 million and deducting the maintenance capital expenditures of
$1.5 million from cash provided by operating activities of $23.0 million. Cash
available for distribution for the six months ended June 30, 2007 was
calculated by adding back the changes in non-cash working capital and other
non-cash items of $1.8 million and deducting the maintenance capital
expenditures of $2.8 million from cash provided by operating activities of
$12.6 million. See Table 4 above for a breakdown of these figures for the
periods from January 1, 2008 to June 30, 2008 and from January 1, 2007 to June
30, 2007, respectively.
    For the quarter ended June 30, 2008, the Fund declared distributions of
$6.8 million or $0.290 per unit. Cash available for distribution exceeded
actual distributions by $1.3 million or $0.059 per unit for the quarter ended
June 30, 2008. During the quarter ended June 30, 2008, the Data Group made
cash payments of $0.6 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 of primarily severance payments and
moving costs. These cash payments were funded by cash generated from
operations and the net proceeds from asset dispositions. For the quarter ended
June 30, 2007, the Fund declared distributions of $6.8 million or $0.290 per
unit. Actual distributions exceeded cash available for distribution by
$2.5 million or $0.104 per unit for the quarter ended June 30, 2007.
    For the six months ended June 30, 2008, the Fund declared distributions
of $13.6 million or $0.580 per unit. Cash available for distribution exceeded
actual distributions by $4.8 million or $0.205 per unit for the six months
ended June 30, 2008. During the six months ended June 30, 2008, the Data Group
made cash payments of $1.7 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 of primarily severance payments and
moving costs. These cash payments were funded by cash generated from
operations and the net proceeds from asset dispositions. For the six months
ended June 30, 2007, the Fund declared distributions of $13.6 million or
$0.580 per unit. Actual distributions exceeded cash available for distribution
by $1.9 million or $0.080 per unit for the six months ended June 30, 2007. See
Table 4 above for a breakdown of these figures for the periods from January 1,
2008 to June 30, 2008 and from January 1, 2007 to June 30, 2007, respectively.

    INVESTING ACTIVITIES

    Capital expenditures for the quarter ended June 30, 2008 of $0.7 million
related primarily to maintenance capital expenditures which were financed by
cash flow from operations. During the quarter ended June 30, 2008, the Data
Group sold the Medicine Hat, Alberta property for gross proceeds of
$1.8 million. Capital expenditures for the six months ended June 30, 2007 of
$1.5 million related primarily to maintenance capital expenditures.

    FINANCING ACTIVITIES

    For the quarter ended June 30, 2008, the Fund paid or declared aggregate
cash distributions of $6.8 million to its unitholders. For the six months
ended June 30, 2008, the Fund paid cash distributions of $13.6 million to its
unitholders.

    OUTLOOK

    Management believes that the Fund will continue to meet its objectives,
continuing to meet its monthly per unit distributions to unitholders of
$0.09656 for the foreseeable future. The Fund's Board of Trustees will
continue to monitor the Fund's cash available for distribution, its payout
ratio and the need to pay distributions to ensure the Fund is not taxable.
    The Fund currently believes that the Data Group's restructuring,
integration and other initiatives relating to the combination of the former
Data Business Forms Limited and Relizon Canada businesses will achieve pre-tax
operating and other synergies and cost savings of over $10.0 million per
annum. The Fund believes substantially all of the restructuring charges
related to the integration of the former Data Business Forms Limited and
Relizon Canada businesses have been accrued in the twelve months ended
December 31, 2007.
    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 previously announced federal income tax changes
applicable to income trusts 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 draft
legislation that purports 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 2008
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. The Fund's current objective is to
maintain its existing level of cash distributions to unitholders in 2011,
notwithstanding the cash taxes which may then be payable by the Fund.
    Many of the Data Group's customers may be affected by economic conditions
affecting the broader market. Current and future conditions in the domestic
and global economies remain uncertain. The Data Group is becoming increasingly
concerned about the impact of an uncertain economy on its commercial print and
direct mail businesses. Downturns in the economy may cause the Data Group's
customers to reduce their budgets or reduce orders for the Data Group's
products or services. The Data Group will continue to monitor economic
conditions.
    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. It is anticipated that
maintenance capital expenditures in 2008 will be approximately $4.8 million.
    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)              June 30,   December 31,
                                                        2008         2007
                                                          $            $
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash and cash equivalents                          14,864        5,315
      Accounts receivable                                47,060       57,417
      Inventories                                        49,609       42,266
      Prepaid expenses and other current assets           4,249        3,649
      Income taxes recoverable                              610          837
                                                    -------------------------
                                                        116,392      109,484

    Property, plant and equipment                        43,254       47,528
    Goodwill                                            151,206      151,206
    Intangible assets                                    60,278       65,766
                                                    -------------------------
                                                        371,130      373,984
                                                    -------------------------
                                                    -------------------------
    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities           34,396       40,014
      Accrued restructuring and
       integration provisions                             3,535        5,245
      Deferred revenue                                    9,085        6,886
      Distributions payable                               2,269        2,269
                                                    -------------------------
                                                         49,285       54,414

    Revolving bank facility                              70,000       70,000
    Convertible debentures                               34,243       34,159
    Future income taxes                                   7,255        6,655
    Deferred gain                                         1,823        1,920
    Unfavourable lease obligation                         1,197        1,251
    Deferred lease inducement                             1,041        1,103
    Pension obligation                                    9,674        9,668
    Post-employment and post-retirement benefits          2,167        2,153
                                                    -------------------------
                                                        176,685      181,323
                                                    -------------------------
    Unitholders' Equity
    Units                                               215,336      215,336
    Conversion option                                       898          898
    Accumulated other comprehensive loss                   (441)         (66)
    Deficit                                             (21,348)     (23,507)
                                                    -------------------------
                                                        194,445      192,661
                                                    -------------------------
                                                        371,130      373,984
                                                    -------------------------
                                                    -------------------------


    CONSOLIDATED STATEMENTS OF INCOME AND
     COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    (in thousands of dollars,                         For the      For the
     except per unit amounts, unaudited)               three        three
                                                       months       months
                                                       ended        ended
                                                      June 30,     June 30,
                                                        2008         2007
                                                          $            $
    -------------------------------------------------------------------------
    Revenues                                             93,733       97,201

    Cost of revenues (including depreciation
     of $1,932 and $1,983, respectively)                 67,785       71,818
                                                    -------------------------

    Gross profit                                         25,948       25,383
                                                    -------------------------

    Expenses
      Selling, commissions and expenses                   9,477       10,564
      General and administration expenses
       (including depreciation of $118 and
       $186, respectively)                                7,853        7,229
      Integration costs                                       -        2,363
      Amortization of intangible assets                   2,744        2,411
                                                    -------------------------
                                                         20,074       22,567
                                                    -------------------------

    Income before interest and income taxes               5,874        2,816
                                                    -------------------------

    Interest expense on long-term debt
     (net of interest income of $102 and
     $108, respectively)                                  1,471        1,565
                                                    -------------------------

    Income before income taxes                            4,403        1,251
                                                    -------------------------

    Provision for future income taxes                       400        9,746
                                                    -------------------------

    Net income (loss) for the period                      4,003       (8,495)
                                                    -------------------------
                                                    -------------------------

    Gain on cash flow hedges                                328          622
                                                    -------------------------

    Comprehensive income (loss) for the period            4,331       (7,873)
                                                    -------------------------
                                                    -------------------------

    Basic income (loss) per unit                           0.17        (0.36)
                                                    -------------------------

    Diluted income (loss) per unit                         0.17        (0.36)
                                                    -------------------------

    Units outstanding                                23,490,592   23,475,659
                                                    -------------------------


    CONSOLIDATED STATEMENTS OF INCOME AND
     COMPREHENSIVE INCOME
    -------------------------------------------------------------------------
    (in thousands of dollars,                         For the      For the
     except per unit amounts, unaudited)               three        three
                                                       months       months
                                                       ended        ended
                                                      June 30,     June 30,
                                                        2008         2007
                                                          $            $
    -------------------------------------------------------------------------
    Revenues                                            194,759      201,197

    Cost of revenues (including depreciation
     of $3,871 and $4,025, respectively)                140,424      148,213
                                                    -------------------------

    Gross profit                                         54,335       52,984
                                                    -------------------------

    Expenses
      Selling, commissions and expenses                  19,664       21,633
      General and administration expenses
       (including depreciation of $250
       and $353, respectively)                           15,920       14,942
      Integration costs                                       -        3,419
      Amortization of intangible assets                   5,488        4,822
                                                    -------------------------
                                                         41,072       44,816
                                                    -------------------------

    Income before interest and income taxes              13,263        8,168
                                                    -------------------------

    Interest expense on long-term debt (net
     of interest income of $210 and $153,
     respectively)                                        3,069        3,107
                                                    -------------------------

    Income before income taxes                           10,194        5,061
                                                    -------------------------

    Provision for future income taxes                       600        9,746
                                                    -------------------------

    Net income (loss) for the period                      9,594       (4,685)
                                                    -------------------------
                                                    -------------------------

    (Loss) gain on cash flow hedges                        (375)         685
                                                    -------------------------

    Comprehensive income (loss) for the period            9,219       (4,000)
                                                    -------------------------
                                                    -------------------------

    Basic income (loss) per unit                           0.41        (0.20)
                                                    -------------------------

    Diluted income (loss) per unit                         0.41        (0.20)
                                                    -------------------------

    Units outstanding                                23,490,592   23,475,659
                                                    -------------------------


    CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
    -------------------------------------------------------------------------
    (in thousands of
     dollars, unaudited)                          Accumu-
                                                   lated
                                                   other
                                                  compre-             Total
                                        Conver-   hensive             Unit-
                                         sion     income             holders'
                              Units     option    (loss)   Deficit   Equity
                                $         $         $         $         $
    -------------------------------------------------------------------------

    Balance as at
     December 31, 2006       215,164       902         -    (1,409)  214,657

    Accounting policy
     change                        -         -        58    (2,312)   (2,254)
                            -------------------------------------------------

    Balance as at
     January 1, 2007         215,164       902        58    (3,721)  212,403

    Distributions declared         -         -         -   (13,602)  (13,602)

    Gain on cash flow hedges       -         -       685         -       685

    Net loss for the period        -         -         -    (4,685)   (4,685)
                            -------------------------------------------------

    Balance as at
     June 30, 2007           215,164       902       743   (22,008)  194,801
                            -------------------------------------------------
                            -------------------------------------------------



    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         -         -         -   (13,610)  (13,610)

    Loss on cash flow hedges       -         -      (375)        -      (375)

    Net income for the period      -         -         -     9,594     9,594
                            -------------------------------------------------

    Balance as at
     June 30, 2008           215,336       898      (441)  (21,348)  194,445
                            -------------------------------------------------
                            -------------------------------------------------


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (in thousands of dollars,                         For the      For the
     except per unit amounts, unaudited)               three        three
                                                       months       months
                                                       ended        ended
                                                      June 30,     June 30,
                                                        2008         2007
                                                          $            $
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    -------------------------------------------------------------------------
    Net income (loss) for the period                      4,003       (8,495)
    Items not involving cash
      Depreciation of property, plant and equipment       2,050        2,169
      Amortization of intangible assets                   2,744        2,411
      Pension expense                                       484          746
      Contributions made to pension plans                  (678)        (694)
      (Gain) loss on disposal of property,
       plant and equipment                                 (151)          47
      Accretion of convertible debentures                    42           43
      Amortization of deferred gain                         (49)           -
      Unfavourable lease obligations                        (27)         (34)
      Amortization of lease inducement                      (31)         (30)
      Post-employment and post-retirement benefits            8            5
      Future income taxes                                   400        9,746
                                                    -------------------------
                                                          8,795        5,914
    Changes in non-cash items relating to
     operating activities                                 2,499        3,179
                                                    -------------------------
                                                         11,294        9,093
                                                    -------------------------
    Investing activities
    -------------------------------------------------------------------------
    Purchase of property, plant and equipment              (721)      (1,618)
    Proceeds on disposal of property,
     plant and equipment                                  1,633           82
                                                    -------------------------
                                                            912       (1,536)
                                                    -------------------------
    Financing activities
    -------------------------------------------------------------------------
    Distributions to unitholders                         (6,805)      (6,801)
                                                    -------------------------
                                                         (6,805)      (6,801)
                                                    -------------------------
    Increase in cash and cash
     equivalents during the period                        5,401          756
                                                    -------------------------
    Cash and cash equivalents - beginning of period       9,463        1,371
                                                    -------------------------
    Cash and cash equivalents - end of period            14,864        2,127
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information
      Interest paid                                       2,033        1,036


    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (in thousands of dollars,                         For the      For the
     except per unit amounts, unaudited)               three        three
                                                       months       months
                                                       ended        ended
                                                      June 30,     June 30,
                                                        2008         2007
                                                          $            $
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    -------------------------------------------------------------------------
    Net income (loss) for the period                      9,594       (4,685)
    Items not involving cash
      Depreciation of property, plant and equipment       4,121        4,378
      Amortization of intangible assets                   5,488        4,822
      Pension expense                                       987        1,492
      Contributions made to pension plans                  (981)      (1,432)
      (Gain) loss on disposal of property,
       plant and equipment                                  (15)          61
      Accretion of convertible debentures                    84           86
      Amortization of deferred gain                         (97)           -
      Unfavourable lease obligations                        (54)         (51)
      Amortization of lease inducement                      (62)         (61)
      Post-employment and post-retirement benefits           14           11
      Future income taxes                                   600        9,746
                                                    -------------------------
                                                         19,679       14,367
    Changes in non-cash items relating
     to operating activities                              3,312       (1,735)
                                                    -------------------------
                                                         22,991       12,632
                                                    -------------------------
    Investing activities
    -------------------------------------------------------------------------
    Purchase of property, plant and equipment            (1,467)      (2,752)
    Proceeds on disposal of property,
     plant and equipment                                  1,635           82
    Acquisition of business                                   -        1,000
                                                    -------------------------
                                                            168       (1,670)
                                                    -------------------------
    Financing activities
    -------------------------------------------------------------------------
    Distributions to unitholders                        (13,610)     (13,602)
                                                    -------------------------
                                                        (13,610)     (13,602)
                                                    -------------------------
    Increase (decrease) in cash and cash
     equivalents during the period                        9,549       (2,640)
    -------------------------------------------------------------------------
    Cash and cash equivalents - beginning of period       5,315        4,767
    -------------------------------------------------------------------------
    Cash and cash equivalents - end of period            14,864        2,127
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information
      Interest paid                                       2,851        2,923
      Non-cash lease inducement                               -          766
    

    %SEDAR: 00021422E




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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