The DATA Group Income Fund announces second quarter results for 2010

    
    HIGHLIGHTS
    ----------

    Q2 2010
    -------
    -   Second quarter 2010 ("Q2") Revenues of $81.0 million; Q2 Gross Profit
        of $19.5 million; Q2 Net Loss of $0.1 million, includes a one time
        charge of $2.3 million for the issuance of convertible debentures
        during Q2
    -   Q2 Cash Available for Distribution of $4.7 million or $0.201 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 144.3% (See Table 4 below); Q2 Payout Ratio
        (excluding one-time restructuring charges) of 139.7%
    -   Q2 Adjusted EBITDA of $7.4 million (See Table 3 and "Non-GAAP
        Measures" below)

    YTD 2010
    --------
    -   Year to Date ("YTD") 2010 Revenues of $166.6 million, YTD Gross
        Profit of $40.4 million, YTD Net Income of $3.3 million, includes a
        one time charge of $2.3 million for the issuance of convertible
        debentures during Q2
    -   YTD Cash Available for Distribution of $10.9 million or $0.464 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 124.8% (See Table 4 below), YTD Payout Ratio
        (excluding one-time restructuring charges) of 121.2%
    -   YTD Adjusted EBITDA of $15.7 million (See Table 3 and "Non-GAAP
        Measures" below)
    

BRAMPTON, ON, Aug. 10 /CNW/ - The DATA Group Income Fund (TSX: DGI.UN) ("the Fund") today announced financial and operating results for the second quarter ended June 30, 2010, which include the results of operations for The Data Group Limited Partnership (the "Data Group").

"The second quarter of 2010 results suggest that the operating environment continues to be very inconsistent as the Data Group experienced volatile operating results during the quarter", said David Odell, President and Chief Executive Officer.

OUTLOOK

The second quarter of 2010 continued to be uncertain. While the Data Group continued to benefit from new business wins achieved in 2009, many of its traditional customers continued to experience lower activity levels. As a result, the Data Group experienced a 3.9% reduction in second quarter revenues compared to the same period in 2009. The Fund's Board of Trustees will continue to closely monitor the Fund's monthly distribution levels in light of the current economy, the Fund's on-going and anticipated cash available for distribution and cash resources. The Board of Trustees anticipates making an announcement in the fourth quarter of 2010 regarding the Fund's distribution policy for 2011. The current economic environment continues to be difficult to predict. Management will continue to manage the Data Group's business on a "more of the same basis" and believes the Data Group is well positioned to benefit from an economic recovery.

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


    Consolidated Financial Information
    -------------------------------------------------------------------------
    For the periods ended
     June 30, 2010 and 2009    Apr. 1 to   Apr. 1 to   Jan. 1 to   Jan. 1 to
    (in thousands of dollars,    June 30,    June 30,    June 30,    June 30,
     except per unit amounts,       2010        2009        2010        2009
     unaudited)                        $           $           $           $
    -------------------------------------------------------------------------
    Revenues                      80,995      84,269     166,559     174,686
    Cost of revenues              61,516      62,938     126,170     130,213
    -------------------------------------------------------------------------
    Gross profit                  19,479      21,331      40,389      44,473

    Selling, general and
     administrative expenses      13,680      15,693      27,990      31,621
    Lease exit charge                  -         866           -         866
    Gain on cancellation of
     convertible debentures            -           -           -          (2)
    Amortization of intangible
     assets                        2,566       2,649       5,132       5,298
    -------------------------------------------------------------------------
    Income before interest and
     income taxes                  3,233       2,123       7,267       6,690
    -------------------------------------------------------------------------

    Interest expense and
     financing costs               3,916       1,253       5,210       2,689
    -------------------------------------------------------------------------
    (Loss) income before income
     taxes                          (683)        870       2,057       4,001

    Income tax expense
     (recovery)
      Current                          -           -        (324)          -
      Future                        (600)        121        (915)        455
    -------------------------------------------------------------------------
                                    (600)        121      (1,239)        455
    -------------------------------------------------------------------------
    Net (loss) income for the
     period                          (83)        749       3,296       3,546
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic and diluted (loss)
     income per unit               (0.00)       0.03        0.14        0.15
    Number of units
     outstanding              23,490,592  23,490,592  23,490,592  23,490,592
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Consolidated Balance Sheet   As at       As at
     Information                June 30,    June 30,
    (in thousands of dollars,    2010        2009
     unaudited)                    $           $
    -------------------------------------------------------------------------
    Current assets               101,810     103,446
    Current liabilities           41,151      39,436

    Total assets                 310,249     330,536
    Total long-term liabilities  119,074     129,132
    Unitholders' equity          150,024     161,968
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    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
     June 30, 2010 and 2009    Apr. 1 to   Apr. 1 to   Jan. 1 to   Jan. 1 to
    (in thousands of dollars,    June 30,    June 30,    June 30,    June 30,
     except percentage              2010        2009        2010        2009
     amounts, unaudited)               $           $           $           $
    -------------------------------------------------------------------------

    Revenues
      DATA East and West          73,785      77,289     151,858     159,670
      Sundog                       4,333       4,699       9,171      10,030
      Multiple Pakfold             3,740       3,211       7,484       6,921
      Intersegment                  (863)       (930)     (1,954)     (1,935)
    -------------------------------------------------------------------------
                                  80,995      84,269     166,559     174,686
    -------------------------------------------------------------------------

    Gross profit
      DATA East and West          17,763      19,905      36,749      41,133
      Sundog                       1,057       1,187       2,325       2,665
      Multiple Pakfold               659         239       1,315         675
    -------------------------------------------------------------------------
                                  19,479      21,331      40,389      44,473
    -------------------------------------------------------------------------

    Gross profit, as a
     percentage of revenues
      DATA East and West           24.1%       25.8%       24.2%       25.8%
      Sundog                       24.4%       25.3%       25.4%       26.6%
      Multiple Pakfold             17.6%        7.4%       17.6%        9.8%
    -------------------------------------------------------------------------
                                   24.0%       25.3%       24.2%       25.5%
    -------------------------------------------------------------------------

    Selling, general and
     administrative expenses      13,680      15,693      27,990      31,621
    -------------------------------------------------------------------------
      As a percentage of
       revenues                    16.9%       18.6%       16.8%       18.1%
    -------------------------------------------------------------------------

    Adjusted EBITDA (see
     Table 3)                      7,414       7,430      15,653      16,526
    -------------------------------------------------------------------------
      Adjusted EBITDA margin,
       as a percentage of
       revenues                     9.2%        8.8%        9.4%        9.5%
    -------------------------------------------------------------------------

    Net (loss) income for
     the period                      (83)        749       3,296       3,546
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



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


    Adjusted EBITDA Reconciliation
    -------------------------------------------------------------------------
    For the periods ended      Apr. 1 to   Apr. 1 to   Jan. 1 to   Jan. 1 to
     June 30, 2010 and 2009      June 30,    June 30,    June 30,    June 30,
    (in thousands of dollars,       2010        2009        2010        2009
     unaudited)                        $           $           $           $
    -------------------------------------------------------------------------
    Net (loss) income for
     the period                      (83)        749       3,296       3,546
    -------------------------------------------------------------------------
    Net interest expense
     on long-term debt             1,650       1,253       2,944       2,689
    Financing costs                2,266           -       2,266           -
    Depreciation of property,
     plant and equipment           1,615       1,792       3,254       3,674
    Amortization of intangible
     assets                        2,566       2,649       5,132       5,298
    Lease exit charge                  -         866           -         866
    Gain on cancellation of
     convertible debentures            -           -           -          (2)
    Current income tax recovery        -           -        (324)          -
    Future income tax (recovery)
     expense                        (600)        121        (915)        455
    -------------------------------------------------------------------------
    Adjusted EBITDA                7,414       7,430      15,653      16,526
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

RESULTS OF OPERATIONS

THE DATA GROUP INCOME FUND

Overview

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 second quarter of 2010) sells a broad range of printed products and document management services directly to end users. Sundog (which provided approximately 5% of total revenues for the second quarter of 2010) sells commercial printing products, document management services and event tickets. Multiple Pakfold (which provided approximately 5% of total revenues for the second quarter of 2010) sells business forms and labels to independent brokers and resellers.

Revenues

During the six months of 2010, the Data Group continued to encounter weakness in the domestic economic environment, which negatively impacted the Fund's revenues over that period. The decline in revenues was partially offset by revenues from new business. For the quarter ended June 30, 2010, the Fund recorded revenues of $81.0 million, a decrease of $3.3 million or 3.9% compared with the same period in 2009. The decrease, before intersegment revenues, was primarily the result of a $3.5 million decrease in the DATA East and West segment, a $0.4 million decrease in the Sundog segment and offset by a $0.5 million increase in the Multiple Pakfold segment. For the six months ended June 30, 2010, the Fund recorded revenues of $166.6 million, a decrease of $8.1 million or 4.7% compared with the same period in 2009. The decrease, before intersegment revenues, was primarily the result of a $7.8 million decrease in the DATA East and West segment, a $0.8 million decrease in the Sundog segment and offset by a $0.6 million increase 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, 2010, cost of revenues decreased to $61.5 million from $62.9 million for the same period in 2009. Gross profit for the quarter ended June 30, 2010 was $19.5 million, which represented a decrease of $1.8 million or 8.7% from $21.3 million for the same period in 2009. The decrease in gross profit for the quarter ended June 30, 2010 was attributable to a gross profit decrease of $2.1 million in the DATA East and West segment, a gross profit decrease of $0.1 million in the Sundog segment and was offset by a gross profit increase of $0.4 million in the Multiple Pakfold segment. Gross profit as a percentage of revenues decreased to 24.0% for the quarter ended June 30, 2010 compared to 25.3% for the same period in 2009. For the six months ended June 30, 2010, cost of revenues decreased to $126.2 million from $130.2 million for the same period in 2009. Gross profit for the six months ended June 30, 2010 was $40.4 million, which represented a decrease of $4.1 million or 9.2% from $44.5 million for the same period in 2009. The decrease in gross profit for the six months ended June 30, 2010 was attributable to a gross profit decrease of $4.4 million in the DATA East and West segment, a gross profit decrease of $0.3 million in the Sundog segment and was offset by a gross profit increase of $0.6 million in the Multiple Pakfold segment. Gross profit as a percentage of revenues decreased to 24.0% for the six months ended June 30, 2010 compared to 25.3% for the same period in 2009.

Selling, General and Administrative Expenses and Restructuring Expenses

Selling, general and administrative ("SG&A") expenses, including administrative expenses of the Fund, for the quarter ended June 30, 2010 decreased $2.0 million to $13.7 million compared to $15.7 million in the same period of 2009. The decrease in SG&A expenses was the result of the Data Group's on-going productivity improvements and cost reduction initiatives. As a percentage of revenues, these costs were 16.9% of revenues for the quarter ended June 30, 2010 compared to 18.6% of revenues for the same period in 2009. For the quarters ended June 30, 2010 and 2009, the Data Group incurred $0.2 million and $0.3 million of severance expenses, respectively. These costs were included in SG&A and were related to the Data Group's on-going productivity improvement initiatives. SG&A expenses for the six months ended June 30, 2010 decreased $3.6 million to $28.0 million compared to $31.6 million for the same period of 2009. The decrease in SG&A expenses was the result of the Data Group's on-going productivity improvements and cost reduction initiatives. As a percentage of revenues, these costs were 16.8% of revenues for the six months ended June 30, 2010 compared to 18.1% of revenues for the same period in 2009. For the six months ended June 30, 2010 and 2009, the Data Group incurred $0.3 million and $0.3 million of severance expenses, respectively. These costs were included in SG&A and were related to the Data Group's on-going productivity improvement initiatives.

Asset Sales

During the six months ended June 30, 2010, the Data Group completed the sale of its Orangeville, Ontario property for gross proceeds of $2.2 million. During the six months ended June 30, 2009, the Data Group sublet its Dorval, Québec facility for the remainder of the lease term expiring in 2021 and incurred a lease exit charge of $0.9 million, representing the liability (at present value) for remaining lease costs under the lease agreement net of sublease income. During the six months ended June 30, 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 June 30, 2010, Adjusted EBITDA was $7.4 million, or 9.2% of revenues. Adjusted EBITDA for the quarter ended June 30, 2010 remained largely unchanged from the same period in the prior year and the Adjusted EBITDA margin for the quarter, as a percentage of revenues, increased from 8.8% of revenues in 2009 to 9.2% of revenues in 2010. For the six month ended June 30, 2010, Adjusted EBITDA was $15.7 million, or 9.4% of revenues. Adjusted EBITDA for the six months ended June 30, 2010 decreased $0.9 million or 5.3% from the same period in the prior year and the Adjusted EBITDA margin for the six month period, as a percentage of revenues, decreased from 9.5% of revenues in 2009 to 9.4% of revenues in 2010.

Interest expense and financing costs

Net interest expense on long-term debt outstanding under the Data Group's credit facilities, the Fund's outstanding $34.8 million aggregate principal amount of 6.75% convertible debentures and the Fund's outstanding $45.0 million aggregate principal amount of 6.00% convertible debentures was $1.7 million for the quarter ended June 30, 2010 compared to $1.3 million for the same period in 2009. Net interest expense on long-term debt was $2.9 million for the six months ended June 30, 2010 compared to $2.7 million for the same period in 2009. During the quarter ended June 30, 2010, the Fund incurred $2.3 million of financing costs related to the issuance of the 6.00% convertible debentures and repaid $45.0 million of long-term debt outstanding under the Data Group's credit facilities.

Income Taxes

The Fund reported loss before income taxes of $0.7 million and a future income tax recovery of $0.6 million for the quarter ended June 30, 2010. The future income tax recovery was due to a change in estimates of future reversals of temporary differences and new temporary differences that arose in the quarter. The Fund reported income before income taxes of $0.9 million and a future income tax expense of $0.2 million for the quarter ended June 30, 2009. 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 $2.1 million, a current income tax recovery of $0.3 million and a future income tax recovery of $0.9 million for the six months ended June 30, 2010. The current income tax recovery represents the final adjustment related to the amount payable by the Data Group to settle reassessments by the Canada Revenue Agency and certain provincial tax authorities that, in each case, adjust the pricing of transactions between Relizon Canada and its former parent company prior to its acquisition by the Fund. The future income tax recovery was due to a change in estimates of future reversals of temporary differences and new temporary differences that arose during the period. The Fund reported income before income taxes of $4.0 million and a future income tax expense of $0.4 million for the six months ended June 30, 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.

Net (Loss) Income

Net loss for the quarter ended June 30, 2010 was $0.1 million compared to a net income of $0.7 million for the quarter ended June 30, 2009. The decrease in comparable profitability for the quarter ended June 30, 2010 was substantially due to the one time financing costs relating to the issuance of $45.0 million convertible debentures expensed in the quarter and lower gross profit in 2010 as a result of lower revenues due to generally uncertain economic conditions. The decrease in profitability was offset by the cost savings from on-going productivity improvement and cost reduction initiatives, reductions in SG&A and a future income tax recovery in the second quarter of 2010 compared to a future income tax expense and a lease exit charge during 2009 as discussed above.

Net income for the six months ended June 30, 2010 was $3.3 million compared to a net income of $3.5 million for the six months ended June 30, 2009. The decrease in comparable profitability for the six months ended June 30, 2010 was substantially due to $2.3 million in convertible debenture issuance costs, lower gross profit as a result of lower revenues due to generally uncertain economic conditions, offset by a future income tax recovery in 2010 compared to a future income tax expense in the same period in 2009, realized cost savings from on-going productivity improvement and cost reduction initiatives, reductions in SG&A and a lease exit charge during 2009 that did not reoccur in 2010 as discussed above.

DATA EAST AND WEST

Revenues at the Data Group's DATA East and West segment for the quarter ended June 30, 2010 decreased $3.5 million or 4.5% to $73.8 million from $77.3 million for the same period in the prior year. Revenues for the six months ended June 30, 2010 decreased $7.8 million or 4.9% to $151.9 million from $159.7 million for the same period in the prior year.

Revenues for the three and six months ended June 30, 2010 decreased due to lower spending from customers in the government and direct mail industries as a result of continuing generally uncertain economic conditions in Canada. During the three months ended June 30, 2010, the segment experienced strong sales in June after weaker sales in April and May. In addition, revenues from lotteries during the first quarter of 2010 were lower than the same period in 2009 and continued to be lower during the second quarter of 2010. During the first six months of 2010, the segment experienced revenue gains from new business, which partially offset declines in revenues from existing customers.

For the quarter ended June 30, 2010, gross profit decreased $2.1 million to $17.8 million from $19.9 million for the same period in 2009. Gross profit as a percentage of revenues for the quarter ended June 30, 2010 decreased to 24.1% from 25.8% for the same period in 2009. The decrease in gross profit as a percentage of revenues during the quarter ended June 30, 2010 was due to lower revenues as discussed above.

For the six months ending June 30, 2010, gross profit decreased $4.4 million to $36.7 million from $41.1 million in the same period of 2009. Gross profit as a percentage of revenues for the six months ended June 30, 2010 decreased to 24.2% from 25.8% for the same period in 2009. The decrease in gross profit as a percentage of revenues during the six months ended June 30, 2010, was due to lower revenues and was partially offset by realized savings from on-going productivity improvements and cost reduction initiatives.

SUNDOG

Revenues at the Data Group's Sundog segment for the quarter ended June 30, 2010 decreased $0.4 million or 7.8% to $4.3 million from $4.7 million for the same period in the prior year. Revenues for the six months ended June 30, 2010 decreased $0.8 million or 8.6% to $9.2 million from $10.0 million for the same period in the prior year.

The decrease in revenues for the three and six months ended June 30, 2010 was due to a highly competitive printing market in Alberta and due to uncertain economic conditions in that province, which continue to negatively affect demand for commercial printing in that market, primarily marketing materials. The first quarter of 2010 revenues were also impacted by lower annual report volumes.

For the quarter ended June 30, 2010, gross profit decreased $0.1 million to $1.1 million from $1.2 million for the same period in 2009. Gross profit as a percentage of revenues for the quarter ended June 30, 2010 decreased to 24.4% from 25.3% for the same period in 2009. The decrease in gross profit as a percentage of revenues for the three months ended June 30, 2010 was principally due to lower revenues as noted above.

For the six months ended June 30, 2010, gross profit decreased $0.3 million to $2.3 million from $2.7 million for the same period in 2009. Gross profit as a percentage of revenues for the six months ended June 30, 2010 decreased to 25.4% from 26.6% for the same period in 2009. The decrease in gross profit as a percentage of revenues for the six months ended June 30, 2010 was principally due to the revenue shortfall discussed above and was partially offset by realized savings from cost reduction initiatives.

MULTIPLE PAKFOLD

Revenues at the Data Group's Multiple Pakfold segment for the quarter ended June 30, 2010 increased $0.5 million or 16.5% to $3.7 million from $3.2 million for the same period in the prior year. Revenues for the six months ended June 30, 2010 increased $0.6 million or 8.1% to $7.5 million from $6.9 million for the same period in the prior year.

The increase in revenues for the three and six months ended June 30, 2010 was attributable to an increase in market share due the bankruptcy of a competitor. Economic conditions continue to adversely impact the segment, which affects quoting activity, order quantities and reorder cycles.

For the quarter ended June 30, 2010, gross profit increased $0.4 million to $0.6 million from $0.2 million for the same period in 2009. Gross profit as a percentage of revenues for the quarter ended June 30, 2010 increased to 17.6% from 7.4% for the same period in 2009. For the six months ended June 30, 2010, gross profit increased $0.6 million to $1.3 million from $0.7 million for the same period of 2009. Gross profit as percentage of revenues for the six months ended June 30, 2010 was 17.6% compared to 9.8% for the same period in 2009. The improvement in gross profit as a percentage of revenues for the three and six months ended June 30, 2010 was due to the increase in revenues and the cost reduction initiatives undertaken in prior periods by the segment to improve operating efficiencies.

    
    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
     June 30, 2010 and 2009
    (in thousands of dollars,  Apr. 1 to   Apr. 1 to   Jan. 1 to   Jan. 1 to
     except percentages and      June 30,    June 30,    June 30,    June 30,
     per unit amounts,              2010        2009        2010        2009
     unaudited)                        $           $           $           $
    -------------------------------------------------------------------------
    Cash provided by (used in)
     operating activities          5,639       3,952      18,485      13,874
    Capital adjustments
      Maintenance capital
       expenditures(1)              (485)       (167)       (735)     (1,306)
      Purchase of convertible
       debentures                      -           -           -          (6)

    Other adjustments
     including discretionary
     items:
      Changes in non-cash
       working capital(2)           (589)      1,937      (8,078)       (755)
      Pension plan wind-up
       contributions(3)                -           -       1,260           -
      Other(4)                       150         117         (28)        224
    -------------------------------------------------------------------------
    Cash available for
     distribution                  4,715       5,839      10,904      12,031
    -------------------------------------------------------------------------
    Distributions to
     unitholders(5)                6,805       6,805      13,610      13,610
    -------------------------------------------------------------------------
    Shortfall of cash
     available for
     distribution over
     actual
     distributions                (2,090)       (966)     (2,706)     (1,579)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Per unit(6)
    -------------------------------------------------------------------------
    Cash available for
     distribution per unit(6)      0.201       0.249       0.464       0.513
    -------------------------------------------------------------------------
    Distributions to
     unitholders per unit(6)       0.290       0.290       0.580       0.580
    -------------------------------------------------------------------------
    Shortfall of cash available
     for distribution per unit
     over actual distributions
     per unit                     (0.089)     (0.041)     (0.116)     (0.067)
    -------------------------------------------------------------------------
    Payout ratio(7)               144.3%      116.5%      124.8%      113.1%
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    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 (used in) 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.
    (3) Excludes pension plan wind-up contributions to the Data Group's
        Relizon Canada defined benefit pension plan. During the six months
        ended June 30, 2010, the Data Group made its 2010 annual contribution
        of $0.6 million and an additional wind-up contribution prepayment of
        $0.6 million to that pension plan. It is currently expected that the
        wind-up benefit obligations will be substantially settled within this
        fiscal year. Subsequent to the quarter ended June 30, 2010, the final
        outstanding wind-up deficiency of $0.8 million was funded by the Data
        Group in advance of the benefit settlement, as required under
        applicable pension regulations.
    (4) Includes income tax related expenses and other amounts that do not
        reflect the ongoing operations of the Data Group's business.
    (5) Distributions are in respect of the distributions declared.
    (6) 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 or paid and not the weighted average
        number of units outstanding. As at June 30, 2010 and 2009, 23,490,592
        units were outstanding.
    (7) 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 (used in) operating activities to cash available for distribution for the three and six month periods ended June 30, 2010 and 2009, respectively, and the amounts discussed below. For the quarter ended June 30, 2010, the Fund generated $4.7 million or $0.201 per unit of cash available for distribution compared to $5.8 million or $0.249 per unit for the same period in 2009. Cash available for distribution for the quarter ended June 30, 2010 was calculated by deducting from cash provided by (used in) operating activities of $5.6 million, maintenance capital expenditures of $0.5 million and changes in non-cash working capital of $0.6 million, respectively, and adding back other non-cash items of $0.2 million. Cash available for distribution for the quarter ended June 30, 2009 was calculated by deducting from cash provided by (used in) operating activities of $4.0 million, maintenance capital expenditures of $0.2 million and adding back changes in non-cash working capital of $1.9 million and other non-cash items of $0.1 million, respectively.

For the six months ended June 30, 2010, the Fund generated $10.9 million or $0.464 per unit of cash available for distribution compared to $12.0 million or $0.513 per unit for the same period in 2009. Cash available for distribution for the six months ended June 30, 2010 was calculated by deducting from cash provided by operating activities of $18.5 million, maintenance capital expenditures of $0.7 million, changes in non-cash working capital of $8.1 million and other non-cash items of $0.1 million, respectively, and adding back pension plan wind-up contributions of $1.3 million. Cash available for distribution for the six months ended June 30, 2009 was calculated by deducting from cash provided by operating activities of $13.9 million, maintenance capital expenditures of $1.2 million and changes in non-cash working capital of $0.8 million, respectively, and adding back other non-cash items of $0.2 million.

For the quarter ended June 30, 2010, the Fund declared distributions of $6.8 million or $0.290 per unit. Actual distributions exceeded cash available for distribution by $2.1 million or $0.089 per unit for the quarter ended June 30, 2010. During the quarter ended June 30, 2010, the Data Group made cash payments of $0.4 million for the accrued restructuring provisions related to severance costs incurred as part of the Data Group's on-going productivity improvement initiatives charged to restructuring expense. These cash payments were funded by cash generated from operations and existing cash resources. The restructuring costs paid during the quarter have been deducted in determining cash available for distribution as these payments are included in cash provided by (used in) operating activities.

For the quarter ended June 30, 2009, the Fund declared distributions of $6.8 million or $0.290 per unit. Actual distributions exceeded cash available for distribution by $1.0 million or $0.041 per unit for the quarter ended June 30, 2009. During the quarter ended June 30, 2009, the Data Group made cash payments of $1.0 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 improvements initiatives charged to restructuring expense. These cash payments were funded entirely by cash generated from operations and the net proceeds from asset dispositions. The restructuring and integration costs paid during the quarter have been deducted in determining cash available for distribution as these payments are included in cash provided by (used in) operating activities.

For the six months ended June 30, 2010, the Fund declared distributions of $13.6 million or $0.580 per unit. Actual distributions exceeded cash available for distribution by $2.7 million or $0.464 per unit for the six months ended June 30, 2010. During the six months ended June 30, 2010, 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 improvements initiatives charged to restructuring expense. These cash payments were funded by cash generated from operations, the net proceeds from the sale of the Data Group's former facility in Orangeville Ontario and existing cash resources. The restructuring and integration costs paid during the quarter have been deducted in determining cash available for distribution as these payments are included in cash provided by (used in) operating activities.

For the six months ended June 30, 2009, the Fund declared distributions of $13.6 million or $0.580 per unit. Actual distributions exceeded cash available for distribution by $1.6 million or $0.067 per unit for the six months ended June 30, 2009. During the six months ended June 30, 2009, the Data Group made cash payments of $1.9 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, the net proceeds from asset dispositions and existing cash resources. The restructuring and integration costs paid during the quarter have been deducted in determining cash available for distribution as these payments are included in cash provided by (used in) operating activities.

INVESTING ACTIVITIES

Capital expenditures for the quarter ended June 30, 2010 of $0.5 million related primarily to maintenance capital expenditures and were financed by cash flow from operations and existing cash resources. Capital expenditures for the six months ended June 30, 2010 of $0.7 million related primarily to maintenance capital expenditures and were financed by cash flow from operations and net proceeds from asset dispositions. During the six months ended June 30, 2010, the Data Group sold its former Orangeville, Ontario facility for gross proceeds of $2.2 million.

FINANCING ACTIVITIES

During the quarter ended June 30, 2010, the Fund issued $45.0 million aggregate principal amount of 6.00% convertible unsecured subordinated debentures (the "6.00% Convertible Debentures"). The terms of the 6.00% Convertible Debentures are described in greater detail in the Fund's short form prospectus dated April 16, 2010 which is available on System for Electronic Document Analysis and Retrieval at www.sedar.com. During the three months ended June 30, 2010, the net proceeds from the sale of the 6.00% Convertible Debentures of approximately $42.7 million and a portion of cash on hand totalling $45.0 million were used to repay a portion of the Data Group's outstanding borrowings under its credit facility. For the quarter ended June 30, 2010, the Fund paid or declared aggregate cash distributions of $6.8 million to its unitholders. For the six months ended June 30, 2010, the Fund paid or declared aggregate cash distributions of $13.6 million to its unitholders.

    
    About The DATA Group Income Fund
    --------------------------------
    

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 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.

All financial information in this press release is presented in Canadian dollars and in accordance with Canadian generally accepted accounting principles ("GAAP"), unless specified otherwise.

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 weakened domestic and global economic conditions on the Data Group's businesses; the risk that the Data Group's efforts to reduce its operating costs may not become effective as quickly as the Data Group expects, thereby impacting the Data Group's profitability and cash available for distribution should the Data Group's revenues decline further than expected; the risk that, should the Data Group's revenues decline further than expected, the cost reduction measures taken by the Data Group in response to the current economic environment may not be sufficient and further reductions may be necessary; 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; 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, and the effect of those 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 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. Adjusted EBITDA for the three and six months ended June 30, 2010 means EBITDA adjusted for financing costs. Adjusted EBITDA for the three months ended June 30, 2009 means EBITDA adjusted for lease exit charges. Adjusted EBITDA for the six months ended June 30, 2009 means EBITDA adjusted for gains on cancellation of convertible debentures and lease exit charges. 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 for the three months ended June 30, 2010 and 2009 means cash provided by (used in) operating activities increased by, or reduced for, maintenance capital expenditures, changes in non-cash working capital, and other non-cash items. Cash available for distribution for the six months ended June 30, 2010 means cash provided by (used in) operating activities increased by, or reduced for, maintenance capital expenditures, pension plan wind-up contributions, changes in non-cash working capital, and other non-cash items. Cash available for distribution for the six months ended June 30, 2009 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 an indicator 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 (loss) income to Adjusted EBITDA, see Table 3 above. For a reconciliation of cash provided by (used in) operating activities to cash available for distribution, see Table 4 above.

    
    CONSOLIDATED BALANCE SHEETS
    -------------------------------------------------------------------------
    (in thousands of dollars, unaudited)                June 30, December 31,
                                                            2010        2009
                                                               $           $
    -------------------------------------------------------------------------
    Assets
    Current assets
      Cash and cash equivalents                           15,684      11,736
      Accounts receivable                                 38,064      44,930
      Inventories                                         43,216      47,449
      Prepaid expenses and other current assets            4,846       4,192
      Assets held for sale                                     -       2,085
                                                      -----------------------
                                                         101,810     110,392

    Property, plant and equipment                         28,060      30,672
    Goodwill                                             141,206     141,206
    Intangible assets                                     39,173      44,305
                                                      -----------------------
                                                         310,249     326,575
                                                      -----------------------
                                                      -----------------------
    Liabilities
    Current liabilities
      Accounts payable and accrued liabilities            28,238      29,663
      Accrued restructuring provisions                       731       1,556
      Income taxes payable                                   109       1,059
      Deferred revenue                                     9,804       8,971
      Distributions payable                                2,269       2,269
                                                      -----------------------
                                                          41,151      43,518

    Revolving bank facility                               25,000      70,000
    Convertible debentures                                77,484      34,488
    Future income taxes                                    5,103       6,018
    Deferred gain                                          1,432       1,530
    Unfavourable lease obligation                            963       1,025
    Deferred lease inducement                                796         858
    Lease exit accrual                                       719         793
    Pension obligations                                    5,418       8,003
    Post-employment and post-retirement benefits           2,159       2,143
                                                      -----------------------
                                                         160,225     168,376
                                                      -----------------------
    Unitholders' Equity
    Units                                                215,336     215,336
    Conversion options                                     3,036         897
    Deficit                                              (68,348)    (58,034)
                                                      -----------------------
                                                         150,024     158,199
                                                      -----------------------
                                                         310,249     326,575
                                                      -----------------------
                                                      -----------------------



    CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND
    COMPREHENSIVE INCOME (LOSS)
    -------------------------------------------------------------------------
    (in thousands of dollars, except per                 For the     For the
     unit amounts, unaudited)                              three       three
                                                          months      months
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2010        2009
                                                               $           $
    -------------------------------------------------------------------------
    Revenues                                              80,995      84,269

    Cost of revenues (including depreciation of $1,541
     and $1,726, respectively)                            61,516      62,938
                                                      -----------------------

    Gross profit                                          19,479      21,331
                                                      -----------------------

    Expenses
      Selling, commissions and expenses                    7,979       8,408
      General and administration expenses (including
       depreciation of $74 and $66, respectively)          5,701       7,285
      Lease exit charge                                        -         866
      Amortization of intangible assets                    2,566       2,649
                                                      -----------------------

                                                          16,246      19,208
                                                      -----------------------

    Income before interest and income taxes                3,233       2,123

    Interest expense and financing costs (net of
     interest income of $26 and $207, respectively)        3,916       1,253
                                                      -----------------------

    (Loss) income before income taxes                       (683)        870
                                                      -----------------------

    Future income tax (recovery) expense                    (600)        121
                                                      -----------------------

    Net (loss) income for the period                         (83)        749
                                                      -----------------------
                                                      -----------------------

    Gain on cash flow hedges                                   -         434
                                                      -----------------------

    Comprehensive income for the period                      (83)      1,183
                                                      -----------------------
                                                      -----------------------

    Basic (loss) income per unit                           (0.00)       0.03
                                                      -----------------------

    Diluted (loss) income per unit                         (0.00)       0.03
                                                      -----------------------

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



    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
                                                         June 30,    June 30,
                                                            2010        2009
                                                               $           $
    -------------------------------------------------------------------------
    Revenues                                             166,559     174,686

    Cost of revenues (including depreciation of
     $3,103 and $3,532, respectively)                    126,170     130,213
                                                      -----------------------

    Gross profit                                          40,389      44,473
                                                      -----------------------

    Expenses
      Selling, commissions and expenses                   16,291      17,209
      General and administration expenses (including
       depreciation of $151 and $142, respectively)       11,699      14,412
      Lease exit charge                                        -         866
      Gain on cancellation of convertible debentures           -          (2)
      Amortization of intangible assets                    5,132       5,298
                                                      -----------------------
                                                          33,122      37,783
                                                      -----------------------

    Income before interest and income taxes                7,267       6,690
                                                      -----------------------

    Interest expense and financing costs (net of
     interest income of $26 and $247, respectively)        5,210       2,689
                                                      -----------------------

    Income before income taxes                             2,057       4,001
                                                      -----------------------

    Income tax expense (recovery)
      Current                                               (324)          -
      Future                                                (915)        455
                                                      -----------------------

                                                          (1,239)        455
                                                      -----------------------

    Net income for the period                              3,296       3,546
                                                      -----------------------
                                                      -----------------------

    Gain on cash flow hedges                                   -         715
                                                      -----------------------

    Comprehensive income for the period                    3,296       4,261
                                                      -----------------------
                                                      -----------------------

    Basic income per unit                                   0.14        0.15
                                                      -----------------------

    Diluted income per unit                                 0.14        0.15
                                                      -----------------------

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



    CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
    -------------------------------------------------------------------------
    (in thousands                               Accumu-
     of dollars,                                 lated
     unaudited)                                  other
                                                compre-                Total
                                               hensive                  Unit-
                                 Conversion     income               holders'
                           Units    options      (loss)   Deficit     Equity
                               $          $          $          $          $
    -------------------------------------------------------------------------
    Balance as at
     December 31, 2008   215,336        898     (1,059)   (43,857)   171,318

    Distributions
     declared                  -          -          -    (13,610)   (13,610)

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

    Gain on cash
     flow hedges               -          -        715          -        715

    Net income for
     the period                -          -          -      3,546      3,546
                        -----------------------------------------------------

    Balance as at
     June 30, 2009       215,336        897       (344)   (53,921)   161,968
                        -----------------------------------------------------
                        -----------------------------------------------------

    Balance as at
     December 31, 2009   215,336        897          -    (58,034)   158,199

    Distributions
     declared                  -          -          -    (13,610)   (13,610)

    Issuance of
     convertible
     debentures                -      2,139          -          -      2,139

    Net income for
     the period                -          -          -      3,296      3,296
                        -----------------------------------------------------

    Balance as at
     June 30, 2010       215,336      3,036          -    (68,348)   150,024
                        -----------------------------------------------------
                        -----------------------------------------------------



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (in thousands of dollars, unaudited)                 For the     For the
                                                           three       three
                                                          months      months
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2010        2009
                                                               $           $
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    -------------------------------------------------------------------------
    Net (loss) income for the period                         (83)        749
    Adjustments to net (loss) income
      Depreciation of property, plant and equipment        1,615       1,792
      Amortization of intangible assets                    2,566       2,649
      Pension expense                                        367         230
      Contributions made to pension plans                 (1,017)       (484)
      (Gain) loss on disposal of property, plant
       and equipment                                         (16)         18
      Lease exit charge                                        -         866
      Financing costs                                      2,266           -
      Accretion of convertible debentures                     94          42
      Amortization of deferred gain                          (49)        (49)
      Unfavourable lease obligation                          (31)        (29)
      Amortization of lease inducement                       (31)        (31)
      Accretion of lease exit accrual                        (39)         (8)
      Post-employment and post-retirement benefits             8          23
      Future income tax (recovery) expense                  (600)        121
                                                      -----------------------
                                                           5,050       5,889
    Changes in non-cash items relating to
     operating activities                                    589      (1,937)
                                                      -----------------------
                                                           5,639       3,952
                                                      -----------------------
    Investing activities
    -------------------------------------------------------------------------
    Purchase of property, plant and equipment               (485)       (167)
    Proceeds on disposal of property, plant and equipment      -         588
                                                      -----------------------
                                                            (485)        421
                                                      -----------------------
    Financing activities
    -------------------------------------------------------------------------
    Issuance of convertible debentures, net               42,734           -
    Repayment of revolving bank facility                 (45,000)          -
    Distributions to unitholders                          (6,805)     (6,805)
                                                      -----------------------
                                                          (9,071)     (6,805)
                                                      -----------------------
    Decrease in cash and cash equivalents
     during the period                                    (3,917)     (2,432)
    -------------------------------------------------------------------------
    Cash and cash equivalents - beginning of period       19,601      14,112
    -------------------------------------------------------------------------
    Cash and cash equivalents - end of period             15,684      11,680
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information
      Interest paid                                        1,431       1,865
      Income taxes paid                                        -       3,470



    CONSOLIDATED STATEMENTS OF CASH FLOWS
    -------------------------------------------------------------------------
    (in thousands of dollars, unaudited)                 For the     For the
                                                             six         six
                                                          months      months
                                                           ended       ended
                                                         June 30,    June 30,
                                                            2010        2009
                                                               $           $
    -------------------------------------------------------------------------
    Cash provided by (used in)
    Operating activities
    -------------------------------------------------------------------------
    Net income for the period                              3,296       3,546
    Adjustments to net income
      Depreciation of property, plant and equipment        3,254       3,674
      Amortization of intangible assets                    5,132       5,298
      Pension expense                                        734         460
      Contributions made to pension plans                 (3,319)       (986)
      Loss (gain) on disposal of property, plant
       and equipment                                         104         (87)
      Gain on cancellation of convertible debentures           -          (2)
      Lease exit charge                                        -         866
      Financing costs                                      2,266           -
      Accretion of convertible debentures                    135          83
      Amortization of deferred gain                          (98)        (97)
      Unfavourable lease obligation                          (62)        (58)
      Amortization of lease inducement                       (62)        (61)
      Accretion of lease exit accrual                        (74)         (8)
      Post-employment and post-retirement benefits            16          36
      Future income tax (recovery) expense                  (915)        455
                                                      -----------------------
                                                          10,407      13,119
    Changes in non-cash items relating to
     operating activities                                  8,078         755
                                                      -----------------------
                                                          18,485      13,874
                                                      -----------------------
    Investing activities
    -------------------------------------------------------------------------
    Purchase of property, plant and equipment               (735)     (1,306)
    Proceeds on disposal of property, plant and
     equipment                                             2,074       1,236
                                                      -----------------------
                                                           1,339         (70)
                                                      -----------------------
    Financing activities
    -------------------------------------------------------------------------
    Issuance (repurchase) of convertible debentures,
     net                                                  42,734          (6)
    Repayment of revolving bank facility                 (45,000)          -
    Distributions to unitholders                         (13,610)    (13,610)
                                                      -----------------------
                                                         (15,876)    (13,616)
                                                      -----------------------
    Increase in cash and cash equivalents during
     the period                                            3,948         188
    -------------------------------------------------------------------------
    Cash and cash equivalents - beginning of period       11,736      11,492
    -------------------------------------------------------------------------
    Cash and cash equivalents - end of period             15,684      11,680
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow information
      Interest paid                                        2,009       2,541
      Income taxes paid                                      596       3,470
    

SOURCE THE DATA GROUP INCOME FUND

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

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THE DATA GROUP INCOME FUND

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