Pason Systems Inc. reports second quarter earnings



    Stock Exchange: TSX
    Symbol: PSI

    CALGARY, Aug. 9 /CNW/ - Pason Systems Inc. ("Pason" or "the Company")
today announced its results for the six-month period ended June 30, 2007.

    
    Performance Data

    -------------------------------------------------------------------------
                       Three Months Ended June 30,  Six Months Ended June 30,
                             2007     2006  Change      2007     2006  Change
    -------------------------------------------------------------------------
    (000s, except per share
     data) (unaudited)         ($)      ($)    (%)        ($)      ($)    (%)

    Revenue                44,597   47,706     (7)   114,917  115,434      -
    Earnings                5,376   11,620    (54)    23,900   31,751    (25)
      Per share - basic      0.07     0.15    (53)      0.30     0.41    (27)
      Per share - diluted    0.07     0.14    (50)      0.30     0.39    (23)
    Cash flow from
     operations(1)         18,574   19,659     (6)    48,703   52,865     (8)
      Per share - basic      0.23     0.25     (8)      0.62     0.68     (9)
      Per share - diluted    0.23     0.24     (4)      0.61     0.66     (8)
    Capital expenditures   21,520   20,170      7     41,693   32,911     27
    Working capital        56,875   39,159     45     56,875   39,159     45
    Total assets          271,658  232,874     17    271,658  232,874     17
    Shareholders'
     equity               248,439  193,335     29    248,439  193,335     29
    Common shares
     outstanding (No.)
      Basic                79,523   77,733      2     79,151   77,472      2
      Diluted              81,196   80,753      1     80,227   80,461      -
    Shares outstanding
     end of period         79,758   77,837      2     79,758   77,837      2
    -------------------------------------------------------------------------
    (1)  For the purposes of cash flow per share calculations, cash flow is
         defined as earnings adjusted for depreciation and amortization,
         stock-based compensation expense and future income taxes. This
         definition is not a recognized measure under Canadian generally
         accepted accounting principles, and accordingly, may not be
         comparable to measures used by other companies.
    


    President's message

    Operations Review

    As disclosed in the previous quarter's Shareholders' Letter, the dramatic
reduction in Canadian rig activity to levels not seen in ten years did, in
fact, reduce earnings. Revenue decreased 7% from the prior year to
$44.6 million and net earnings declined 54% to $5.4 million. Earnings per
diluted share were $0.07 compared to $0.14 in the second quarter of 2006. Cash
flow from operations was not as negatively impacted at $18.6 million versus
$19.7 million in the prior year due to the fact that much of our earnings
reduction was caused by a change in depreciation policy discussed during the
previous quarter and further below. The reduced results in Canada were
somewhat offset by a record second quarter in the United States.
    The United States segment operating profit improved 21% to $14.0 million
versus $11.6 million in 2006 and was also up 8% sequentially over the first
quarter's results of $12.9 million. This is despite significant devaluation of
the U.S. dollar against the Canadian dollar, which negatively impacted U.S.
results by $0.9 million when presented in Canadian dollars. Rental revenue for
the second quarter increased 23% over 2006, while the year-over-year increase
in industry drilling days was only 10%. Our revenue per industry drilling day
climbed a further 13% to $195 compared to $173 in the prior year. We continue
to be very encouraged by our strengthening instrumentation franchise in the
United States. Many Canadian service companies are just now entering the U.S.
market to flee the declining Canadian market, but we are well positioned
having started our U.S. operations ten years ago. The slowing of activity in
North America may actually aid our United States operations in the near-term.
When Canada was booming, we were not always able to deliver all of the new
rental instrumentation that our U.S. unit requested. Further, with the U.S.
activity leveling off, we do not have to hire field technicians at such a
frenzied pace, which provides us more time to review the performance of the
people we currently employ and improve upon training. This opportunity
presents itself to all service companies, but since we make the quality of our
field service function our prime competitive advantage, we have more upside
from this opportunity.
    Contribution from our geological services division for the quarter was
disappointing. Margin from geological services was down 23% to $1.1 million
from $1.5 million in 2006. Certainly the sinking U.S. dollar did not help, but
there was also a reluctance by customers to invest as much in geological
services throughout the industry. Where services were employed, the choice was
usually towards the unmanned or less expensive options, and as a result, our
unmanned days increased by 300 days, while the manned services days decreased
by 400 days. We are now fully booked for manned services in the traditionally
strong third quarter.
    In Canada, our segment operating profit was a loss of $6.3 million versus
a profit of $5.3 million in the prior year. Our revenue fell 43% to
$10.8 million compared to an industry decrease of 44% in drilling days for the
quarter. Our revenue per industry drilling day was $790 compared to $785 a
year ago. The decline in drilling activity in Canada has been significant,
while at the same time, most service companies find themselves with their
largest overhead ever after ramping up to meet the industry's needs of the
past few years. Clearly our field service structure, which consists primarily
of salaried field technicians, is our greatest cost, but we are reluctant to
dismantle this important part of our business. However, we are not expanding
our field technician count and are using some of this temporarily excess
labour to make a push on marketing and installing Electronic Service Recorders
(ESRs).
    International (South America, Mexico and Australia) now comprises over
100 rigs with Pason instrumentation. Revenue for the quarter was $1.6 million,
up from $1.4 million in 2006, and the segment profit was $0.9 million compared
to $0.7 million last year. Our South American partner continues to dominate in
those countries and is making continued gains in deploying Pason's full suite
of instrumentation products. Recently, our ESR has been strong in Argentina
with 60 systems either installed or committed for installation. In Australia,
our new international operations manager invested two months to help develop
the capabilities of our local partner. We now have ten rigs installed or
rigging up, which is the majority of activity in that small market, and we are
now looking at other surrounding countries for expansion with our Australian
partner.
    As noted above, our depreciation charges for the quarter were up
substantially over the prior year. Ideally, we would like to depreciate our
assets using unit-of-use that provides the best matching of revenues and
depreciation expenses. However, because we have thousands of component parts
that come together to make systems as needed and are being constantly
interchanged, there really is no practical depreciation method other than
declining balance to depreciate these assets. In recalculating our
depreciation using declining balance for assets previously depreciated under
unit-of-use, there was no material difference in 2005, 2006 and the first
quarter of 2007. However, in the 2007 second quarter with its unusually low
activity, our depreciation was $11.9 million, up $4.6 million from 2006, or an
increase of $0.04 per share over what the previous unit-of-use method would
have generated. Clearly this is a timing difference and we will benefit from
proportionately lower depreciation charges in future periods of higher
activity.

    Outlook

    The depth of the decline in Canadian drilling activity surprised most
industry followers given the historically high commodity prices. One factor
contributing to the decline has been a concern about the overall finding costs
in Canada, of which drilling is just a subset. Normal market forces from
reduced drilling (decreasing supply and lower prices for services) should
largely balance out and increase demand again by late this year. However, the
industry has a challenge in getting drilling costs down and Pason's response
is to provide services that meet that objective. Our product strategy is to
target drilling support functions that previously required specialists and
expensive people at the wellsite and then redesign the function so that a
typical drilling crew can provide the onsite support while operating decisions
can be provided by remote management. This operating change offers the
potential for a meaningful reduction in drilling costs and is being much
better received in the new environment.
    Outside of Canada in the near-term, we see no reason why we cannot
continue to grow strongly in all of our markets.


    On behalf of the Board of Directors,

    (signature)

    Jim Hill
    President & Chief Executive Officer

    August 9, 2007


    Second Quarter Conference Call

    Pason will be conducting a conference call for interested analysts,
brokers, investors and media representatives to review its second quarter
results at 9:00 a.m. (Calgary time) on Friday, August 10, 2007. The conference
call dial-in number is 1-800-733-7571. Seven-day replay: 1-877-289-8525 and
enter 21232929 followed by the number sign.

    Pason Systems Inc. is the world's largest provider of rental oilfield
instrumentation systems that are designed and manufactured for use on
land-based drilling and service rigs. Pason offers a tightly integrated
package of complex services, including data acquisition, wellsite reporting
software, remote communications and Internet information management tools.
    Pason's common shares trade on the Toronto Stock Exchange under the
symbol PSI. Additional information on Pason, including the Interim Report to
Shareholders which includes the Management Discussion and Analysis for the
period ended June 30, 2007 is available on the website at www.pason.com.

    Certain information regarding the Company contained herein may constitute
forward-looking statements under applicable securities laws. Such statements
are subject to known or unknown risks and uncertainties that may cause actual
results to differ materially from those anticipated or implied in the
forward-looking statements.



    
    CONSOLIDATED BALANCE SHEETS

    -------------------------------------------------------------------------
    As at                                June 30,  December 31,      June 30,
                                            2007          2006          2006
    -------------------------------------------------------------------------
    (000s) (unaudited)                        ($)           ($)           ($)

    Assets
    Current
      Cash                                24,646        21,857        12,205
      Accounts receivable                 48,573        70,173        56,615
      Prepaid expenses                     2,184         1,816         2,239
      Income taxes                         2,504             -             -
    -------------------------------------------------------------------------
                                          77,907        93,846        71,059
    Investment                             3,000         3,000         3,000
    Capital assets                       187,610       171,458       156,286
    Deferred development costs             3,141         2,556         2,529
    -------------------------------------------------------------------------
                                         271,658       270,860       232,874
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities
    Current
      Accounts payable and accrued
       liabilities                        21,032        22,256        23,166
      Income taxes                             -         7,192         3,020
      Dividend payable                         -         5,903             -
      Current portion of non-revolving
       term credit facility                    -             -         5,714
    -------------------------------------------------------------------------
                                          21,032        35,351        31,900
    Future income taxes                    2,187         4,300         6,210
    Long-term portion of non-revolving
     term credit facility                      -             -         1,429
    -------------------------------------------------------------------------
                                          23,219        39,651        39,539
    -------------------------------------------------------------------------
    Shareholders' Equity
    Share capital                         46,574        38,085        33,579
    Contributed surplus                    8,735         7,130         5,201
    Accumulated other comprehensive
     income (Note 1)                     (21,139)      (10,353)      (14,915)
    Retained earnings                    214,269       196,347       169,470
    -------------------------------------------------------------------------
                                         248,439       231,209       193,335
    -------------------------------------------------------------------------
                                         271,658       270,860       232,874
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS

    -------------------------------------------------------------------------
                                      Three Months Ended    Six Months Ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    (000s, except per share data)
     (unaudited)                            ($)       ($)       ($)       ($)

    Revenue
      Rental revenue                    41,393    44,174   108,173   108,821
      Geological services                3,204     3,532     6,744     6,613
    -------------------------------------------------------------------------
                                        44,597    47,706   114,917   115,434
    -------------------------------------------------------------------------
    Expenses
      Rental services                   16,895    14,592    36,819    28,745
      Geological services                2,082     2,079     4,502     4,108
      Manufacturing and distribution     1,515     2,613     4,680     5,338
      Research and development           1,872     1,969     4,147     4,076
      Administration                     1,935     1,562     3,740     3,083
      Stock-based compensation           1,655     1,139     2,805     2,080
      Interest                              26       208        63       503
      Depreciation and amortization     11,858     7,428    23,702    18,492
    -------------------------------------------------------------------------
                                        37,838    31,590    80,458    66,425
    -------------------------------------------------------------------------
    Earnings before income taxes         6,759    16,116    34,459    49,009
    -------------------------------------------------------------------------
    Income taxes
      Current                            1,698     5,024    12,263    16,716
      Future                              (315)     (528)   (1,704)      542
    -------------------------------------------------------------------------
                                         1,383     4,496    10,559    17,258
    -------------------------------------------------------------------------
    Earnings                             5,376    11,620    23,900    31,751
    Retained earnings, beginning
     of period                         214,871   161,739   196,347   141,608
    Dividends                           (5,978)   (3,889)   (5,978)   (3,889)
    -------------------------------------------------------------------------
    Retained earnings, end of period   214,269   169,470   214,269   169,470
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Earnings per share (Note 2)
      Basic                               0.07      0.15      0.30      0.41
      Diluted                             0.07      0.14      0.30      0.39
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

    -------------------------------------------------------------------------
                                      Three Months Ended    Six Months Ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    (000s) (unaudited) (Note 1)             ($)       ($)       ($)       ($)

    Earnings                             5,376    11,620    23,900    31,751
    Other comprehensive income, net
     of tax                             (9,554)   (3,514)  (10,786)   (3,390)
    -------------------------------------------------------------------------
    Total comprehensive (loss) income   (4,178)    8,106    13,114    28,361
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF ACCUMULATED OTHER COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                                      Three Months Ended    Six Months Ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    (000s) (unaudited) (Note 1)             ($)       ($)       ($)       ($)

    Accumulated other comprehensive
     income, beginning of period       (11,585)        -   (10,353)        -
    Reclassification from foreign
     currency translation adjustment         -   (11,401)        -   (11,525)
    Other comprehensive income, net of
     tax                                (9,554)   (3,514)  (10,786)   (3,390)
    -------------------------------------------------------------------------
    Accumulated other comprehensive
     income, end of period             (21,139)  (14,915)  (21,139)  (14,915)
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    CONSOLIDATED STATEMENTS OF CASH FLOWS

    -------------------------------------------------------------------------
                                      Three Months Ended    Six Months Ended
                                                 June 30,            June 30,
                                          2007      2006      2007      2006
    -------------------------------------------------------------------------
    (000s) (unaudited)                      ($)       ($)       ($)       ($)

    Cash flows related to
     the following activities:
    Operating
      Earnings                           5,376    11,620    23,900    31,751
      Adjustments for non-cash items:
        Depreciation and amortization   11,858     7,428    23,702    18,492
        Stock-based compensation         1,655     1,139     2,805     2,080
        Future income taxes               (315)     (528)   (1,704)      542
    -------------------------------------------------------------------------
                                        18,574    19,659    48,703    52,865
      Changes in non-cash working
       capital                           8,213    14,771     3,245      (574)
    -------------------------------------------------------------------------
                                        26,787    34,430    51,948    52,291
    -------------------------------------------------------------------------
    Financing
      Issue of common shares under
       the stock option plan             4,745     1,201     7,289     3,624
      Repayment of non-revolving term
       credit facility                       -    (1,428)        -    (2,857)
      Payment of dividends              (5,978)   (3,889)  (11,881)   (3,889)
    -------------------------------------------------------------------------
                                        (1,233)   (4,116)   (4,592)   (3,122)
    -------------------------------------------------------------------------
    Investing
      Additions to capital assets      (20,905)  (19,819)  (40,814)  (32,003)
      Deferred development costs          (615)     (351)     (879)     (908)
      Proceeds on disposal of capital
       assets                                4       139        47       160
      Changes in non-cash working
       capital                           1,037     7,905    (2,921)    2,246
    -------------------------------------------------------------------------
                                       (20,479)  (12,126)  (44,567)  (30,505)
    -------------------------------------------------------------------------
    Net increase in cash and
     cash equivalents                    5,075    18,188     2,789    18,664
    Cash and cash equivalents,
     beginning of period                19,571    (5,983)   21,857    (6,459)
    -------------------------------------------------------------------------
    Cash and cash equivalents,
     end of period                      24,646    12,205    24,646    12,205
    -------------------------------------------------------------------------
    Represented by:
      Cash and cash equivalents         24,646    12,205    24,646    12,205
    -------------------------------------------------------------------------
    See accompanying notes to the consolidated financial statements.



    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

    Six Months Ended June 30, 2007 and 2006
    (000s, except per share data) (unaudited)

    1.  Significant Accounting Policies

        These interim consolidated financial statements have been prepared in
        accordance with the same accounting policies and methods of
        computation as those outlined in the annual audited financial
        statements. These interim consolidated financial statements do not
        include all disclosures normally provided in annual financial
        statements and should be read in conjunction with the Company's
        audited annual financial statements for the year ended December 31,
        2006.

        Significant Accounting Changes

        (a) Beginning in fiscal 2007, the Company adopted the new Section
            1530 "Comprehensive Income" standard issued by the Canadian
            Institute of Chartered Accountants. This section introduces
            comprehensive income, which is comprised of earnings and other
            comprehensive income (OCI). OCI represents changes in
            shareholders' equity during a period from transactions with
            non-owner sources and includes unrealized foreign currency
            translation gains and losses on self-sustaining foreign
            operations, which is the only component of Pason's OCI. This new
            section has been applied retroactively and all comparative
            financial statements have been restated accordingly.

            The cumulative changes in the unrealized foreign currency
            translation gains and losses that were previously disclosed in
            shareholders' equity under the caption foreign currency
            translation adjustment have been reclassified to another
            component of shareholders' equity called accumulated other
            comprehensive income, which represents the cumulative amounts of
            OCI.

        (b) In the first quarter of 2007, the Company changed its
            depreciation policy on certain capital assets. Rental equipment,
            which was previously depreciated on a unit-of-use method, is now
            depreciated on a declining-balance method at an annual rate of
            20% with no residual value. The full impact of this change on a
            retroactive basis was measured and the Company concluded that the
            differences arising from the comparison of the old to new method
            were immaterial to the overall consolidated financial statements.
            Consequently, the Company has not restated any prior period.

            Certain comparative figures have been reclassified to conform to
            the current year's presentation and to record the effect of the
            retroactive application of the new accounting change in
            comprehensive income noted above.

    2.  Share Capital

        Authorized
          Unlimited number of common shares
          Unlimited number of preferred shares, issuable in series

        Issued
          Common shares

        ---------------------------------------------------------------------
                                                        Shares        Amount
        ---------------------------------------------------------------------
                                                          (No.)           ($)

        Balance, December 31, 2006                      78,738        38,085
          Exercise of stock options                      1,020         7,289
          Contributed surplus adjustment on exercise
           of stock options                                  -         1,200
        ---------------------------------------------------------------------
        Balance, June 30, 2007                          79,758        46,574
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Stock Option Plan

        At June 30, 2007, 5,655 stock options were outstanding for common
        shares at exercise prices ranging from $2.88 to $17.75 per share,
        expiring between 2007 and 2010 as follows:

        ---------------------------------------------------------------------
                                       2007                    2006
        ---------------------------------------------------------------------
                                            Weighted                Weighted
                                             Average                 Average
                                   Share    Exercise       Share    Exercise
                                 Options       Price     Options       Price
        ---------------------------------------------------------------------
                                    (No.)         ($)       (No.)         ($)
        Outstanding, beginning
         of period                 6,889       10.84       7,110        7.92
          Granted                    122       14.91         689       16.66
          Exercised               (1,020)       7.15        (792)       4.58
          Forfeited                 (336)      13.86        (373)      10.55
        ---------------------------------------------------------------------
        Outstanding, end of
         period                    5,655       11.41       6,634        9.07
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Exercisable, end of
         period                    2,541        8.39       2,424        6.29
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Available for grant,
         end of period             2,321                   1,150
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        All options are issued at market price and vest over three years.
        Options issued prior to November 2004 expire five years after the
        date of issuance. Effective November 2004 through October 2006,
        options granted expire three years and 60 days after issuance.
        Effective November 2006, options granted expire three years and
        six months after issuance.

        The following table summarizes information about stock options
        outstanding at June 30, 2007:

        ---------------------------------------------------------------------

                              Options Outstanding       Options Exercisable
        ---------------------------------------------------------------------
                                    Weighted
                                     Average  Weighted              Weighted
        Range of                   Remaining   Average               Average
        Exercise        Options  Contractual  Exercise Exercisable  Exercise
        Prices      Outstanding         Life     Price     (Vested)    Price
        ---------------------------------------------------------------------
        ($)               (No.)       (Years)       ($)       (No.)       ($)

        2.88 - 7.25      1,269          1.27      5.19       1,269      5.19
        7.26 - 13.50     1,760          1.40     10.13         806      9.47
        13.51 - 17.75    2,626          2.24     15.28         466     15.27
        ---------------------------------------------------------------------
                         5,655          1.76     11.41       2,541      8.39
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        The Company is authorized to issue a maximum of 30,000 shares under
        its stock option plan, of which 26,515 options have been granted,
        5,655 options are outstanding, 4,843 options have been cancelled and
        8,327 options are available for issue at June 30, 2007. The total
        number of options outstanding must not exceed 10% of the total common
        shares outstanding.

        Stock options issued to employees and directors have been accounted
        for using the fair value method and recorded as stock-based
        compensation expense of $2,805 (2006 - $2,080) in the consolidated
        statement of earnings, using the following weighted average
        assumptions:

        ---------------------------------------------------------------------
                                                            2007        2006
        ---------------------------------------------------------------------

        Fair value of stock options ($)                     3.91        4.25
        Forfeiture rate (%)                                 16.8        17.0
        Risk-free interest rate (%)                         4.10        4.25
        Expected option life (years)                        3.14        3.14
        Expected volatility (%)                             32.0        31.4
        Annual dividends per share (%)                       1.0         1.0
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Amounts recorded to contributed surplus relating to the fair value of
        stock options expensed and subsequent reduction for options exercised
        are as follows:

        ---------------------------------------------------------------------
                                                                      Amount
        ---------------------------------------------------------------------
                                                                          ($)
        Contributed Surplus
        Balance, December 31, 2006                                     7,130
          Stock-based compensation expense for the period              2,805
          Stock options exercised                                     (1,200)
        ---------------------------------------------------------------------
        Balance, June 30, 2007                                         8,735
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

    3.  Segmented Information

        The Company operates in three geographic segments within one industry
        segment. Rental services are provided in Canada, the United States
        and internationally (South America, Mexico and Australia). The
        amounts related to each segment are as follows:

        ---------------------------------------------------------------------
                                              United
                                  Canada      States   International   Total
        ---------------------------------------------------------------------
                                      ($)         ($)         ($)         ($)
        Three Months Ended
         June 30, 2007
        Revenue from external
         customers                10,818      32,217       1,562      44,597
        Depreciation and
         amortization              5,922       5,641         295      11,858
        Operating costs           11,176      12,586         361      24,123
        ---------------------------------------------------------------------
        Segment operating (loss)
         profit                   (6,280)     13,990         906       8,616
        ---------------------------------------------------------
        ---------------------------------------------------------
        Interest                                                          26
        Corporate expenses                                               176
        Stock-based compensation                                       1,655
        Income taxes                                                   1,383
                                                                    ---------
        Earnings                                                       5,376
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Capital expenditures       7,443      11,648       2,429      21,520
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Three Months Ended
         June 30, 2006
        Revenue from external
         customers                18,961      27,314       1,431      47,706
        Depreciation and
         amortization              2,328       4,841         259       7,428
        Operating costs           11,322      10,908         454      22,684
        ---------------------------------------------------------------------
        Segment operating profit   5,311      11,565         718      17,594
        ---------------------------------------------------------
        ---------------------------------------------------------
        Interest                                                         208
        Corporate expenses                                               131
        Stock-based compensation                                       1,139
        Income taxes                                                   4,496
                                                                    ---------
        Earnings                                                      11,620
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Capital expenditures       5,372      13,095       1,703      20,170
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------


        ---------------------------------------------------------------------
                                              United
                                  Canada      States   International   Total
        ---------------------------------------------------------------------
                                      ($)         ($)         ($)         ($)
        Six Months Ended
         June 30, 2007
        Revenue from external
         customers                46,288      65,261       3,368     114,917
        Depreciation and
         amortization             12,405      10,712         585      23,702
        Operating costs           25,096      27,614         885      53,595
        ---------------------------------------------------------------------
        Segment operating profit   8,787      26,935       1,898      37,620
        ---------------------------------------------------------
        ---------------------------------------------------------
        Interest                                                          63
        Corporate expenses                                               293
        Stock-based compensation                                       2,805
        Income taxes                                                  10,559
                                                                    ---------
        Earnings                                                      23,900
                                                                    ---------
        Capital assets           109,828      67,992       9,790     187,610
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Capital expenditures      17,745      19,929       4,019      41,693
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        Six Months Ended
         June 30, 2006
        Revenue from external
         customers                61,352      51,430       2,652     115,434
        Depreciation and
         amortization             10,052       7,939         501      18,492
        Operating costs           23,457      20,863         735      45,055
        ---------------------------------------------------------------------
        Segment operating profit  27,843      22,628       1,416      51,887
        ---------------------------------------------------------
        ---------------------------------------------------------
        Interest                                                         503
        Corporate expenses                                               295
        Stock-based compensation                                       2,080
        Income taxes                                                  17,258
                                                                    ---------
        Earnings                                                      31,751
                                                                    ---------
                                                                    ---------
        Capital assets            96,906      53,650       5,730     156,286
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
        Capital expenditures      10,249      20,713       1,949      32,911
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------
    





For further information:

For further information: Pason Systems Inc.: Jim Hill, President and
CEO, Phone: (403) 301-3401, Fax: (403) 301-3499, E-mail: jim.hill@pason.com;
Jim Glasspoole, Chief Financial Officer, Phone: (403) 692-3840, Fax: (403)
301-3411, E-Mail: jim.glasspoole@pason.com


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