- Company Continues to Execute on Long-term Growth Strategy -
Toronto Stock Exchange symbol: RC
WATERLOO, ON, Aug. 2 /PRNewswire-FirstCall/ - RDM Corporation (TSX: RC),
a leading developer of specialized software and hardware products for
electronic payment processing, today reported its financial results for the
three months ended June 30, 2005.
Financial Summary
- Total revenues for the quarter were $4.1 million, compared with
$5.4 million for the three months ended June 30, 2004. The 23%
decrease was primarily due to disappointing scanner sales in the
Digital Imaging segment as Check 21 market adoption continued to be
impacted by lengthy bank product rollouts.
- On a percentage basis, gross profits increased to 47% of revenues for
the quarter, compared to gross profits of 42% a year earlier, due to a
higher percentage of revenues coming from the Company's Electronic
Payments Solutions business in the third quarter of fiscal 2005.
- Net earnings were $88,000 or $0.00 per share in the third quarter of
2005, compared to $335,000 or $0.02 per share the previous year; on a
year-to-date basis, net earnings improved to $133,000 or $0.01 per
share, compared to a net loss of $157,000 or $(0.01) per share for the
first three quarters of 2004.
Operating Highlights
- RDM announced the release of the EC7000i series imager. The EC7000 is
the industry's first feature rich, low cost, dual sided (front and
back of documents simultaneously) document scanner. It is built on the
same platform as RDM's industry leading EC6000 and will fill the
growing demand in the market created by the adoption of electronic
cheque deposit by corporate America.
- Version 2.0 of ITMS, RDM's cheque electronification system, was
released. Version 2.0 contains many advanced remittance processing and
workflow enhancement features that add even more efficiency and
benefits to the inherent advantages of electronic cheque deposit.
- Average ITMS transaction volume for the quarter reached a new high of
415,000 items per week.
"While our revenues for the quarter were disappointing and below our
goals, the fundamentals of our business are stronger than ever," said Douglas
Newman, President and CEO of RDM Corporation. "One of our key objectives for
the year was to build a solid base of major U.S. banks as users of our ITMS
system. We have succeeded in acquiring several additional banks as customers
and now have an industry leading position with 10 major banks utilizing ITMS
as their electronic cheque deposit service for their corporate customers. We
have several more banks in various stages of negotiation. As all of these
banks complete their integration work with RDM and begin to execute on their
remote deposit product offering, we expect our ITMS volumes will continue to
grow."
Digital Imaging
The Digital Imaging segment, which encompasses both electronic scanner
sales and the ITMS service, recorded revenues of $1.8 million in the third
quarter of 2005, a decrease of $978,000 or 35% from the prior year. The
segment posted an operating loss of $1.1 million in the quarter, compared to a
loss of $846,000 in the third quarter of 2004.
While ITMS volumes increased 65% over the same quarter last year to an
average of 415,000 transactions per week, scanner shipments were 35% below the
same period.
Management continues to believe that the Digital Imaging segment
represents a very attractive long-term growth opportunity, and RDM has been
successful in gaining a foothold in the market by signing up a significant
number of financial institution customers as distribution partners. Short-term
sales will remain difficult to predict, however, as both ITMS adoption and
scanner sales are governed by RDM's customers' slower than anticipated
rollouts to their corporate clients. Bank product sales cycles can be lengthy,
and in the interim RDM continues to explore complementary distribution
channels and has also begun targeting end users directly through other Value
Added Resellers (VAR's) to help create pull in the marketplace and encourage
the banks to expedite their rollouts by increasing bank customers' demand.
Electronic Payments Solutions
Electronic Payments Solutions segment revenues were $1.7 million in the
third quarter of 2005, a decrease of $321,000 or 16% from the previous year.
The decrease was primarily due to variations in degrees of progress on custom
development projects as compared to the same quarter in 2004 and Management
remains confident in the segment's prospects. The segment's contribution to
operating profits remained very strong at $1.1 million.
On a year-to-date basis Electronic Payments Solutions revenues are well
ahead of the previous year. Management expects that fiscal 2005 revenues for
this segment will exceed fiscal 2004 levels, as both the U.S. government and
private sector financial institutions continue to engage RDM for their custom
development project needs.
Quality Assurance
Quality Assurance segment revenues were $579,000 in the third quarter, an
increase of $52,000 or 10% over the third quarter of 2004. On a year-to-date
basis this segment is performing ahead of the previous year. The Quality
Assurance segment contributed $114,000 to third quarter 2005 operations.
Balance Sheet
At June 30, 2005, RDM had working capital of $9.8 million, including cash
and cash equivalents of $4.6 million, as compared to working capital of
$9.6 million, including cash and cash equivalents of $4.5 million at
March 31, 2005.
Notice of Conference Call Webcast
RDM will be hosting a conference call to discuss the Company's third
quarter financial results on August 3, 2005 at 10:00 a.m. ET, dial in number:
1-800-257-1836, reference number 21132780 followed by the number sign.
Detailed financial results and MD&A will also be available at http://www.sedar.com by
August 3, 2005. A live audio webcast of the call will be available at
http://www.rdmcorp.com. Webcast attendees are welcome to listen to the conference in
real-time or at their convenience.
About RDM Corporation
RDM Corporation is headquartered in Waterloo, Ontario and trades on the
Toronto Stock Exchange under the symbol RC. RDM is a leading developer of
specialized software and hardware products for electronic payment processing.
RDM has pioneered electronic cheque conversion systems and web-based image and
transaction management services for banks, retailers, payment processors and
government agencies. RDM's newest offering is its innovative and proprietary
Image and Transaction Management System (ITMS(TM)) whereby transaction
information can be remotely captured and processed electronically from
distributed locations, freeing up significant customer float time and
significantly reducing costs associated with returned cheques. RDM holds an
approximate 18% interest (13% on a fully diluted basis) in Xign Corporation, a
California based provider of collaborative software for the financial supply
chain. For further information, visit RDM's web-site at http://www.rdmcorp.com.
RDM CORPORATION
Consolidated Balance Sheets
(Amounts In Canadian Dollars, In Thousands, Except Share and Per Share
Amounts)
June 30 September 30
------- ------------
2005 2004
---- ----
(Unaudited) (Audited)
Assets:
Current assets:
Cash and cash equivalents $ 4,607 $ 4,009
Accounts receivable 2,451 2,329
Inventories 4,375 5,054
Other 225 137
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Total current assets 11,658 11,529
Long-term investment 6,379 6,379
Capital assets 2,336 2,286
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Total assets $20,373 $20,194
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Liabilities and shareholders' equity:
Current liabilities:
Accounts payable and accrued liabilities $ 1,445 $ 2,788
Deferred revenue 402 681
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Total current liabilities 1,847 3,469
Shareholders' equity:
Share capital 26,689 25,098
Deficit (8,036) (8,169)
Share purchase loans (127) (204)
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Total shareholders' equity 18,526 16,725
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Total liabilities and shareholders' equity $20,373 $20,194
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RDM CORPORATION
Consolidated Statements of Operations and Deficit
(Amounts in Canadian Dollars, In Thousands, Except Share and Per Share
Amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
June 30 June 30
------- -------
2005 2004 2005 2004
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Revenue $ 4,133 $ 5,380 $13,195 $13,253
Cost of revenue 2,182 3,101 7,325 7,988
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Gross profit 1,951 2,279 5,870 5,265
Operating expenses:
Sales and marketing 578 648 1,763 1,885
Research and development 736 808 2,405 2,069
General and
administration 326 216 878 822
Depreciation and
amortization 250 237 598 482
Stock-based compensation 50 70 180 180
Interest and other (77) (35) (87) (101)
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1,863 1,944 5,737 5,337
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88 335 133 (72)
Litigation expenses - - - 85
-------------------------------------------------------------------------
Earnings (loss) from
operations 88 335 133 (157)
Income taxes - - - -
-------------------------------------------------------------------------
Net earnings (loss) 88 335 133 (157)
-------------------------------------------------------------------------
Deficit, beginning of
period $(8,124) $(8,775) $(8,169) $(8,283)
-------------------------------------------------------------------------
Deficit, end of period $(8,036) $(8,440) $(8,036) $(8,440)
-------------------------------------------------------------------------
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Earnings (loss) per share
- basic $ 0.00 $ 0.02 $ 0.01 $ (0.01)
-------------------------------------------------------------------------
Earnings (loss) per share
- diluted $ 0.00 $ 0.02 $ 0.01 $ (0.01)
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RDM CORPORATION
Consolidated Statements of Cash Flows
(Amounts in Canadian Dollars, In Thousands, Except Share and Per Share
Amounts)
Three Months Ended Nine Months Ended
------------------ -----------------
June 30 June 30
------- -------
2005 2004 2005 2004
----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
----------- ----------- ----------- -----------
Cash provided by (used in):
Operations:
Net earnings (loss) $ 88 $ 335 $ 133 $ (157)
Items not involving
cash:
Depreciation and
amortization 250 237 598 482
Change in non-cash
operating working
capital (105) 164 (1,077) (314)
Stock-based
compensation 50 70 180 180
Repayment of share
purchase loans 8 13 77 13
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291 819 (89) 204
Financing:
Issuance of share
capital, net of issue
costs - 13 1,411 40
Investing:
Purchase of capital
assets (205) (332) (724) (1,136)
-------------------------------------------------------------------------
Increase (decrease) in
cash 86 500 598 (892)
Cash and cash
equivalents, beginning
of period 4,521 4,126 4,009 5,518
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 4,607 $ 4,626 $ 4,607 $ 4,626
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SOURCE RDM Corporation
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CONTACT:
David Mason, Investor Relations, The Equicom
Group Inc., (416) 815-0700 ext. 237 phone, (416) 815-0080 fax,
dmason@equicomgroup.com; Jim Kopperson, Chief Financial Officer,
RDM Corporation, (519) 746-8483 ext. 284 phone, (519) 746-3317
fax, jkopperson@rdmcorp.com; To request a free copy of this
organization's annual report, please go to http://www.newswire.ca
and click on reports@cnw.
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