RDM Corporation reports third quarter results

WATERLOO - RDM Corporation, reported its financial results for the three month period ended June 30, 2009.

Q3 2009 Highlights

- Total revenues were $5.9 million in the third quarter of fiscal 2009,
compared to $5.2 million in the third quarter of 2008.

- Payment Processing Services segment revenues, which are recurring in
nature, were $2.5 million in Q3 2009, compared to $1.7 million a year
earlier.

- Transaction volumes for RDM's Image & Transaction Management System
(ITMS(R)) averaged 3.8 million items per week during the third
quarter, compared to 2.8 million items per week a year earlier, and
3.6 million items per week during Q2 2009.

- ITMS(R) end user locations grew from 17,000 to 17,800 during the
third quarter and 13,300 at the end of the third quarter in 2008.

- RDM added one additional bank distributor and two new independent
sales organizations (ISOs) during the quarter.

- Gross profit was $2.5 million or 42% of revenues, compared to $1.8
million or 34% of revenues in the third quarter of 2008.

- Net earnings were $175,000 or $0.01 per share (fully diluted) in Q3
2009, compared to a net loss of $298,000 or $0.01 per share in Q3
2008.

- Cash and equivalents of $16.9 million at June 30, 2009 were unchanged
from the end of the prior quarter.

"While recent economic conditions have restricted growth opportunities in
our sector, we made continued progress in growing our recurring revenues from
our Payment Processing Services", said Douglas Newman, President and CEO of
RDM Corporation. "ITMS transaction volumes and end users have increased
sequentially and year over year and we continue to expand both our
distribution network and our product footprint. Our strong financial position
has enabled us to build on our competitive advantage through ongoing
investment in product leadership, which we believe maximizes our long-term
growth potential."

RDM generated total revenues of $5.9 million in the three months ended
June 30, 2009, an increase of $0.7 million from the third quarter of fiscal
2008. The strengthening of the U.S. dollar compared to last year's third
quarter resulted in a $0.8 million favourable impact on reported revenues.
Payment Processing Services segment revenues increased by $0.8 million or
48% from a year earlier to $2.5 million, driven by growth in ITMS transaction
volumes and end users as well as the change in currency exchange rates.
Revenues in the Digital Imaging Products segment increased by $0.3 million to
$2.9 million, as a reduction in proprietary scanner shipments was offset by
the favourable impact of exchange rates and higher third party scanner
shipments. The Electronic Payments Solutions segment and the Quality Assurance
segment, which represented a combined 8% of total revenues in the third
quarter, generated revenues of $180,000 and $322,000, respectively, compared
to $554,000 and $331,000, respectively, in the third quarter of 2008.
Gross profit increased by $0.7 million to $2.5 million in the third
quarter of 2009 from $1.8 million in the comparable period of fiscal 2008.
Expressed as a percentage of revenues, gross margin was 42%, compared to 34%
in Q3 2008. Increased margins were due to the favourable impact of exchange
rates and a change in product mix to include a higher proportion of payment
processing recurring revenue. Gross profit in the Payment Processing Services
segment grew to $1.2 million in the third quarter from $467,000 a year
earlier. The segment generated an operating loss of $233,000, compared to a
loss of $776,000 in Q3 2008. This improvement in operating earnings was
realized even as the Company invested an additional $162,000 in sales,
marketing and research and development efforts.
Sales and marketing expense decreased $36,000 to $1.2 million in Q3 2009,
with efforts focused primarily on the rapidly growing Payment Processing
Services segment, and in particular on signing new ITMS banks and ISO
resellers and promoting Simply Deposit(TM). Research and development expenses
increased $242,000 to $1.1 million as the Company continued to invest in new
product development including Simply Deposit Mobile(TM). Simply Deposit Mobile
is a downloadable remote deposit product application that will initially be
available for the iPhone and latest Blackberry handsets. General and
administration expenses decreased $51,000 to $533,000.
Net earnings were $175,000 in the third quarter of 2009, or $0.01 per
share, compared to a net loss of $298,000 or $0.01 per share a year earlier.
In addition to the factors noted above, earnings were affected by a foreign
exchange gain of $692,000 recognized in the quarter, compared to a gain of
$131,000 in Q3 2008. The foreign exchange gain was due to the impact of a
shift in exchange rates during the quarter on forward contracts held by the
Company as economic hedges, partially offset by a gain in U.S. denominated
monetary assets.
RDM repurchased 30,100 shares in the third quarter, including 12,600
shares repurchased since the renewal of its Normal Course Issuer Bid on May
21, 2009. At June 30, 2009, the Company had 20.8 million common shares
outstanding.