Mr. Randy Fowlie reports

RDM CORPORATION REPORTS FISCAL 2014 THIRD QUARTER FINANCIAL RESULTS

RDM Corp. today released its financial results for the three-month period ended June 30, 2014. All figures are reported in United States dollars unless otherwise stated.

Third-quarter 2014 highlights (unless otherwise noted, comparisons are made between fiscal third-quarter 2014 and fiscal third-quarter 2013 results):

• Total revenue was $5.6-million in third-quarter 2014 compared with $5.2-million in second-quarter 2014 and $6.1-million in third-quarter 2013.
• Total payment processing services revenue was $3.6-million compared with $3.5-million.
• Recurring payment processing revenue was $3.2-million, an increase of 6 per cent over third-quarter 2013 and 5 per cent over the prior quarter.
• Gross margin percentage increased to 56 per cent from 53 per cent.
• Operating income was $717,000 compared with $744,000.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.1-million, compared with $952,000 in the second quarter and $1.1-million in third-quarter 2013.
• Net income improved to $535,000 compared with a loss of $1.5-million in third-quarter 2013.
• The company added 2,790 new end-user seats to bring the ITMS network to 37,422 seats, an increase of 21 per cent from one year earlier and 8 per cent from the prior quarter.

Year-to-date highlights:

• Cloud-based payment processing services revenue increased 10 per cent to $10.7-million.
• Despite an 11-per-cent decrease in digital imaging hardware revenue, total revenue increased 1 per cent to $16.5-million, compared with the nine months ended June 30, 2013.
• Payment processing revenue represented 65 per cent of total revenue compared with 60 per cent in the prior year.
• Gross margin percentage increased to 56 per cent from 54 per cent in the first nine months of 2013.
• Adjusted EBITDA increased 27 per cent over the prior year to $3.1-million.

"The third quarter was highlighted by steady growth in recurring revenue and continued strong increase in new end-user seats, which will help fuel future growth in our payment processing business," said Randy Fowlie, president and chief executive officer of RDM. "For the first nine months of the year, payment processing revenue increased to 65 per cent of our total revenue compared with 60 per cent in the prior year, which continues to drive profitability."

Dividend

The board of directors declared today a dividend of one cent per share, payable on Sept. 5, 2014, to shareholders of record on Aug. 22, 2014. Pursuant to the rules of the Toronto Stock Exchange, the ex dividend date will be Aug. 20, 2014. The dividends to be paid on Sept. 5, 2014, are designated as eligible dividends for the purpose of Section 89 of the Income Tax Act (Canada).

Conference call

RDM will be hosting a conference call to discuss the company's third-quarter results on July 24, 2014, at 9 a.m. EDT. Dial-in numbers are 647-427-7450 or 1-888-231-8191. The call will be webcast live and archived at the company's website. Detailed financial results and management's discussion and analysis will be filed on SEDAR.

         CONDENSED CONSOLIDATED INTERIM STATEMENTS OF INCOME         
        (in thousands of U.S. dollars, except per-share data)                                            
                                                                                                             
                                          Three months ended June 30,
                                                2014             2013
Revenue 
Payment processing services                   $3,578           $3,526
Digital imaging products                       1,990            2,559
                                               5,568            6,085
Cost of revenue                                2,436            2,847
Gross profit                                   3,132            3,238
Operating expenses 
Sales and marketing                              807              858
Research and development                       1,146            1,072
General and administration                       462              564
                                               2,415            2,494
Income from operations                           717              744
Other items 
Foreign exchange gain (loss)                     (17)             (13)
Interest income                                   12                9
Other (expense)                                 (153)          (2,243)
                                                (158)          (2,247)
Income before income taxes                       559           (1,503)
Current income tax expense                        24               37
Income for the period                            535           (1,540)
Income per share -- basic and diluted           0.03            (0.07)

We seek Safe Harbor.