PNI Digital Media (TSX VENTURE:PN)(OTCBB:PNDMF), ("PNI" or the "Company"), the
leading innovator in digital media solutions for retailers, announced financial
results for the second quarter of Fiscal Year 2011. Revenue for the quarter was
$5.0 million. If foreign currency exchange rates had remained constant, revenue
for the quarter would have been approximately $5.2 million, compared to $5.3
million during the same period last year.
Fiscal 2011 Second Quarter Financial and Operational Highlights:
-- Transacted 3.6 million orders over the PNI Digital Media Platform, a 10%
increase compared to the second quarter of Fiscal 2010
-- Revenue of $5.0 million, compared to $5.3 million in second quarter of
Fiscal 2010
-- Transactional revenue of $3.5 million, compared to $3.7 million during
the second quarter of Fiscal 2010 Transaction fees represented 69% of
total revenue for the quarter, consistent with the same period last year
-- Non-GAAP adjusted EBITDA(1) of $(0.1 million), compared to $1.0 million
during the same period last year
-- GAAP net loss after income taxes of $852,000 for the quarter
-- The Company extended its agreement with Costco for an additional five
year term through 2016
-- More than 700 promotions were offered over the PNI Digital Media
Platform during the quarter
"Our second quarter is historically our weakest and this year was no exception,"
said Kyle Hall, Chief Executive Officer of PNI Digital Media. "We were happy to
announce our contract extension with Costco through 2016 and look forward to
announcing more customer news as we are able."
Conference Call
The Company will host a conference call on Thursday, May 26th, 2011 at 4:30pm ET
(1:30pm PT) to discuss the Company's Fiscal 2011 second quarter financial
results. Mr. Kyle Hall, Chief Executive Officer, Mr. Aaron Rallo, President and
Chief Operating Officer and Mr. Simon Bodymore, Chief Financial Officer will
host the call.
To join the call, please dial (888) 241-0394 (US/Canada) or (647) 427-3413
(International) and quote conference ID no. 67562578. Please call 10 minutes
prior to the scheduled start time. PNI Digital Media will also provide a live
webcast and slide presentation, available on the Company's website at
www.pnimedia.com/webcast. The presentation will be available for download for
dial-in callers.
Consolidated Balance Sheets
March 31, September 30,
2011 2010
------------------------------
Assets
Current assets
Cash and cash equivalents $ 4,745,436 $ 4,690,355
Accounts receivable 3,782,818 5,302,865
Prepaid expenses and other current assets 590,213 541,026
Current portion of future income tax asset 1,082,060 1,026,651
------------------------------
10,200,527 11,560,897
Property and equipment 5,617,962 5,230,829
Future income tax asset 4,531,907 4,953,934
Intangible assets 691,821 1,115,794
Goodwill 634,603 658,904
------------------------------
$ 21,667,946 $ 23,520,358
------------------------------
------------------------------
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 3,667,556 $ 5,471,878
Current portion of deferred revenue 423,910 613,081
Current portion of capital lease
obligations - 107,964
Future income tax liability 109,772 119,081
------------------------------
4,201,238 6,312,004
Deferred revenue 55,713 78,876
------------------------------
4,256,951 6,390,880
------------------------------
Shareholders' Equity
Share capital $ 66,633,431 $ 66,200,215
Contributed surplus 18,944,573 18,933,619
------------------------------
85,578,004 85,133,834
------------------------------
Deficit (65,453,778) (65,684,820)
Accumulated other comprehensive loss (2,713,231) (2,319,536)
------------------------------
(68,167,009) (68,004,356)
------------------------------
17,410,995 17,129,478
------------------------------
$ 21,667,946 $ 23,520,358
------------------------------
------------------------------
Consolidated Statements of Earnings and Comprehensive Gain
Three Months Ended Six Months Ended
March 31, March 31, March 31, March 31,
2011 2010 2011 2010
----------------------------------------------------
Revenue $ 5,031,263 $ 5,261,722 $ 12,765,068 $ 13,017,935
Expenses
Network delivery 992,498 1,238,269 2,482,453 3,185,953
Software development 2,879,128 1,922,796 5,607,417 3,847,388
General and
administration 1,056,037 1,009,289 2,079,828 2,090,047
Sales and marketing 257,919 215,027 561,029 455,530
Amortization 692,853 1,322,910 1,382,232 2,695,726
----------------------------------------------------
5,878,435 5,708,291 12,112,959 12,274,644
----------------------------------------------------
(Loss) earnings from
operations
before the undernoted (847,172) (446,569) 652,109 743,291
Realized foreign
exchange (loss) (57,549) (40,434) (82,998) (60,575)
Unrealized foreign
exchange (loss) gain (104,980) 458,835 90,908 626,808
Interest income - 253 48 679
Interest expense -
capital lease - (21,915) (5,536) (49,238)
Interest expense -
other (15) - (15) (1,560)
Loss on disposal of
property and equipment (71,241) - (90,713) -
Loss on settlement of
asset retirement
obligation - (4,810) - (4,810)
----------------------------------------------------
(233,785) 391,929 (88,306) 511,304
----------------------------------------------------
(Loss) earnings before
income taxes (1,080,957) (54,640) 563,803 1,254,595
Current income tax
benefit (expense) - - - -
Future income tax
benefit (expense) 228,478 (36,246) (332,761) (101,158)
----------------------------------------------------
Net (loss) earnings (852,479) (90,886) 231,042 1,153,437
Other comprehensive
gain (loss):
Unrealized foreign
exchange gain (loss) on
translation of self
sustaining foreign
operations 62,942 (659,784) (393,695) (971,840)
----------------------------------------------------
Comprehensive (loss)
gain $ (789,537) $ (750,670) $ (162,653) $ 181,597
----------------------------------------------------
----------------------------------------------------
(Loss) earnings per
share
Basic $ (0.03) $ (0.00) $ 0.01 $ 0.03
Fully diluted $ (0.03) $ (0.00) $ 0.01 $ 0.03
Non-GAAP Financial Measures
Three Months Ended
March 31, 2011 March 31, 2010
------------------------------
Net (loss) in accordance with GAAP $ (852,479) $ (90,886)
Amortization 692,853 1,322,910
Interest expense 15 21,915
Income tax (benefit) expense (228,478) 36,246
Stock based compensation expense 160,303 181,872
Unrealized foreign exchange loss (gain) 104,980 (458,835)
------------------------------
Adjusted EBITDA $ (122,806) $ 1,013,222
------------------------------
------------------------------
Six Months Ended
March 31, 2011 March 31, 2010
------------------------------
Net earnings (loss) in accordance with GAAP $ 231,042 $ 1,153,437
Amortization 1,382,232 2,695,726
Interest expense 5,551 50,798
Income tax expense 332,761 101,158
Stock based compensation expense 359,400 366,949
Unrealized foreign exchange (gain) (90,908) (626,808)
------------------------------
Adjusted EBITDA $ 2,220,078 $ 3,741,260
------------------------------
------------------------------
Notes:
1 - Non-GAAP Measures
The Company continues to provide all information required in accordance with
GAAP, but believes evaluating its ongoing operating results may not be as useful
if an investor is limited to reviewing only GAAP financial measures.
Accordingly, the Company uses non-GAAP financial information to evaluate its
ongoing operations and for internal planning and forecasting purposes. The
primary non-GAAP financial measures utilized by the Company include adjusted
EBITDA and adjusted EBITDA per share. Adjusted EBITDA is defined as earnings
(loss) before interest expense, taxes, depreciation, amortization, unrealized
foreign currency gains and losses and stock-based compensation.
To supplement the Company's financial statements presented on a GAAP basis, we
believe that these non-GAAP measures provide useful information about the
Company's core operating results and thus are appropriate to enhance the overall
understanding of the Company's past financial performance and its prospects for
the future. These adjustments to the Company's GAAP results are made with the
intent of providing both management and investors a more complete understanding
of the Company's underlying operational results and trends and performance.
Management uses these non-GAAP measures to evaluate the Company's financial
results, develop budgets, manage expenditures, and determine employee
compensation. The presentation of additional information is not meant to be
considered in isolation or as a substitute for or superior to net (loss)
earnings or net (loss) earnings per share determined in accordance with GAAP.
Currency:
All amounts are expressed in Canadian dollars. This notice is qualified in its
entirety by reference to the Company's financial statements and accompanying
Management Discussion and Analysis, which are accessible on the SEC'S website at
www.sec.gov/edgar.shtml and on SEDAR at www.sedar.com.
About PNI Digital Media- Founded in 1995, PNI Digital Media operates the PNI
Digital Media Platform, which provides transaction processing and order routing
services for major retailers. The PNI Digital Media Platform connects
consumer-ordered digital content, whether from online, in-store kiosks, desktop
software or mobile phones, with retailers that have on-demand manufacturing
capabilities for the production of personalized products such as photos, photo
books and calendars, business cards and stationery. PNI Digital Media
successfully generates millions of transactions each year for retailers and
their thousands of locations worldwide.
Further information on our company can be found at www.pnimedia.com.
The statements that are not historical facts contained in this release are
forward-looking statements that involve risks and uncertainties. PNI Digital
Media's actual results could differ materially from those expressed or implied
by such forward-looking statements. Factors that could cause or contribute to
such differences include, but are not limited to, changes in technology,
employee retention, inability to deliver on contracts, failure of customers to
continue marketing the online solution, competition, general economic
conditions, foreign exchange and other risks detailed in the Company's annual
report and other filings. Additional information related to the Company can be
found on SEDAR at www.sedar.com and on the SEC'S website at
www.sec.gov/edgar.shtml. The information contained herein is subject to change
without notice. PNI Digital Media shall not be liable for technical or editorial
errors or omissions contained herein.
PNI Digital Media relies upon litigation protection for "forward-looking"
statements.
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