RDM Corporation Announces Record Third Quarter Revenues

Gross profit margin increased $304,000 or 15% to $2.3 million, while as a percentage of revenues, gross profit for the third quarter of 2004 remained constant at 42%. The Companys net earnings for the third quarter of 2004 were $405,000 or $0.02 per share compared to $254,000 or $0.01 per share for the quarter ended June 30, 2003. Electronic Payments Solutions segment revenues of $2.0 million increased $1.6 million in the third quarter of 2004 compared to the third quarter of 2003. The Company continues to work closely with senior U.S. Government agencies and large U.S. financial institutions to apply innovative RDM solutions to improve the infrastructure of the U.S. payments system. Management was pleased with the segments revenue performance and $1.1 million operating contribution and expects that Electronic Payments Solutions results will continue to be strong for the remainder of the year. Digital Imaging segment revenues of $2.8 million decreased $698,000 or 20% in the third quarter of 2004 compared to the third quarter of 2003, primarily due to non-recurring revenues of approximately $750,000 in the third quarter of 2003. Overall, the Digital Imaging segment posted an operating loss of $846,000 in the third quarter of 2004 compared to earnings of $130,000 in the same quarter last year, due to the impact of increased development activity in the third quarter of 2004 and the aforementioned non-recurring revenue in the third quarter of 2003. As a result of additional development work on Synergy, the Companys new all-in-one payment terminal, the Company now expects to be shipping Synergy late in fiscal 2004. Quality Assurance segment revenues were relatively stable at $527,000 in the third quarter of 2004, and management expects that the division will again generate revenues of approximately $500,000 in the remaining quarter of fiscal 2004. The Quality Assurance segment remained profitable, contributing $96,000 to third quarter 2004 earnings. For the nine months ended June 30, 2004, the Companys consolidated revenues increased 48% to $13.3 million, primarily due to double-digit growth in the Companys Digital Imaging and Electronic Payments Solutions businesses. For the nine months ended June 30, 2004 the Companys earnings were $23,000, a significant improvement over the loss of $644,000 experienced in the first nine months of 2003. At June 30, 2004 the Company had working capital of $7.7 million, including cash and cash equivalents of $4.6 million, as compared to working capital of $7.3 million, including cash and cash equivalents of $4.1 million, at March 31, 2004. The majority of the increase in cash resources and working capital was due to the Companys strong third quarter revenue and earnings performance.