Nurun Inc.
TSX : NUR

Nurun Inc.

October 30, 2007 12:54 ET

Nurun Reports Continued Growth in Q3 2007

MONTREAL, QUEBEC--(Marketwire - Oct. 30, 2007) - Nurun Inc. (TSX:NUR), a subsidiary of Quebecor Media Inc., today reported its financial results for the third quarter ended September 30, 2007. Unless otherwise indicated, all amounts are in Canadian dollars.

FINANCIAL RESULTS

Continuing its steady growth of the past four years, Nurun recorded revenues of $19.1 million in the third quarter of 2007, an increase of $1.9 million or 10.9% from $17.2 million in the same period of 2006. The revenue increase was essentially due to internal growth. An 11.2% rise in Canadian revenues was driven by the recruitment of new customers and increased volume from existing customers. Revenues from Europe and Asia grew by 24.1% during the quarter and accounted for 38.1% of sales. The U.S. was the only market in which projected growth levels were not achieved. Year-to-date revenues were up $8.0 million or 14.9% to $61.9 million, compared with $53.9 million in the same period of 2006.

In absolute value, Nurun's operating income was stable at $1.4 million in the third quarter of 2007, compared with the same quarter of 2006. As a percentage of revenues, third-quarter operating income was 7.4% in 2007, compared with 8.1% in 2006. On a year-to-date basis, operating income totalled $2.8 million, compared with $4.2 million in the same period of 2006. As a percentage of revenues, year-to-date operating income was 4.5% in 2007, compared with 7.7% in 2006. The reduction in operating income was mainly due to the impact of decreased U.S. revenues.

Nurun recorded net income of $0.9 million, or $0.03 per share, in the third quarter of 2007, compared with $1.7 million, or $0.05 per share, in the same quarter of 2006. The $0.8 million decrease in net income was essentially due to higher depreciation and amortization charges, decreased income tax recovery and the net loss from discontinued operations in the third quarter of 2006.

On a year-to-date basis, Nurun recorded net income of $0.6 million, or $0.02 per share, compared with $3.7 million, or $0.11 per share in the same period of 2006. The $3.1 million decrease in year-to-date net income was essentially due to the change in operating income, higher depreciation and amortization charges, and decreased income tax recovery.

"Nurun saw sustained revenue growth in the third quarter, particularly in Europe and Asia, where the Company realized nearly 40% of its quarterly sales and where internal growth remains robust," said Jacques-Herve Roubert, President and Chief Executive Officer. "In North America, growth was also healthy in Canada but we continue to experience difficulties in the U.S. Our goal is to achieve the same level of success in the U.S. as we have known in the other countries where we operate. By virtue of its international scope and the breadth of its services, Nurun is advantageously positioned to continue its growth."

CHANGES TO THE BOARD OF DIRECTORS

On October 18, 2007, Mr. Marcel Cote submitted his resignation from the Board of Directors of Nurun. The Board would like to thank Mr. Cote for his contribution during the past eight years. On October 30, 2007, Mr. Marc Tremblay, Vice-President of Legal Affairs, Quebecor Media was nominated to the Board.

DEFINITION OF OPERATING INCOME

The Company defines operating income as earnings before interest, depreciation of capital assets, mark-to-market of a temporary investment and income taxes.

As defined above, operating income does not measure results in accordance with generally accepted accounting principles. It is not intended to replace other financial operating performance measures or the statement of cash flows as a measure of liquidity. Operating income is used by the Company because management believes it is a meaningful measure of performance. Operating income is commonly used by the investment community to analyze and compare corporate performance. It also facilitates year-over-year comparison of results since it excludes unusual items that are not readily comparable from year to year, among other things. The Company's definition of operating income may not be identical to similarly titled measures reported by other companies.

FORWARD-LOOKING STATEMENTS

The statements in this press release that are not historical facts constitute forward-looking statements and are subject to known and unknown material risks, uncertainties and assumptions that could cause Nurun's actual results for future periods to differ materially from those set forth in the forward-looking statements. Certain factors that may cause actual results to differ from current expectations include competition, dependence on major client, pricing, general changes in the economic environment, international expansion, key personnel recruitment, further acquisitions and foreign exchange exposure. Investors and others are cautioned that the foregoing list of factors is not exhaustive and that undue reliance should not be placed on any forward-looking statements. For more information on the risks, uncertainties and assumptions that could cause Nurun's actual results to differ from current expectations, please refer to Nurun's public filings available at www.sedar.com and www.nurun.com including, in particular, the "Risks and Uncertainties" section of Nurun's Management Discussion and Analysis for the year ended December 31, 2006 and updated information in Nurun's quarterly Management Discussion and Analysis reports.

The forward-looking statements in this press release reflect Nurun's expectations as of October 30, 2007 and are subject to change after this date. Nurun expressly disclaims any obligation or intention to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.

ABOUT NURUN INC.

Nurun Inc. (TSX:NUR), a subsidiary of Quebecor Media Inc., is a global company which strategizes, executes, and measures interactive programs that use new technologies. From building awareness to acquiring and retaining clients, our solutions provide exceptional user experiences that enable eCommerce transactions while leveraging the lifetime value of client relationships.

Since it was founded in 1985, Nurun has worked with a wide variety of companies and organizations, including Groupe DANONE, Cingular Wireless, Louis Vuitton, Thales, Pfizer, SkyTeam, Home Depot, Pleasant Holidays, L'Oreal, Microsoft (MSN), Renault, Autotrader.com, Equifax, Telecom Italia and the Government of Quebec. Nurun's centres of expertise employ more than 760 professionals in Canada, the U.S., Europe and China. For more information, please visit www.nurun.com.



NURUN INC.
Consolidated Balance Sheets
September 30, 2007, with comparative figures
as at December 31, 2006 (in thousands of dollars)
-------------------------------------------------------------------------
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2007 2006
(unaudited) (audited)
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Assets
Current assets:
Cash and cash equivalents $24,962 $26,857
Temporary investments 233 976
Accounts receivable 20,251 22,609
Work in process 9,679 8,716
Income taxes and tax credits receivable 3,323 3,707
Prepaid expenses 1,151 1,248
Future tax assets 1,172 1,241
Subordinated loan to an affiliated
company and interest receivable - 170,045
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60,771 235,399
Investment tax credits 1,788 1,525
Capital assets 4,810 3,655
Intangible assets 1,839 3,009
Future tax assets 2,906 3,835
Goodwill 14,997 14,502
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$87,111 $261,925
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities $17,203 $17,346
Income taxes payable 69 20
Deferred revenues 2,729 4,030
Preferred shares and dividends
payable to an affiliated company - 170,049
Future tax liabilities 256 302
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20,257 191,747
Future tax liabilities 254 592
Shareholders' equity:
Share capital 304,656 302,827
Contributed surplus 8,921 11,056

Deficit (241,141) (241,736)
Accumulated other comprehensive loss (5,836) (2,561)
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(246,977) (244,297)
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Total Shareholder's equity 66,600 69,586
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$87,111 $261,925
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NURUN INC.
Consolidated Statements of Earnings
Three-month periods ended September 30, 2007 and 2006
(in thousands of dollars, except per share amounts)
(unaudited)

------------------------------------------------------------------------
------------------------------------------------------------------------
2007 2006
------------------------------------------------------------------------

Revenues $19,073 $17,198

Operating expenses:
Cost of services and selling
and administrative expenses 17,571 15,759
Loss on foreign exchange 98 41
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17,669 15,800

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Operating income 1,404 1,398

Interest income, net (238) (229)
Depreciation and amortization 732 426
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Earnings before income taxes 910 1,201

Income taxes (recovery) 1 (1,411)
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Net earnings from continuing operations 909 2,612

Net loss from discontinued operations - 875
------------------------------------------------------------------------
------------------------------------------------------------------------
Net earnings $909 $1,737
------------------------------------------------------------------------
------------------------------------------------------------------------
Net earnings per share - basic and diluted -
continuing operations $0.03 $0.08
Net loss per share - basic and diluted
- discontinued operations - 0.03
------------------------------------------------------------------------
Net earnings per share - basic and diluted $0.03 $0.05
------------------------------------------------------------------------
------------------------------------------------------------------------

Basic weighted average number of shares
outstanding (in thousands) 34,050 33,213
Diluted weighted average number of shares
outstanding (in thousands) 34,300 33,716
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NURUN INC.
Consolidated Statements of Earnings
Nine-month periods ended September 30, 2007 and 2006
(in thousands of dollars, except per share amounts)
(unaudited)

------------------------------------------------------------------------
------------------------------------------------------------------------
2007 2006
------------------------------------------------------------------------

Revenues $61,928 $53,907

Operating expenses:
Cost of services and selling and
administrative expenses 58,732 49,506
Loss on foreign exchange 401 244
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59,133 49,750

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Operating income 2,795 4,157

Interest income, net (756) (698)
Depreciation and amortization 2,231 1,235
Reduction in value of a temporary investment 610 -
------------------------------------------------------------------------
Earnings before income taxes 710 3,620

Income taxes (recovery) 115 (958)
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Net earnings from continuing operations 595 4,578

Net loss from discontinued operations - 875
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Net earnings $595 $3,703
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Net earnings per share - basic and diluted -
continuing operations $0.02 $0.14
Net loss per share - basic and diluted -
discontinued operations - 0.03
------------------------------------------------------------------------
Net earnings per share - basic and diluted $0.02 $0.11
------------------------------------------------------------------------
------------------------------------------------------------------------
Basic weighted average number of shares
outstanding (in thousands) 33,675 33,132
Diluted weighted average number of shares
outstanding (in thousands) 33,910 33,712
------------------------------------------------------------------------
------------------------------------------------------------------------



NURUN INC.
Consolidated Statements of Deficit
Three-month periods ended September 30, 2007 and 2006
(in thousands of dollars) (unaudited)

--------------------------------------------------------------------
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2007 2006
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Deficit, beginning of period $(242,050) $(245,997)
Net earnings 909 1,737
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Deficit, end of period $(241,141) $(244,260)
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Consolidated Statements of Other
Comprehensive Income (loss)
Three-month periods ended
September 30, 2007 and 2006 (in thousands of dollars)
(unaudited)
--------------------------------------------------------------------
2007 2006
--------------------------------------------------------------------
Net earnings $909 $1,737

Other comprehensive income (loss),
net of income taxes:
Change in unrealized losses on translating
financial statements of self-sustaining
foreign operations (1,068) (2)

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Comprehensive income (loss) $(159) $(1,735)
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NURUN INC.
Consolidated Statements of Deficit
Nine-month periods ended September 30, 2007 and 2006
(in thousands of dollars) (unaudited)

--------------------------------------------------------------------
--------------------------------------------------------------------
2007 2006
--------------------------------------------------------------------
Deficit, beginning of period $(241,736) $(247,963)

Net earnings 595 3,703

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Deficit, end of period $(241,141) $(244,260)
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Consolidated Statements of Other Comprehensive Income (loss)
Nine-month periods ended September 30, 2007 and 2006
(in thousands of dollars) (unaudited)

--------------------------------------------------------------------
--------------------------------------------------------------------
2007 2006
--------------------------------------------------------------------
Net earnings $595 $3,703

Other comprehensive income (loss), net of income
taxes:
Change in unrealized losses on translating
financialstatements of self-sustaining foreign
operations (3,275) (5)

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Comprehensive income (loss) $(2,680) $3,698
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NURUN INC.
Consolidated Statements of Cash Flows
Three-month periods ended September 30, 2007 and 2006
(in thousands of dollars) (unaudited)

----------------------------------------------------------------------
----------------------------------------------------------------------
2007 2006
----------------------------------------------------------------------

Cash flows related to operating activities:
Net earnings $909 $1,737
Adjustments for:
Depreciation and amortization 732 426
Future income taxes 34 (1,395)
Investment tax credits (263) -
Stock-based compensation and other (638) 278
Net loss from discontinued operations - 875
----------------------------------------------------------------------
774 1,921
Tax consolidation - 2,700
----------------------------------------------------------------------
774 4,621
Changes in non-cash operating
working capital items:
Accounts receivable (370) 1,381
Work in process 2,014 72
Income taxes and tax credits receivable (278) (744)
Accounts payable and accrued liabilities (1,563) (27)
Deferred revenues (985) 392
Other 10 (127)
----------------------------------------------------------------------
(398) 5,568
Cash flows related to financing activities:
Issuance of common shares 3 31
Redemption of common shares - (274)
Issuance (repurchase) of preferred shares (184,816) 165,000
Subordinated loan (refund) to an
affiliated company 184,800 (165,000)
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(13) (243)
Cash flows related to investing activities:
Business acquisitions, net of acquired cash
and cash equivalents (405) (2,788)
Additions to capital assets (1,070) (388)
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(1,475) (3,176)
Effect of exchange rate changes on cash
and cash equivalents (199) 36
----------------------------------------------------------------------
Net increase (decrease) in cash
and cash equivalents (2,085) 2,185

Cash and cash equivalents,
beginning of period 27,047 31,049
----------------------------------------------------------------------
Cash and cash equivalents, end of period $24,962 $33,234
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NURUN INC.
Consolidated Statements of Cash Flows
Nine-month periods ended September 30, 2007 and 2006
(in thousands of dollars) (unaudited)

-------------------------------------------------------------------------
-------------------------------------------------------------------------
2007 2006
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Cash flows related to operating activities:
Net earnings (loss) $595 $3,703
Adjustments for:
Depreciation and amortization 2,231 1,235
Future income taxes 289 (1,351)
Investment tax credits (263) -
Stock-based compensation and other 546 854
Net loss from discontinued operations - 875
Reduction in value of a temporary investment 610 -
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4,008 5,316
Tax consolidation - 2,700
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4,008 8,016
Changes in non-cash operating working
capital items:
Accounts receivable 1,168 1,459
Work in process (1,580) (988)
Income taxes and tax credits receivable 296 (211)
Accounts payable and accrued liabilities 782 900
Deferred revenues (1,035) 471
Other 33 (53)
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3,672 9,594
Cash flows related to financing activities:
Issuance of common shares 48 131
Redemption of common shares (92) (1,248)
Issuance (repurchase) of preferred shares (184,816) 165,000
Subordinated loan (refund) to an
affiliated company 184,800 (165,000)
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(60) (1,117)
Cash flows related to investing activities:
Business acquisitions, net of acquired cash
and cash equivalents (2,167) (6,065)
Additions to capital assets (2,585) (900)
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(4,752) (6,965)
Effect of exchange rate changes on cash
and cash equivalents (755) (112)
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Net increase (decrease) in cash
and cash equivalents (1,895) 1,400

Cash and cash equivalents,
beginning of period 26,857 31,834
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Cash and cash equivalents, end of period $24,962 $33,234
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