DTI Dental Technologies Inc.
TSX VENTURE : DTI

DTI Dental Technologies Inc.

May 25, 2006 19:50 ET

DTI Dental Technologies Reports Results for 3 Months Ended March 31, 2006

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - May 25, 2006) - DTI Dental Technologies Inc. (TSX VENTURE:DTI), one of North America's leading operators of dental laboratories, today announced financial results for the three-month period ended March 31, 2006. The results include:

- Revenue for the quarter amounted to $10.8 million, an increase in revenue of 34.0% over the comparable period in 2005.

- Same lab sales growth for the quarter of 6.3% in Canada and same lab sales growth of 5.8% in the USA in local currency.

- Lab operating income increased by 23.2% to $2.1 million in 2006.

- DTI generated EBITDA (earnings before interest, taxes depreciation and amortization) of $1.2 million or 11.6% of sales compared to $917,596 or 11.4% of sales in 2005.

- DTI recorded a net income of $431 (four hundred and thirty one dollars) or $0.00 per share compared to a net loss of $84,003 or $0.01 per share in 2005.

"I am pleased with the improvement in the 1st quarter results as our labs in both Canada and in the U.S. experienced growth in same-lab sales," said Paolo Kalaw, Chief Executive Officer. "The results of our largest acquisition completed in October 2005 continue to be very encouraging."

About DTI Dental Technologies Inc.

DTI is a multi-site operator of premium quality dental laboratories, with sixteen labs in seven U.S. states and three Canadian provinces. DTI's laboratories design and manufacture custom dental prosthetics including crowns, bridges and orthodontic appliances. DTI's experienced management team is committed to building shareholder value by increasing market share, revenue and cash flow through improved marketing, training, business processes and maximizing opportunities for additional growth. DTI is well positioned to capitalize on growing demand by our aging population for high quality cosmetic and restorative dental products.

Forward-Looking Statements

This news release contains forward-looking statements that are subject to various risks and uncertainties. The Company's actual results could differ materially from those anticipated in such forward-looking statements as a result of numerous factors that may be beyond the Company's control. Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made, and the Company assumes no obligation to update forward-looking statements should circumstances in management's expectations or opinions change.



DTI DENTAL TECHNOLOGIES INC.
Consolidated Balance Sheets
(Expressed in Canadian dollars)

March 31, 2006 and December 31, 2005

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Mar 2006 Dec 2005
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Assets

Current assets:
Cash $ 932,849 $ 1,093,486
Accounts receivable 4,865,316 4,574,235
Inventory 1,117,654 1,083,106
Prepaid expenses 170,098 139,519
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7,085,917 6,890,346

Property and equipment 5,326,965 5,359,291

Deferred charges 176,496 184,030

Customer relationships 1,457,283 1,496,189

Goodwill 12,113,384 12,059,680

Future income taxes 1,797,804 1,772,259
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$ 27,957,849 $ 27,761,795
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Liabilities and Shareholders' Equity

Current liabilities:
Bank indebtedness $ 1,245,779 $ 297,630
Accounts payable and accrued liabilities 3,431,206 4,046,628
Current portion of vendor notes payable 437,849 788,111
Current portion of long-term debt 18,512,806 18,148,676
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23,627,640 23,281,045

Vendor notes payable 1,536,873 1,821,493

Long-term debt 2,376,462 2,308,931

Shareholders' equity:
Capital stock 7,649,380 7,649,380
Contributed surplus 167,839 142,756
Deficit (3,973,741) (3,974,172)
Cumulative translation adjustment (3,426,604) (3,467,638)
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416,874 350,326
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$ 27,957,849 $ 27,761,795
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DTI DENTAL TECHNOLOGIES INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)

For the three month periods ended March 31, 2006 and 2005

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Mar 2006 Mar 2005
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Sales $ 10,807,703 $ 8,067,386

Direct cost of sales
(excluding amortization):
Materials 1,781,498 1,337,222
Labour 3,824,797 2,706,097
Freight 459,846 337,563
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6,066,141 4,380,882
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Contribution margin 4,741,562 3,686,504

Direct lab overheads 2,662,069 1,998,951
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Lab income 2,079,493 1,687,553

Head office lab support and other
corporate expenses 831,165 769,957

Other expenses (income):
Amortization 326,001 188,154
Interest, financing and other costs
on long-term debt 880,671 730,864
Interest and other income - (14,366)
Accretion of discount on vendor
notes payable 5,162 5,785
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1,211,834 910,437
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Earnings before income taxes 36,494 7,159

Income tax expense 36,063 91,162
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Net earnings (loss) for the period 431 (84,003)

Deficit, beginning of period (3,974,172) (3,203,416)
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Deficit, end of period $ (3,973,741) $ (3,287,419)
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Net earnings (loss) per share
Basic $ 0.00 $ (0.01)
Diluted 0.00 (0.01)

Weighted average shares outstanding
Basic 13,914,437 13,854,437
Diluted 13,914,437 13,854,437

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DTI DENTAL TECHNOLOGIES INC.
Consolidated Statement of Cash Flows
(Expressed in Canadian dollars)

For the three month periods ended March 31, 2006 and 2005

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Mar 2006 Mar 2005
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Cash provided by (used in):

Operations:
Net earnings (loss) for the period $ 431 $ (84,003)
Items not affecting cash:
Amortization 326,001 188,154
Non cash interest expense on term loans 348,559 297,522
Accretion of discounts on vendor
notes payable 5,162 5,785
Stock based compensation expense 25,083 13,001
Future income tax recovery (23,628) 53,145
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681,608 473,604
Changes in non-cash working
capital items:
Accounts receivable (320,587) (169,331)
Inventory (31,703) (67,214)
Prepaid expenses (30,068) (5,208)
Accounts payable and accrued liabilities (569,003) (289,600)
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Cash flows used in operations (269,753) (57,749)

Investments:
Purchase of property and equipment (33,992) (64,949)
Purchase of dental laboratories,
net of cash acquired (13,051) (484,228)
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Cash flows used in investments (47,043) (549,177)

Financing:
Bank indebtedness 948,149 -
Repayment of vendor notes payable (646,315) (515,950)
Repayment of long-term debt (34,405) (15,260)
Deferred charges incurred (86,288) (20,420)
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Cash flows provided by (used in) financing 181,141 (551,630)

Effect of foreign exchange on cash (24,982) 70,578
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Decrease in cash (160,637) (1,087,978)

Cash, beginning of period 1,093,486 2,289,798
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Cash, end of period $ 932,849 $ 1,201,820
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