DTI Dental Technologies Inc.
TSX VENTURE : DTI

DTI Dental Technologies Inc.

August 22, 2006 18:56 ET

DTI Dental Technologies Reports Results for 6 Months Ended June 30, 2006

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 22, 2006) - DTI Dental Technologies Inc. (TSX VENTURE:DTI), one of North America's leading operators of dental laboratories, today announced sales and earnings results for the three-month and six-month periods ended June 30, 2006. The results include:

- Revenue for the six-month period increased by 26.3% or $21.8 million compared to $17.2 million in the comparable period of 2005, and revenue for the quarter amounted to $11.0 million compared to $9.2 million, representing an increase of 19.6% over the comparable period in 2005.

- Same-lab sales grew in Canada by 3.7% for the quarter and 4.9% for the six-month period.

- Same-lab sales in the USA grew by 1.1% for the quarter and 3.4% for the six-month period, in local currency.

- Lab operating income increased by 21.2% to $2.4 million for the quarter and by 22.1% to $4.5 million year-to-date over the comparable periods in 2005.

- DTI generated EBITDA (earnings before interest, taxes, depreciation, and amortization) of $1.5 million or 14.1% of sales for the quarter, compared to $1.3 million or 14.2% for the same period in 2005, and $2.8 million or 12.8% of sales for the six-month period, compared to $2.2 million or 12.9% for the same period in 2005.

- DTI recorded a net income of $158,797, or $0.01 per share for the quarter and a net income of $159,228, or $0.01 per share on a year-to-date basis, compared to a net income of $229,483, or $0.02 per share and net income of $145,480, or $0.01 per share respectively for comparable periods in 2005.

"DTI's performance in the second quarter has continued to show improvement with growth in both sales and lab operating income," said Paolo Kalaw, Chief Executive Officer. "I am particularly pleased with the results of our acquisition completed October 22, 2005. We expect ongoing improvement in our results over next year."

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 custom design and manufacture crowns, bridges, dentures, cosmetic appliances, 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)

June 30, 2006 and December 31, 2005

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Jun 2006 Dec 2005
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Assets

Current assets:
Cash $ 1,456,692 $ 1,093,486
Accounts receivable 4,768,762 4,574,235
Inventory 1,048,147 1,083,106
Prepaid expenses 262,739 139,519
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7,536,340 6,890,346

Property and equipment 2,362,701 5,359,291

Deferred charges 208,894 184,030

Customer relationships 1,369,109 1,496,189

Goodwill 11,720,447 12,059,680

Future income taxes 1,714,360 1,772,259
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$ 24,911,851 $ 27,761,795
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Liabilities and Shareholders' Deficiency

Current liabilities:
Bank indebtedness $ 136,304 $ 297,630
Accounts payable and accrued liabilities 3,122,289 4,046,628
Current portion of vendor notes payable 431,449 788,111
Current portion of long-term debt 18,801,382 18,148,676
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22,491,424 23,281,045

Vendor notes payable 1,428,150 1,821,493

Long-term debt 139,946 2,308,931

Deferred gain on sale of building 893,866 -

Shareholders' deficiency:
Capital stock 7,649,380 7,649,380
Contributed surplus 193,204 142,756
Deficit (3,814,944) (3,974,172)
Cumulative translation adjustment (4,069,175) (3,467,638)
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(41,535) 350,326
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$ 24,911,851 $ 27,761,795
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DTI DENTAL TECHNOLOGIES INC.
Consolidated Statements of Operations and Deficit
(Expressed in Canadian dollars)

For the three and six month periods ended June 30, 2006 and 2005

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Three months Three months Six months Six months
ended ended ended ended
Jun 2006 Jun 2005 Jun 2006 Jun 2005
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Sales $ 10,965,385 $ 9,167,322 $ 21,773,088 $ 17,234,708

Direct cost
of sales
(excluding
amortization):
Materials 1,968,920 1,581,765 3,750,418 2,918,987

Labour 3,609,634 2,879,567 7,434,431 5,585,664
Freight 463,470 379,292 923,316 716,855
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6,042,024 4,840,624 12,108,165 9,221,506
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Contribution
margin 4,923,361 4,326,698 9,664,923 8,013,202

Direct lab
overheads 2,524,321 2,347,019 5,186,390 4,345,970

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Lab operating
income 2,399,040 1,979,679 4,478,533 3,667,232

Head office
lab support
and other
corporate
expenses 855,375 680,073 1,686,540 1,450,030

Other expenses
(income):
Amortization 351,697 195,219 677,698 383,374
Interest and
financing
costs on
long-term debt 910,681 770,735 1,790,936 1,501,601
Interest and
other income (3,858) (3,527) (3,442) (17,891)
Accretion of
discount on
vendor notes
payable 1,412 4,572 6,574 10,356
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1,259,932 966,999 2,471,766 1,877,440
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Income before
income taxes 283,733 332,607 320,227 339,762

Income tax expense
Current 70,454 36,707 130,144 74,724
Future 54,482 66,417 30,855 119,558
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124,936 103,124 160,999 194,282
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Net earnings
for the period 158,797 229,483 159,228 145,480

Deficit, beginning
of period (3,973,741) (3,287,419) (3,974,172) (3,203,416)

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Deficit,
end of period $ (3,814,944) $ (3,057,936) $ (3,814,944) $ (3,057,936)
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Net earnings
(loss) per share
Basic $ 0.01 $ 0.02 $ 0.01 $ 0.01
Diluted 0.01 0.02 0.01 0.01

Weighted
average shares
outstanding
Basic 13,914,437 13,857,067 13,914,437 13,857,067
Diluted 13,914,437 13,965,392 13,914,437 13,965,392

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

For the three and six month periods ended June 30, 2006 and 2005
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Three months Three months Six months Six months
ended ended ended ended
Jun 2006 Jun 2005 Jun 2006 Jun 2005
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Cash provided
by (used in):

Operations:
Net earnings
(loss) for
the period $ 158,797 $ 229,483 $ 159,228 $ 145,480
Items not
affecting
cash:
Amortization 351,697 195,219 677,698 383,374

Accrued
interest
expense on
term loans 367,950 322,259 716,509 619,781
Accretion of
discounts on
vendor notes
payable 1,412 4,572 6,574 10,356
Gain on sale
of property
and equipment - (13,820) - (13,820)
Stock based
compensation
expense 25,365 18,800 50,448 31,801
Future income
tax expense 54,482 66,417 30,855 119,558
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959,703 822,930 1,641,312 1,296,530

Changes in
non-cash
working
capital items:
Accounts
receivable (35,265) (79,320) (355,852) (248,651)
Inventory 42,344 (13,284) 10,641 (80,499)
Prepaid
expenses (98,139) 27,352 (128,207) 22,148
Accounts
payable and
accrued
liabilities (237,817) (631,079) (806,819) (920,678)
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Cash flows
provided by
operations 630,826 126,599 361,075 68,850

Investments:
Proceeds on
sale of
property and
equipment 3,654,885 22,496 3,654,885 22,496
Purchase of
property and
equipment (48,987) (532,970) (82,979) (597,920)
Purchase of
dental
laboratories,
net of cash
acquired (32,599) (5,080) (45,650) (489,308)
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Cash flows
provided by
(used in)
investments 3,573,299 (515,554) 3,526,256 (1,064,732)

Financing:
Bank
indebtedness (1,109,475) 470,782 (161,326) 470,782
Repayment of
vendor notes
payable (46,341) (187,485) (692,656) (652,435)
Repayment of
long-term debt (2,310,506) (18,460) (2,344,910) (33,720)
Issue of
common shares - 41,600 - 41,600
Deferred
charges
incurred (149,285) (44,166) (235,572) (64,586)
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Cash flows
provided by
(used in)
financing (3,615,607) 262,271 (3,434,464) (238,359)

Effect of
foreign
exchange on
cash flows (64,675) (30,012) (89,661) (10,433)
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Increase
(decrease)
in cash 523,843 (156,696) 363,206 (1,244,674)

Cash, beginning
of period 932,849 1,201,820 1,093,486 2,289,798
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Cash,
end of period $ 1,456,692 $ 1,045,124 $ 1,456,692 $ 1,045,124
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