Nurun Inc.
TSX : NUR

Nurun Inc.

May 02, 2007 09:25 ET

Nurun Reports Continued Growth with Revenue Increase of $3.0 Million or 17% in Q1 2007

MONTREAL, QUEBEC--(CCNMatthews - May 2, 2007) - Nurun Inc. (TSX:NUR), a subsidiary of Quebecor Media Inc., today reported its financial results for the first quarter ended March 31, 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 $21.0 million in the first quarter of 2007, an increase of $3.0 million or 16.9% from $18.0 million in the same period of 2006. Organic growth accounted for 4.8% revenue growth, acquisitions for 8.0%, and foreign currency fluctuations against the Canadian dollar for 4.1%. Europe and Asia accounted for 35.6% of Nurun's total revenues in the first quarter of 2007, up from 27.1% in the first quarter of 2006. The increase was due in part to the impact of the business acquisitions made in 2006 and customer acquisition.

Nurun's operating income decreased by $0.9 million from $1.4 million in the first quarter of 2006 to $0.5 million in the first quarter of 2007. As a percentage of revenues, operating income was 2.4% in the first quarter of 2007, compared with 7.8% in the same period of 2006. The decrease in operating income was essentially due to a lower volume from the USA. As well, a $0.4 million compensation charge payable at the end of the price adjustment period in consideration of a business acquisition was recorded in the first quarter of 2007. Non-labour direct service costs also increased.

Nurun's net earnings were $22,000 or $0.00 per share in the first quarter of 2007, compared with $945,000 or $0.03 per share in the same quarter of 2006. The decrease in net earnings was due to the reduction in operating income and the increase in depreciation and amortization charges.

"These results are in line with our previous quarters in term of revenue growth," said Jacques-Herve Roubert, President and Chief Executive Officer of Nurun. "Our quarterly profitability was impacted by USA results being lower than our expectations and by a non-recurring charge related to an acquisition. Profitability improvement near the end of the quarter combined with new clients gained in the USA in the same quarter, however, show that profitability should be back on its progressive track."

DEFINITION OF OPERATING INCOME

The Company defines operating income as earnings before interest, depreciation and amortization, 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 clients, pricing, general changes in the economic environment, international expansion, key staff 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 at May 2, 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 e-commerce / 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, Club Med, Pfizer, SkyTeam, Home Depot, Pleasant Holidays, L'Oreal, Microsoft (MSN), Renault, Europcar, Autotrader.com, Equifax, Telecom Italia and the Government of Quebec. Nurun's centres of expertise employ more than 700 professionals in Canada, the U.S., Europe and China.



NURUN INC.
Consolidated Balance Sheets
March 31, 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 $28,452 $26,857
Temporary investments 977 976
Accounts receivable 23,126 22,609
Work in process 10,627 8,716
Income taxes and tax credits receivable 2,788 3,707
Prepaid expenses 1,082 1,248
Future tax assets 1,247 1,241
Subordinated loan to an affiliated company
and interests receivable 174,981 170,045
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243,280 235,399

Investment tax credits 1,525 1,525
Capital assets 4,188 3,655
Intangible assets 2,643 3,009
Future tax assets 3,486 3,835
Goodwill 14,474 14,502

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$269,596 $261,925
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Liabilities and Shareholders' Equity

Current liabilities:
Accounts payable and accrued liabilities $19,149 $17,346
Income taxes payable 12 20
Deferred revenues 4,866 4,030
Preferred shares and dividends payable 174,990 170,049
Future tax liabilities 302 302
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199,319 191,747

Future tax liabilities 488 592

Shareholders' equity:
Share capital 302,606 302,827
Contributed surplus 11,501 11,056
Deficit (241,714) (241,736)
Accumulated other comprehensive loss (2,604) (2,561)
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69,789 69,586

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$269,596 $261,925
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NURUN INC.
Consolidated Statements of Earnings
Three-month periods ended March 31, 2007 and 2006
(in thousands of dollars, except amounts per share) (unaudited)

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2007 2006
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Revenues $21,048 $17,999

Expenses:
Cost of services and selling and
administrative expenses 20,509 16,536
Loss on foreign exchange 28 58
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20,537 16,594

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Operating income 511 1,405

Interest income, net (264) (201)
Depreciation and amortization 753 426

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Earnings before income taxes 22 1,180

Income taxes - 235

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Net earnings $22 $945
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Net earnings per share - basic and diluted $0.00 $0.03
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Basic weighted average number of shares
outstanding (in thousands) 33,021 33,089
Diluted weighted average number of shares
outstanding (in thousands) 33,601 33,708

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NURUN INC.
Consolidated Statements of Deficit
Three-month periods ended March 31, 2007 and 2006
(in thousands of dollars) (unaudited)

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

Net earnings 22 945

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Deficit, end of period $(241,714) $(247,018)
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Consolidated Statements of Comprehensive Income (loss)
Three-month periods ended March 31, 2007 and 2006
(in thousands of dollars) (unaudited)

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2007 2006
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Net earnings $22 $945

Other comprehensive income (loss), net of
income taxes:
Change in unrealized losses on translating
financial statements of self-sustaining
foreign operations (43) 355

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Comprehensive income (loss) $(21) $1,300
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NURUN INC.
Consolidated Statements of Cash Flows
Three-month periods ended March 31, 2007 and 2006
(in thousands of dollars) (unaudited)

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2007 2006
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Cash flows related to operating activities:
Net earnings $22 $945
Adjustments for:
Depreciation and amortization 753 426
Future income taxes 231 28
Stock-based compensation and other 315 289
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1,321 1,688
Changes in non-cash operating working
capital items:
Accounts receivable (540) 811
Work in process (1,926) (1,814)
Income taxes and tax credits receivable 911 933
Accounts payable and accrued liabilities 1,857 2,531
Deferred revenues 834 1,073
Other 158 213
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2,615 5,435

Cash flows related to financing activities:
Issuance of common hares 6 42
Redemption of common shares (92) (415)
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(86) (373)

Cash flows related to investing activities:
Business acquisition, net of acquired cash
and cash equivalents - (2,168)
Additions to capital assets (916) (273)
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(916) (2,441)

Effect of exchange rate changes on cash and
cash equivalents (18) 107

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Net increase in cash and cash equivalents 1,595 2,728

Cash and cash equivalents, beginning of
period 26,857 31,834

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Cash and cash equivalents, end of period $28,452 $34,562
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