Xentel DM Incorporated
TSX VENTURE : XDM

Xentel DM Incorporated

April 30, 2009 17:18 ET

Xentel Reports December 31, 2008 Fiscal Year End Results

CALGARY, ALBERTA--(Marketwire - April 30, 2009) - Xentel DM Incorporated (TSX VENTURE:XDM) -



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Three months Fiscal year
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Period ended December 31 2008 2007 2008 2007
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($ 000's, except per
share amounts)
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Revenue $ 24,455 $ 22,866 $ 96,219 $ 100,079
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Gross Margin 4,844 3,872 22,757 20,698
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Net (loss) earnings (187) (1,106) 1,518 (1,477)
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EBITDA 213 (1,210) 5,275 1,303
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EPS, fully diluted $ 0.00 $ (0.04) $ 0.06 $ (0.06)
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EBITDA, per share,
fully diluted $ 0.01 $ (0.05) $ 0.20 $ 0.05
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EBITDA - Net Earnings before income taxes, interest, depreciation and
amortization. Since Gross Margin, EBITDA and diluted EBITDA per share have
no standardized GAAP meaning, the comparability of these amounts to other
enterprises may not be possible if the basis of calculation of differs.
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Xentel DM Incorporated a North American specialty entertainment and relationship marketing company, today reported its financial results for the three and twelve months ended December 31, 2008.

Net loss for the fourth quarter 2008 was $187 thousand compared to a net loss of $1,106 thousand for the fourth quarter 2007. Revenues amounted to $24,455 thousand compared to $22,866 thousand for the fourth quarters 2008 and 2007 respectively. EBITDA for the three months ended December 31, 2008 was $213 thousand compared to negative EBITDA of $1,210 thousand for the same period in 2007. In the fourth quarter 2008, the Canadian traditional calling patterns were modified to alleviate the potential impact of the introduction of the do not call list in Canada resulting in a small loss for the quarter.

For the fiscal years ended December 31, 2008 and 2007 revenues were $96,219 thousand and $100,079 thousand respectively. For the twelve months ended December 31, 2008 the Company had net earnings of $1,518 thousand or $0.06 per share compared to a net loss of $1,477 thousand or negative $0.06 per share for the same period in 2007. EBITDA for the year ended December 31, 2008 was $5,275 thousand or $0.20 per basic and diluted share compared to EBITDA for the same period in 2007 of $1,303 thousand or $0.05 per basic and diluted share.

In 2008, the Company elected to change its accounting practices and wrote off work in process as of January 1, 2007 in the amount of $6,421 thousand less the associated future income tax effect of $2,480 thousand to retained earnings. Also, during the year 2008, long term debt (except for an amount due to related party) was substantially paid and the intangible assets that were part of the 2003 acquisition have been fully depreciated.

During the year, the Company:

- strategically adjusted fiscal arrangements with certain clients designed to improve profitability,

- improved data management,

- modified its labour utilization model, and,

- continued its cost optimization measures.

2008 was a year when the prior actions reflected in improved results. Branch overhead and corporate administration costs decreased 10% year over year. Throughout 2008, management realigned labour utilization and significantly altered the previously proven business model to better adapt to current circumstances.

David Winograd, President US operations, stated, "2008 results are much improved over 2007 and prior years. Despite the challenges presented in the current softening economic conditions, the Company has continued to improve its operating performance."

Michael Platz, Chairman, added, "The 2008 results are a testament to the spirit and effort displayed by all members of the Xentel team. My personal thanks goes out to each and every one of them."

Xentel is one of North America's leading relationship-marketing concerns and producers of cause-related entertainment events. The Corporation's success is attributable to proprietary sales tools including technologically advanced teleservices and sophisticated customer databases. Xentel has over 400 clients and 1,900 employees in over 25 offices across North America.

Certain statements in this press release may constitute "forward looking statements" and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Corporation to be materially different from any performance or achievement expressed or implied by such "forward looking statements".



Xentel DM Incorporated
Consolidated Balance Sheets
As at December 31 2008 2007
('000s)

Assets
Current assets

Cash and cash equivalents $ 1,365 $ 205
Accounts receivable, net of allowances 6,910 6,488
Inventory 617 628
Prepaid expenses 1,235 838
Due from related party 1,589 -
Future income taxes 1,568 230
Other intangible assets 64 1,277
Goodwill 1,239 1,004

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$ 20,726 $ 20,293
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Liabilities
Current liabilities

Bank indebtedness $ 86 $ 1,303
Accounts payable and accrued liabilities 5,877 5,913
Income taxes payable 275 64
Current portion of long term liabilities 141 1,343
Future income taxes 715 662
Due to related party 3,244 -

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10,338 9,285

Long term debt 6 24
Future income taxes 38 1,028
Deferred tenant inducement 223 306
Due to related party - 2,488

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10,605 13,131

Shareholders' equity

Share capital 8,925 9,280
Warrants - 205
Contributed surplus 558 79
Accumulated other comprehensive income (2,389) (3,911)
Retained earnings 3,027 1,509

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10,121 7,162

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$ 20,726 $ 20,293
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Xentel DM Incorporated
Consolidated Statements of Operations and
Retained Earnings
For the years ended December 31 2008 2007
('000s, except per share amounts)

Revenue $ 96,219 $ 100,079

Cost of revenue 73,462 79,381

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Gross margin 22,757 20,698

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Corporate expenses

Branch overhead and corporate administration 17,482 19,395
Interest expense 427 702
Amortization of equipment 977 1,156
Amortization of intangible assets 1,306 1,584

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20,192 22,837

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Earnings (loss) before undernoted items 2,565 (2,139)

Other items
Expenses relating to the 2003
privatization lawsuit (74) (240)

--------- ---------
Earnings (loss) before income taxes 2,491 (2,379)

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Income tax expense (recovery)
Current income tax expense 240 (256)
Future income tax expense 733 (646)

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973 (902)

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Net earnings (loss) 1,518 (1,477)

Retained earnings, beginning of year 1,509 6,927

Write off of work in process, net of
future income taxes of $2,480 - (3,941)

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Retained earnings, end of year $ 3,027 $ 1,509
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Basic and diluted net earnings (loss) per share $ 0.06 $ (0.06)
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Basic weighted average number of shares 26,111 26,195
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Diluted weighted average number of shares 26,111 26,195
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Xentel DM Incorporated
Consolidated Statements of Contributed Surplus
For the years ended December 31 2008 2007
('000s)

Balance, beginning of year $ 79 $ 70

Stock based compensation on vesting of options 15 9
Expiry of warrants 205 -
Discount on share repurchase from stated value 259 -

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Balance, end of year $ 558 $ 79
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Xentel DM Incorporated
Consolidated Statements of Comprehensive Income (Loss)
For the years ended December 31 2008 2007
('000s)

Net earnings (loss) for the year $ 1,518 $ (1,477)

Foreign currency translation adjustment from
self sustaining foreign operations 1,522 (914)

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Comprehensive income (loss) $ 3,040 $ (2,391)
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Xentel DM Incorporated
Consolidated Statements of Accumulated Other
Comprehensive Income
For the years ended December 31 2008 2007
('000s)

Balance, beginning of year $ (3,911) $ (2,997)

Foreign currency translation adjustment from
self sustaining foreign operations 1,522 (914)

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Balance, end of year $ (2,389) $ (3,911)
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Xentel DM Incorporated
Consolidated Statements of Cash Flows
For the years ended December 31 2008 2007
('000s)

Cash flows from (used in) operating activities

Net earnings (loss) for the year $ 1,518 $ (1, 477)

Non cash transactions reflected in
net earnings (loss)
Amortization 2,283 2,740
Future income tax expense (recovery) 732 (646)
Stock based compensation 15 9
Adjustment for non cash interest 258 322

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4,806 948

Net change in non cash working capital items
Accounts receivable 312 1,916
Inventory 99 (71)
Prepaid expenses (323) 198
Other current assets (1) (3)
Income taxes payable 207 (737)
Accounts payable and accrued liabilities (522) (373)

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Net change in non cash working capital items (228) 930

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4,578 1,878

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Cash flows from (used in) financing activities

Bank indebtedness (1,242) 192
Long term debt repaid (1,446) (1,989)
Redemption of share capital (107) -
Issuance of share capital on option exercise 11 -

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(2,784) (1,797)

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Cash flows (used in) investing activities

Investment in equipment (675) (772)

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(675) (772)

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Effect of exchange rate fluctuations
on cash balances 41 101

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Net increase in cash and cash equivalents 1,160 (590)

Cash and cash equivalents, beginning of year 205 795

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Cash and cash equivalents, end of year $ 1,365 $ 205
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The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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