Data Group Inc. announces full year and fourth quarter results for 2012

Data Group Inc. announces full year and fourth quarter results for 2012 
Highlights 
Full Year 2012 


    --  Revenues of $336.3 million, Gross Profit of $87.2 million, and
        Net Loss of $37.1 million (DUE TO A NON-CASH GOODWILL
        IMPAIRMENT CHARGE OF $44.0 MILLION)
    --  Full Year Dividends declared of $15.3 million or $0.65 per
        share
    --  Full Year Adjusted EBITDA of $28.7 million (See Table 2 and
        "Non-GAAP Measures" below)

Q4 2012
    --  Revenues of $86.9 million, Gross Profit of $23.2 million, and
        Net Loss of $41.6 million (DUE TO A NON-CASH GOODWILL
        IMPAIRMENT CHARGE OF $44.0 MILLION)
    --  Q4 Dividends declared of $3.8 million or $0.162 per share
    --  Q4 Adjusted EBITDA of $9.1 million (See Table 2 and "Non-GAAP
        Measures" below)

BRAMPTON, ON, March 6, 2013 /CNW/ - DATA Group Inc. (TSX: DGI) ("DATA Group") 
announced its financial and operating results for the fourth quarter ("Q4") 
and the year ended December 31, 2012, which include the operating results of 
its subsidiaries DATA Group Ltd., The Fulfillment Solutions Advantage Inc. 
("FSA") and FSA Datalytics Canada Inc. ("Datalytics").

"DATA Group made strong progress on our growth strategy in the fourth 
quarter. Our Q4 2012 Adjusted EBITDA was ahead of the fourth quarter 2011 by 
5.1% as we signed significant new client agreements, launched two important 
new products and initiated a new program to accelerate our rate of cost saving 
reductions in 2013 and beyond. We incurred a net loss during the quarter and 
year to date due to a change in the valuation of our goodwill in Q4. This 
was a non-cash adjustment which does not impact current or future cash flows 
and more closely aligns our book value per share with our current market value 
per share" said Michael Suksi, President and Chief Executive Officer. 
"During the fourth quarter, we announced a change in our dividend policy 
effective January 1, 2013, which improves the allocation of our available cash 
among dividends on our common shares, our debt reduction plans and investment 
in our growth initiatives. Consistent with that announcement, in a separate 
press release issued this morning we confirmed a quarterly dividend of $0.075 
per share ($0.30 annualized) payable on April 15, 2013 to holders of record on 
March 28, 2013. As evidence of the sustainability of our dividend, if we had 
paid the $0.075 per share in Q4 of 2012, we would have had a 30.5% payout of 
free cash flow. Based on our current business outlook, we expect to continue 
with this dividend per share rate for the balance of 2013, while also 
continuing to reduce our debt and invest in new revenue generating 
activities. We believe this strategy will position DATA Group for 
sustainable profit growth, enterprise value appreciation and a consistent 
dividend payout to our shareholders over the longer term."

DATA Group continues to expand its capabilities with new electronic 
communications oriented solutions, in order to position the company for 
sustainable, long term growth. The company's growth strategy is to meet its 
client's evolving requirements by bundling its new e-communication services 
with its traditional print services into a single, holistic communications 
management solution. Clients will enter into multi-year outsourcing 
contracts with DATA Group for this bundled solution. DATA Group refers to 
this set of services as Managed Business Communications Services. This growth 
strategy also includes selectively expanding into the United States with its 
existing clients who have U.S. operations and making acquisitions that 
accelerate our expansion into new products and services. DATA Group is also 
focused on continuously reducing costs in its traditional business in order to 
offset investment in its growth strategy and to improve profitability. DATA 
Group believes this strategy provides it with substantial opportunities to 
offset revenue declines in traditional print services due to technological 
change, resulting in revenue and profitability growth through expanded market 
share in its traditional business and from new revenue streams. DATA Group 
remains focused on the successful, ongoing execution of this plan in a 
prudent, well managed fashion, balancing its investment in the growth plan 
with its financial strategy.

During the fourth quarter and throughout 2012, DATA Group made material 
progress on this strategy. Revenues and gross profit both grew during the 
year. Adjusted EBITDA for the year was down due to our investment in our 
growth strategy but increased in the fourth quarter by 5.1%. The growth in 
revenues and gross profit was due to increased new business wins and the 
acquisition of FSA and Datalytics late in 2011. DATA Group also won a number 
of new customer agreements that will take material effect in 2013, in which 
its bundled Managed Business Communications Services ("MBCS") played a key 
role. More specifically, DATA Group recently signed a letter of intent for 
one of the largest single source, multi-year, customer agreements in its 
history. This is an expansion of a current agreement with a significant 
client, and includes management and provision of administrative documents as 
well as marketing print and communications services in Canada and the U.S. 
The new agreement took effect in December of 2012 and has required DATA Group 
to make modest investments in people and technology throughout the fourth 
quarter, including the establishment of operations in Niles, Illinois. Two 
additional significant new agreements, based on the MBCS approach will begin 
in the first half of 2013. Partially offsetting this, DATA Group experienced 
some losses of business during the fourth quarter due to technological change 
and competitive activity, which will take effect in 2013. DATA Group expects 
the net impact of these wins and losses will be positive to revenues and 
Adjusted EBITDA in the future.

DATA Group launched two new technology-oriented services in the fourth quarter 
of 2012. Marketing Campaign Management, a software-based service enhances 
the effectiveness of our client's marketing departments by creating 
collaborative, automated workflows between the clients' marketing staff, their 
agencies and fulfillment of the campaign by DATA Group. This results in 
faster and more effective marketing campaign planning, creative design, 
execution and reporting on results. DATA Group also launched Document Process 
Management ("DPM") services. Rather than just managing the supply of "blank" 
(or uncompleted) documents which the DATA Group currently does, DPM enables 
DATA Group to provide services associated with completing and using documents, 
such as workflow consulting and process automation, scanning and archiving of 
documents and related data extraction.

In the fourth quarter of 2012, DATA Group achieved approximately $2.0 million 
in cost saving efficiencies. In 2012, DATA Group generated approximately 
$5.3million in cost savings, which is similar to what we have achieved in 
the previous two years. DATA Group is now initiating a new program that it 
believes will increase our rate of cost savings in the future.

As previously announced, DATA Group made a change to its dividend policy in 
November of 2012, which took effect in January of 2013. Our annualized 
dividend is now $0.30 per share and will be paid on a quarterly basis. In 
2013, we expect to maintain a consistent common share dividend through a 
40%-60% payout of free cash flow. We believe this change is a prudent 
decision that will help us achieve sustainable growth and value for our 
investors by enabling us to achieve an improved balance between our dividend 
policy, our debt reduction goals and investment in our growth initiatives.

Table 1 The following table sets out selected historical financial information 
for the periods noted.

Consolidated Financial Information

For the periods ended      Oct. 1 to  Oct. 1 to  Jan. 1 to  Jan. 1 to
December 31, 2012 and 2011  Dec. 31,   Dec. 31,   Dec. 31,   Dec. 31,
(in thousands of Canadian     2012       2011       2012       2011
dollars, except per            $          $          $          $
share/unit amounts,
unaudited)

Revenues                       86,915     89,798    336,315    332,043

Cost of revenues               63,743     67,285    249,143     248,633

Gross profit                   23,172     22,513     87,172     83,410
                                                                      

Selling, general and           15,528     15,474     64,225     58,780
administrative expenses

Gain on settlement of           (243)          -      (243)          -
pension plan

Impairment of goodwill         44,000          -     44,000          -

Corporate conversion costs          -        148         84        585

Acquisition costs                   -        410          -        410

Amortization of intangible      2,310      2,578      9,242     10,275
assets
                                                                      

(Loss) income before         (38,423)      3,903   (30,136)     13,360
finance costs and income
taxes
                                                                      

Finance costs                                                         

  Interest expense              1,464      1,486      5,882      5,662

  Interest income                   -        (8)       (15)       (74)

  Change in fair value of           -        442          -      (738)
  conversion options

  Amortization of                 157        133        617        526
  transaction costs
                                1,621      2,053      6,484      5,376
                                                                      

(Loss) income before         (40,044)      1,850   (36,620)      7,984
income taxes
                                                                      

Income tax expense                                                    
(recovery)

  Current                       1,452        465      4,220      1,836

  Deferred                        119        157    (3,712)        765
                                1,571        622        508      2,601
                                                                      

Net (loss) income for the    (41,615)      1,228   (37,128)      5,383
period
                                                                      

Net (loss) income            (41,609)      1,265   (37,072)      5,420
attributable to
shareholders/unitholders

Basic and diluted (loss)       (1.77)       0.05     (1.58)       0.23
income per share/unit

Number of common           23,490,592 23,490,592 23,490,592 23,490,592
shares/units outstanding
                                                                      

Consolidated Statements of   As at      As at                         
Financial Position          Dec. 31,   Dec. 31,
Information                   2012       2011
(in thousands of Canadian      $          $
dollars, unaudited)

Current assets                 84,069     93,170                      

Current liabilities            40,316     44,874                      
                                                                      

Total assets                  224,629    289,773                      

Total non-current             122,199    127,223                      
liabilities
                                                                      

Shareholders' equity           61,978          -                      

Unitholders' equity                 -    117,363                      

Non-controlling interest          136        313                      

Total equity                   62,114    117,676                      


Table 2The following table provides a reconciliation of net income 
(loss) to Adjusted EBITDA for the periods noted. See "Non-GAAP Measures". 
Adjusted EBITDA Reconciliation                                  
For the periods ended December  Oct. 1 to Oct. 1 to Jan. 1 to Jan. 1 to
31, 2012 and 2011               Dec. 31,  Dec. 31,  Dec. 31,  Dec. 31, 
                              2012      2011      2012      2011
(in thousands of Canadian           $         $         $         $
dollars, unaudited) 
Net (loss) income for the        (41,615)     1,228  (37,128)     5,383
period 
Interest expense                    1,464     1,486     5,882     5,662 
Interest income                         -       (8)      (15)      (74) 
Change in fair value of                 -       442         -     (738)
conversion options 
Amortization of transaction           157       133       617       526
costs 
Depreciation of property, plant     1,407     1,570     5,727     5,752
and equipment 
Amortization of intangible          2,310     2,578     9,242    10,275
assets 
Gain on settlement of pension       (243)         -     (243)         -
plan 
Impairment of goodwill             44,000         -    44,000         - 
Corporate conversion costs              -       148        84       585 
Acquisition costs                       -       410         -       410 
Current income tax expense          1,452       465     4,220     1,836 
Deferred income tax (recovery)        119       157   (3,712)       765
expense 
Adjusted EBITDA                     9,051     8,609    28,674    30,382 


                                                                       

RESULTS OF OPERATIONS

Revenues
For the quarter ended December 31, 2012, DATA Group recorded revenues of 
$86.9million, a decrease of $2.9million or 3.2% compared with the same 
period in 2011. The net decrease, before intersegment revenues, was the 
result of a $3.2million decrease in the DATA East and West segment and was 
offset by a $0.3 million increase in the Multiple Pakfold segment. The 
decrease in revenues in the DATA East and West segment was due to declines in 
revenues from existing customers and partially offset by revenue gains from 
new business wins. During the fourth quarter of 2012, the segment began 
operations and shipping from its Niles, Illinois facility servicing a large 
financial institution. The increase in revenues in the Multiple Pakfold 
segment was attributable to market share growth as a result of implementing a 
targeted accounts program and an improvement in successful quoting activity. 
For the year ended December 31, 2012, DATA Group recorded revenues of 
$336.3million, an increase of $4.3million or 1.3% compared with the same 
period in 2011. The increase, before intersegment revenues, was the result 
of a $4.1million increase in the DATA East and West segment and a 
$0.1million increase in the Multiple Pakfold segment. The increase in 
revenues in the DATA East and West segment was due to the inclusion of the 
results of operations of FSA and Datalytics for the full year and revenue 
gains from new business wins. The increase in revenues was partially offset 
by declines in revenues from commercial printing in Western Canada, revenues 
from business documents in Ontario were lower due to several large projects 
for major customers in the prior year which did not repeat and declines in 
revenues from existing customers due to technological changes.

Cost of Revenues and Gross Profit
For the quarter ended December 31, 2012, cost of revenues decreased to 
$63.7million from $67.3million for the same period in 2011. Gross profit 
for the quarter ended December 31, 2012 was $23.2million, which represented 
an increase of $0.7million or 2.9% from $22.5million for the same period 
in 2011. The increase in gross profit for the quarter ended December 31, 
2012 was attributable to an increase in gross profit of $0.5 million in the 
DATA East and West segment and of $0.1 million in the Multiple Pakfold 
segment, respectively. Gross profit as a percentage of revenues increased to 
26.7% for the quarter ended December 31, 2012 compared to 25.1% for the same 
period in 2011. For the year ended December 31, 2012, cost of revenues 
increased to $249.1million from $248.6million for the same period in 
2011. Gross profit for the year ended December 31, 2012 was $87.2million, 
which represented an increase of $3.8million or 4.5% from $83.4million for 
the same period in 2011. The increase in gross profit for the year ended 
December 31, 2012 was attributable to an increase in gross profit of $3.7 
million in the DATA East and West segment and of $0.1 million in the Multiple 
Pakfold segment, respectively. Gross profit as a percentage of revenues 
increased to 25.9% for the year ended December 31, 2012 compared to 25.1% for 
the same period in 2011.

Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses, including 
administrative expenses of DATA Group Inc. (the "Corporation") but excluding 
amortization of intangible assets, for the quarter ended December 31, 2012 
remained unchanged at $15.5 million compared to the same period in 2011. As 
a percentage of revenues, these costs were 17.9% of revenues for the quarter 
ended December 31, 2012 compared to 17.2% of revenues for the same period in 
2011. For the quarter ended December 31, 2011, DATA Group incurred 
$0.3million of severance expenses. SG&A expenses for the year ended 
December 31, 2012 increased $5.4million to $64.2million compared to 
$58.8million for the same period of 2011. The increase in SG&A expenses 
for the year ended December 31, 2012 was attributable to the inclusion of FSA 
and Datalytics in DATA Group's results of operations and investments to launch 
new products and services initiatives. As a percentage of revenues, these 
costs were 19.1% of revenues for the year ended December 31, 2012 compared to 
17.7% of revenues for the same period in 2011. For each of the years ended 
December 31, 2012 and 2011, DATA Group incurred $0.7 million and $0.6million 
of severance expenses, respectively. Those severance costs were included in 
SG&A and were related productivity improvements and cost reduction initiatives.

Gain On Settlement of Pension Plan, Corporate Conversion Costs and Other
During the quarter ended December 31, 2012, DATA Group recorded a gain of $0.2 
million on the settlement of a pension plan related to the over contribution 
to the benefit settlement upon finalizing the wind-up of a pension plan. 
During the quarter ended December 31, 2011, DATA Group incurred total 
professional fees of $0.4million related to the acquisitions of FSA and 
Datalytics and $0.1 million related to the conversion to a corporation on 
January 1, 2012, respectively.

During the year ended December 31, 2012, DATA Group incurred total 
professional fees of $0.1million related to the conversion of the Fund to a 
corporation on January 1, 2012 and recorded a gain of $0.2million on the 
settlement of a pension plan related to the over contribution to the benefit 
settlement upon finalizing the wind-up of a pension plan. During the year 
ended December 31, 2011, DATA Group incurred total professional fees of 
$0.4million related to the acquisitions of FSA and Datalytics and $0.6 
million related to the conversion to the corporation on January1, 2012, 
respectively.

Impairment of Goodwill
During the fourth quarter of 2012, DATA Group performed its annual review for 
impairment of goodwill by comparing the fair value of each of its reporting 
segments to the segment's carrying value on DATA Group's books. DATA Group 
determined the fair value of each cash generating unit ("CGU") by discounting 
expected future cash flows in accordance with recognized valuation methods. 
The process of determining those fair values required DATA Group to make a 
number of estimates and assumptions such as projected future revenues, costs 
of revenues, operating margins, market conditions well into the future, and 
discount rates. As a result of that review and market indicators, including 
the trading price of DATA Group's common shares, DATA Group concluded that, 
the fair value of its DATA East and West CGU was less than its carrying 
value. Accordingly, DATA Group recognized an impairment of goodwill charge 
of $44.0million related to the DATA East and West CGU in 2012.

Adjusted EBITDA
For the quarter ended December 31, 2012, Adjusted EBITDA was $9.1million, or 
10.4% of revenues. Adjusted EBITDA for the quarter ended December 31, 2012 
increased $0.4 million or 5.1% from the same period in the prior year and the 
Adjusted EBITDA margin for the quarter, as a percentage of revenues, increased 
from 9.6% of revenues in 2011 to 10.4% of revenues in 2012. The increase was 
attributable to realized costs savings from the on-going productivity 
improvement and cost reduction initiatives and higher profit margins related 
to revenues from FSA and new business wins in each of the DATA Group's 
reporting segments. Adjusted EBITDA for the year ended December 31, 2012 was 
$28.7 million, or 8.5% of revenues. Adjusted EBITDA for the year ended 
December 31, 2012 decreased $1.7 million or 5.6% from the same period in the 
prior year and the Adjusted EBITDA margin for the year ended December 31, 
2012, as a percentage of revenues, decreased from 9.2% of revenues in 2011 to 
8.5% of revenues in 2012. The decrease was attributable to the cost of DATA 
Group's investment in its growth strategy in 2012. These costs included SG&A 
expenses, were related to investments to launch new products and services.

Interest Expense and Finance Costs
Interest expense on long-term debt outstanding under DATA Group's credit 
facilities and DATA Group's outstanding $45.0million aggregate principal 
amount of 6.00% Convertible Unsecured Subordinated Debentures (the 6.00% 
Convertible Debentures") was $1.5million for the quarters ended December 31, 
2012 and 2011 respectively, and was $5.8million for the year ended December 
31, 2012 compared to $5.7million for the same period in 2011. The increase 
in interest expense during the year ended December 31, 2012 was the result of 
higher outstanding balances under DATA Group's credit facilities and higher 
rates of interest charged on those balances during 2012.

Finance costs for the quarter and year ended December 31, 2011 included a 
charge of $0.4 million and a recovery $0.7million, respectively, related to 
the change in the fair value of The DATA Group Income Fund's (the "Fund") 
conversion options. The conversion options were the conversion feature in 
each of the Fund's outstanding convertible debentures, which was measured at 
fair value at each reporting date. The Fund's obligations under those 
convertible debentures were assumed by the Corporation in connection with a 
plan of arrangement. As a result of the Fund's conversion to a corporation 
on January1, 2012, those conversion option liabilities were classified as 
equity on the financial statements of the Corporation due to the change in the 
nature of the underlying security to shares from units and are no longer 
re-measured at fair value at each reporting date.

Income Taxes
DATA Group reported a loss before income taxes of $40.0 million, a current 
income tax expense of $1.5 million and a deferred income tax expense of 
$0.1million for the quarter ended December 31, 2012 compared to income 
before income taxes of $1.9million, a current income tax expense of $0.5 
million and a deferred income tax expense of $0.2million for the quarter 
ended December 31, 2011. DATA Group reported a loss before income taxes of 
$36.6million, a current income tax expense of $4.2 million and a deferred 
income tax recovery of $3.7 million for the year ended December 31, 2012 
compared to income before income taxes of $8.0million, a current income tax 
expense of $1.8 million and a deferred income tax expense of $0.8million for 
the year ended December 31, 2011. The current tax expense for the quarter 
and year ended December 31, 2012 were higher than the same periods in 2011 due 
to the Fund's conversion to a corporation, which resulted in higher taxable 
income for the quarter and year ended December 31, 2012, respectively. The 
deferred income tax expense was due to a change in estimates of future 
reversals of temporary differences and new temporary differences that arose 
during the quarter ended December 31, 2012. The deferred income tax recovery 
was due to the conversion, a change in estimates of future reversals of 
temporary differences and new temporary differences that arose during the year 
ended December 31, 2012. As a result of the conversion, DATA Group 
re-measured its deferred tax assets and liabilities at the corporate tax rates 
applicable to corporations, which are lower than the top marginal tax rate for 
individuals used by the Fund. In addition, the Fund's conversion option 
liabilities were reclassified as equity on January1, 2012 and the associated 
deferred tax asset was reversed. As a result of these changes, DATA Group 
recorded a deferred income tax recovery $1.4million during the first quarter 
of 2012.

Net (Loss) Income
Net loss for the quarter ended December 31, 2012 was $41.6 million compared to 
a net income of $1.2million for the quarter ended December 31, 2011. The 
decrease in comparable profitability for the quarter ended December 31, 2012 
was substantially due to a goodwill impairment charge and higher current 
income tax expense. The decrease in profitability was partially offset by 
higher gross profit in 2012, a gain on the settlement of a pension plan, lower 
corporate conversion costs and acquisition costs that did not re-occur in 2012.

Net loss for the year ended December 31, 2012 was $37.1million compared to a 
net income of $5.4million for the year ended December 31, 2011. The 
decrease in comparable profitability for the year ended December 31, 2012 was 
substantially due to a goodwill impairment charge, higher SG&A expenses, a 
large recovery related to the change in the fair value of the conversion 
options in the Fund's outstanding convertible debentures in 2011, and a higher 
current income tax expense as discussed above. The decrease in comparable 
profitability was partially offset by higher gross profit, the acquisition of 
FSA and Datalytics, a gain on the settlement of a pension plan, acquisition 
costs during 2011 and the deferred income tax recovery due to the change in 
estimate of future reversals of temporary differences, new temporary 
differences that arose during the period and the conversion of the Fund to a 
corporation.

INVESTING ACTIVITIES

Capital expenditures for the quarter ended December 31, 2012 of $0.4 million 
related primarily to maintenance capital expenditures. For the year ended 
December 31, 2012, DATA Group incurred capital expenditures of $2.0million 
related primarily to maintenance capital expenditures and an investment in 
intangible assets of $0.4 million related to the software licences. These 
capital expenditures were financed by cash flow from operations and existing 
cash resources.

FINANCING ACTIVITIES

At December 31, 2012, DATA Group had a bank overdraft of $1.2 million, which 
consisted of outstanding cheques of $2.5million offset by cash and cash 
equivalents of $1.3million. During the year ended December 31, 2012, DATA 
Group repaid $2.5 million of its Revolving Bank Facility outstanding. For 
the quarter and year ended December 31, 2012, DATA Group paid aggregate cash 
dividends of $3.8million and $14.0million, respectively, to its 
shareholders. For the year ended December 31, 2012, DATA Group paid 
aggregate cash distributions of $1.3million to holders of the common shares 
of DATA Group (formerly unitholders of the Fund).

About DATA Group Inc.

DATA Group Inc. is a managed business communications services company 
specializing in customized document management and marketing solutions. DATA 
Group develops, manufactures, markets and supports integrated web and 
print-based communications, information management and direct marketing 
products and services that help its customers reduce costs, increase revenues, 
maintain brand consistency and simplify their business process. DATA Group's 
expertise and resources enable it to address any document requirement of its 
customers, from a simple mail-out to an enterprise-wide document management or 
direct marketing initiative. We have over 1,800 employees working from 35 
locations across Canada and the United Sates to accomplish this.

Additional information relating to DATA Group Inc. is available on 
www.datagroup.ca, and in the disclosure documents filed by DATA Group Inc. on 
the System for Electronic Document Analysis and Retrieval (SEDAR) at 
www.sedar.com.

All financial information in this press release is presented in Canadian 
dollars and in accordance with generally accepted accounting principles 
("GAAP") measured under International Financial Reporting Standards ("IFRS"), 
as issued by the International Accounting Standards Board ("IASB") for 
publicly accountable entities, unless otherwise noted. Financial figures 
presented prior to January 1, 2012 are those of The DATA Group Income Fund, 
the predecessor to DATA Group Inc.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release constitute "forward-looking" 
statements that involve known and unknown risks, uncertainties and other 
factors which may cause the actual results, performance, objectives or 
achievements of DATA Group, or industry results, to be materially different 
from any future results, performance, objectives or achievements expressed or 
implied by such forward-looking statements. When used in this press release, 
words such as "may", "would", "could", "will", "expect", "anticipate", 
"estimate", "believe", "intend", "plan", and other similar expressions are 
intended to identify forward-looking statements. These statements reflect 
DATA Group's current views regarding future events and operating performance, 
are based on information currently available to DATA Group, and speak only as 
of the date of this press release. These forward-looking statements involve 
a number of risks, uncertainties and assumptions and should not be read as 
guarantees of future performance or results, and will not necessarily be 
accurate indications of whether or not such performance or results will be 
achieved. Many factors could cause the actual results, performance, 
objectives or achievements of DATA Group to be materially different from any 
future results, performance, objectives or achievements that may be expressed 
or implied by such forward-looking statements. The principal factors, 
assumptions and risks that DATA Group made or took into account in the 
preparation of these forward-looking statements include the risk that DATA 
Group may not be successful in growing its business or in managing its organic 
growth; DATA Group's ability to develop and successfully market new products 
and services; competition from competitors supplying similar products and 
services; DATA Group's ability to grow its sales or even maintain historical 
levels of its sales of printed business documents; the impact of economic 
conditions on DATA Group's businesses; risks associated with acquisitions by 
DATA Group; increases in the costs of paper and other raw materials used by 
DATA Group and DATA Group's ability to maintain relationships with its 
customers. Additional factors are discussed elsewhere in this press release 
and under the heading "Risks and Uncertainties" in DATA Group's management's 
discussion and analysis and in DATA Group's other publicly available 
disclosure documents, as filed by DATA Group on SEDAR (www.sedar.com). 
Should one or more of these risks or uncertainties materialize, or should 
assumptions underlying the forward-looking statements prove incorrect, actual 
results may vary materially from those described in this press release as 
intended, planned, anticipated, believed, estimated or expected. Unless 
required by applicable securities law, DATA Group does not intend and does not 
assume any obligation to update these forward-looking statements.

NON-GAAP MEASURES

This press release includes certain non-GAAP measures as supplementary 
information. When used in this press release, EBITDA means earnings before 
interest and finance costs, taxes, depreciation and amortization. Adjusted 
EBITDA for the three months ended December 31, 2012 means EBITDA adjusted for 
a gain on the settlement of a pension plan and a goodwill impairment charge. 
Adjusted EBITDA for the three months ended December 31, 2011 means EBITDA 
adjusted for acquisition and corporate conversion costs. Adjusted EBITDA for 
the year ended December 31, 2012 means EBITDA adjusted for corporate 
conversion costs, a gain on the settlement of a pension plan and a goodwill 
impairment charge. Adjusted EBITDA for the year ended December 31, 2011 
means EBITDA adjusted for acquisition and corporate conversion costs. DATA 
Group believes that, in addition to net income (loss), EBITDA and Adjusted 
EBITDA are useful supplemental measures in evaluating the performance of DATA 
Group and its predecessors. EBITDA and Adjusted EBITDA are not earnings 
measures recognized by IFRS and do not have any standardized meanings 
prescribed by IFRS. Therefore, EBITDA and Adjusted EBITDA are unlikely to be 
comparable to similar measures presented by other issuers.

Investors are cautioned that neither EBITDA nor Adjusted EBITDA should be 
construed as an alternative to net income (loss) determined in accordance with 
IFRS as an indicator of DATA Group's performance. For a reconciliation of 
net income (loss) to Adjusted EBITDA, see Table 2 above.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands of Canadian        December 31, 2012   December 31, 2011
dollars, unaudited)                      $                   $

Assets                                                                

Current assets                                                        

  Cash and cash equivalents                      -               4,046

  Trade receivables                         41,580              43,647

  Inventories                               38,085              40,786

  Prepaid expenses and other                 4,404               4,691
  current assets
                                            84,069              93,170
                                                                       

Non-current assets                                                    

  Deferred income tax assets                 1,534                 887

  Property, plant and                       20,420              24,149
  equipment

  Intangible assets                         17,540              26,367

  Goodwill                                 101,066             145,200
                                           224,629             289,773

Liabilities                                                           

Current liabilities                                                   

  Bank overdraft                             1,161                   -

  Trade payables                            28,289              32,280

  Provisions                                   308                 349

  Income taxes payable                       1,699               1,933

  Deferred revenue                           7,586               9,039

  Dividends/distributions                    1,273               1,273
  payable
                                            40,316              44,874
                                                                      

Non-current liabilities                                               

  Provisions                                   867               1,069

  Revolving bank facility                   57,553              60,123

  Convertible debentures                    42,311              42,229

  Deferred income tax                          766               5,686
  liabilities

  Other non-current                          1,137               1,548
  liabilities

  Pension obligations                       16,839              14,043

  Other post-employment                      2,726               2,525
  benefit plans
                                           162,515             172,097

Equity                                                                

Shareholders' equity                                                  

  Shares                                   215,336                   -

  Units                                          -             215,336

  Conversion options                           516                   -

  Foreign currency translation                   1                   -
  reserve

  Deficit                                (153,875)            (97,973)
                                            61,978             117,363

Non-controlling interest                       136                 313
                                            62,114             117,676
                                           224,629             289,773


CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS)
INCOME 
(in thousands of Canadian   For the three months  For the three months
dollars, except per          ended December 31,    ended December 31,
share/unit amounts,                 2012                  2011
unaudited) 
                                       $                     $ 
Revenues                                   86,915                89,798 
                                                                    
Cost of revenues                           63,743                67,285 
                                                                    
Gross profit                               23,172                22,513 


                                                                       

Expenses                                                               

  Selling, commissions and                  9,332                 9,182
  expenses

  General and
  administration expenses
  excluding
  amortization of
  intangible assets                         6,196                 6,292

  Gain on settlement of                     (243)                     -
  pension plan

  Impairment of goodwill                   44,000                     -

  Acquisition costs                             -                   410

  Corporate conversion                          -                   148
  costs

  Amortization of                           2,310                 2,578
  intangible assets
                                           61,595                18,610
                                                                       

(Loss) income before                     (38,423)                 3,903
finance costs and income
taxes
                                                                       

Finance costs                                                          
    Interest expense                         1,464                 1,486
    Interest income                              -                   (8)


Change in fair value of                      -                   442
  conversion options 
Amortization of                            157                   133
  transaction costs 
                                        1,621                 2,053 
                                                                    
(Loss) income before income              (40,044)                 1,850
taxes 


                                                                       

Income tax expense                                                     
(recovery)
    Current                                  1,452                   465
    Deferred                                   119                   157
                                            1,571                   622
                                                                       

Net (loss) income for the                (41,615)                 1,228
period
                                                                       

Other comprehensive income                                             

  Actuarial gains on                        1,076                 2,039
  post-employment benefit
  obligations

  Taxes related to                          (282)                 (913)
  post-employment
  adjustment above

  Foreign currency                              1                     -
  translation
                                              795                 1,126
                                                                       

Comprehensive (loss) income              (40,820)                 2,354
for the period
                                                                       

ATTRIBUTABLE TO                                                        

SHAREHOLDERS' or                                                       
UNITHOLDERS'
    Net (loss) income                    (41,609)                 1,265
    Other comprehensive                       795                 1,126
    income (loss)

  Comprehensive income                   (40,814)                 2,391
  (loss) for the period
                                                                       

NON-CONTROLLING INTEREST                                               
    Net loss                                  (6)                  (37)
    Other comprehensive                         -                     -
    income (loss)

  Comprehensive loss for                      (6)                  (37)
  the period
                                                                       

Basic (loss) income per                    (1.77)                  0.05
share/unit

Diluted (loss) income per                  (1.77)                  0.05
share/unit


CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS)
INCOME 
(in thousands of Canadian        For the year ended  For the year ended
dollars, except per share/unit    December 31, 2012  December 31, 2011
amounts, unaudited) 
                                          $                  $ 
Revenues                                     336,315            332,043 
                                                                    
Cost of revenues                             249,143            248,633 
                                                                    
Gross profit                                  87,172             83,410 
                                                                    
Expenses                                                                
Selling, commissions and                    37,317             34,861
  expenses 
General and administration
  expenses excluding
  amortization 


       of intangible assets                   26,908             23,919

  Gain on settlement of pension                (243)                  -
  plan

  Impairment of goodwill                      44,000                  -

  Corporate conversion costs                      84                585

  Acquisition costs                                -                410

  Amortization of intangible                   9,242             10,275
  assets
                                             117,308             70,050
                                                                       

(Loss) income before finance                (30,136)             13,360
costs and income taxes
                                                                       

Finance costs                                                          

  Interest expense                             5,882              5,662

  Interest income                               (15)               (74)

  Change in fair value of                          -              (738)
  conversion options

  Amortization of transaction                    617                526
  costs
                                               6,484              5,376
                                                                       

(Loss) income before income                 (36,620)              7,984
taxes
                                                                       

Income tax expense (recovery)                                          

  Current                                      4,220              1,836

  Deferred                                   (3,712)                765
                                                 508              2,601
                                                                       

Net (loss) income for the year              (37,128)              5,383
                                                                       

Other comprehensive (loss)                                             
income

  Deferred income tax recovery                   406                  -
  on conversion to a corporation

  Actuarial losses on                        (5,528)            (1,597)
  post-employment benefit
  obligations

  Taxes related to                             1,449                716
  post-employment adjustment
  above

  Foreign currency translation                     1                  -
                                             (3,672)              (881)
                                                                       

Comprehensive (loss) income for             (40,800)              4,502
the year
                                                                       

ATTRIBUTABLE TO                                                        

SHAREHOLDERS' or UNITHOLDERS'                                          
    Net (loss) income                       (37,072)              5,420
    Other comprehensive loss                 (3,672)              (881)

  Comprehensive (loss) income               (40,744)              4,539
  for the year
                                                                       

NON-CONTROLLING INTERESTS                                              
    Net loss                                    (56)               (37)
    Other comprehensive income                     -                  -
    (loss)

  Comprehensive loss for the                    (56)               (37)
  year
                                                                       

Basic (loss) income per                       (1.58)               0.23
share/unit

Diluted (loss) income per                     (1.58)               0.23
share/unit

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
                                          Attributable to Shareholders'                              

(in thousands                                 Foreign
of Canadian                                   currency                 Total        Non-
dollars,                          Conversion translation           Shareholders' controlling  Total
unaudited)      Shares     Units   options     reserve    Deficit     Equity      interest    Equity
                    $         $         $           $          $            $           $         $
                                                                                                     

Balance as at         -   215,336          -           -  (87,234)       128,102           -  128,102
December 31,
2010
                                                                                                     

Net income            -         -          -           -     5,420         5,420        (37)    5,383
(loss) for the
year

Other                 -         -          -           -     (881)         (881)           -    (881)
comprehensive
loss for the
year

Total                 -         -          -           -     4,539         4,539        (37)    4,502
comprehensive
income (loss)
for the year
                                                                                                     

Acquisition of        -         -          -           -         -             -         350      350
business

Distributions         -         -          -           -  (15,278)      (15,278)           - (15,278)
declared
                                                                                                     

Balance as at         -   215,336          -           -  (97,973)       117,363         313  117,676
December 31,
2011
                                                                                                     
                                                                                                     

Balance as at         -   215,336          -           -  (97,973)       117,363         313  117,676
December 31,
2011

Effect of       215,336 (215,336)        516           -         -           516           -      516
conversion to a
corporation
                215,336         -        516           -  (97,973)       117,879         313  118,192
                                                                                                     

Net loss for          -         -          -           -  (37,072)      (37,072)        (56) (37,128)
the year

Other                 -         -          -           1   (3,673)       (3,672)           -  (3,672)
comprehensive
(loss) income
for the year

Total                 -         -          -           1  (40,745)      (40,744)        (56) (40,800)
comprehensive
(loss) income
for the year
                                                                                                     

Acquisition of        -         -          -           -       121           121       (121)        -
non-controlling
interest

Dividends             -         -          -           -  (15,278)      (15,278)           - (15,278)
declared
                                                                                                     

Balance as at   215,336         -        516           1 (153,875)        61,978         136   62,114
December 31,
2012

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of Canadian          For the three       For the three
dollars, unaudited)                 months ended        months ended
                                  December 31, 2012   December 31, 2011
                                              $                   $

Cash provided by (used in)                                             

Operating activities                                                   

Net (loss) income for the                  (41,615)               1,228
period

Adjustments to net (loss)                                              
income

  Depreciation of property,                   1,407               1,570
  plant and equipment

  Amortization of intangible                  2,310               2,578
  assets

  Pension expense and gain on                 (159)                  42
  settlement of pension plan

  Gain on disposal of property,                 (9)                (31)
  plant and equipment

  Change in provisions                        (191)               (188)

  Impairment of goodwill                     44,000                   -

  Change in fair value of                         -                 442
  conversion options

  Amortization of transaction                   157                 133
  costs

  Accretion of convertible                       75                  75
  debentures

  Other non-current liabilities               (215)                (27)

  Other post-employment benefit               (136)               (113)
  plans, net

  Income tax expense                          1,571                 622
                                              7,195               6,331

Changes in working capital                    (843)               3,141

Contributions made to pension                 (468)               (897)
plans, net

Income taxes paid                             (537)                (13)
                                              5,347               8,562

Investing activities                                                   

Purchase of property, plant and               (416)               (841)
equipment

Proceeds on disposal of                          12                  53
property, plant and equipment

Acquisition of businesses, net                    -            (12,181)
of cash acquired of $58
                                              (404)            (12,969)

Financing activities                                                   

Proceeds from revolving bank                      -               5,500
facility

Finance costs                                 (240)                 (5)

Dividends or distributions paid             (3,819)             (3,819)
                                            (4,059)               1,676
                                                                       

Increase (decrease) in (bank
overdraft) cash and cash                        884             (2,731)
equivalents during the period

(Bank overdraft) cash and cash              (2,045)               6,777
equivalents - beginning of
period

(Bank overdraft) cash and cash              (1,161)               4,046
equivalents - end of period
                                                                       
    CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands of Canadian     For the year ended    For the year ended
dollars, unaudited)             December 31, 2012     December 31, 2011
                                           $                     $

Cash provided by (used in)                                             

Operating activities                                                   

Net (loss) income for the                (37,128)                 5,383
year

Adjustments to net (loss)                                              
income

  Depreciation of property,                 5,727                 5,752
  plant and equipment

  Amortization of                           9,242                10,275
  intangible assets

  Pension expense and gain                    165                   413
  on settlement of pension
  plan

  Loss on disposal of                           6                     4
  property, plant and
  equipment

  Impairment of goodwill                   44,000                     -

  Change in provisions                      (243)                 (561)

  Change in fair value of                       -                 (738)
  conversion options

  Amortization of                             617                   526
  transaction costs

  Accretion of convertible                    299                   298
  debentures

  Other non-current                         (411)                  (87)
  liabilities

  Other post-employment                        63                   (2)
  benefit plans, net

  Income tax expense                          508                 2,601
                                           22,845                23,864

Changes in working capital                  (254)                 (662)

Contributions made to                     (2,759)               (3,051)
pension plans, net

Income taxes paid                         (4,454)                  (13)
                                           15,378                20,138

Investing activities                                                   

Purchase of property, plant               (2,028)               (2,167)
and equipment

Purchase of intangible                      (415)                     -
assets

Proceeds on disposal of                        24                    53
property, plant and
equipment

Acquisition of businesses,                      -              (12,181)
net of cash acquired of $58
                                          (2,419)              (14,295)

Financing activities                                                   

(Repayment of) proceeds                   (2,500)                 5,500
from revolving bank
facility

Financing costs                             (388)                  (14)

Dividends or distributions               (15,278)              (15,278)
paid
                                         (18,166)               (9,792)
                                                                       

Decrease in cash and cash                 (5,207)               (3,949)
equivalents during the year

Cash and cash equivalents -                 4,046                 7,995
beginning of year

(Bank overdraft) cash and                 (1,161)                 4,046
cash equivalents - end of
year
                                                                       
    





Mr. Michael Suksi President and Chief Executive Officer DATA Group Inc. Tel: 
(905) 791-3151

Mr. Paul O'Shea Chief Financial Officer DATA Group Inc. Tel: (905) 791-3151

SOURCE: DATA Group Inc.

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2013/06/c2563.html

CO: DATA Group Inc.
ST: Ontario
NI: FIN PUB ERN 

-0- Mar/06/2013 12:45 GMT


 
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