Fiscal Q2 2012 Financial Highlights -- Revenue was $5.0 million compared to $5.0 million in the same quarter ....." />
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PNI Digital Media Reports Fiscal Second Quarter 2012 Financial Results

(May 10, 2012)

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 05/10/12 -- PNI Digital Media (TSX:PN)(OTCBB:PNDMF) ("PNI"), the leading innovator in digital media solutions for retailers, reported financial results for the second quarter of fiscal 2012 ended March 31st, 2012.

Fiscal Q2 2012 Financial Highlights -- Revenue was $5.0 million compared to $5.0 million in the same quarter last year -- Transactional revenue was $3.6 million, an increase of 6% compared to Q2 FY11. Transactional revenue comprised 73% of total revenue for the quarter -- Generated an IFRS loss before income taxes of $0.9 million for the quarter, an improvement compared to a loss of $1.1 million in the quarter last year -- Non-IFRS adjusted EBITDA(1) loss of $39,000, an improvement compared to a loss of $123,000 in fiscal Q2 2011 -- Processed 3.8 million transactions over the PNI Digital Media Platform, an improvement of 4% from the same quarter last year -- Strong balance sheet with $5.8 million in cash and no debt Fiscal Q2 2012 Operational Highlights & Recent Events -- Launched all-new iPhone app for Tesco Photo, helping to increase transactions for the quarter -- Successfully launched Folded Words (www.foldedwords.com), taking orders for stationery and invitations -- Successfully launched an all-new update to the award-winning PNI Connected Kiosk(TM) software for retail photo kiosks -- Strengthened the company's management team with the addition of Zack Wickes as VP Technology

"Our second quarter saw record transactions for our seasonally-weakest quarter," said Kyle Hall, Chief Executive Officer of PNI Digital Media. "We saw a solid performance in our core photo business while we continued our push into our new business lines."

Conference Call


The company will host a conference call Thursday, May 10th at 4:30 p.m. ET (1:30 p.m. PT) to discuss these financial results. PNI Digital Media's CEO Kyle Hall, and CFO, Simon Bodymore, will host the presentation, followed by a question and answer period.

Dial-In Number: 1-888-241-0394

International: 1-647-427-3413

Conference ID#: 75283626

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.

PNI Digital Media will also provide a live webcast and slide presentation, which will be available on the company's website at www.pnimedia.com/webcast. An archived replay of the webcast will be available on the company's website for 45 days following the live event.

Consolidated Statements of Income and Comprehensive Income Three Months Ended Six Months Ended March 31, March 31, March 31, March 31, 2012 2011 2012 2011 ------------------------------------------------------ Revenue $ 5,005,226 $ 5,031,263 $ 11,955,602 $ 12,765,068 Cost of sales 2,270,679 2,229,508 4,862,248 4,884,033 ------------------------------------------------------ Gross Profit 2,734,547 2,801,755 7,093,354 7,881,035 Expenses Software development 2,272,113 2,410,604 4,436,290 4,716,458 General and administration 973,687 1,092,311 2,066,716 2,192,620 Sales and marketing 255,921 274,237 426,875 598,082 ------------------------------------------------------ 3,501,721 3,777,152 6,929,881 7,507,160 ------------------------------------------------------ (Loss) profit from operations (767,174) (975,397) 163,473 373,875 Foreign exchange (loss) gain (154,724) (162,529) (49,438) 7,910 Finance income 369 - 928 48 Finance costs - (15) - (5,551) ------------------------------------------------------ (154,355) (162,544) (48,510) 2,407 ------------------------------------------------------ (Loss) profit before income tax (921,529) (1,137,941) 114,963 376,282 Current income tax recovery (expense) - - - - Deferred income tax recovery (expense) 560,818 255,184 564,549 (279,349) ------------------------------------------------------ Income tax recovery (expense) 560,818 255,184 564,549 (279,349) ------------------------------------------------------ (Loss) profit for the period (360,711) (882,757) 679,512 96,933 Other comprehensive gain (loss): Cumulative translation adjustment 144,610 62,942 (142,448) (393,695) ------------------------------------------------------ Total comprehensive (loss) income for the period $ (216,101) $ (819,815) $ 537,064 $ (296,762) ------------------------------------------------------ ------------------------------------------------------ (Loss) earnings per share Basic $ (0.01) $ (0.03) $ 0.02 $ 0.00 Fully diluted $ (0.01) $ (0.03) $ 0.02 $ 0.00 Consolidated Statements of Financial Position March September October 31, 2012 30, 2011 1, 2010 ---------------------------------------- Assets Current assets Cash and cash equivalents $ 5,794,912 $ 3,936,176 $ 4,690,355 Accounts receivable 4,443,280 4,535,912 5,302,865 Prepaid expenses and other current assets 469,297 460,140 541,026 ---------------------------------------- 10,707,489 8,932,228 10,534,246 Property and equipment 4,880,256 5,140,150 5,230,829 Deferred income tax asset 7,606,322 7,065,857 5,861,504 Intangible assets 1,001,448 680,437 1,115,794 Goodwill 647,219 654,222 658,904 ---------------------------------------- $ 24,842,734 $ 22,472,894 $ 23,401,277 ---------------------------------------- ---------------------------------------- Liabilities Current liabilities Accounts payable and accrued liabilities $ 4,379,176 $ 3,284,311 $ 5,471,878 Current portion of deferred revenue 374,991 250,323 613,081 Current portion of finance lease obligations - - 107,964 ---------------------------------------- 4,754,167 3,534,634 6,192,923 Deferred revenue 502,572 33,898 78,876 ---------------------------------------- 5,256,739 3,568,532 6,271,799 ---------------------------------------- Shareholders' Equity Share capital $ 66,817,451 $ 66,420,572 $ 66,307,826 Contributed surplus 19,270,110 19,522,420 18,933,619 ---------------------------------------- 86,087,561 85,942,992 85,241,445 ---------------------------------------- Deficit (66,332,855) (67,012,367) (68,111,967) Accumulated other comprehensive loss (168,711) (26,263) - ---------------------------------------- (66,501,566) (67,038,630) (68,111,967) ---------------------------------------- 19,585,995 18,904,362 17,129,478 ---------------------------------------- $ 24,842,734 $ 22,472,894 $ 23,401,277 ---------------------------------------- ---------------------------------------- Non-IFRS Financial Measures Three Months Ended March 31, March 31, 2012 2011 -------------------------- Net loss in accordance with IFRS $ (360,711) $ (882,757) Amortization of property and equipment 417,678 501,683 Amortization of intangible assets 268,467 191,170 Interest expense - 15 Income taxes (560,818) (255,184) Stock based compensation expense 65,492 217,287 Unrealized foreign exchange loss 130,659 104,980 -------------------------- Adjusted EBITDA $ (39,233) $ (122,806) -------------------------- -------------------------- Six Months Ended March 31, March 31, 2012 2011 -------------------------- Net profit in accordance with IFRS $ 679,512 $ 96,933 Amortization of property and equipment 822,453 997,058 Amortization of intangible assets 533,798 385,174 Interest expense - 5,551 Income taxes (564,549) 279,349 Stock based compensation expense 144,761 546,921 Unrealized foreign exchange loss (gain) 34,987 (90,908) -------------------------- Adjusted EBITDA $ 1,650,962 $ 2,220,078 -------------------------- --------------------------

Notes:

1 - Non-IFRS Measures

The Company continues to provide all information required in accordance with IFRS, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only IFRS financial measures. Accordingly, the Company uses non-IFRS financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. The primary non-IFRS financial measures utilized by the Company include adjusted EBITDA. Adjusted EBITDA is non-IFRS financial measure which the Company defines as net profit plus amortization, interest expense, tax expense, share-based compensation expense and unrealized foreign exchange loss (gain).

To supplement the Company's financial statements presented on an IFRS basis, we believe that these non-IFRS measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. These adjustments to the Company's IFRS results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results and trends and performance. Management uses these non-IFRS measures to evaluate the Company's financial results, develop budgets, manage expenditures, and determine employee compensation. The presentation of additional information is not meant to be considered in isolation or as a substitute for or superior to net (loss) earnings or net (loss) earnings per share determined in accordance with IFRS.

Currency:

All amounts are expressed in Canadian dollars. This notice is qualified in its entirety by reference to the Company's financial statements and accompanying Management Discussion and Analysis, which are accessible on the SEC'S website at www.sec.gov/edgar.shtml and on SEDAR at www.sedar.com.

About PNI Digital Media: Founded in 1995, PNI Digital Media operates the PNI Digital Media Platform, which provides transaction processing and order routing services for major retailers. The PNI Digital Media Platform connects consumer-ordered digital content, whether from online, in-store kiosks, desktop software or mobile phones, with retailers that have on-demand manufacturing capabilities for the production of personalized products such as photos, photo books and calendars, business cards and stationery. PNI Digital Media successfully generates millions of transactions each year for retailers and their thousands of locations worldwide. Further information on our company can be found at www.pnimedia.com.

The statements that are not historical facts contained in this release are forward-looking statements that involve risks and uncertainties. PNI Digital Media's actual results could differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, changes in technology, employee retention, inability to deliver on contracts, failure of customers to continue marketing the online solution, competition, general economic conditions, foreign exchange and other risks detailed in the Company's annual report and other filings. Additional information related to the Company can be found on SEDAR at www.sedar.com and on the SEC'S website at www.sec.gov/edgar.shtml. The information contained herein is subject to change without notice. PNI Digital Media shall not be liable for technical or editorial errors or omissions contained herein.

PNI Digital Media relies upon litigation protection for "forward-looking" statements.

PNI Digital Media is a registered trademark of PNI Digital Media Inc. All other trademarks are property of their respective owners.

The TSX has neither approved nor disapproved the information contained in this release. Neither TSX nor its Regulation Services Provider (as that term is defined in the policies of the TSX) accepts responsibility for the adequacy or accuracy of this release.

Contacts:
For Financial Information, Contact:
Simon Bodymore, CFO
(604) 893-8955 ext.229

For Investor Relations and Press, Contact:
Simon Cairns
(866) 544-4881
ir@pnimedia.com
Twitter: @pni_media

Michael Koehler or Matt Glover
Liolios Group, Inc.
949-574-3860
pni@liolios.com


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