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Xentel		.	Press Release - October 29, 2001
Q3 Results 2001 (PDF: 136 KB /5 pages)			XENTEL DM Reports Record Earnings for Third Quarter 2001 Earnings up 60% over same period last year EBITDA reaches record levels CALGARY, ALBERTA, October 29, 2001 - XENTEL DM Incorporated (CDNX:XDM) today reported record net earnings for the 3 months ended September 30, 2001 of $1,660,000 or $0.09 per share as compared to net earnings of $1,038,000 for the same period in 2000, an increase of $622,000 or 60%. Net earnings for the first three quarters of 2001 were $3,877,000 or $0.20 per share compared to a loss of $987,000 for the nine months ended September 30, 2000. EBITDA was also at record levels. For the third quarter 2001, EBITDA was $2,889,000 or $0.15 per share and for the nine months ended September 30, 2001 EBITDA was $7,281,000 or $0.38 per share. For the respective periods in 2000, EBITDA was $2,240,000 or $0.12 per share and $2,207,000 or $0.12 per share. These were increases of 29% and 230% respectively. Revenues for the third quarter 2001 were $23,479,000 compared to $24,071,000 for the third quarter 2000, a decrease of $592,000. For the respective periods, the gross margins were $8,116,000 or 35% of revenues and $7,222,000 or 30% of revenues. This is an increase in gross margins of $894,000 or 12% period over period. Branch and corporate administration costs for the third quarter 2001 increased by $245,000 over the third quarter 2000 at 22% and 21% of revenues respectively. The Company’s balance sheet is strong with working capital at September 30, 2001 of $6,065,000 compared to negative working capital of $1,364,000 a year ago, an increase of $7,429,000 in 12 months. Currently the working capital ratio is 1:6 to 1 including cash of $831,000. Mike Platz, Chairman stated, "These are record earnings in the 22 year history of our Company. We have raised the bar for the future with the relentless pursuit in cost cutting measures, increases in margins and revenue enhancements to ensure future top and bottom line growth." Canadian Operations Third quarter 2001 revenues for the Canadian operation were $10,974,000 compared to $11,551,000 for the third quarter 2000, a decrease of $537,000. However, for the year to date revenues were $71,423,000 compared to revenues of $71,313,000 for the same period last year, an increase of $110,000. Net earnings were $532,000 compared to $423,000 for the third quarters 2001 and 2000, an increase of $109,000 or 26%. Also for the nine months ended September 30, 2001 compared to the nine months ended September 30, 2000, the net earnings increased by $487,000 or 56% from $869,000 to $1,356,000. "New contracts, such as the recently signed agreement with the National Association of Professional Police in Canada combined with new contact management and MIS software currently being implemented in the teleservices area will ensure that Xentel maintains its preeminent position in the marketplace", noted Geoff Pickering, President. United States Operations Revenues for the US operations were $12,505,000 for the third quarter 2001 compared to revenues of $12,520,000 for the third quarter 2000 and for the nine months ended September 30, 2001 and 2000 were $36,924,000 and $36,990,000 respectively. The net earnings for the third quarter 2001 were $1,128,000 compared to $615,000 for the third quarter 2000, an increase of $513,000 or 83%. For the year to date, year over year, net earnings increased $4,377,000 from a loss of $1,856,000 to net earnings of $2,521,000. XENTEL DM Incorporated is one of North America’s leading producers of family oriented live entertainment and expects to stage approximately 500 events in North America in 2001. The Company’s success is attributable to its proprietary sales tools including its technologically advanced teleservices organization and sophisticated customer databases. These tools are used to effectively pre-sell its events, thereby increasing revenue and reducing risk by minimizing the number of unsold event tickets. XENTEL DM Inc. has over 300 clients and approximately 2,000 employees in 21 offices across North America. The Company is traded on the Canadian Venture Exchange under the symbol XDM. The Canadian Venture Exchange has neither approved nor disapproved of the contents of this announcement. View Consolidated Balance Sheet View Consolidated Statement of Operations and Retained Earnings View Consolidated Statement of Cash Flows A copy of our quarterly 2001 reports and our annual report for the year ending December 31, 2000 can be found at our website www.xentel.com or by writing to: Xentel DM Incorporated 10 Kodiak Crescent Toronto, Ontario M3J 3G5 Fax: 416-633-4643 For further information, please contact: Caren Holtby Investor Relations Tel: (866) 204-9861 carenh@xentel.com Peter R. Pielsticker, CA Vice President, Corporate Finance Tel: (416) 633-4646 x 271 peterp@xentel.com

Consolidated Balance Sheet

		September 30, 2001		September 30, 2000		December 31, 2000
(in thousands of Canadian dollars)		(unaudited)		(unaudited)		(audited)
ASSETS
Current Assets
Cash	$	831	$	-	$	-
Accounts receivable		9,461		6,663		6,520
Due from related parties		47		68		19
Inventory		506		515		549
Work-in-progress		5,262		4,570		4,575
Prepaid expenses		952		936		823
Other		19		84		54
Total current assets		17,078		12,836		12,540
Customer contracts		2,619		3,520		3,334
Capital assets		4,915		5,103		5,005
Future income taxes		-		277		-
	$	24,612	$	21,736	$	20,879
LIABILITIES
Current liabilities
Bank indebtedness (note 2)	$	2,232	$	992	$	1,892
Accounts payable and accrued liabilities		6,948		11,608		8,608
Due to related parties (note 4)		-		495		495
Future income taxes (note 3)		1,394		709		342
Current portion of long-term debt		439		396		417
Total current liabilities		11,013		14,200		11,754
Long-term debt (note 2)		5,383		5,298		5,245
Government assistance		-		67		41
Due to related parties (note 4)		500		-		-
Future income taxes (note 3)		45		-		45
Total liabilities		16,941		19,565		17,085
SHAREHOLDERS' EQUITY
Share capital (note 5)		3,925		1,748		3,925
Warrants		450		2,346		450
Retained earnings (deficit)		3,296		(1,923)		(581)
Total shareholders' equity		7,671		2,171		3,794
	$	24,612	$	21,736	$	20,879

Consolidated Statement of Operations and Retained Earnings (Deficit)

(unaudited)

 

(in thousands of Canadian dollars except per share data)		Three months ending September 30				Nine months ending September 30
		2001		2000		2001		2000
Revenues	$	23,479	$	24,071	$	71,423	$	71,313
Cost of revenues		15,363		16,849		48,910		53,859
Gross margin		8,116		7,222		22,513		17,454
Expenses
Branch and corporate administration costs		5,227		4,982		15,232		15,247
Interest		268		350		744		847
Depreciation and amortization		528		531		1,579		1,596
		6,023		5,863		17,555		17,690
Earnings (loss) before income taxes		2,093		1,359		4,958		(236)
Future income taxes		433		321		1,081		740
Current income taxes		-		-		-		11
		433		321		1,081		751
Net earnings for the period		1,660		1,038		3,877		(987)
Retained earnings (deficit), beginning of period		1,636		(2,961)		(581)		(1,822)
Adjustment for future income taxes		-		-		-		886
Retained earnings (deficit), end of period	$	3,296	$	(1,923)	$	3,297	$	(1,923)
Basic and fully diluted earnings per share	$	0.09	$	0.05	$	0.20	$	(0.05)
Weighted number of average shares outstanding		19,022		19,022		19,022		17,968

Consolidated Statement of Cash Flows

(unaudited)

(in thousands of Canadian dollars)		Three months ending September 30				Nine months ending September 30
		2001		2000		2001		2000
Cash flows from (used in) operating activities
Net earnings	$	1,660	$	1,038	$	3,877	$	(987)
Non-cash items included in net earnings:
Depreciation and amortization		528		531		1,579		1,596
Future income taxes		433		321		1,081		740
Amortization of government assistance		-		(25)		(41)		(76)
Adjustment for interest not paid		23		22		67		67
Cash flows from operations		2,644		1,887		6,563		1,340
Changes in non-cash working capital		(2,282)		(1,008)		(5,389)		(1,219)
		362		879		1,174		121
Cash flows from (used in) financing activities
Bank indebtedness		726		(897)		339		78
Repayment of long-term debt		317		(55)		93		(191)
Warrants issued		-		-		-		(184)
Shares cancelled		-		(11)		-		377
		1,043		(963)		432		80
Cash flows (used in) investing activities
Net additions to capital assets		(574)		84		(775)		(351)
Deferred financing costs		-		-		-		150
		(574)		84		(775)		(201)
Net increase (decrease) in cash		831		-		831		-
Cash, beginning of period		-		-		-		-
Cash, end of period	$	831	$	-	$	831	$	-

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