The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Globe Investor

News Sources

Take control of your investments with the latest investing news and analysis

Press release from CNW Group

D + H Reports Third Quarter 2012 Results

Tuesday, November 06, 2012

D + H Reports Third Quarter 2012 Results17:00 EST Tuesday, November 06, 2012Stock Exchange Symbol: DHWebsite: www.dhltd.comTORONTO, Nov. 6, 2012 /CNW/ - Davis + Henderson Corporation ("D+H" or the "Corporation" or the "Company") today reported financial results for the three and nine months ended September 30, 2012 that were consistent with the Company's strategic agenda and reflected year-over-year growth in revenues, EBITDA1 and Adjusted EBITDA1.  The increase in revenues and EBITDA was primarily from the U.S. Segment driven by the strong growth in Mortgagebot LLC ("Mortgagebot") and the inclusion of Avista Solutions, Inc. ("Avista") from the date of its acquisition of May 3, 2012."This was another period of solid performance for D+H, punctuated by new customer wins and the ongoing realization of value from our broader financial technology capabilities," said Gerrard Schmid, Chief Executive Officer. "Our ability to deliver diverse solutions to more banks and credit unions in North America creates growth opportunities and helps to offset near-term challenges associated with economic and market volatility.""Strong cash generation also enabled us to continue to repay debt and strengthen our balance sheet to support future organic growth and growth by acquisition strategies," said Brian Kyle, Chief Financial Officer. "We have also used that cash flow strength to increase our dividend, effective with the next payment, raising it from $1.24 per share to $1.28 per share annualized.  This is our second increase since we converted to a corporation in January 2011."With the aim of continuously improving Canadian operations, during the first nine months of 2012, D+H incurred $5.6 million of charges related to cost-realignment initiatives that are expected to benefit its Canadian platform in both current and future periods.  Annualized savings are expected to be realized going forward, and will be used to offset an increase in expenses to support future growth.  These cost-realignment initiatives were made possible by the recent completion of a successful business integration project that began in late 2010.Third Quarter Highlights Revenue was $191.8 million, an increase of $5.5 million, or 3.0%, compared to $186.3 million for the same quarter in 2011.EBITDA of $48.0 million (25.0% margin), increased by $1.8 million, or 3.8%, from $46.2 million (24.8% margin) in the same quarter in 2011, due to continued strong growth in the Mortgagebot business and the inclusion of Avista in the U.S. Segment. EBITDA in the Canadian Segment reflected modest revenue growth and savings realized from integration and transformation initiatives, offset by charges related to cost-realignment initiatives to benefit future periods.Adjusted EBITDA was $51.3 million (26.7% margin) for the third quarter of 2012, an increase of $4.4 million, or 9.5%, compared to $46.8 million (25.1% margin) for the same period in 2011.  Adjusted EBITDA for the third quarter of 2012 excluded $3.3 million of acquisition-related costs as well as other charges related to cost-realignment initiatives. These expenses consisted of $2.4 million of cost-realignment charges in the Canadian Segment that are not considered to be in the normal course of operations, and $0.9 million related to transaction costs and certain retention expenses associated with the acquisitions of Mortgagebot and Avista in the U.S. Segment. Acquisition-related and other charges for the same period in 2011 were $0.6 million related to the Mortgagebot acquisition. These items were excluded as management believes they are not indicative of underlying business performance and excluding these adjustments is more reflective of ongoing operating results.Net income increased to $19.6 million ($0.3310 per share) from $15.1 million ($0.2542 per share) for the same quarter in 2011. Net income for the third quarter of 2012 included a non-cash income tax recovery of $1.2 million related to the Mortgagebot acquisition.  Net income for the third quarter of 2011 was reduced by $4.0 million of an unrealized mark-to-market loss on interest-rate swaps.  Fair value adjustments related to these interest-rate swaps are recognized in net income as these swaps are not designated as hedges for hedge accounting purposes.Adjusted net income1 increased to $28.1 million ($0.4752 per share) from $26.2 million ($0.4429 per share) for the third quarter of 2011.During the third quarter of 2012, D+H paid a dividend of $0.31 per share to its shareholders of record on August 31, 2012. During the same period in 2011, D+H paid $0.31 per share to its shareholders of record on August 31, 2011. D+H increased its target annual dividend from $1.24 per share to $1.28 per share annualized, for shareholders of record as of November 30, 2012, to be paid on December 31, 2012.The Company also made net repayments of $17.8 million on its credit facilities during the third quarter of 2012.American Banker, Bank Technology News and IDC Financial Insights once again named D+H as one of the world's top financial technology ("FinTech") firms in the international FinTech 100 with a 2012 ranking of 35th, up 6 places since 2011. D+H is the highest ranked Canadian headquartered company on the FinTech 100 listing.   This recognition is a reflection of the steps D+H has taken to provide a broad spectrum of financial technology products and services to its customers and as it continues to innovate and grow to better serve the financial services industry.Effective October 15, 2012, William W. Neville resigned from the D+H Board of Directors, a role that he had held since 2009, to assume a new executive role within the Company as the President of D+H USA, with overall responsibility for the Company's U.S. operations and for broadening D+H's presence in the United States.Nine-Month Highlights Revenue was $570.5 million, an increase of $29.5 million, or 5.5%, compared to $540.9 million for the same nine-month period in 2011.EBITDA was $141.9 million (24.9% margin), an increase of $10.1 million, or 7.7%, compared to $131.8 million (24.4% margin) for the same period in 2011.Adjusted EBITDA was $150.3 million (26.3% margin) for the first nine months of  2012, an increase of $15.4 million, or 11.4%, compared to $134.9 million (24.9% margin) for the same period of 2011. Adjusted EBITDA for the first nine months of 2012 excluded impacts of acquisition-related and other charges of $8.4 million, which consisted of $5.6 million related to cost-realignment initiatives to benefit future periods within the Canadian Segment and $2.8 million related to transaction costs and certain retention expenses related to the acquisition of Mortgagebot and Avista within the U.S. Segment.  Acquisition-related and other charges for the same period in 2011 were $3.1 million incurred primarily in connection with the Mortgagebot acquisition.Net income was $55.4 million ($0.9357 per share), a year-over-year decrease of $19.1 million, or 25.7%, compared to $74.6 million ($1.3077 per share) for the same period in 2011.  Net income for the nine-month period in 2011 benefited from the inclusion of non-cash tax recoveries of $22.8 million attributable to D+H's conversion to a corporation in the first quarter of 2011 and a non-cash tax recovery relating to losses within certain U.S. subsidiaries that were not previously recognized in connection with the acquisition of Mortgagebot in the second quarter of 2011, partially offset by $3.5 million of an unrealized mark-to-market loss on interest-rate swaps.  Net income for the first nine months of 2012 was impacted by $8.4 million of acquisition-related and other charges as described above.Adjusted net income was $82.5 million ($1.3926 per share) for the first nine months of 2012, an increase of $4.4 million, or 5.6%, compared to $78.1 million ($1.3698 per share) for the same period in 2011.On May 3, 2012, D+H acquired a 100% equity interest in Avista, a leading provider of Software as a Service ("SaaS") mortgage loan origination software, for a purchase price of US$ 40 million.Additionally, on April 24, 2012, D+H made a strategic minority investment in Compushare, Inc. ("Compushare"), based in Santa Ana, California, a technology management and cloud computing provider to financial institutions, for US$ 9.8 million.During the first nine months of 2012, dividends of $0.93 per share were paid to shareholders, up from $0.9133 per share in the same period of 2011.____________________________________________1 D+H's financial results are prepared in accordance with IFRS. D+H reports several non-IFRS financial measures, including EBITDA, Adjusted EBITDA and Adjusted net income used above. Adjusted EBITDA is calculated as EBITDA, adjusted to remove acquisition-related and other charges, including expenses associated with cost-realignment initiatives which are not considered to be part of normal course of operations.   Adjusted net income is calculated as net income, adjusted to remove certain non-cash items and certain items of note such as acquisition-related and other charges, including expenses associated with cost-realignment initiatives as described above, discontinued operations and the related tax effects of these adjustments including tax effects of corporate conversions. These items are excluded in calculating Adjusted EBITDA and Adjusted net income as they are not considered indicative of the underlying business performance for the period being reviewed and management believes that excluding these adjustments is more reflective of ongoing operating results. Any non-IFRS financial measures should be considered in context with the IFRS financial statement presentation and should not be considered in isolation or as a substitute for IFRS net income or cash flows. Further, D+H's measures may be calculated differently from similarly titled measures of other companies. See Non-IFRS Financial Measures for a more complete description of these terms.D+H's unaudited condensed interim consolidated financial statements for the third quarter of 2012, accompanying notes to the financial statements and management's discussion & analysis ("MD&A") along with the supplementary financial information will be available today at www.dhltd.com and tomorrow on www.sedar.com.For a more detailed discussion of the results and management's outlook, please see the MD&A below.CAUTION CONCERNING FORWARD-LOOKING STATEMENTSThis press release contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forward-looking statements"). Statements concerning D+H's objectives, goals, strategies, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements.  The words "believe", "expect", "anticipate", "estimate", "intend", "may", "will", "would" and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.  These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of D+H to meet its revenue, "EBITDA", "Adjusted EBITDA" and "Adjusted net income" targets (see Non-IFRS Financial Measures for a more complete description of the terms EBITDA, Adjusted EBITDA and Adjusted net income); general industry and economic conditions; changes in D+H's relationship with its customers and suppliers; pricing pressures and other competitive factors; the anticipated effect of acquisitions on the financial performance of D+H; and the expected benefits arising as a result of acquisitions. D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements.  While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements.Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Business, or developments in D+H's industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements.Risks related to forward-looking statements include, among other things, challenges presented by declines in the use of personal and business cheques; the Company's dependence on a limited number of large financial institution customers and dependence on their acceptance of new programs; strategic initiatives being undertaken to meet the Company's financial objective; stability and growth in the real estate, mortgage and lending markets; as well as general market conditions, including economic and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.  The documents incorporated by reference herein also identify additional factors that could affect the operating results and performance of the Company. Forward-looking statements are based on management's current plans, estimates, projections, beliefs and opinions, and D+H does not undertake any obligation to update forward-looking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws.All of the forward-looking statements made in this press release and the documents incorporated by reference herein are qualified by these cautionary statements and other cautionary statements or factors contained herein, and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company.CONFERENCE CALLDavis + Henderson will discuss its financial results for the three and nine months ended September 30, 2012 via conference call at 10:00 a.m. EST (Toronto time) on Wednesday, November 7, 2012. The number to use for this call is 647-427-7450 for Local / International callers or 1-888-231-8191 for US / Canada callers. The conference call will be hosted by Gerrard Schmid, Chief Executive Officer and by Brian Kyle, Chief Financial Officer. The conference call will also be available on the web by accessing CNW Group's website http://www.newswire.ca/en/webcast/detail/1052963/1144399. For anyone unable to listen to the scheduled call, the rebroadcast number will be: 416-849-0833for Toronto area callers, or 1-855-859-2056 for all other callers, with Encore Password 46733496. The rebroadcast will be available until Wednesday November 21, 2012.  An archive recording of the conference call will also be available at the above noted web address for one month following the call and a text version of the call will be available at www.dhltd.com.ADDITIONAL INFORMATIONAdditional information relating to the Company, including the Company's most recently filed Annual Information Form, is available on SEDAR at www.sedar.com.MANAGEMENT'S DISCUSSION AND ANALYSISThis Management's Discussion and Analysis ("MD&A") for Davis + Henderson Corporation (the "Company" or the "Corporation" or the "Business" or "Davis + Henderson" or "D+H" or "we" or "our"), which was formerly known as Davis + Henderson Income Fund (the "Fund"), has been prepared with an effective date of November 6, 2012 and should be read in conjunction with the MD&A in the Annual Report for the year ended December 31, 2011, dated March 6, 2012, and the unaudited condensed interim consolidated financial statements for the three and nine months ended September 30, 2012. External economic and industry factors remain substantially unchanged from those described in the annual MD&A and the Corporation's most recently filed Annual Information Form, except as described herein.NON-IFRS FINANCIAL MEASURESThe information presented within the tables in this MD&A include certain adjusted financial measures such as "EBITDA" (Earnings before interest, taxes, depreciation and amortization; EBITDA also excludes fair value adjustments of interest-rate swaps which are directly related to interest expense), "Adjusted EBITDA" (EBITDA adjusted to remove acquisition-related and other charges, including expenses incurred in connection with cost-realignment initiatives which are not considered to be incurred in the normal course of operations and are not indicative of the underlying business performance), "Adjusted net income" (net income before certain non-cash charges such as amortization of intangibles from acquisitions and fair value adjustments of interest-rate swaps and certain items of note such as acquisition-related and other charges and discontinued operations), and "Adjusted net income per share", all of which are not defined terms under IFRS.These non-IFRS financial measures should be read in conjunction with the Consolidated Statements of Income.  See the reconciliation of EBITDA, Adjusted EBITDA and Adjusted net income to the most directly comparable IFRS measure, "net income", in the "Operating Results" section of this MD&A.Management believes these supplementary measures provide useful additional information related to the operating results of the Corporation.  Management uses these subtotals as measures of financial performance and as a supplement to the Consolidated Statements of Income.  Investors are cautioned that these measures should not be construed as an alternative to using net income as a measure of profitability or as an alternative to the IFRS Consolidated Statements of Income or other IFRS statements.Further, these measures do not have any standardized meaning and D+H's method of calculating each balance may not be comparable to calculations used by other companies bearing the same description.EBITDAIn addition to its use by management as an internal measure of financial performance, EBITDA (with adjustments) is used to measure compliance with certain financial covenants under the Company's credit facility and bonds. EBITDA is also used by D+H as a factor in assessing the performance and the value of a business. EBITDA has limitations as an analytical tool, and the reader should not consider it in isolation or as a substitute for analysis of results as reported under IFRS.Adjusted EBITDA   Adjusted EBITDA is also used by D+H in assessing the performance of its businesses.  Adjusted EBITDA excludes: (i) acquisition-related expenses such as transaction costs, and certain retention and incentive costs incurred as part of acquisitions; and (ii) other charges incurred in connection with cost-realignment initiatives which are not considered to be part of the normal course of operations.   These items are excluded in calculating Adjusted EBITDA as they are not considered indicative of the underlying business performance for the period being reviewed and management believes that excluding these adjustments is more reflective of ongoing operating results.Similar to EBITDA, Adjusted EBITDA also has limitations as an analytical tool, and the reader should not consider it in isolation or as a substitute for analysis of results as reported under IFRS.Adjusted Net Income and Adjusted Net Income per ShareEffective January 1, 2011, as a result of the conversion from an income trust structure to a corporate structure, the Business introduced Adjusted net income and Adjusted net income per share as measures for evaluating results.  Periods prior to January 1, 2011, do not have comparable measures.Adjusted net income is used as a measure of internal performance similar to net income, but is calculated after removing the impacts of certain items such as acquisition-related expenses, discontinued operations and certain non-cash items such as amortization of intangibles from acquisitions and fair value adjustments of interest-rate swaps. Also excluded from Adjusted net income are the tax effects of corporate conversion and acquisitions. These items are excluded in calculating Adjusted net income as they are not considered indicative of the financial performance of the Business for the period being reviewed.STRATEGYD+H's goal is to be a leading financial technology ("FinTech") provider to the North American financial services marketplace. Today our solutions include several market-leading service offerings.  Within the Canadian market they include payment solutions; the provision of collateral management services; the servicing of student loans; mortgage technology solutions and several specialty servicing businesses including credit card and insurance processing.  In the United States, D+H is a market-leading provider of Software-as-a-Service ("SaaS") Point-of-Sale ("POS") mortgage and consumer loan solutions to over 1,100 community banks and credit unions; and more recently through the acquisition of Avista Solutions, Inc. ("Avista"), a leading provider of SaaS Loan Origination System ("LOS") to over 150 community banks and credit unions. Across North America, we offer leading commercial lending, small business lending and leasing technology solutions to mid-size and large financial institutions.D+H's strategy is to establish market-leading positions within well-defined and growing service areas in the financial services marketplace, and to reinforce these market-leading positions with technology solutions that deliver increasing value to our customers and shareholders. We expect to advance this strategy through organic initiatives, through partnering with third parties and by way of selective acquisitions. D+H's long-term financial objective is to deliver sustainable and growing earnings through continued organic revenue growth and by way of strategic acquisitions.Over the past several years, D+H has executed this strategy by evolving payment solutions, completing several acquisitions including ASSET Inc. ("ASSET") and Mortgagebot LLC ("Mortgagebot") in 2011 and Avista in 2012, and by further enhancing our services and capabilities within all service areas.As announced recently, D+H's improved ranking in the FinTech 100 is a testament to D+H's increasing technological capabilities, as the FinTech 100 ranks companies according to their global financial technology revenues. Through a series of strategic acquisitions, including the most recent acquisitions of Mortgagebot and Avista, D+H has extended its reach and capabilities as a company that offers a range of technology solutions to the financial services market.  This recognition is a reflection of the steps D+H has taken to provide a broad spectrum of financial technology products and services to its customers and as it continues to innovate and grow to better serve the financial services industry.Within our U.S. Segment, our strategic focus revolves around building a range of technology offerings, with an emphasis on cloud computing solutions or SaaS offerings, to better serve the regional banks, community banks and credit unions in the U.S.  We expect to advance this strategy organically through adjacent offerings, such as our recent expansion into consumer loans, and through further U.S. acquisitions that will allow us to broaden our technology capabilities to this customer segment.On a go-forward basis, consistent with its strategy, management is working to: (i) continue our organic growth initiatives in the U.S.; (ii) evolve our payment solutions programs; (iii) enhance customer value and extend our technology supported services related to mortgages, auto, personal, student, commercial and leasing markets; and (iv) identify appropriate acquisition targets to support the strategic direction of D+H.For a detailed discussion of the results for the three and nine months ended September 30, 2012 and management's outlook, please see below. For a detailed discussion of risk factors, please refer to the most recent Annual Information Form and the 2011 Annual Report filed on SEDAR.ACCOUNTING PRINCIPLES AND FINANCIAL INFORMATION PRESENTATIONThe Company's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB").  Prior to January 1, 2011, the consolidated financial statements were reported in accordance with Canadian generally accepted accounting principles ("Canadian GAAP").Results from continuing operations include the performance of acquired businesses from the respective dates of acquisition and exclude results from businesses classified as discontinued operations.Comparative information presented for periods prior to January 1, 2011 relate to those of the Fund, and the results for the periods subsequent to January 1, 2011 are those of the Corporation. Consequently, throughout this MD&A, any references to distributions, unitholders and per unit amounts relate to periods prior to January 1, 2011, and any references to dividends, shareholders and per share amounts relate to periods subsequent to January 1, 2011.All amounts are in Canadian dollars, unless otherwise specified.Segment ReportingD+H began reporting its results by its reportable segments in the first quarter of 2012, based on its two strategic business units, the "Canadian Segment" and the "U.S. Segment".  Comparatives have been presented to conform to the current period disclosure.The Canadian Segment includes results from payment solutions (reported as programs to chequing accounts in prior years), loan registration and recovery services, loan servicing, technology solutions in the commercial lending, small business lending and leasing areas, lending technology services to the Canadian mortgage market and other business service solutions.  The U.S. Segment consists of lending technology services to the U.S. mortgage market, including results from Mortgagebot, Avista and D+H's share of profit from the investment in Compushare, Inc. ("Compushare").The results reported under each of these segments do not include items such as interest expense, income taxes and fair value adjustments related to derivative instruments, as these items are considered to be of a corporate nature.OPERATING RESULTS - THIRD QUARTER AND YEAR-TO-DATE 2012The following tables are derived from, and should be read in conjunction with, the Consolidated Statements of Income for the three and nine months ended September 30, 2012 and 2011 and include non-IFRS financial measures. Management believes this supplementary disclosure provides useful additional information. See Non-IFRS Financial Measures section for a description of non-IFRS terms used.The consolidated results include those of Avista, effective from the acquisition date of May 3, 2012, reported as part of the U.S. segment.(in thousands of Canadian dollars,  unaudited)       Quarter ended September 30, Nine months ended September 30,      2012 2011 20122011Revenue $191,807  $186,275  $ 570,488  $540,943Expenses  143,811  140,050  428,553  409,118              EBITDA 1 47,996  46,225  141,935  131,825EBITDA Margin 25.0% 24.8%  24.9% 24.4%              Adjustments:          Acquisition-related and other charges 2 3,265  610  8,380  3,116              Adjusted EBITDA 1 $51,261  $46,835  $ 150,315  $134,941Adjusted EBITDA Margin 26.7% 25.1%  26.3% 24.9%           1 EBITDA and Adjusted EBITDA are non-IFRS terms. See Non-IFRS Financial Measures for a more complete description of these terms.2 Acquisition-related and other charges for the third quarter of 2012 include expenses related to cost-realignment initiatives as well as acquisition related costs pertaining to certain retention and incentive costs in connection with the acquisitions of Mortgagebot and Avista.  Acquisition-related and other charges for the same period in 2011 included certain retention and incentive costs related to the acquisition of Mortgagebot.     Quarter ended September 30,    Nine months ended September 30,     2012 vs. 2011  2012 vs. 2011     % change   % changeRevenue 3.0%  5.5%EBITDA 1 3.8%  7.7%Adjusted EBITDA 1 9.5%  11.4%1 EBITDA and Adjusted EBITDA are non-IFRS terms. See Non-IFRS Financial Measures for a more complete description of these terms.(in thousands of Canadian dollars, except per share amounts, unaudited)      Quarter ended September 30, Nine months ended September 30,    2012 2011  2012 2011          Revenue $191,807  $186,275  $570,488  $540,943Expenses  143,811  140,050  428,553  409,118            EBITDA 1 47,996  46,225  141,935  131,825Depreciation of capital assets and amortizationof non-acquisition intangibles 7,030  5,820  21,227  17,151Amortization of intangibles from acquisitions 10,930  11,040  33,119  29,722Interest expense 4,943  4,792  14,585  14,053Income from investment in an associate, net of tax 2 (53) -  (91) -Amortization and fair value adjustment ofderivative instruments 3 (445) 3,991  (1,474) 3,531Income tax expense (recovery)  5,986  5,522  19,143  (7,051)            Income from continuing operations 19,605  15,060  55,426  74,419Income from discontinued operations, net of tax 4 - -  - 140            Net income $19,605  $15,060  $55,426  $74,559                        Income from continuing operations per share,basic and diluted 5, 6 $0.3310  $0.2542  $0.9357  $1.3053Net income per share, basic and diluted 5, 6 $0.3310  $0.2542  $0.9357  $1.3077         1EBITDA and Adjusted EBITDA are non-IFRS terms. See Non-IFRS Financial Measures for a more complete description of these terms.2D+H's share of profit from Compushare, the minority investment purchased on April 24, 2012, reported as part of the U.S. Segment.3Includes: (i) mark-to-market adjustments of interest-rate swaps that are not designated as hedges for hedge accounting purposes, and for which any change in the fair value of these contracts is recorded through the Consolidated Statement of Income; and (ii) amortization of the mark-to-market adjustment of interest-rate swaps relating to cumulative net gains and losses that were deferred prior to January 1, 2007 when hedge accounting was discontinued for these swaps.4 D+H sold a non-strategic component of its contact centre business in October 2010 and entered into a transition agreement with the buyer which ended on April 1, 2011. The results of these operations are presented as discontinued operations in the comparative periods presented. 5 Diluted net income per share reflects impacts of outstanding options.  If the average market price during the period is below the option price plus the fair market value of the option, then the options are not included in the dilution calculation.6 Weighted average number of shares outstanding during the third quarter and the first nine months of 2012 was 59,233,373 shares (Q3 2011 - 59,233,373 shares; Nine months ended September 30, 2011 - 57,013,593 shares).(in thousands of Canadian dollars, except per share amounts, unaudited)    Quarter ended September 30, Nine months ended September 30,    2012 2011  2012 2011Net income $19,605  $15,060  $55,426  $74,559Adjustments:          Non-cash items:           Amortization of intangibles from acquisitions 10,930  11,040  33,119  29,722  Amortization and fair value adjustment ofderivative instruments 2 (445) 3,991  (1,474) 3,531 Other items of note:           Acquisition-related and other charges 3 3,265  610  8,380  3,116  Discontinued operations, net of tax 4 -  -  -  (140) Tax effect of above adjustments (excludingdiscontinued operations) 5 (4,051) (4,465)  (11,807) (9,854) Tax effect of corporate conversion and acquisitions 6 (1,156) -  (1,156) (22,837)            Adjusted net income 1 $28,148  $26,236  $82,488  $78,097                        Adjusted net income per share, basic and diluted 1, 7, 8 $0.4752  $0.4429  $1.3926  $1.3698      Quarter ended September 30,    Nine months ended September 30,     2012 vs. 2011  2012 vs. 2011     % change   % changeAdjusted net income per share 1, 7, 8 7.3%  1.7% 1 Adjusted net income and Adjusted net income per share are non-IFRS terms. See Non-IFRS Financial Measures for a more complete description of these terms.2  Includes: (i) mark-to-market adjustments of interest-rate swaps that are not designated as hedges for hedge accounting purposes, and for which any change in the fair value of these contracts is recorded through the Consolidated Statement of Income; and (ii) amortization of the mark-to-market adjustment of interest-rate swaps relating to cumulative net gains and losses that were deferred prior to January 1, 2007 when hedge accounting was discontinued for these swaps.3Acquisition-related and other charges for the third quarter of 2012 include expenses related to cost-realignment initiatives as well as acquisition related costs pertaining to certain retention and incentive costs in connection with the acquisitions of Mortgagebot and Avista.  Acquisition-related and other charges for the same period in 2011 included certain retention and incentive costs related to the acquisition of Mortgagebot.4D+H sold a non-strategic component of its contact centre business in October 2010 and entered into a transition agreement with the buyer which ended on April 1, 2011. The results of these operations are presented as discontinued operations in the comparative periods presented. 5The following adjustments to net income are tax effected at their respective tax rates: (i) amortization of acquisition intangibles; (ii) amortization and fair value adjustment of derivative instruments; and (iii) acquisition-related and other charges.6Adjustment for the third quarter of 2012 consisted of a non-cash tax recovery related to liabilities recognized in connection with the acquisition of Mortgagebot.  Adjustments for the first nine months of 2011 consisted of a non-cash income tax recovery attributable to losses within certain U.S. subsidiaries that had not been previously recognized, and a non-cash income tax recovery recognized in connection with the conversion to a Corporation.7Diluted net income per share and Diluted Adjusted net income per share (non-IFRS term) reflect impacts of outstanding options.  If the average market price during the period is below the option price plus the fair market value of the option, then the options are not included in the dilution calculation.8  Weighted average number of shares outstanding during the third quarter and the first nine months of 2012 was 59,233,373 shares (Q3 2011 - 59,233,373 shares; Nine months ended September 30, 2011 - 57,013,593 shares).Overview - ConsolidatedGrowth in consolidated revenues in the third quarter of 2012, compared to the same period in 2011, was driven by both Canadian and U.S. Segments while growth in consolidated EBITDA was attributable to the U.S. Segment.  The U.S. Segment contributed to the increase in revenues from the acquisition of Avista, and to a lesser extent, through growth in Mortgagebot.  For the nine months ended September 30, 2012, both segments contributed to the increase in revenues with the U.S. Segment contributing to EBITDA growth.Consolidated EBITDA for both the third quarter of 2012 and the first nine months of 2012 were impacted by expenses incurred in relation to cost-realignment initiatives in the Canadian Segment and acquisition-related charges in connection with the acquisitions of Mortgagebot and Avista in the U.S. Segment. Consolidated Adjusted EBITDA, which excludes these charges, was higher in both segments for both the third quarter, and the first nine months of 2012, compared to the same periods in 2011.Consolidated net income for the three months ended September 30, 2012 was higher compared to the same period in 2011, mainly attributable to EBITDA growth in the U.S. Segment and fair value changes related to the interest-rate swaps combined with a non-cash tax recovery in Corporate. Net income during the third quarter of 2011 was impacted by unrealized losses related to the interest-rate swaps recorded as part of Corporate.  Consolidated net income was lower for the first nine months of 2012 compared to the same nine-month period in 2011. The first nine months of 2011 benefited from non-cash income tax recoveries recorded in relation to acquisitions and in connection with the conversion from an income trust to a corporation. Consolidated Adjusted net income for the third quarter and the first nine months of 2012 was higher compared to the same periods in 2011.  Consolidated Adjusted net income excludes the following: (i) impacts of non-cash items such as amortization of intangibles from acquisitions and gains and losses related to fair value adjustment of derivative instruments; (ii) other items of note such as acquisition-related and other charges described earlier and discontinued operations; and (iii) tax recoveries related to the changes in the tax status of D+H as a result of the conversion from an income trust to a corporation, and non-cash tax recoveries relating to acquisitions.  Net income was also adjusted for the tax impact of these items to arrive at Adjusted net income.(in thousands of Canadian dollars, unaudited)               Quarter ended September 30,     Canadian Segment U.S. Segment Corporate Consolidated      2012 2011  2012 2011  2012 2011  2012 2011Revenue $ 176,075  $  175,728  $  15,732  $10,547  $-  $-  $  191,807  $  186,275Expenses  135,948  134,153  7,863  5,897  -  -  143,811  140,050                        EBITDA 1 40,127  41,575  7,869  4,650  -  -  47,996  46,225EBITDA Margin 22.8% 23.7%  50.0% 44.1%  -  -   25.0% 24.8%                        Adjustments:                    Acquisition-related and other charges 2 2,401  -  864  610  -  -  3,265  610                       Adjusted EBITDA 1 $42,528  $41,575  $8,733  $5,260  $-  $-  $51,261  $46,835Adjusted EBITDA Margin 24.2% 23.7%  55.5% 49.9%  -  -   26.7% 25.1%     Quarter ended September 30,     Canadian   U.S.       Segment   Segment  Consolidated     2012 vs. 2011 2012 vs. 20112012 vs. 2011     % change  % change % change      Revenue 0.2% 49.2%3.0%EBITDA 1 (3.5%) 69.2%3.8%Adjusted EBITDA 1 2.3% 66.0%9.5%              Nine months ended September 30,   Canadian Segment U.S. Segment Corporate Consolidated    2012 2011  2012 2011  2012 2011  2012 2011Revenue $529,230  $  522,732  $  41,258  $18,211  $-  $-  $  570,488  $  540,943Expenses  406,346  396,890  22,207  12,228  -  -  428,553  409,118                      EBITDA 1 122,884  125,842  19,051  5,983  -  -  141,935  131,825EBITDA Margin 23.2% 24.1%  46.2% 32.9%  -  -  24.9% 24.4%                      Adjustments:                    Acquisition-related and other charges 2 5,576  199  2,804  2,917  -  -  8,380  3,116                      Adjusted EBITDA 1 $128,460  $  126,041  $  21,855  $8,900  $-  $-  $  150,315  $  134,941Adjusted EBITDA Margin 24.3% 24.1%  53.0% 48.9%  -  -   26.3% 24.9%                             Nine months ended September 30,   Canadian   U.S.    Segment   Segment  Consolidated   2012 vs. 2011 2012 vs. 20112012 vs. 2011  % change  % change % change     Revenue1.2% 126.6%5.5%EBITDA 1(2.4%) 218.4%7.7%Adjusted EBITDA 11.9% 145.6%11.4% 1EBITDA and Adjusted EBITDA are non-IFRS terms. See Non-IFRS Financial Measures for a more complete description of these terms.2Acquisition-related and other charges for the third quarter and the first nine months of 2012 include expenses related to cost-realignment initiatives in the Canadian Segment and acquisition-related costs pertaining to certain retention and incentive costs in connection with the acquisitions of Mortgagebot and Avista in the U.S. Segment.  Acquisition-related and other charges for the same period in 2011 included certain retention and incentive costs related to the acquisition of Mortgagebot in the U.S. Segment and transaction costs related to the ASSET acquisition in the Canadian Segment.Overview - Canadian SegmentOperating results from the following service areas are included in the Canadian Segment:  (i) payment solutions; (ii) loan registration and recovery services; (iii) loan servicing; (iv) lending technology services in Canada; and (v) business service solutions.Revenues in the Canadian Segment for the three and nine month periods in 2012 increased compared to the same periods in 2011 with increases in some service areas and decreases in others.  See the "Revenue" section for further discussion by service area.EBITDA in the Canadian Segment for both the three and nine months ended September 30, 2012 decreased compared to the prior year as the increase in revenues was offset by expenses related to cost-realignment initiatives incurred to benefit future periods of $2.4 million and $5.6 million respectively. Adjusted EBITDA, which excludes these cost-realignment charges, was higher for both the three and nine-month periods in 2012 compared to prior year.Overview - U.S. SegmentThe U.S. Segment consists of the operating results of Mortgagebot and Avista since their respective acquisition dates of April 12, 2011 and May 3, 2012.  Mortgagebot is a leading SaaS provider of mortgage POS offerings in the United States and a provider of a range of consumer direct, loan officer, branch and call centre mortgage and consumer loan origination solutions for over 1,100 community banks and credit unions.  Avista is a leading provider of SaaS mortgage loan origination software for over 150 community and regional banks, credit unions and mortgage bankers in the United States.  D+H's share of profit from the investment in an associate, Compushare, is also recorded as part the U.S. Segment, from the date of purchase of the minority investment of April 24, 2012.Revenues for the U.S. Segment for the three and nine months ended September 30, 2012 were higher compared to the same periods in 2011 due to the inclusion of Avista since May 2012 and organic growth in Mortgagebot primarily from strong refinancing activity.EBITDA in the U.S. Segment for the third quarter and the first nine months of 2012 was higher compared to the prior year, mainly due to growth in Mortgagebot and the inclusion of Avista results. Adjusted EBITDA, which excludes acquisition-related and other charges in connection with the Mortgagebot and Avista acquisitions, also increased in the U.S. Segment for both the three and nine-month periods in 2012.REVENUERevenue - Consolidated(in thousands of Canadian dollars, unaudited)    Quarter ended September 30,  Nine months ended September 30,      2012 2011 2012 2011Revenue             Payment solutions1    $73,751  $74,095 $225,319  $222,564 Loan registration and recovery services    43,778  42,002 126,802  121,417 Loan servicing     31,407  32,426 98,907  97,771 Lending technology services 2    35,717  29,026 95,478  70,883 Business service solutions 3    7,154  8,726 23,982  28,308     $ 191,807  $186,275 $ 570,488  $540,9431 Reported as Programs to chequing account in prior years.2 Includes revenue reported as part of the U.S. segment.3 Reported as Other in prior years.Consolidated revenue for the third quarter of 2012 was $191.8 million, an increase of $5.5 million, or 3.0%, compared to the same period in 2011. For the first nine months of 2012, consolidated revenue of $570.5 million, increased by $29.5 million, or 5.5%, compared to the same period in 2011.  These increases were primarily due to growth within the U.S. Segment, and the inclusion of Avista acquired on May 3, 2012.  Services delivered by D+H are subject to seasonality, including fees earned in connection with mortgage origination services and automobile loan registration services, which are typically stronger in the second and third quarters than in the first and fourth quarters.The following table reflects the relative size of each of the major service areas as a percentage of consolidated revenue based on a rolling twelve-month period:            Rolling twelve-months ended September 30,      20122011Revenue - Consolidated        Payment solutions1     40%42% Loan registration and recovery services     22%21% Loan servicing     18%19% Lending technology services 2     16%13% Business service solutions 3     4%5%              100%100% 1 Reported as Programs to chequing account in prior years.2 Includes revenues reported as part of the U.S. segment.3 Reported as Other in prior years.Payment solutions include: (i) the cheque supply program which serves the personal and small business account holders of our financial services customers; and (ii) various other subscription fee based enhancement services and other service offerings directed towards account opening activities and other service offerings directed towards chequing and credit card programs. These service offerings (excluding the component of enhancement and identity protection services that are integrated in the cheque order) currently represent a small component of revenues within this revenue category. In general, cheque order volumes in this area have historically been declining as consumers and small businesses choose other payment methods.  These volume declines have been partially offset by increased average order values for cheques and growth in service enhancements to the chequing and credit card programs. Revenue from payment solutions is reported as part of the Canadian Segment.Loan registration and recovery services support the personal and commercial lending activities of our financial services customers. Services include the registration and management of data related to secured lending for both personal and real property loans as well as recovery services related to both secured and unsecured lending activities. The largest contributors within this revenue category are search and registration services, which currently account for approximately 50% to 60% of revenue, and recovery services accounting for approximately 25% to 35%. In both instances, loans relating to vehicle purchases are a significant driver of activity and as such can be variable. In general, registration services are impacted by both economic cyclicality and seasonality, while recovery services are, in general, counter-cyclical. Other services within this revenue category include mortgage discharge services and various search-related services, both of which we deliver on behalf of our financial institution customers.  Revenues from loan registration and recovery services are reported as part of the Canadian Segment.Loan servicing programs include student loans administration services offered to financial institutions and governments and credit card servicing offered to card issuers.  The student loans administration services currently account for approximately 70% to 80% of revenues within this revenue category.  In general, student loan servicing volumes have been stable and modestly growing as student loans balances have been increasing and the term of the loans extended.  Recent integration of two lending portfolios into a single managed portfolio will reduce the fees we earn on a net basis. Volumes related to credit card servicing can be more variable and are primarily impacted by customer initiatives.  Revenues from loan servicing programs are reported as part of the Canadian Segment.Lending technology services include services directed towards mortgage markets in both Canada and, recently with the acquisitions of Avista in May 2012 and Mortgagebot in April 2011, the United States. As well, we offer technology products and services in both countries directed towards leasing, commercial lending and small business lending. Revenues related to mortgage markets currently represent approximately 85% to 95% of revenues within this category, with approximately 50% to 60% attributable to transaction-based fees earned in connection with Canadian mortgage originations and 40% to 50% representing fees related to the U.S. SaaS loan origination services.  Mortgage origination fees can be variable and are impacted by many factors including the economy, the housing market and interest rates, among others.  For segment reporting purposes, revenues from the lending technology services to the Canadian mortgage markets and the products and technology solutions for leasing, commercial lending and small business lending offered in both Canada and U.S. are reported as part of the Canadian Segment. Revenues from the U.S. SaaS loan origination services related to Mortgagebot and Avista are reported as part of the U.S. Segment.Business service solutions include a number of smaller service offerings that are primarily outsourced activities D+H performs on behalf of a variety of customers including non-financial services customers. Revenues from these activities are reported as part of the Canadian Segment. Revenue - Canadian SegmentTotal revenues in the Canadian Segment for the third quarter of 2012 of $176.1 million, increased by $0.3 million, or 0.2%, compared to the same quarter in 2011.  For the nine-month period in 2012, total revenues were $529.2 million, an increase of $6.5 million, or 1.2%, compared to the same period in 2011.(in thousands of Canadian dollars, unaudited)   Quarter ended September 30,   Nine months ended September 30,   2012 2011 2012 2011Revenue - Canadian Segment         Payment solutions 1 $73,751  $74,095 $225,319  $222,564 Loan registration and recovery services  43,778  42,002 126,802  121,417 Loan servicing  31,407  32,426 98,907  97,771 Lending technology services 2 19,985  18,479 54,220  52,672 Business service solutions 3 7,154  8,726 23,982  28,308           $176,075  $175,728 $529,230  $522,7321 Reported as Programs to chequing account in prior years.2 Excludes revenues from Mortgagebot and Avista.3 Reported as Other in prior years.       Revenue from payment solutions for the third quarter of 2012 was $73.8 million, a decrease of $0.3 million, or 0.5%, compared to the same quarter in 2011. For the nine months ended September 30, 2012, revenue was $225.3 million, an increase of $2.8 million, or 1.2%, compared to the same period in 2011.  Revenue for the third quarter of 2012 was impacted by volume declines in cheque orders, which were partially offset by the positive impact of higher average order values and product and service enhancements in the chequing and credit card programs. Revenue for the third quarter of 2011 benefited from a recovery in order volumes previously impacted by the postal strike that occurred in the latter part of the second quarter of 2011.  For the nine-month period in 2012, the positive impact of higher average order values overcame a decline in cheque order volumes. Management believes that the long-term downward trend in cheque order volumes is relatively unchanged and continues to be in the low single digit range.   D+H continues to develop service enhancements to offset this impact and to generate future growth within this category. In recent periods, there has been greater volatility in order volumes, especially among personal orders.Loan registration and recovery services revenue for the third quarter of 2012 was $43.8 million, an increase of $1.8 million, or 4.2%, compared to the same quarter in 2011.  For the first nine months of  2012, revenue was $126.8 million, an increase of $5.4 million, or 4.4%, compared to the same period in 2011.  This increase was mainly due to higher transaction volumes in registration services reflecting a continuing recovery within the auto and auto lending markets.  Volumes in this area can be variable due to changes in the economy, changes in the auto and auto lending markets and seasonality. Typically, this service area experiences stronger volumes during the second and third quarters as compared to the first and fourth quarters as consumers more frequently purchase and finance cars in the spring and summer.  For the third quarter of 2012, a modest increase in recovery services was attributable to higher volumes and increased average order values partially offset by customer repatriation.  For the first nine months of 2012, the increase in revenue attributable to higher volumes in registration services was partially offset by an expected decline in the ASSET automotive lending recovery services, which are counter-cyclical.Loan servicing programs revenue for the third quarter was $31.4 million, a decrease of $1.0 million, or 3.1%, compared to the same quarter in 2011. For the first nine months of 2012, revenue of $98.9 million increased by $1.1 million, or 1.2%, compared to the same period in 2011.  Loan servicing programs consist of student loan administration services, the largest portion of revenues within this service area, and credit card servicing. Modestly higher volumes in the third quarter of 2012 were offset by contractual price declines and an expected reduction in fees from a previously announced consolidation and integration between two customers within the student loans program. The increase in revenue for the nine-month period in 2012 was due to higher volumes and higher professional fees, partially offset by contractual price declines and the customer consolidation and integration described above. Volumes in the student loan administration service area are expected to be relatively stable and modestly growing in the short-term. Activities related to cost management and improving delivery efficiency are being directed towards lowering the impact of reduced pricing and fees related to the recent customer consolidation. During the third quarter of 2012, D+H successfully extended our largest student loan servicing contract for a multi-year term with opportunity for further extensions.  D+H services student loan portfolios under long-term contracts to governments and financial institutions and successfully extending this contract was imperative and provides greater certainty around revenue streams within the student loan administration services component.A decline in revenues in the credit card servicing component within the loan servicing programs compared to the prior year was attributable to specific customer initiatives in prior periods that contributed to higher revenues in those periods.Revenue from lending technology services related to the Canadian Segment for the third quarter of 2012 was $20.0 million, an increase of $1.5 million, or 8.1%, compared to the same quarter in 2011.  Revenue was $54.2 million for the first nine months of 2012, an increase of $1.5 million, or 2.9%, compared to the same period in 2011. Third quarter 2012 revenue benefited from higher mortgage origination fees due to strong Canadian housing and mortgage market activity compared to the same quarter in 2011. For the first nine months of 2012, the increase due to market activity was partially offset by the decrease in origination fees driven by customer repatriation of certain services we historically performed for them as previously announced.  In general, due to the continued tightening of mortgage rules announced by the Department of Finance on June 21, 2012 that became effective in July 2012, industry analysts expect the recently observed reduction in Canadian housing market prices and sales volumes to continue in major urban areas for the remainder of 2012 and into 2013.Revenues from business service solutions in the third quarter of 2012 were $7.2 million, compared to $8.7 million for the same period in 2011 due to program repatriations by certain customers in prior periods.  We expect the effects of these repatriated businesses to stabilize in upcoming periods.  On October 7, 2010, the Business sold a non-strategic component of its contact centre business and entered into a transition agreement with the buyer, which expired on April 1, 2011.  The results of these operations were previously reported in this revenue category and have been presented as discontinued operations for the comparative periods presented.Revenue - U.S. SegmentU.S. Segment revenue related to online mortgage origination from Mortgagebot and Avista for the third quarter of 2012 was $15.7 million, an increase of $5.2 million, or 49.2%, compared to $10.5 million for the same period in 2011. This reflected the inclusion of Avista since its acquisition in May 2012 combined with strong ongoing organic growth in Mortgagebot as a result of higher volumes driven by continued low interest-rate environment in the U.S.   Revenue for the first nine months of 2012 was $41.3 million, compared to $18.2 million for the same period in 2011.  The increase in the nine-month period for 2012 was primarily attributable to the inclusion of Mortgagebot and Avista effective from their respective dates of acquisition, April 2011 and May 2012.EXPENSESExpenses - Consolidated  (in thousands of Canadian dollars, unaudited)     Quarter ended September 30,    Nine months ended September 30,     2012 2011  2012 2011            Employee compensation and benefits 1  $56,805  $55,648  $170,144  $159,207Non-compensation direct expenses 2  60,587  59,290  179,629  174,805Other operating expenses 3  26,419  25,112  78,780  75,106                $143,811  $140,050  $428,553  $409,1181Employee compensation and benefits on a consolidated basis includes retention and incentive expenses related to acquisitions of businesses and are net of apprenticeship tax credits and amounts capitalized related to software product development. Employee compensation expenses for the third quarter of 2012 included $2.4 million of expenses related to cost-realignment initiatives in the Canadian Segment.  For the nine months ended September 30, 2012, $5.6 million was recorded as cost-realignment charges in the Canadian Segment.2 Non-compensation direct expenses include materials, shipping, selling expenses and third party direct disbursements.3Other operating expenses include occupancy costs, communication costs, licensing fees, professional fees, contractor fees, transaction costs related to acquisitions of businesses and expenses not included in other categories.Consolidated expenses of $143.8 million for the third quarter of 2012 increased by $3.8 million, or 2.7%, compared to the same quarter in 2011.  For the first nine months of 2012, consolidated expenses were $428.6 million, an increase of $19.4 million, or 4.8%, compared to the same period in 2011. Consolidated expenses for the third quarter of 2012 included acquisition-related and other charges of $3.3 million consisting of $2.4 million incurred in connection with cost-realignment initiatives in the Canadian Segment, as well as acquisition-related expenses attributable to the acquisitions of Mortgagebot and Avista of $0.9 million, in the U.S. Segment. For the same period in 2011, $0.6 million was recognized as acquisition-related and other charges in connection with the acquisition of Mortgagebot in the U.S. Segment.  For the nine months ended September 30, 2012, on a consolidated basis, acquisition-related and other charges were $8.4 million related to the cost-realignment charges in the Canadian Segment and Mortgagebot and Avista acquisitions in the U.S Segment, compared to $3.1 million for the same period in 2011 recorded in connection with the acquisitions of ASSET and Mortgagebot.Expenses - Canadian SegmentTotal expenses for the Canadian Segment for the third quarter of 2012 were $135.9 million, an increase of $1.8 million, or 1.3%, compared to the same quarter in 2011.  Expenses for the first nine months of 2012 were $406.3 million, an increase of $9.5 million, or 2.4%, compared to the same period in 2011.Expenses for the third quarter 2012 for the Canadian Segment included $2.4 million of expenses related to cost-realignment initiatives that are not considered to be part of normal-course operations. For the nine months ended September 30, 2012, $5.6 million was recorded as charges related to cost-realignment initiatives in the Canadian Segment. These charges are expected to benefit the Canadian Segment in both current and future periods.   Annualized savings are expected to be realized going forward, and will be used to offset an increase in expenses to support future growth. These cost-realignment initiatives were made possible by the recent completion of a successful business integration project that began in late 2010.Excluding these cost-realignment charges, total expenses in the Canadian Segment for the third quarter of 2012 decreased by $0.6 million, or 0.4%, compared to the third quarter of 2011, and for the first nine months of 2012 increased by $4.1 million, or 1.0%.  The first nine months of 2011 included $0.2 million of acquisition-related charges in connection with the acquisition of ASSET in the Canadian Segment.(in thousands of Canadian dollars, unaudited)      Quarter ended September 30,    Nine months ended September 30,      2012   2011    2012   2011             Employee compensation and benefits 1 $51,839  $51,948  $156,749  $152,635Non-compensation direct expenses 2 60,330  59,030  178,836  174,290Other operating expenses 3 23,779  23,175  70,761  69,965                $135,948  $134,153  $406,346  $396,8901Employee compensation and benefits are net of apprenticeship tax credits and amounts capitalized related to software product development. Employee compensation expenses for the third quarter of 2012 included $2.4 million of expenses related to cost-realignment initiatives in the Canadian Segment ($5.6 million for the nine-month period).2Non-compensation direct expenses include materials, shipping, selling expenses and third party direct disbursements.3Other operating expenses include occupancy costs, communication costs, licensing fees, professional fees, contractor fees, transaction costs related to acquisitions of businesses and expenses not included in other categories. Other operating expenses are net of inter-segment management fees received from the U.S. segment.Employee compensation and benefits costs of $51.8 million for the third quarter of 2012 for the Canadian Segment were lower by $0.1 million, or 0.2%, compared to the same quarter in 2011, and for the first nine months of 2012, costs of $156.7 million, increased by $4.1 million, or 2.7%, compared to the same period in 2011. Expenses for the third quarter of 2012 benefited from savings realized as a result of cost-realignment initiatives executed in prior periods, partially offset by $2.4 million of expenses in relation to cost-realignment initiatives to benefit future periods, replacement of contract labour (recorded as other operating expenses) with full-time staff and an increase in share-based compensation expense. For the nine-month period, the increase was primarily due to $5.6 million of expenses related to cost-realignment initiatives as described above and an increase in share-based compensation expense, partially offset by savings realized as a result of cost-realignment initiatives executed in prior periods and apprenticeship tax credits.  Replacement of contract labour with full-time staff also contributed to the increase in expenses in the first nine months of 2012 compared to the same period in 2011.Non-compensation direct expenses for the Canadian Segment were $60.3 million for the third quarter of 2012, an increase of $1.3 million, or 2.2%, compared to the same quarter in 2011.  For the first nine months of 2012, non-compensation direct expenses of $178.8 million, increased by $0.3 million, or 0.2%, compared to the same period in 2011.  In general, these expenses directionally change with revenue changes.   An increase in direct costs associated with the loan registration services, consistent with the increase in revenues in this service area, was partially offset by a decrease in direct costs in other service areas.Other operating expenses of $23.8 million for the third quarter of 2012 were higher by $0.6 million, or 2.6%, compared to the same quarter in 2011, primarily due to a decrease in capitalization of development costs and the impact of foreign exchange loss on certain intercompany balances, partially offset by savings realized from transformation and integration initiatives. For the first nine months of the current year, other operating expenses of $70.8 million, increased by $0.8 million, or 1.1%, compared to the same period in 2011, primarily attributable to costs associated with technology transformation and integration activities. The increases were partially offset by the replacement of contract labour with full-time staff as discussed above and inter-segment management fees charged to the U.S. Segment for shared services.Expenses - U.S. SegmentTotal expenses for the U.S. Segment for the third quarter of 2012 were $7.9 million, an increase of $2.0 million, or 33.3%, compared to the same quarter in 2011. This increase was primarily due to the inclusion of the Avista cost base and expense growth in Mortgagebot consistent with revenue growth.  Expenses for the third quarter of 2012 were also impacted by $0.9 million of acquisition-related charges in connection with the Avista and Mortgagebot acquisitions, and for the same period in 2011, were impacted by $0.6 million of costs related to the Mortgagebot acquisition.  For the first nine months of 2012, expenses were $22.2 million, an increase of $10.0 million, compared to the same period in 2011.  The increase during the nine-month period was attributable to the inclusion of the Avista cost base, effective from the date of acquisition of May 3, 2012 and the timing of the Mortgagebot acquisition. Expenses for the first nine months of 2012 also included acquisition-related costs of $2.8 million in connection with the Avista and Mortgagebot acquisitions, consistent with the acquisition related expenses for the nine-month period in 2011.(in thousands of Canadian dollars, unaudited)     Quarter ended September 30,    Nine months ended September 30,      2012   2011    2012   2011             Employee compensation and benefits 1 $4,966  $3,700  $13,395  $6,572Non-compensation direct expenses  257  260  793  515Other operating expenses 2 2,640  1,937  8,019  5,141                $7,863  $5,897  $22,207  $12,2281 Employee compensation and benefits expenses include retention and incentive costs related to the acquisitions of Avista and Mortgagebot.2Other operating expenses include inter-segment management fees, occupancy costs, transaction costs related to acquisitions of businesses and expenses not included in other categories. Amounts reported for 2012 and 2011 include transaction costs incurred in connection with the acquisitions of Avista and Mortgagebot respectively.Employee compensation and benefits costs of $5.0 million for the third quarter of 2012 for the U.S. Segment were higher by $1.3 million, or 34.2%, compared to the same quarter in 2011, and for the first nine months of 2012, costs of $13.4 million, increased by $6.8 million, or 103.8%, compared to the same period in 2011. The increase in the third quarter of 2012 was primarily due to the inclusion of the Avista cost base including retention payments in connection with the acquisition of Avista. The increase during the nine-month period is attributable to the timing of both the Avista and Mortgagebot acquisitions.Non-compensation direct expenses for the U.S. Segment of $0.3 million for the third quarter of 2012 remained relatively consistent to the same quarter in 2011.  For the first nine months of 2012, non-compensation direct expenses of $0.8 million, increased by $0.3 million, or 54.0%, compared to the same period in 2011 due to the inclusion of Avista and timing of the Mortgagebot acquisition.  In general, these expenses directionally change with revenue changes.Other operating expenses of $2.6 million for the third quarter of 2012 were higher by $0.7 million, or 36.3%, compared to the same quarter in 2011 and for the first nine months of the current year, other operating expenses of $8.0 million, increased by $2.9 million, or 56.0%, compared to the same period in 2011, primarily attributable to the inclusion of Avista and transaction costs related to acquisitions. For the three and nine-month periods in 2012, other expenses included transaction costs of $0.1 million and $0.7 million respectively, incurred in connection with the acquisition of Avista.  For the nine-month period in 2011, other expenses included transaction costs of $1.8 million, related to the Mortgagebot acquisition.  Also included in other expenses for the periods presented is the inter-segment management fees charged by the Canadian Segment for shared services.EBITDA AND EBITDA MARGINEBITDA and EBITDA Margin - ConsolidatedConsolidated EBITDA during the third quarter of 2012 was $48.0 million, an increase of $1.8 million, or 3.8%, compared to $46.2 million for the same quarter in 2011. For the first nine months of 2012, consolidated EBITDA of $141.9 million, increased by $10.1 million, or 7.7%, compared to $131.8 million for the same period in 2011. EBITDA margin of 25.0% on a consolidated basis for the third quarter of 2012 increased from 24.8% for the same period in 2011. For the nine-month period of 2012, consolidated EBITDA margin of 24.9% increased from 24.4% for the same period in 2011. Growth in EBITDA in 2012 was mainly driven by the U.S Segment. In the Canadian Segment, strong market activity in the lending technology and loan registration service areas and savings realized from transformation and integration initiatives, was offset by a decline in revenue in other service areas and expenses related to cost-realignment initiatives to benefit future periods.EBITDA and EBITDA Margin - Canadian SegmentCanadian Segment EBITDA for the third quarter of 2012 was $40.1 million, a decrease of $1.5 million, or 3.5%, compared to the same quarter in 2011, primarily due to a decline in revenues in the payment solutions and loan servicing service areas and expenses related to cost-realignment initiatives to benefit future periods.  This decrease was partially offset by the contribution made by strong volumes in the lending technology and loan registration and recovery service areas and savings realized from integration and transformation initiatives.  EBITDA for the first nine months of 2012 of $122.9 million was lower by 2.4% compared to EBITDA of $125.8 million for the same period in 2011 due to expenses related to cost-realignment initiatives as well as the impact of integration and program repatriation by customers as previously described. Cost management activities are being directed towards lowering the impact of reduced pricing and fees as a result of the integration and repatriation by the customers as described above. EBITDA for the third quarter of 2012 was impacted by $2.4 million of charges in relation to cost-realignment initiatives as described earlier (for the nine months ended September 30, 2012 - $5.6 million).EBITDA margin for the third quarter and the first nine months of 2012 was 22.8% and 23.2% respectively, compared to 23.7% and 24.1% for the same periods in 2011.  Lower EBITDA margins in both the current quarter and the nine-month period in 2012 primarily related to the cost-realignment initiatives as described above.EBITDA and EBITDA Margin - U.S. SegmentU.S. Segment EBITDA for the third quarter of 2012 was $7.9 million, an increase of $3.2 million, compared to the same quarter in 2011, attributable to strong growth in the Mortgagebot business as well as the inclusion of Avista results effective from the date of acquisition of May 3, 2012.  EBITDA for the third quarter of 2012 included acquisition-related costs of $0.9 million, consisting of retention and incentive costs related to the Mortgagebot acquisition as well as transaction costs and retention expenses related to the Avista acquisition.  EBITDA for the first nine months of 2012 in the U.S. Segment was $19.1 million, compared to $6.0 million for the same period in 2011 for the same reasons above.ADJUSTED EBITDA AND ADJUSTED EBITDA MARGINAdjusted EBITDA and Adjusted EBITDA Margin - ConsolidatedConsolidated Adjusted EBITDA during the third quarter of 2012 was $51.3 million, an increase of $4.4 million, or 9.5%, compared to the same quarter in 2011. For the first nine months of 2012, consolidated Adjusted EBITDA of $150.3 million, increased by $15.4 million, or 11.4%, compared to the same period in 2011.  Consolidated Adjusted EBITDA excluded acquisition-related and other charges of $3.3 million for the third quarter of 2012, consisting of $2.4 million in the Canadian Segment and $0.9 million in the U.S. Segment and for the nine months ended September 30, 2012, excluded acquisition-related and other charges of $8.4 million, consisting of $5.6 million in the Canadian Segment and $2.8 million in the U.S. Segment.   On a consolidated basis, Adjusted EBITDA margin for the third quarter of 2012 was 26.7%, up from 25.1% a year ago.  For the first nine months of 2012, consolidated Adjusted EBITDA margin was 26.3%, compared to 24.9% for the same period in 2011.Adjusted EBITDA and Adjusted EBITDA Margin - Canadian SegmentAdjusted EBITDA reported in the Canadian Segment excludes: (i) acquisition-related expenses such as transaction costs, and certain retention and incentive costs incurred as part of the acquisitions; and (ii) other charges incurred in connection with cost-realignment initiatives which are not considered to be part of the normal course of operations.  These items are excluded from the calculation of Adjusted EBITDA as they are not considered indicative of the underlying business performance for the period being reviewed and management believes that excluding these adjustments is more reflective of ongoing operating results.Adjusted EBITDA of $42.5 million in the Canadian Segment for the third quarter of 2012 increased by 2.3%, compared to $41.6 million for the same quarter in 2011 and excluded $2.4 million of charges incurred in connection with the cost-realignment initiatives.  Adjusted EBITDA margin for the third quarter of 2012 was 24.2%, compared to 23.7% a year ago.For the nine-month period ended September 30, 2012, Adjusted EBITDA of $128.5 million, was higher by 1.9%, compared to $126.0 million for the same period in 2011. Adjusted EBITDA for the first nine months of 2012 excluded acquisition-related charges of $5.6 million in connection with the cost-realignment initiatives.  Adjusted EBITDA for the first nine months of 2011 excluded $0.2 million of acquisition-related charges incurred in connection with the ASSET acquisition.  Adjusted EBITDA margin of 24.3% for the first nine months of 2012 increased moderately from 24.1% for the first nine months of 2011.Adjusted EBITDA and Adjusted EBITDA Margin - U.S. SegmentU.S. Segment Adjusted EBITDA increased by 66.0% to $8.7 million for the third quarter of 2012, compared to $5.3 million in the third quarter of 2011.  Adjusted EBITDA in the most recent third quarter excluded acquisition-related expenses of $0.9 million related to retention and incentive expenses in connection with the Mortgagebot and Avista acquisitions.  For the same quarter in 2011, $0.6 million of transaction costs and retention expenses related to the acquisition of Mortgagebot were excluded from EBITDA, to arrive at Adjusted EBITDA of $5.3 million.  Adjusted EBITDA for the first nine months of 2012 of $21.9 million excluded $2.8 million of acquisition-related costs and compared favourably to an Adjusted EBITDA of $8.9 million for the same period in 2011, which excluded acquisition-related charges of $2.9 million related to transaction costs and retention and incentive costs incurred as a result of the Mortgagebot acquisition.(in thousands of Canadian dollars, unaudited)              Quarter ended September 30,    Canadian Segment  U.S. Segment  Corporate  Consolidated    2012 2011  2012 2011  2012 2011  2012 2011Revenue $176,075  $  175,728  $  15,732  $10,547  $-  $-  $  191,807  $  186,275Expenses  135,948  134,153  7,863  5,897  -  -  143,811  140,050                      EBITDA 1 40,127  41,575  7,869  4,650  -  -  47,996  46,225Depreciation of capital assets andnon-acquisition intangibles 6,623  5,649  407  171  -  -  7,030  5,820Amortization of intangibles from acquisitions 7,920  8,256  3,010  2,784  -  -  10,930  11,040Interest expense   -  -  -  -  4,943  4,792  4,943  4,792Income from investment in an associate, net of tax 2 -  -  (53) -  -  -  (53) -Amortization and fair value adjustmentof derivative instruments 3 -  -  -  -  (445) 3,991  (445) 3,991Income tax expense  -  -  -  -  5,986  5,522  5,986  5,522                      Income (loss) from continuing operations 25,584  27,670  4,505  1,695  (10,484) (14,305)  19,605  15,060Income from discontinuedoperations, net of tax 4 -  -  -  -  -  -  -  -                      Net income (loss) $25,584  $27,670  $4,505  $1,695  $(10,484) $(14,305)  $19,605  $15,060                           Nine months ended September 30,    Canadian Segment  U.S. Segment  Corporate  Consolidated    2012 2011  2012 2011  2012 2011  2012 2011Revenue $529,230  $  522,732  $  41,258  $18,211  $-  $-  $  570,488  $  540,943Expenses 406,346  396,890  22,207  12,228  -  -  428,553  409,118                      EBITDA 1 122,884  125,842  19,051  5,983  -  -  141,935  131,825Depreciation of capital assets andnon-acquisition intangibles 20,087  16,750  1,140  401  -  -  21,227  17,151Amortization of intangibles from acquisitions 24,182  24,529  8,937  5,193  -  -  33,119  29,722Interest expense -  -  -  -  14,585  14,053  14,585  14,053Income from investment in an associate, net of tax 2 -  -  (91) -  -  -   (91) -Amortization and fair value adjustmentof derivative instruments 3 -  -  -  -  (1,474) 3,531  (1,474) 3,531Income tax expense (recovery)  -  -  -  -  19,143  (7,051)  19,143  (7,051)                      Income (loss) from continuing operations 78,615  84,563  9,065  389  (32,254) (10,533)  55,426  74,419Income from discontinuedoperations, net of tax 4 -  140  - -  - -  -  140                      Net income (loss) $78,615  $84,703  $9,065  $389  $(32,254) $(10,533)  $55,426  $74,559                      1EBITDA is a non-IFRS term.  See Non-IFRS Financial Measures for a complete description of this term.2 D+H's share of profit from Compushare, the minority investment purchased on April 24, 2012, reported as part of the U.S. Segment.3Includes: (i) mark-to-market adjustments of interest-rate swaps that are not designated as hedges for hedge accounting purposes, and for which any change in the fair value of these contracts is recorded through the Consolidated Statement of Income; and (ii) amortization of the mark-to-market adjustment of interest-rate swaps relating to cumulative net gains and losses that were deferred prior to January 1, 2007 when hedge accounting was discontinued for these swaps.4D+H sold a non-strategic component of its contact centre business in October 2010 and entered into a transition agreement with the buyer which ended on April 1, 2011. The results of these operations are presented as discontinued operations for the comparative periods.DEPRECIATION OF CAPITAL ASSETS AND AMORTIZATION OF NON-ACQUISITION INTANGIBLESDepreciation of Capital Assets and Amortization of Non-acquisition Intangibles - Canadian SegmentDepreciation of capital assets and amortization of non-acquisition intangible assets of $6.6 million during the third quarter of 2012 for the Canadian Segment increased by $1.0 million, or 17.2%, compared to $5.6 million in the third quarter of 2011.  For the first nine months of 2012, depreciation and amortization was $20.1 million, compared to $16.8 million for the same period in 2011. The increases in both periods were related to higher capital expenditures in the current year.Depreciation of Capital Assets and Amortization of Non-acquisition Intangibles - U.S. SegmentDepreciation of capital assets and amortization of non-acquisition intangible assets during the third quarter of 2012 for the U.S. Segment was $0.4 million, and for the first nine months of 2012 was $1.1 million, compared to $0.2 million for the third quarter and $0.4 million for the first nine months of 2011.  The increase in the three-month period in 2012 was due to higher capital expenditures to support growth in Mortgagebot and related to the integration of Mortgagebot and Avista. The increase during the first nine months of 2012 was due to the timing of the Mortgagebot acquisition in April 2011, higher capital expenditures in 2012 and to a lesser extent, inclusion of Avista.AMORTIZATION OF INTANGIBLES FROM ACQUISITIONSAmortization of Intangibles from Acquisitions - Canadian SegmentIn the Canadian Segment, amortization of acquisition-related intangibles for the third quarter of 2012 was $7.9 million, compared to $8.3 million for the same period in 2011. For the first nine months of 2012, amortization was $24.2 million, compared to $24.5 million for the same period in 2011.  The decreases in amortization for both the three and nine-month periods in 2012 compared to the same periods in 2011 were attributable to the completion of amortization of certain intangibles during the current year.Amortization of Intangibles from Acquisitions - U.S. SegmentAmortization of intangibles from acquisitions for the third quarter of 2012 for the U.S. Segment was $3.0 million, which includes amortization related to the intangibles from the Mortgagebot and Avista acquisitions, compared to $2.8 million for the same quarter in 2011.  For the nine months ended September 30, 2012, amortization was $8.9 million, compared to $5.2 million for the same period in 2011.INCOME FROM INVESTMENT IN AN ASSOCIATEConsolidated net income for the third quarter and the first nine months of 2012 included D+H's share of income of $0.1 million related to the investment in an associate, Compushare, effective from April 24, 2012.  D+H's portion of the income from Compushare is reported as part of the U.S. Segment for segment reporting purposes.The investment in Compushare is accounted for using the equity method of accounting and is recognized initially at cost.  The cost of the investment includes transaction costs.CORPORATE D+H reports the following as part of Corporate as they are not allocated to the segments for reporting purposes: (i) interest expense; (ii) amortization and fair value adjustments of derivative instruments; and (iii) income tax expense (recovery).Interest ExpenseInterest expense for the third quarter of 2012 increased by $0.2 million compared to the same quarter in 2011 due to increased long-term, fixed rate borrowings related to the acquisition of Avista and a minority investment in Compushare.  The increase in interest expense in the third quarter of 2012 was partially offset by favourable pricing on the credit facility. For the first nine months of 2012, interest expense was higher by $0.5 million, compared to the same period in 2011, due to lower average debt balances in 2011 due to the timing of the various acquisitions in 2011 and 2012.Amortization and Fair Value Adjustment of Derivative InstrumentsInterest-rate swapsCompared to a net unrealized loss of $4.0 million in the third quarter of 2011, a net unrealized gain of $0.4 million on interest-rate swaps was recognized in the third quarter of 2012 reflecting fair value adjustments related to changes in market interest rates at September 30, 2012 compared to June 30, 2012.   For the first nine months of 2012, the net unrealized gain related to the interest-rate swaps was $1.5 million, compared to a net unrealized loss of $3.5 million for the same period in 2011.These unrealized gains and losses are recognized in income because these interest-rate swaps are not designated as hedges for accounting purposes.  In general, a loss on interest-rate swaps is recorded when interest rates decrease as compared to certain previous periods and a gain is recorded when interest rates increase.  Provided the Company does not cancel its interest-rate swaps, the unrealized amounts represent a non-cash unrealized gain or loss that will subsequently reverse through the statement of income as the related swaps mature.  D+H has historically held its derivative contracts to maturity.Income Tax Expense (Recovery)An income tax expense of $6.0 million was recorded in the third quarter of 2012, compared to a tax expense of $5.5 million for the third quarter of 2011 and included tax expenses related to the utilization of loss carry-forwards and book income not taxable until a future period.  The income tax expense in the third quarter of 2012 was partially offset by a tax recovery related to liabilities recognized in connection with the acquisition of Mortgagebot.Tax expense for the first nine months of 2012 was $19.1 million, attributable to the utilization of loss carry-forwards and book income not taxable until a future period and a tax recovery related to liabilities recognized in connection with the acquisition of Mortgagebot.  Tax recoveries for the first nine months of 2011 of $7.1 million included the recognition of previously unrecognized deferred tax assets related to intangible assets which are expected to be realized as a consequence of the corporate conversion as well as certain losses within the U.S. subsidiaries that were recognized in connection with the acquisition of Mortgagebot.Due to the corporate structure and certain available tax losses, the Company does not expect to pay any significant cash taxes until after 2013.Net Income - ConsolidatedConsolidated net income of $19.6 million for the third quarter of 2012 was higher by $4.5 million, or 30.2%, compared to consolidated net income of $15.1 million for the same quarter in 2011. Consolidated net income for the third quarter of 2012 was impacted by acquisition-related and other charges of $3.3 million, which included expenses related to cost-realignment initiatives incurred to achieve operational effectiveness, reported as part of the Canadian Segment. Consolidated net income for the three months ended September 30, 2012 also included a $1.2 million tax recovery related to liabilities recognized in connection with the acquisition of Mortgagebot. For the nine-month period ended September 30, 2012, consolidated net income of $55.4 million, was lower by $19.1 million, or 25.7%, compared to $74.6 million for the same period in 2011. Consolidated net income for the first nine months of 2011 benefited from tax recoveries of $22.8 million related to changes in the tax status of the Company as a result of the conversion from an income trust to a corporation as well as the recognition of a deferred tax asset attributable to losses of certain U.S. subsidiaries that were recognized as a consequence of the acquisition of Mortgagebot.As described earlier, consolidated net income for the third quarter and the first nine months of 2012 also included D+H's share of income from investment in an associate, Compushare, effective from April 24, 2012.Adjusted Net Income - ConsolidatedFor the third quarter of 2012, consolidated Adjusted net income was $28.1 million ($0.4752 per share), an increase of $1.9 million, or 7.3%, compared to $26.2 million ($0.4429 per share) for the same period in 2011.  Consolidated Adjusted net income for the third quarter of 2012 excluded a $1.2 million non-cash tax recovery related to liabilities recognized in connection with the acquisition of Mortgagebot.Consolidated Adjusted net income for the first nine months of 2012 was $82.5 million, an increase of $4.4 million, or 5.6%, compared to $78.1 million for the same period in 2011.  Consolidated Adjusted net income for the first nine months of 2011 excluded non-cash tax recoveries of $22.8 million related to (i) the changes in the tax status of D+H as a result of the conversion from an income trust to a corporation and (ii) the acquisition of Mortgagebot in relation to losses within certain U.S. subsidiaries that were not previously recognized.EIGHT QUARTER CONSOLIDATED STATEMENT OF INCOME - SUMMARY1(in thousands of Canadian dollars, except per share amounts, unaudited)                 2012  2011  2010        Q3   Q2   Q1   Q4   Q3   Q2   Q1   Q4                      Revenue $191,807  $197,068 $181,613 $183,777 $186,275 $185,120 $169,548 $162,474Expenses2 143,811  143,962 140,780 138,202 140,050 137,023 132,045 133,018                     EBITDA 2, 3 47,996  53,106 40,833 45,575 46,225 48,097 37,503 29,456Adjustments:                 Acquisition-related and other charges 2     3,265  4,378 737 637 610 707 1,799 6,268Adjusted EBITDA 3 $51,261  $57,484 $41,570 $46,212 $46,835 $48,804 $39,302 $35,724                     EBITDA 2, 3 $47,996  $53,106 $40,833 $45,575 $46,225 $48,097 $37,503 $29,456Depreciation of capital assets and amortization                of non-acquisition intangibles 7,030  7,360 6,837 6,749 5,820 5,827 5,504 5,643Amortization of intangibles from acquisitions 10,930  11,250 10,939 11,009 11,040 10,590 8,092 7,108Interest expense 4,943  4,821 4,821 4,909 4,792 5,272 3,989 3,405Income from investment in an associate, net of tax (53) (38) - - - - - -Amortization and fair value adjustment of                derivative instruments4 (445) 616 (1,645) (145) 3,991 1,227 (1,687) (2,796)Income tax expense (recovery) 5,986  8,210 4,947 7,684 5,522 1,717 (14,290) 3,448                     Income from continuing operations 19,605  20,887 14,934 15,369 15,060 23,464 35,895 12,648Income (loss) from discontinued operations, net of tax 5 -  - - - - - 140 (620)                     Net income $19,605  $20,887 $14,934 $15,369 $15,060 $23,464 $36,035 $12,028                     Adjustments:                 Non-cash items:                  Amortization of intangibles from acquisitions $10,930  $11,250 $10,939 $11,009 $11,040 $10,590 $8,092    Amortization and fair value adjustment ofderivative instruments 4 (445) $616 (1,645) (145) 3,991 1,227 (1,687)   Other items of note:     -            Acquisition-related and other charges 2 3,265  $4,378 737 637 610 707 1,799    Discontinued operations, net of tax 5 -  $- - - - - (140)   Tax effect of above adjustments (excludingdiscontinued operations) 6 (4,051) $(4,758) (2,998) (3,391) (4,465) (3,256) (2,133)   Tax effect of corporate conversion and acquisitions 7 (1,156) $- - 2,080 - (3,628) (19,209)                       Adjusted net income3 $28,148  $32,373 $21,967 $25,559 $26,236 $29,104 $22,757                                                                 Adjusted net income per share, basic and diluted 3, 8 $0.4752  $0.5465 $0.3709 $0.4315 $0.4429 $0.4974 $0.4275  n/m Income from continuing operations per share,basic and diluted 8 $0.3310  $0.3526 $0.2521 $0.2595 $0.2542 $0.4010 $0.6743 $0.2376Net income per share, basic and diluted 8 $0.3310  $0.3526 $0.2521 $0.2595 $0.2542 $0.4010 $0.6769 $0.2260                                       n/m = not measurable1 Results include those of Avista, effective from the date of acquisition of May 3, 2012, Mortgagebot effective from the date of acquisition of April 12, 2011 and ASSET, effective from the date of acquisition of January 18, 2011.2 Expenses include acquisition-related and other charges including transaction costs incurred in connection with acquisition of businesses as well as certain retention and incentive costs related to the Avista and Mortgagebot acquisitions. For the second and third quarters of 2012, acquisition-related and other charges also included expense related to cost-realignment initiatives.3 EBITDA, Adjusted EBITDA and Adjusted net income are non-IFRS terms.  See Non-IFRS Financial Measures for a more complete description of these terms.  Periods prior to January 1, 2011 do not have a comparable measure for Adjusted net income due to the differences in taxation for D+H as an income trust prior to January 1, 2011 and as a corporation subsequent to that date.4   Includes: (i) mark-to-market adjustments of interest-rate swaps that are not designated as hedges for hedge accounting purposes, and for which any change in the fair value of these contracts is recorded through the Consolidated Statement of Income; and (ii) amortization of the mark-to-market adjustment of interest-rate swaps relating to cumulative net gains and losses that were deferred prior to January 1, 2007 when hedge accounting was discontinued for these swaps.5 D+H sold a non-strategic component of its contact centre business in October 2010 and entered into a transition agreement with the buyer, which expired on April 1, 2011.  The results of these operations are presented as discontinued operations.6 The following adjustments to net income are tax effected at their respective tax rates: (i) amortization of acquisition intangibles; (ii) amortization and fair value adjustment on derivative instruments; and (iii) acquisition-related and other charges.7 Adjustments for the third quarter of 2012 included a non-cash tax recovery of $1.2 million related to liabilities recognized in connection with the acquisition of Mortgagebot.  Adjustments for the first and second quarters of 2011 included non-cash income tax recoveries recorded in connection with the conversion to a corporation and acquisitions.  Adjustments for the fourth quarter of 2011 related to de-recognition of previously recognized tax attributes.8Diluted net income per share and Diluted Adjusted net income per share (non-IFRS term) reflect impacts of outstanding options.  If the average market price during the period is below the option price plus the fair market value of the option, then the options are not included in the dilution calculatD+H has generally reported quarterly revenues that are relatively stable and growing when measured on a year-over-year basis, however more recent changes in the economic environment, specifically the housing and mortgage markets and the auto lending markets, have increased volatility. Measured on a sequential quarter-to-quarter basis, revenues can also vary due to seasonality and are generally stronger in the second and third quarters. EBITDA is impacted by acquisition-related and other charges during the quarters, including transaction and retention costs related to acquisitions as well as other charges attributable to cost-realignment initiatives not considered to be incurred in the normal course of operations. Adjusted EBITDA removes the impacts of these charges as these are not indicative of the underlying business performance and management believes that excluding these items is more reflective of ongoing operating results.The acquisitions of ASSET on January 18, 2011, Mortgagebot on April 12, 2011, and Avista on May 3, 2012 have increased revenues and expenses. Per share amounts were also impacted by the issuance of 6,000,000 additional shares of Davis + Henderson Corporation in April 2011 to partially fund the acquisition of Mortgagebot.Effective January 1, 2011, as a result of the conversion from an income trust structure to a corporate structure, D+H began using Adjusted net income as a measure for evaluating its results.  Adjusted net income is a non-IFRS financial measure.  See Non-IFRS Financial Measures for a more complete description of this term.  Periods prior to January 1, 2011, do not have a comparable measure for Adjusted net income.Net income has been more variable as it has been affected by non-cash items such as fair value adjustments of interest-rate swaps, amortization of intangibles from acquisitions, acquisition-related and other charges and changes in other non-cash tax items.CONSOLIDATED CASH FLOW AND LIQUIDITYThe following table is derived from, and should be read in conjunction with, the Consolidated Statements of Cash Flows. Management believes this disclosure provides useful additional information related to the cash flows of the Corporation, repayment of debt and other investing activities.Consolidated Summary of Cash Flows   (in thousands of Canadian dollars, unaudited)         Quarter ended September 30,    Nine months ended September 30,          2012   2011    2012   2011                  Cash and cash equivalents provided by (used in):                              OPERATING ACTIVITIES              Income from continuing operations       $19,605  $15,060  $ 55,426  $74,419 Depreciation and amortization of assets       17,960  16,860  54,346  46,873 Amortization and fair value adjustment of derivative instruments      (445) 3,991  (1,474) 3,531 Share of profit of investment in associate, net of tax       (53) -  (91) - Difference in interest expense and cash interest paid       780  282  1,715  1,015 Non-cash income tax and options expenses       5,899  5,627  20,871  (6,897)                        43,746  41,820  130,793  118,941 Decrease (increase) in non-cash working capital items       (2,282) 1,036  (29,591) (29,767) Changes in other operating assets and liabilities anddiscontinued operations   1,817  1,130  2,848  2,467                 Net cash from operating activities      43,281  43,986  104,050  91,641                                 FINANCING ACTIVITIES               Net change in long-term indebtedness      (17,789) (15,000)  22,772  169,505 Issuance costs, equity and debt      (791) (103)  (902) (9,900) Proceeds from the issuance of shares      -  -  -  121,800 Distributions and dividends paid during the period        (18,362) (18,362)  (55,086) (52,278) Net cash from (used in) financing activities      (36,942) (33,465)  (33,216) 229,127                 INVESTING ACTIVITIES               Capital expenditures     (6,934) (7,073)  (23,600) (24,724) Acquisition of investment in an associate     -  -  (10,058) - Acquisition of subsidiaries     -  -  (37,946) (292,993) Net cash used in investing activities        (6,934) (7,073)  (71,604) (317,717)                 Increase (decrease) in cash and cash equivalents for the period      (595) 3,448  (770) 3,051 Cash and cash equivalents, beginning of period      2,038  747  2,213  1,144 Cash and cash equivalents, end of period      $1,443  $4,195  $1,443  $4,195 As at September 30, 2012, cash and cash equivalents totalled $1.4 million, compared to $2.2 million at December 31, 2011.Operating ActivitiesOperating activities provided $43.3 million during the three months ended September 30, 2012, compared to $44.0 million for the same period in 2011. For the first nine months of 2012, operating activities provided $104.1 million, compared to $91.6 million during the same period in 2011.  The changes in net cash from operating activities for the three and nine-month periods ended September 30, 2012 compared to the same quarter in 2011 was mainly due to the timing of the working capital inflows and outflows as described below.  The increase in net cash from operating activities during the nine-month period in 2012 was due to a strong growth in EBITDA compared to the same period in 2011.Changes in Non-Cash Working Capital and Other Items(in thousands of Canadian dollars, unaudited)     Quarter ended September 30,   Nine months ended September 30,    2012 2011 2012 2011           Decrease (increase) in non-cash working capital items  $ (2,282) $1,036 $(29,591) $(29,767) Change in other operating assets and liabilities and discontinued operations  1,817  1,130 2,848  2,467          Decrease (increase) in non-cash working capital and other items  $(465) $2,166 $(26,743) $(27,300)                 The net increase in non-cash working capital in the third quarter of 2012 primarily related to an increase in trade receivables, partially offset by an increase in accrued payables, both due to normal course timing differences. The net decrease in the third quarter in 2011 was additionally impacted by lower receivables as a result of increased collections related to the effect on payments from the postal strike which occurred during the second quarter of 2011.  The net increase in non-cash working capital for the first nine months of 2012 related to an increase in trade receivables combined with a reduction in accrued payables reflecting payments during the period.The Company expects to experience continued variability of non-cash working capital due to the nature and timing of services rendered in connection with the businesses recently acquired.Financing ActivitiesNet cash used in financing activities was $36.9 million during the three months ended September 30, 2012, compared to $33.5 million used in the same period in 2011. The net change during the quarter was primarily due to debt repayments net of drawings within our credit facilities and a dividend payment. D+H made net repayments of $17.8 million during the third quarter of 2012.For the first nine months of 2012, net cash used in financing activities was $33.2 million compared to $229.1 million provided by financing activities for the same period in 2011. Net cash provided by financing activities during the nine-month period in 2011 reflected net proceeds from the issuance of equity and debt to fund the Mortgagebot and ASSET acquisitions in 2011.Financing activities during the nine-month period ended September 30, 2012 primarily related to drawings on the credit facilities to fund the Compushare investment and the Avista acquisition in April and May 2012, respectively and dividend payments.  The Business drew a net of $22.8 million during the first nine months of 2012.DividendsDuring the third quarter of 2012, D+H paid a dividend of $0.31 per share to its shareholders.  For the same quarter in 2011, $0.31 per share was paid to shareholders.  During the first nine months of 2012, D+H paid $0.93 per share to its shareholders, and for the same period in 2011, $0.9133 per share was paid.  Dividends paid during the nine-month period in 2011 comprised of a $0.1533 per unit distribution that was paid on January 31, 2011 (declared on December 31, 2010 when D+H was an income trust), a $0.15 per share special dividend paid on March 31, 2011, a $0.30 per share dividend paid on June 30, 2011 and a $0.31 per share paid on September 30, 2011.D+H increased its target annual dividend from $1.24 per share to $1.28 per share annualized, for shareholders of record as of November 30, 2012, to be paid on December 31, 2012.Investing ActivitiesDuring the third quarter of 2012, $6.9 million was used by investing activities compared to $7.1 million during the same period in 2011.  For the nine-month period ended September 30, 2012, investing activities used $71.6 million compared to $317.7 million during the same period in 2011.  Amounts for the nine-month period in 2012 reflect the Avista acquisition in May 2012 and the acquisition of a minority investment in Compushare in April 2012, and amounts for the nine-month period in 2011 reflect the ASSET and Mortgagebot acquisitions in January and April 2011 respectively.Capital Expenditures Consolidated capital expenditures were $6.9 million for the third quarter of 2012, $0.1 million lower compared to the same period of 2011. For the nine months ended September 30, 2012, capital expenditures were $23.6 million, a decrease of $1.1 million, compared to the same period in 2011. Higher capital expenditures in 2011 reflected timing of expenditures as well as integration and upgrade activities, and investing in the development of technology products and capability.Long-Term IndebtednessAs at September 30, 2012, the Company had $ 527.9 million of committed funds and $278.3 million of additional uncommitted arrangements available subject to prior approval of the relevant lenders with any fees, spreads and other additional terms to be negotiated at that time. Total committed funds consisted of $355.0 million under the credit facility and $172.9 million, which was drawn from bonds, as described below.  Total uncommitted funds consisted of $150.0 million under the credit facility and $128.3 million from the bonds, also as described below.The long-term indebtedness is recorded on the Consolidated Statement of Financial Position, net of unamortized deferred financing fees. The long-term indebtedness as at September 30, 2012, before deducting unamortized deferred finance fees of $6.1 million, was $371.3 million, compared to $352.1 million at December 31, 2011.Credit FacilityThe long-term indebtedness as at September 30, 2012 included drawings under a Seventh Amended and Restated Credit Agreement ("Credit Agreement") dated April 12, 2011 of $198.4 million. Total committed senior secured credit facilities under this Credit Agreement as at September 30, 2012 were $355.0 million, consisting of a revolving credit facility.  Effective July 5, 2012, the Credit Agreement was amended in accordance with the First Amending Agreement to the Seventh Amended and Restated Credit Agreement ("Credit Agreement Amendment") to extend the maturity date by one year to April 12, 2017 and include more favourable pricing as well as amendments to certain covenants. The Business is permitted to draw on the revolving facility's available balance of $156.6 million to fund capital expenditures or for other general purposes.  The Credit Agreement contains a number of covenants and restrictions, including the requirement to meet certain financial ratios and financial condition tests.  The financial covenants include a leverage test, a fixed charge coverage ratio test and a limit on the maximum amount of distributions by D+H to its shareholders during each rolling four-quarter period.  The Company was in compliance with all of its financial covenants and financial condition tests as of the end of its latest quarterly period.As at September 30, 2012, the Credit Agreement provides for an additional uncommitted credit arrangement of up to $150.0 million with the use of the funds subject to the prior approval of the relevant lenders with any fees, spreads and other additional terms to be negotiated at that time.BondsAs at September 30, 2012, committed funds of $172.9 million were drawn and $128.3 million of uncommitted funds were available from bonds.The bonds consisted of the following:  (i) fixed-rate bonds of $80.0 million issued under a Second Amended and Restated Note Purchase and Private Shelf Agreement ("Note Purchase Agreement") dated April 12, 2011, which included a $50.0 million bond issued under the senior secured Note Purchase Agreement at a fixed-interest rate of 5.99% and a $30.0 million bond at 5.17%, both maturing on June 30, 2017; (ii) a Note Purchase and Private Shelf Agreement ("Prudential Note Purchase Agreement") pursuant to which the Company issued US$ 63.0 million of senior secured guaranteed notes at 5.59%, maturing on April 12, 2021 to partially fund the acquisition of Mortgagebot.  Effective July 5, 2012, this Note Purchase Agreement was amended in accordance with the First Amendment to Second Amended and Restated Note Purchase and Private Shelf Agreement ("Amendment to Note Purchase Agreement") to make consequential changes to certain covenants. Also effective July 5, 2012,  the Prudential Note Purchase Agreement was amended in accordance with the First Amendment to Note Purchase and Private Shelf Agreement ("Amendment to Prudential Note Purchase Agreement") to increase the uncommitted shelf per the Prudential Note Purchase Agreement by US$ 50.0 million (from US$ 37.0 million to US$ 87.0 million), including amendments to certain covenants.  In addition, D+H issued US$ 16.5 million of senior secured guaranteed notes at 3.94%, maturing on June 30, 2022 reducing the available shelf to US$ 70.5 million.Effective July 5, 2012, the Company also entered into a new Note Purchase and Private Shelf Agreement ("NY Life Note Purchase Agreement"), ranking equally in all material respects with the Credit Agreement and Prudential Note Purchase Agreement, pursuant to which the Company issued US$ 15.0 million of senior secured guaranteed notes at 3.94% maturing June 30, 2022 leaving an additional uncommitted shelf of up to US$ 60.0 million with the use of the shelf subject to the prior approval of the relevant lenders with any fees, spreads and other additional items to be negotiated at that time.During the third quarter of 2012, the aggregate proceeds from the US$ 31.5 million of senior secured guaranteed notes issued pursuant to the Amendment to Prudential Note Purchase Agreement and NY Life Note Purchase Agreement were used to refinance amounts drawn under the Credit Agreement in the second quarter of 2012, to fund the Avista acquisition and for the Compushare investment.The Credit Agreement, Credit Agreement Amendment, Note Purchase Agreement, Amendment to Note Purchase Agreement, Prudential Note Purchase Agreement, Amendment to Prudential Note Purchase Agreement and NY Life Note Purchase Agreement are available at www.sedar.com.The Company has historically hedged against increases in market interest rates on certain of its debt by utilizing interest-rate swaps and by issuing fixed rate long-term bonds as described above.  As at September 30, 2012, the average effective interest rate on the Corporation's total indebtedness was approximately 4.4%.Common Shares OutstandingAs at September 30, 2012, and November 6, 2012, common shares outstanding were 59,233,373, the same as at September 30, 2011 and December 31, 2011.Normal Course Issuer Bid ("NCIB")On September 10, 2012, D+H announced that it received regulatory approval from the Toronto Stock Exchange ("TSX") to carry out a normal course issuer bid ("NCIB"), pursuant to which the Corporation, during the period from September 12, 2012 to September 11, 2013, would be authorized to purchase up to 1,777,000 common shares, representing approximately 3% of the Corporation's issued and outstanding common shares as at September 4, 2012. Daily purchases will be limited to 37,491 common shares, other than block purchase exemptions.Purchases will be made by the Company in accordance with the requirements of the TSX and the price which the Company will pay for any such common shares will be the market price of any such common shares at the time of acquisition, or such other price as may be permitted by the TSX. Any tendered shares taken up and paid for by the Company will be cancelled.The Company intends to fund these purchases through available cash. D+H believes that the market price of its common shares, from time to time, may not reflect their underlying value based on the Company's business and strong financial position. As a result, D+H believes that an investment in its outstanding common shares represents an attractive investment and a desirable use of a portion of its corporate funds.Automatic Share Purchase PlanD+H also announced that it entered into an automatic share purchase plan with a broker in order to facilitate repurchases of its common shares under its normal course issuer bid, and under which the broker may repurchase common shares under the NCIB at any time including without limitation when D+H would ordinarily not be permitted to due to regulatory restrictions or self-imposed blackout periods, based upon the parameters prescribed by the TSX and the terms of the parties' agreement.  The automatic share purchase plan has been reviewed and approved by the TSX.As of November 6, 2012, no shares were purchased under the NCIB.Financial Instruments The Company utilizes cash-flow hedges to hedge foreign currency transactions and interest rate fluctuations.Interest-rate swapsIn respect of interest-rate swap contracts with its lenders, as of September 30, 2012, the Company's borrowing rates on 47.9% of outstanding long-term indebtedness under the Credit Agreement are effectively fixed at the interest rates and for the time periods ending as outlined in the following table:(in thousands of Canadian dollars, unaudited)  Fair value of interest-rateswaps  Maturity Date Notional amountAssetLiabilityInterest Rate ¹December 18, 2014 $25,000 $- $7632.720%March 18, 2015 25,000 - 9632.940%March 18, 2017 25,000 - 1,9383.350%March 20, 2017 20,000 - 1,5643.366%  $95,000 $- $5,228  1The listed interest rates exclude bankers' acceptance fees and prime-rate spreads currently in effect.  Such fees and spreads could increase or decrease depending on the Company's financial leverage compared to certain levels specified in the Credit Agreement.  Based on the financial leverage as at September 30, 2012, the Company's long-term bank indebtedness will be subject to bankers' acceptance fees of 1.50% over the applicable BA rate and prime rate spreads of 0.50% over the prime rate.As at September 30, 2012, the Company would have to pay the fair value of $5.2 million if it were to close out all of its interest-rate swap contracts as set out in the Consolidated Statement of Financial Position.  It is not the present intention of management to close out these contracts and the Company has historically held its derivative contracts to maturity.Foreign exchange forward contracts The Company enters into foreign exchange contracts to fix foreign exchange rates on its foreign currency transactions.   Under these contracts, the Company is required to deliver the agreed US dollar amount and in return receive the contracted Canadian dollar amount set forth in each contract.  The Company has historically held its derivative contracts to maturity.The foreign exchange forward contracts that were in place as of June 30, 2012 expired during the third quarter of 2012.  Therefore, the Company had no foreign exchange forward contracts in place as at September 30, 2012. These foreign exchange contracts were designated as hedges in accordance with IFRS for hedge accounting purposes to hedge a set amount of forecasted cash inflows.  The Company accounted for these hedges as cash flow hedges as per IAS 39. The change in fair value of the hedging instrument (foreign exchange forward contracts), to the extent it is effective, was recorded in Other Comprehensive Income ("OCI"). The ineffective portion of the gain or loss on the hedging instrument was recognized in profit or loss.  The fair value changes were recorded in OCI, as the hedging relationship was considered to be effective both at inception of these hedges and at the reporting date.BUSINESS RISKS  A comprehensive discussion of the risks that impact the Business can be found on the Corporation's most recently filed Annual Information Form and the most recently filed annual MD&A, available on SEDAR at www.sedar.com.  Risks and uncertainties related to the Corporation have not changed since the filing of the 2011 annual MD&A and the 2011 Annual Information Form.OUTLOOK D+H's long-term financial objective is to deliver sustainable and growing earnings through continued organic revenue growth and by way of strategic acquisitions. In January and April 2011, respectively, the Company completed the acquisitions of ASSET and Mortgagebot. In April and May 2012, respectively, D+H acquired a minority interest investment in Compushare, and acquired Avista.  These acquisitions continue to: (i) strengthen our ability to deliver on our goal of being a leading FinTech provider to the North American financial services industry; (ii) provide revenue diversification; and (iii) support our long-term strategy.Going forward, we will focus on executing our organic growth initiatives and continuing to diligently identify efficiency opportunities to better serve customers as our businesses evolve.  Cost-realignment initiatives executed year-to-date are expected to result in annualized savings benefitting both current and future periods, and will be used to offset an increase in expenses to support future growth. Beyond the immediate term, we believe that our market leadership and combined capabilities will solidly position D+H in the markets we serve and allow us to grow consistent with our long-term objectives.As set out in our statement of strategy, we look to grow through a combination of organic initiatives, partnering with third parties and by way of selective acquisitions. Our organic initiatives include: (i) continuing to expand our customer base of SaaS mortgage POS and LOS offerings in the U.S.; (ii) expansion into adjacent cloud computer based offerings in the U.S. market; (iii) the ongoing advancement of payment solutions through growth in value-added consumer and business services to financial institution customers; (iv) the expansion of our current technology enabled offerings within the mortgage, auto, personal, student lending, commercial and leasing markets; and (v) selling and delivering our lending technology solutions to new customers.Our acquisition strategy focuses on acquiring companies that extend or add to the services that we provide within the financial services marketplace, with a bias for companies that have strong SaaS cloud capabilities, defensible business models, growing revenues, and capable management and offer an extension to our existing businesses.With the inclusion of several new service areas over the last several years, we expect to continue to experience some increase in variability in year-over-year quarterly revenues, earnings and cash flows, due to, among other items: (i) volume variances within the lien registration and mortgage origination markets; (ii) timing differences and variability in professional services work; and (iii) fees and expenses associated with acquisitions and related integration activities.  Within the Canadian Segment, the Company believes that revenues from lending technology solutions in the remainder of 2012 will be impacted by more moderate housing prices and lower real estate activity compared to the previous years.   In the U.S. Segment, a slight recovery in the U.S. housing market is expected to somewhat offset a reduction in refinancing activity in the remainder of 2012 and into 2013.For each of 2012 and 2013, we anticipate that our capital spending will be approximately $35 million, which may vary based on spending in support of new growth opportunities if and as they arise.As described earlier, the Corporation does not expect to pay any significant cash taxes until after 2013.ADDITIONAL INFORMATIONAdditional information relating to the Company, including the Company's most recently filed Annual Information Form, is available on SEDAR at www.sedar.com.Consolidated Statements of Financial Position(in thousands of Canadian dollars, unaudited)      September 30, 2012  December 31, 2011         ASSETS        Cash and cash equivalents $1,443  $2,213 Trade and other receivables  96,501   79,753 Prepayments   13,997   12,821 Inventories  4,227   4,946 Derivative assets held for risk management  -   126         Total current assets   116,168   99,859         Deferred tax assets  28,942   39,987 Property, plant and equipment  30,645   32,169 Investment in an associate  10,159   - Intangible assets  429,593   444,575 Goodwill  688,444   666,735         Total non-current assets   1,187,783   1,183,466 Total assets  $1,303,951  $  1,283,325         LIABILITIES        Trade payables and accrued liabilities $86,508  $93,131 Deferred revenue  12,007   10,216 Provisions  425   3,480 Current tax liabilities  970   -         Total current liabilities   99,910   106,827         Deferred revenue   9,501   9,492 Derivative liabilities held for risk management  5,228   6,703 Loans and borrowings  365,268   345,921 Deferred tax liabilities  109,822   97,350 Other long-term liabilities  9,210   7,334         Total non-current liabilities   499,029   466,800 Total liabilities   598,939   573,627         EQUITY        Capital  673,691   673,163 Retained earnings  27,789   27,449 Accumulated other comprehensive income  3,532   9,086 Total equity  705,012   709,698         Total liabilities and equity  $1,303,951  $  1,283,325                Consolidated Statements of Income(in thousands of Canadian dollars, except per share amounts, unaudited)       Three months ended     Nine months ended  September 30, 2012   September 30, 2011  September 30, 2012  September 30, 2011 Revenue $ 191,807   $186,275  $570,488   $540,943 Employee compensation and benefits 56,805    55,648  170,144   159,207 Other expenses 87,006    84,402  258,409   249,911 Income from operating activities before depreciation and amortization  47,996    46,225  141,935   131,825 Depreciation of property, plant and equipment 2,533    2,570  7,484   7,504 Amortization of intangible assets 15,427    14,290  46,862   39,369 Income from operating activities  30,036    29,365  87,589   84,952                Finance expenses:              Amortization and fair value adjustment of derivative instruments  (445)   3,991  (1,474)  3,531 Interest expense  4,943    4,792  14,585   14,053 Income from investment in an associate, net of income tax (53)   -  (91)  - Income from continuing operations before income tax  25,591    20,582  74,569   67,368 Income tax expense (recovery) 5,986    5,522  19,143   (7,051) Income from continuing operations  19,605    15,060  55,426   74,419              Income from discontinued operations, net of income tax  -    -  -   140 Net income $19,605   $15,060  $55,426   $74,559                Net income per share from continuing operations, basic and diluted  $0.3310   $0.2542  $0.9357   $1.3053 Net income per share from discontinued operations, basic and diluted  $-   $-  $-   $0.0025 Net income per share, basic and diluted  $0.3310   $0.2542  $0.9357   $1.3077              Consolidated Statements of Comprehensive Income(in thousands of Canadian dollars, unaudited       Three months ended       Nine months ended  September 30, 2012   September 30, 2011   September 30, 2012   September 30, 2011               Net income $ 19,605  $15,060 $ 55,426  $74,559               Cash flow hedges:             Amortization of mark-to-market adjustment of derivative instruments  -   -  -   86 Effective portion of changes in fair value  (52)  (169)  (126)  (169) Net amount transferred to profit or loss  (82)  -  (167)  - Foreign currency translation  (5,380)  13,662  (5,261)  14,329 Total comprehensive income$ 14,091  $28,553 $ 49,872  $88,805 Consolidated Statements of Changes in Equity(in thousands of Canadian dollars, unaudited) Three months ended September 30, 2012   Accumulated othercomprehensive income (loss)      Share capital Foreigncurrencytranslationreserve Hedgingreserve Retainedearnings /(deficit) Total equity           Balance at July 1, 2012$ 673,515 $ 9,445 $ (399)$ 26,546 $ 709,107 Net income for the period -  -  -  19,605  19,605 Cash flow hedges -  -  (134) -  (134)Foreign currency translation -  (5,380) -  -  (5,380)Dividends -  -  -  (18,362) (18,362)Options  176  -  -  -  176 Balance at September 30, 2012$ 673,691 $ 4,065 $ (533)$ 27,789 $ 705,012                       (in thousands of Canadian dollars, unaudited) Three months ended September 30, 2011  Accumulated othercomprehensive income (loss)     Share capitalForeigncurrencytranslationreserveHedgingreserveRetainedearnings /(deficit)Total equity           Balance at July 1, 2011 $672,902 $667 $- $33,744 $707,313Net income for the period - - - 15,060 15,060Cash flow hedges - - (169) - (169)Foreign currency translation - 13,662 - - 13,662Dividends - - - (18,362) (18,362)Options  105 - - - 105Balance at September 30, 2011 $673,007 $14,329 $(169) $30,442 $717,609                                 (in thousands of Canadian dollars, unaudited)Nine months ended September 30, 2012  Accumulated othercomprehensive income (loss)     Share capitalForeigncurrencytranslationreserveHedgingreserveRetainedearnings /(deficit)Total equity           Balance at January 1, 2012 $673,163  $9,326  $(240) $27,449  $709,698 Net income for the period -  -  -  55,426  55,426 Cash flow hedges -  -  (293) -  (293)Foreign currency translation -  (5,261) -  -  (5,261)Dividends -  -  -  (55,086) (55,086)Options 528  -  -  -  528 Balance at September 30, 2012 $673,691  $4,065  $(533) $27,789  $705,012                                  (in thousands of Canadian dollars, unaudited) Nine months ended September 30, 2011  Accumulated othercomprehensive income (loss)     Share capitalForeigncurrencytranslationreserveHedgingreserveRetainedearnings /(deficit)Total equity           Balance at January 1, 2011 $595,859 $- $(86) $(40,623) $555,150Net income for the period - - - 74,559 74,559Cash flow hedges - - (83) - (83)Foreign currency translation - 14,329 - - 14,329Capital reduction pursuant          to the Arrangement (40,623) - - 40,623 -Share issuance 117,617 - - - 117,617Dividends - - - (44,117) (44,117)Options  154 - - - 154Balance at September 30, 2011 $673,007 $14,329 $(169) $30,442 $717,609 Consolidated Statements of Cash Flows(in thousands of Canadian dollars, unaudited)        Three months ended     Nine months ended    September 30, 2012  September 30, 2011  September 30, 2012  September 30, 2011               Cash and cash equivalents provided by (used in):                            OPERATING ACTIVITIES              Income from continuing operations   $19,605   $15,060 $ 55,426  $74,419 Adjustments for:               Depreciation of property, plant  and equipment   2,533   2,570  7,484   7,504  Amortization of intangible assets  15,427   14,290  46,862   39,369  Amortization of mark-to-market adjustment of derivative instruments   -   -  -   86  Fair value adjustment of derivative instruments   (445)  3,991  (1,474)  3,445  Interest expense   4,943   4,792  14,585   14,053  Deferred taxes   6,177   5,522  19,373   (7,051)  Current taxes   (454)  -  970   -  Options expense   176   105  528   154  Changes in non-cash working capital items  (2,282)  1,036  (29,591)  (29,767)  Changes in other operating assets and liabilities  1,817   1,130  2,848   2,278  Share of profit of investment in an associate net of income tax  (53)  -  (91)  - Cash generated from operating activities   47,444   48,496  116,920   104,490  Interest paid   (4,163)  (4,510)  (12,870)  (13,038)  Cash flows from discontinued operations   -  -  -   189 Net cash from operating activities   43,281   43,986  104,050   91,641               FINANCING ACTIVITIES              Repayment of long-term indebtedness   (50,280)  (15,000)  (80,280)  (232,000) Proceeds from long-term indebtedness   32,491   -  103,052   401,505 Payment of issuance costs of long-term indebtedness   (791)  (103)  (902)  (4,439) Proceeds from issuance of shares   -   -  -   121,800 Payment of issuance costs of shares   -   -  -   (5,461) Dividends paid   (18,362)  (18,362)  (55,086)  (52,278) Net cash from (used in) financing activities   (36,942)  (33,465)  (33,216)  229,127                             INVESTING ACTIVITIES              Acquisition of property, plant and equipment   (1,355)  (1,912)  (5,552)  (5,859) Acquisition of intangible assets   (5,579)  (5,161)  (18,048)  (18,865) Acquisition of subsidiaries  -  -  (37,946)  (292,993) Acquisition of investment in an associate  -   -  (10,058)  - Net cash used in investing activities   (6,934)   (7,073)  (71,604)  (317,717)               Increase / (decrease) in cash and cash equivalents for the period   (595)  3,448  (770)  3,051 Cash and cash equivalents, beginning of period   2,038    747  2,213   1,144 Cash and cash equivalents, end of period   $1,443  $4,195 $ 1,443  $4,195  About D+HD+H is a leading solutions provider to the North American financial services marketplace, providing innovative technology-based programs, products and business services tailored to our customers' needs. A deeply rooted tradition of developing and nurturing valued customer relationships and a broad set of integrated solutions position D+H for ongoing growth in our chosen markets. In 2012, D+H rose to 35th on the FinTech 100, a ranking of the top technology providers to the global financial services industry.Davis + Henderson Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found in the disclosure documents filed by Davis + Henderson Corporation with the securities regulatory authorities, available at www.sedar.com.        SOURCE: Davis + Henderson CorporationFor further information: Brian Kyle, Executive Vice President and Chief Financial Officer, Davis + Henderson Corporation, (416) 696-7700, investorrelations@dhltd.com or visit our website at www.dhltd.com.