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Hartco Announces 2012 Third Quarter Results

MONTREAL, QUEBEC -- (Marketwire) -- 11/08/12 -- Hartco Inc. (TSX:HCI) today announced its financial results for the three and nine month periods ended September 30, 2012.

Consolidated results for the three months ended September 30, 2012

Hartco Inc. ("Hartco") posted consolidated revenues of $89.8 million for the three months ended September 30, 2012, compared to $99.3 million last year, and a net loss of $0.3 million, or -$0.02 per share on a diluted basis compared to net earnings of $2.0 million, or $0.14 per share on a diluted basis, for the corresponding period in 2011.

"A significant slowdown in demand for personal systems and related offerings during the quarter ended September 30th, 2012 had an adverse impact on our revenues and earnings," said Pat Waid, Hartco's President and Chief Operating Officer. "In spite of difficult conditions, effective management of working capital enabled us to maintain a healthy financial position."

Consolidated results for the nine months ended September 30, 2012

For the nine months ended September 30, 2012, Hartco's net loss was $7.9 million, or -$0.60 per share on a diluted basis, on consolidated revenues of $299.3 million, compared to net earnings of $3.2 million, or $0.23 per share on a diluted basis, on consolidated revenues of $330.1 million for the same period last year. Consolidated Adjusted EBITDA was $1.3 million in 2012 compared to $3.8 million for the corresponding period in 2011.

The financial results for the nine months ended September 30, 2012 were negatively impacted by impairment charges of $9.0 million, including $4.9 million pertaining to an internal business transformation project and $4.1 million pertaining to Hartco's investment in ScreenScape. Excluding the impact of these non-recurring items, earnings for the nine months ended September 30, 2012 were almost at breakeven.

Financial Position

Hartco ended the third quarter of 2012 with a cash position of $20.6 million and no debt.

Hartco Outlook

Hartco expects challenging business conditions to persist throughout the remainder of 2012, and the company will focus on improving operational execution and maximizing operating results.

Detailed Financial Information

Detailed financial information pertaining to Hartco's quarterly and annual results can be accessed at www.sedar.com or at www.hartco.com. The third quarter and annual financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS").

About Hartco Inc.

Hartco Inc. (TSX:HCI) has been a leader in the Canadian information technology business for more than thirty years. Through its operating divisions, which together include 49 locations across Canada, Hartco Inc. delivers information technology solutions to private and public sector organizations of every size. For more information, please visit www.hartco.com.

Forward-Looking Statements

This news release contains forward-looking information. Except for historical information contained herein, the statements in this document are forward-looking. Forward-looking statements involve known and unknown risks and uncertainties, which may cause actual results in future periods to differ materially from forecasted results. Those risks include, among others, changes in customer demand for information technology products or services, changes in supplier pricing actions or terms, customer orders, pricing actions by competitors, changes in laws and regulations and general changes in economic conditions. Risks that could cause our results to differ materially from our expectations are discussed in our Annual Management's Discussion & Analysis.


FINANCIAL HIGHLIGHTS                                                        
(In thousands of dollars, except per share amounts)                         
                                                                            
                                Three months ended       Nine months ended  
                                       September 30            September 30 
                                  2012         2011       2012         2011 
                           -------------------------------------------------
                                     $            $          $            $ 
Revenues                        89,808       99,315    299,285      330,124 
Adjusted EBITDA (1)                 53        2,938      1,340        3,809 
                                                                            
Net (loss) earnings               (320)       2,000     (7,948)       3,240 
                                                                            
Diluted (loss) earnings per                                                 
 share                           (0.02)        0.14      (0.60)        0.23 
Free cash flow (deficiency)                                                 
 (2)                             1,163       11,789     (2,379)      (4,001)
Adjusted free cash flow                                                     
 (deficiency) (3)                1,945        6,039       (230)      (8,621)
                                                                            
Cash position                   20,613       15,363     20,613       15,363 

(1) Adjusted EBITDA is defined as net earnings (loss) excluding financial costs, depreciation and amortization, income tax expense, non-recurring gains or losses, impairment charges, and share of results of equity investments. Adjusted EBITDA is a non-IFRS measure as defined in the MD&A.

(2) Cash flow from continuing and discontinued operating activities less capital expenditures. Free Cash Flow is a non-IFRS measure as defined in the MD&A.

(3) Cash flow from continuing and discontinued operating activities, less capital expenditures, net of proceeds from disposal of assets, plus net investing activities, plus net collection of loans and other assets. Adjusted Free Cash Flow is a non-IFRS measure as defined in the MD&A.

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