PARETO ANNOUNCES 2010 THIRD QUARTER RESULTS

Reports 45% revenue growth and a 45% increase in EBITDA

TORONTO, Nov. 11 /CNW/ -  Pareto Corporation (TSX: PTO), a leading Shopper Marketing company, today announced its financial results for the three-months ended September 30, 2010.

Q3 2010 Financial and Operating Highlights:

• Revenue increased 45% to $25.6 million from $17.6 million in Q3 2009
• Revenue increased organically by 28% or $5.6 million during Q3
• EBITDA increased 45% to $3.9 million from $2.7 million in Q3 2009
• Net earnings increased 22% to $1.8 million from $1.5 million in Q3 2009
• Earnings per share increased 42% to $0.051 per share from $0.036 per share in Q3 2009

"Growing demand for Shopper Marketing solutions continued to drive our performance during the quarter, as we reported significant top line growth and improved profitability, with both revenue and EBITDA increasing by 45% over last year," said Kerry Shapansky, Pareto's President and CEO. "Our strong results reflect impressive organic growth as well as the contributions of Direct Sales Force, a company we acquired earlier this year. We have been successful both in acquiring new customers and increasing the services sold to our existing client base. We have also benefited from the return of our incentive travel business, an area that was hit hard by the challenging economic environment in late 2008 and 2009."

"Across industry sectors, the value of Shopper Marketing as a way to drive measurable sales increases, continues to gain traction. Throughout 2010, we have seen heightened demand for our solutions from non-traditional business segments such as the financial services, automotive and telecommunications industries," added Mr. Shapansky. "With our growing customer base, we expect to continue to generate strong results throughout the remainder of the year, as many of our new customers are only now beginning to contribute to our overall revenues."

Financial Review
Pareto's revenues for the quarter ended September 30, 2010 were $25.6 million, an increase of 45.5% from $17.6 million in the third quarter of 2009. The increased revenues were driven by organic growth and the contribution of Direct Sales Force Inc. Adjusting for the impact of the DSF acquisition, organic revenues increased by $5.6 million or 28% during the quarter. The increased revenue stems from a return of incentive travel business that was cancelled in 2009, new customer growth, as well as existing customers increasing the volume of their current services as well as accessing new Shopper Marketing services.

Operating and administrative expenses were $21.7 million in the third quarter of 2010, an increase of 45.6% from $14.9 million during the same period last year. As a percentage of revenue, operating and administrative expenses were virtually unchanged from the comparable 2009 period at 84.9%.

In the third quarter of 2010, net earnings increased 22% to $1.8 million, compared to $1.5 million during the same period last year.  Basic earnings per share were $0.051 for the three months ended September 30, 2010, compared to $0.036 in the third quarter of 2009, an increase of 41.7%.  On a diluted basis, earnings per share increased 41.2% to $0.048 in 2010 compared to $0.034 for the same period last year.

At September 30, 2010, Pareto had total debt of $20.2 million, compared to debt of $17.2 million at June 31, 2010. In the third quarter of 2010, Pareto's operating activities utilized $1.8 million of cash flow compared to $1.9 million generated in 2009, a decrease of $3.7 million.  This decrease was mainly due to the impact of changes in the non cash operating accounts offset by the increase in net earnings during the quarter.  Operating activities before changes in non-cash operating accounts generated $2.3 million of cash flow during the third quarter of 2010 compared to $1.9 million generated in 2009.

Pareto currently has 35.2 million common shares issued and outstanding.

* Non-GAAP Measures

Pareto presents EBITDA information as supplemental figures because management believes they provide useful information regarding operating performance. EBITDA (earnings before amortization, net interest and finance charges, share based compensation, non-recurring expenses, and income taxes) is not a recognized measure under Canadian generally accepted accounting principles (GAAP), does not have standardized meaning, and is unlikely to be comparable to similar measures used by other companies. Accordingly, investors are cautioned that EBITDA should not be construed as an alternative to revenue, net earnings or loss determined in accordance with GAAP as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows.

About Pareto Corporation

Pareto Corporation is a Shopper Marketing company that offers marketing execution solutions to leading companies in a broad range of industry sectors. Pareto provides measurable, quantifiable services that complement our clients' marketing and sales departments. For more information, please visit our website at www.pareto.ca.

This press release contains forward-looking statements related to expected future events and financial operating results of Pareto that involve risks and uncertainties. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions and the risks and uncertainties detailed from time to time in Pareto's SEDAR filings.

Pareto Corporation
Consolidated Balance Sheets
As at	September 30 2010 (unaudited)			December 31 2009 (audited)
Assets
Current assets
Cash	$	-	$	48,623
Accounts receivable		26,700,015		18,766,352
Inventories		3,135,003		1,684,849
Prepaid expenses		1,674,275		645,236
Current future income tax assets		-		41,982
		31,509,293		21,187,042
Loans receivable and other assets		1,767,670		1,570,737
Long-term future income tax assets		-		71,243
Capital assets		4,700,525		4,591,668
Intangible assets		1,695,718		1,280,916
Goodwill		25,942,893		21,058,577
	$	65,616,099	$	49,760,183
Liabilities and Shareholders' Equity
Current liabilities
Bank indebtedness	$	6,530,920	$	415,602
Accounts payable and accrued liabilities		14,223,903		11,035,642
Dividends payable		1,060,470		1,792,129
Deferred revenue		4,307,581		3,044,381
Income taxes payable		2,148,226		2,413,569
Current portion of lease inducements		42,482		42,482
Current portion of long term loan		2,280,000		1,350,000
		30,593,583		20,093,805
Long-term future income tax liabilities		395,823		305,985
Deferred lease inducements		268,399		300,260
Long-term loan		11,408,362		10,191,099
Total liabilities		42,666,167		30,891,149
Shareholders' equity
Share capital		15,380,452		12,635,777
Contributed surplus		1,450,221		2,091,495
Retained earnings and accumulated other comprehensive income		6,119,260		4,141,762
Total shareholders' equity		22,949,933		18,869,034
	$	65,616,099	$	49,760,183

Pareto Corporation
Consolidated Statements of Operations and Retained Earnings
	Three months ended September 30 (unaudited)				Nine months ended September 30 (unaudited)
	2010		2009		2010		2009
Revenue	$	25,597,450	$	17,591,647	$	70,527,748	$	50,823,212
Operating and administrative expenses		21,723,962		14,919,821		61,255,059		44,606,499
		3,873,488		2,671,826		9,272,689		6,216,713
Amortization of capital assets		262,485		153,221		741,201		477,226
Amortization of intangible assets		52,779		52,779		158,336		158,336
Interest expense		229,877		51,938		608,329		148,306
Interest income		(6,191)		(47,410)		(15,358)		(105,992)
Start-up costs		390,380		-		390,380		-
Share-based compensation		131,056		208,441		479,580		629,374
		1,060,386		418,969		2,362,468		1,307,250
Earnings before income taxes		2,813,102		2,252,858		6,910,221		4,909,464
Income taxes		993,182		757,735		2,480,034		1,683,608
Net earnings and comprehensive income  for the period		1,819,920		1,495,122		4,430,187		3,225,855
Retained earnings, beginning of period		5,359,810		9,758,685		4,141,762		9,317,077
Dividends declared		(1,060,470)		(488,762)		(2,452,689)		(1,777,887)
Excess price paid over carrying value on repurchase of common shares		-		(6,085,940)		-		(6,085,940)
Retained earnings, end of period	$	6,119,260	$	4,679,105	$	6,119,260	$	4,679,105
Basic and earnings per share	$	0.051	$	0.036	$	0.128	$	0.076
Diluted earnings per share	$	0.048	$	0.034	$	0.119	$	0.073
Weighted average number of common shares outstanding:
Basic		35,512,483		41,545,569		34,685,152		42,244,025
Diluted		37,917,685		43,857,647		37,255,143		44,410,848

Pareto Corporation
Consolidated Statements of Cash Flows
		Three months ended				Nine months ended
		September 30 (unaudited)				September 30 (unaudited)
		2010		2009		2010		2009
Operating activities
Net earnings for the period	$	1,819,920	$	1,495,122	$	4,430,187	$	3,225,855
Items not involving cash:
Amortization of capital assets		262,485		153,221		741,201		477,226
Amortization of intangible assets		52,779		52,779		158,335		158,336
Amortization of lease inducement		(10,620)		(10,621)		(31,861)		(31,862)
Non-cash interest		19,016		(41,805)		47,264		(90,189)
Share-based compensation		131,056		208,441		479,580		629,374
Future income tax provision		57,683		69,491		200,877		202,131
		2,332,319		1,926,628		6,025,583		4,570,871
Changes in non cash operating accounts		(4,166,418)		(37,428)		(5,311,435)		(1,246,689)
		(1,834,101)		1,889,200		714,148		3,324,182
Investing activities
Capital asset additions		(385,191)		(1,596,770)		(782,361)		(1,864,611)
Intangible asset additions		(260,231)		(107,088)		(618,448)		(107,088)
Loans receivable and other assets		(46,933)		(190,250)		(196,933)		(380,500)
Acquisitions, net of cash		-		-		(4,357,657)		-
		(692,355)		(1,894,108)		(5,955,399)		(2,352,199)
Financing activities
Bank indebtedness		299,564		1,645,284		6,115,318		1,645,284
Proceeds of long term debt		3,000,000		11,823,106		3,000,000		11,823,106
Repayment of long term debt		(300,000)		-		(900,000)		-
Dividends paid		(703,910)		(645,147)		(3,184,347)		(3,006,371)
Repayment of capital lease obligations		-		(582,503)		-		(709,279)
Repayment of loans receivable		-		75,000		-		100,000
Issuance of shares		88,699		-		165,731		-
Share issue costs		-		-		(4,074)		-
Repurchase of common shares		-		(10,170,150)		-		(10,170,150)
		2,384,353		2,145,590		5,192,628		(317,410)
Increase (Decrease) in cash for the period		(142,103)		2,140,682		(48,623)		654,573
Cash, beginning of period		142,103		(2,140,682)		48,623		(654,573)
Cash, end of period	$	-	$	-	$	-	$	-

For further information:

Kerry Shapansky, President and Chief Executive Officer, Pareto Corporation, [phone]

Karen Trudell, Chief Financial Officer, Pareto Corporation, [phone]

Glen Williams, Investor Relations, Equicom Group, [phone] ext 272