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DALSA Reports Strong Revenue and Earnings Growth in Second Quarter 2008

Posted 7/31/2008

Waterloo, Ontario, July 31, 2008 - DALSA Corporation (TSX:DSA), an international leader in high performance digital imaging and semiconductors, today reported revenues of $53.4 million for the quarter ended June 30, 2008, and net income of $4.0 million or $0.21 per share, diluted. The following two tables summarize the key results for the second quarter of 2008 and for the year to date and compare them to the second quarter of 2007 and the first half of 2007, respectively. 

Quarterly Comparisons
(In millions of dollars, except per share amounts)
Q2, 2008
Q2, 2007
Increase
Total Revenues
$53.4
$47.7
12.1%
Total Net Income
$4.0
$0.02
-
Earnings Per Share (diluted)
$0.21
$0.00
-
Gross Margin %
46.6%
38.1%
8.5p.p.*
Order Backlog at June 30
$79.8
$67.4
18.4%
Cash Flow From Operations
$9.3
$1.8
427.9%

Year to Date Comparisons
(In millions of dollars, except per share amounts)
For the six months ended
 
June 30 2008
June 30 2007
Increase
Total Revenues
$108.0
$92.9
16.2%
Total Net Income
 $7.8
$0.3
-
Earnings Per Share (diluted)
 $0.41
$0.01
-
Gross Margin
 45.1%
39.1%
6.0 p.p.*
Cash Flow From Operations
 $16.0
$2.5
538.3%
* percentage points

“I am very pleased with our financial results this quarter,” commented Brian Doody, Chief Executive Officer of DALSA Corporation. “Continuing with our success of recent quarters, we delivered strong revenue and earnings growth. Furthermore, our profitable growth in cash flow and strong backlog are positive indicators of the strength of our business.”
 
“My outlook for the future is positive,” continued Mr. Doody. “The continued strong bookings we are seeing in traditional end markets such as flat panel display inspection are complementing our market share gains in diversified end markets and geographic regions. In the Digital Imaging business, for example, our new products such as our Genie and Piranha Colour cameras drove sharp increases in revenue in the Machine Vision/Industrial segment in the second quarter. Although we anticipate some seasonality during the summer months, we expect that trend to continue moving forward. In the Semiconductor Business, we are particularly excited about recent design wins for our IC Group in the Netherlands in the professional photography segment. Earlier this month, Phase One, the leading manufacturer of medium format digital camera backs, announced its new P 65+ camera back, which features a custom DALSA-designed 60.5 megapixel image sensor chip. The Phase One camera back will be showcased at the upcoming Photokina tradeshow in September in Germany.”
 
Commenting on DALSA’s Digital Cinema new business initiative, Mr. Doody noted, “Our Origin II cinema camera saw continued use in the quarter, even though rental revenues for this part of our business remained small as we continue to seed the field. Projects completed during the quarter included a full length feature, several commercial spots and short productions, and tests for future projects. We also launched our Evolution camera at the Cinegear trade show in Los Angeles, with several hands-on demonstrations for attendees. The reviews of the new camera’s smaller size and improved ergonomics were encouraging.”
 
In the second quarter, Digital Imaging revenues were $31.1 million, up 16.0% from the second quarter of last year. The increase has been fueled largely by sales of newly introduced camera products such as the Ethernet addressable Genie camera line and the new Piranha Colour linescan camera as well continued strong shipments to flat panel inspection OEMs. Standard product gross margins were 53.8%, up 2.7 percentage points from the same period last year. Net earnings in the Digital Imaging business increased by 49.4% to $3.4 million. The division exited the quarter with a record order backlog of $30.8 million. 
 
Revenues in our Semiconductor business were $21.9 million, up 7.8% from the second quarter of 2007. The growth in revenues was fueled not only from robust MEMS demand but also by higher shipments of CMOS wafers resulting from production orders the company announced in December 2007. In the quarter, standard product margins were 40.5%, up 16.9 percentage points compared to the same quarter last year and were fueled by higher revenues and improved product mix. Net income in the Semiconductor Business was $2.5 million, and the backlog at the end of the quarter was $49.0 million.
 
In the Digital Cinema business unit, revenues in the second quarter were $0.5 million. The majority of the revenues came from the rental of HD/SD equipment; however, Origin rentals also contributed to revenues as the division completed several small projects including an independent feature length film. The division posted a loss of $2.0 million, a slight increase from the second quarter of 2007 due to higher R&D costs as the Evolution camera was completed for the Cinegear tradeshow in June. As announced at the end of April, the Company is working with Genuity Capital Markets to explore strategic alternatives for the Digital Cinema business.
 
In the second quarter, the Company generated $9.3 million in cash from operations, up from $6.7 million in the first quarter of 2008. Cash and cash equivalents increased by $5.3 million during the quarter.
 
Dividend
The Company’s Board of Directors has declared an initial quarterly dividend of $0.05 per common share to all shareholders of record on August 15, 2008. The dividend is payable on August 29, 2008. The Company has designated the full amount of these dividends as "eligible dividends" for Canadian income tax purposes.
 
Commenting on the dividend, Dr. Savvas Chamberlain, DALSA’s CTO and Chairman, said, “We are pleased to declare this quarterly dividend. By doing so, DALSA’s board is confirming its confidence in the Company’s operational performance and long term growth opportunities.”
 
For further detail, please refer to the second quarter 2008 Financial Statements, accompanying notes, and Management’s Discussion and Analysis on the DALSA website. The address is http://www.dalsa.com/investor/2008/DSA_2008Q2_release.pdf
 
Investor Conference Call Information
A conference call to discuss the results will be held today at 5:00pm EDT. The conference call, followed by the question and answer period, will be broadcast live and open to anyone interested in listening at http://events.onlinebroadcasting.com/dalsa/073108/index.php. The phone numbers for those who wish to participate in the question and answer period are as follows:
 
Live Conference Access Information:
Local Access: 416-641-6136
Toll-Free Access: 866-223-7781

 
Instant Replay Access information:
Local Access: 416-695-5800
Toll-Free Access: 800-408-3053
Passcode: 3266168
Expiry Date: Aug 14, 2008
 
About DALSA Corporation
DALSA is an international leader in high performance digital imaging and semiconductors with approximately 1000 employees world-wide. Established in 1980, the company designs, develops, manufactures, and markets digital imaging products and solutions, in addition to providing semiconductor products and services. DALSA's core competencies are in specialized integrated circuit and electronics technology, software, and highly engineered semiconductor wafer processing. Products and services include image sensor components (CCD and CMOS); electronic digital cameras; vision processors; image processing software; and semiconductor wafer foundry services for use in MEMS, high-voltage semiconductors, image sensors and mixed-signal CMOS chips. DALSA is listed on the Toronto Stock Exchange under the symbol “DSA” and has its corporate offices in Waterloo, Ontario, Canada.
 
For more information, please contact:
Patrick Myles
Vice President, Corporate Communications
DALSA Corporation
Tel: (519) 886-6001 Ext. 2177
Fax: (519) 886-3972
 
Some of the statements in this press release, including those relating to the company’s strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar expressions, are forward-looking statements within the meaning of securities law. Actual results may differ materially from those currently anticipated. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements are detailed from time to time in DALSA’s periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Investors should read review the Business Risks and Prospects sections of the DALSA 2007 annual Management’s Discussion and Analysis (“MD&A”) to understand the assumptions, risks and uncertainties inherent in forward looking information or statements. DALSA has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  

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