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DALSA Reports First Quarter 2009 Financial Results

Posted 4/30/2009

Waterloo, Ontario April 30, 2009 - DALSA Corporation (TSX:DSA), an international leader in high performance digital imaging and semiconductors, today reported revenues from continuing operations of $37.9 million for the quarter ended March 31, 2009, and net income from continuing operations of $1.3 million or $0.07 per share, diluted. The following table summarizes the key results for the first quarter of 2009 and compares them to the first quarter of 2008.

Quarterly Comparisons
(In millions of dollars, except per share amounts)
Q1, 2009
Q1, 2008
Increase/
(Decrease)
Revenues
$37.9
$54.2
(30.0%)
Earnings from continuing operations
$1.3
$5.7
(76.7%)
Earnings per share from continuing operations
$0.07
$0.30
(76.7%)
Standard product gross margin percentage
35.5%
45.3%
(9.8p.p.*)
Order backlog at March 31
$93.5
$75.8
23.4%
Cash flow from operations
($7.7)
$6.7
n/a

* percentage points
 
“In the first quarter, as anticipated, the dramatic downturn in the global economy had a negative impact on our financial results,” commented Brian Doody, Chief Executive Officer of DALSA Corporation. “Our Digital Imaging business was hardest hit, as we saw a sharp decrease in demand from Asian OEM customers involved in semiconductor, flat panel, and electronics manufacturing. In our Semiconductor business, despite another record quarter of MEMS shipments, we saw a more moderate decline in revenue, due largely to an expected decrease in demand for CMOS wafer processing.” 
 
“As I described earlier this year, we are taking a number of steps to address this challenging economic environment,” continued Mr. Doody. “We are focusing on revenue opportunities to deliver market share in new markets with new product offerings. As you can see from the record backlog this quarter we have been successful in signing new contracts in markets that are less sensitive to the economic downturn. We expect this to help replace lost standard products revenue. On the cost side, we have implemented a number of initiatives that have allowed us to lower our breakeven revenue level while at the same time enabling us to continue to work on key developments and retain our key assets, our employees, such that we can deliver strong results when the economy recovers.”
 
In the Digital Imaging business, revenues were $19.4 million and net income was $1.8 million in the first quarter, compared to revenues of $31.7 million and net income of $3.2 million in the first quarter last year. Net income in this quarter includes a before tax gain of $1.3 million from the sale of land that was completed during the quarter. The revenue decrease is due largely to significantly decreased product demand in the Asia/Pacific region as OEMs continued to delay their investment in capital equipment. Standard product gross margins in the Digital Imaging business for the first quarter were 47.1%, down 4.5 percentage points from the first quarter last year. The decrease is due largely to lower sales and weaker product mix. The division ended the year with a backlog of $34.0 million, up marginally from the fourth quarter of 2008. A slight decrease in the standard products backlog was offset by an increase in Application Specific Contracts backlog, which was at record high levels at the end of the quarter.
 
In the first quarter, the Semiconductor Business had revenues of $18.5 million and a net loss of $0.5 million, compared to revenues of $22.5 million and net income of $2.5 million in the first quarter last year. During the quarter, record shipments of MEMS wafers were offset by an anticipated decline in CMOS wafer shipments and lower shipments of integrated circuits, largely image sensor chips. Gross margins decreased 13.6 percentage points to 22.8% from the same quarter last year. This decrease was due largely to the delivery of lower margin 100mm last time buy orders and lower yields of certain products as we ramp up production. The backlog in the Semiconductor business increased quarter over quarter by $12.9 million to a record $59.5 million. The increase was fuelled in part by new orders received for image sensor chips, largely in the photogrammetry end market.
 
The Company’s net cash position decreased $1.0 million to $11.5 million compared to the end of the fourth quarter of 2008. In the quarter, operations used $7.7 million in cash, compared to cash provided by operations of $6.7 million in the first quarter of 2008. This is largely due to lower profitability as well as cash used to discharge obligations related to income taxes, capital spending and accounts payable. Management believes that cash on hand, existing bank facilities and cash flow from operating activities will be sufficient to fund currently anticipated working capital, planned capital spending, new business initiatives and debt service requirements for the next twelve months, allowing us to manage the Company through the current period of world-wide economic downturn.
 
In the first quarter of 2009, the Company repurchased and cancelled 61,032 shares at a weighted average purchase price of $4.91 as part of our Normal Course Issuer Bid that commenced on September 11, 2008 and expires on September 10, 2009.
 
Dividend
The Company’s Board of Directors has declared a quarterly dividend of $0.05 per common share to all shareholders of record on May 15, 2009. The dividend is payable on May 29, 2009. The Company has designated the full amount of these dividends as "eligible dividends" for Canadian income tax purposes.
 
For further detail, please refer to the first quarter 2009 Financial Statements, accompanying notes, and Management’s Discussion and Analysis on the DALSA website. The address is http://www.dalsa.com/public/corp/investor/2009/DSA_2009Q1_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/043009/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: 5228483
Expiry Date: May 14, 2009
 
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
E-mail: patrick.myles@dalsa.com
Internet: http://www.dalsa.com
 
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 2008 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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