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DALSA Reports Fourth Quarter 2009 Financial Results

Posted 1/28/2010

Waterloo, Ontario January 28, 2010 - DALSA Corporation (TSX:DSA), an international leader in high performance digital imaging and semiconductors, today reported revenue from continuing operations of $43.4 million for the quarter ended December 31, 2009, and net loss from continuing operations of $1.0 million or $0.06 per share, diluted. Excluding a foreign exchange loss of $0.5 million and restructuring costs of $1.3 million, net income from continuing operations for the fourth quarter was $0.4 million or $0.02 per share. For the full year 2009, the Company achieved revenue of $162.5 million and earnings from continuing operations of $0.5 million. The following two tables summarize the key results for the fourth quarter of 2009 and for the full year 2009 and compare them to the fourth quarter of 2008 and the full year 2008, respectively.

($C millions, except per share and percentage amounts)
Q4, 2009
Q4, 2008
Change
Revenue
$      43.4
$     46.2
(6.2)%
Net income (loss) from continuing operations
(1.0)
4.3
(123.5)%
Earnings (loss) per share from continuing operations
(0.06)
0.23
(126.1)%
Net income (loss) from discontinued operations
1.2
(10.1)
112.2%
Earnings (loss) per share from discontinued operations
0.07
(0.54)
113.0%
Standard product gross margin percentage
30.7%
41.6%
(10.9)pp
Order backlog at December 31
79.5
80.2
(0.9)%
Cash flow from operations
0.6
6.5
(90.4)%

Year to Date Comparisons
($C millions, except per share and percentage amounts)
2009
2008
Change
Revenue
$    162.5
$    206.0
(21.1)%
Net income from continuing operations
0.5
21.9
(97.7)%
Earnings per share from continuing operations
0.03
1.17
(97.4)%
Net income (loss) from discontinued operations
1.2
(40.5)
102.9%
Earnings (loss) per share from discontinued operations
0.06
(2.17)
102.8%
Standard product gross margin percentage
32.7%
45.2%
 
(12.5)pp
Cash flow from operations
 (1.9)
24.1
(107.8)%

 “In the fourth quarter we were pleased to see strengthening of demand for our Digital Imaging products, particularly in the Asia Pacific region,” commented Brian Doody, Chief Executive Officer of DALSA Corporation. “A steady rise in bookings for standard products in the Digital Imaging business and an increasing proportion of orders for delivery in the short term are strong indicators for improved results starting in the first half of 2010.

“In our Semiconductor business in 2009, we grew our MEMS revenue by 14% relative to last year, a significant achievement given that industry-wide growth for 2009 was largely flat. This once again placed DALSA among the fastest growing ‘pure-play’ MEMS foundries in the world,” added Mr. Doody. “Despite an unexpected announcement in the fourth quarter by one of our customers that its customer had excess inventory, which stalled our MEMS growth in the fourth quarter and into early 2010, our outlook for MEMS growth continues to be very strong. We have a number of key customers that are moving from R&D into volume production and we expect to see growth in this part of the business starting in the second half of 2010. Overall, DALSA is in a strong competitive position entering 2010 and we are looking forward to profitably growing our business as end markets recover.”
 
In the Digital Imaging business in the fourth quarter, revenue was $26.4 million and net income was $1.2 million, compared to revenue of $24.5 million and net income of $2.6 million in the fourth quarter last year. The revenue increase resulted primarily from higher product shipments in the Asia/Pacific region, as OEMs increased their investment in capital equipment. Despite this increase in revenue, earnings declined largely due to a foreign exchange loss in the quarter compared to a gain in the fourth quarter of last year. Standard product gross margin in the Digital Imaging business for the fourth quarter was 42.1%, down 6.4 percentage points from last year. The decrease is largely due to an inventory provision taken in the quarter. The division ended the year with a backlog of $29.1 million. This decreased slightly from the third quarter of 2009; however, a higher portion of the backlog at the end of the fourth quarter is for delivery in the near term.
 
In the fourth quarter, the Semiconductor Business had revenue of $17.0 million and a net loss of $2.2 million, compared to revenue of $21.6 million and net income of $1.7 million in the fourth quarter last year. The revenue decline is a result of decreased orders from a specific customer due to excess inventory held by its customer. In addition, certain image sensor customers decreased their ordering due to lack of demand for their products due to the recession. The decrease in net income in the Semiconductor Business is largely due to a restructuring expense of $1.3 million in the quarter as we adjusted our operations in the Professional Imaging part of this business to align them with our current revenue levels. The drop in revenue and the lower margin in our foundry as we wound down our 100mm wafer processing line, in addition to a foreign exchange loss, also pushed earnings lower. Gross margin in the Semiconductor business was 11.0%, compared to 32.8% in the fourth quarter of 2008. The decrease is a result of poor coverage of fixed costs due to lower revenue and the delivery of lower margin 100mm last time buy orders. With the closure of our 100mm line, which is expected to be completed in the second quarter of 2010, and an anticipated recovery of utilization rates later in the year, we expect to see a marked improvement in gross margin. The division ended the year with a backlog of $50.4 million, down from $59.1 million in the third quarter of 2009.   This change in Semiconductor backlog was expected, as customers took delivery of portions of large purchase orders scheduled for delivery over multiple years.
 
The Company’s cash position at the end of the fourth quarter was $8.5 million compared to $11.4 million at the end of the third quarter. The decrease is due to our investment in 200mm MEMS equipment in Bromont, which will help satisfy the demand we are seeing for MEMS wafer processing in higher volume at lower prices. Cash provided from operations was $0.6 million, compared to $6.5 million from the same quarter last year.
 
Dividend
The Company’s Board of Directors has declared a quarterly dividend of $0.05 per common share to all shareholders of record on February 12, 2010. The dividend is payable on February 26, 2010. 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 fourth 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_2009Q4_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.digitalmedia.telus.com/dalsa/012810/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: 416-340-2216
Toll-Free Access: 866-226-1792

 
Instant Replay Access information:
Local Access: 416-695-5800
Toll-Free Access: 800-408-3053
Passcode: 2802661
Expiry Date: February 11, 2010
 
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 2009 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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