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PRESS RELEASE: DALSA Reports Fourth Quarter 2010 Financial Results

Posted 1/27/2011

Waterloo, Ontario January 27, 2011 - DALSA Corporation (TSX:DSA), an international leader in high performance digital imaging and semiconductors, today reported revenue from continuing operations of $54.7 million for the quarter ended December 31, 2010, and net income from continuing operations of $5.3 million or $0.29 per share, diluted. For the full year 2010, the Company achieved revenue of $212.3 million and net income from continuing operations of $19.2 million or $1.04 per share, diluted. The following two tables summarize the key results for the fourth quarter of 2010 and for the full year 2010 and compare them to the fourth quarter of 2009 and the full year 2009, respectively.

Quarterly Comparisons
($C millions, except per share and percentage amounts)

Q4, 2010

Q4, 2009

Change

Revenue

$      54.7

$     43.4

26.0%

Net income (loss) from continuing operations

5.3

(1.0)

630%

Earnings per share from continuing operations, diluted

0.29

0.01

2800%

Standard product gross margin percentage

39.1%

30.7%

8.4pp

Order backlog at December 31, 2010

79.7

79.5

0.3%

Cash flow from operations

3.2

0.6

430%

 

Year to Date Comparisons
($C millions, except per share and percentage amounts)

2010

2009

Change

Revenue

$    212.3

$    162.5

30.6%

Net income from continuing operations

19.2

0.5

3659%

Earnings per share from continuing operations, diluted

1.04

0.03

3366%

Standard product gross margin percentage

41.3%

32.7%

8.6pp

Cash flow from operations

26.8

(1.9)

1510%


 “2010 was a strong year for DALSA,” commented Brian Doody, CEO of DALSA Corporation. “In our Digital Imaging business, we saw a significant return of demand for our products as well as new demand for products targeting the high volume industrial machine vision market segment. In our Semiconductor business, despite a decline in revenue year over year, we saw progressively increasing demand for MEMS as the year progressed and we achieved important technical and business development milestones in CMOS x-ray detectors for medical and dental.”

In the Digital Imaging business in the fourth quarter of 2010, we posted $37.2 million in revenue and net income of $6.8 million, compared to revenue of $26.4 million and net income of $1.2 million in the fourth quarter last year. Digital Imaging net income in the quarter included a $2.5 million, after tax gain from the sale of land in Waterloo. Backlog for Digital Imaging at the end of the fourth quarter was $38.6 million, up from $37.9 million at the end of the third quarter of 2010.

In the Semiconductor Business, we reported revenue of $17.5 million and net loss of $1.5 million in the fourth quarter of 2010, compared to revenue of $17.0 million and net loss of $2.2 million in the fourth quarter last year. MEMS revenue increased to a record $9.7 million in the fourth quarter, up from $6.4 million in the same quarter last year. The loss for the quarter in the Semiconductor business was due largely to foreign exchange and reduced wafer starts caused by downtime on a specific piece of wafer processing equipment, which has since been repaired. The Semiconductor backlog decreased marginally from $41.3 million in the third quarter of 2010 to $41.1 million in the fourth quarter of 2010. The MEMS backlog increased to a record level at the end of the year.

Cash provided by operating activities was $3.2 million, compared to cash provided by operating activities of $0.6 million in the same quarter last year. The increase was driven directly by higher sales in the Digital Imaging business. The Company’s cash position at the end of the fourth quarter was $17.4 million, up from $17.2 million at the end of the third quarter of 2010.

Dividend
The Company’s Board of Directors has declared a quarterly dividend of $0.07 per common share to all shareholders of record on February 8, 2011. The dividend is payable on February 16, 2011. 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 2010 Financial Statements, accompanying notes, and Management’s Discussion and Analysis on the DALSA website. The address is http://www.dalsa.com/corp/investor/financials.aspx .

Teledyne Transaction Update
On December 22, 2010, the Company and Teledyne Technologies Incorporated (NYSE: TDY) (“Teledyne”) jointly announced that they had entered into a definitive arrangement agreement providing for the acquisition of the Company by a wholly-owned subsidiary of Teledyne. Pursuant to the transaction, Teledyne will acquire all of the outstanding common shares of DALSA for $18.25 per share payable in cash, representing a premium of 27.7 percent over the twenty-day volume weighted average trading price of $14.29 for DALSA common shares on the Toronto Stock Exchange for the period ended December 21, 2010. Holders of approximately 6.4 million DALSA common shares, representing approximately 34.7 percent of DALSA’s outstanding common shares, have entered into support agreements with Teledyne pursuant to which they have agreed to support and vote in favour of the transaction.

The transaction will be carried out by way of a statutory plan of arrangement under the Business Corporations Act (Ontario). The completion of the transaction is subject to, among other things, the approval of shareholders of DALSA representing at least two-thirds of the common shares of DALSA represented at a special meeting of shareholders of DALSA to be called to consider the transaction and Court approval. The Meeting will take place on February 10, 2011 at 9:00 a.m. at 605 McMurray Road, Waterloo, Ontario. In addition, the transaction is subject to a number of additional closing conditions, including receipt of required regulatory approvals, as well as other customary closing conditions. On January 18, 2011, the Federal Trade Commission granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) (“HSR”) to Teledyne and the Company in connection with the transaction. With the termination of the HSR waiting period, the HSR-related condition to closing under the arrangement agreement has been satisfied.

The Board of Directors of DALSA has unanimously recommended that the shareholders of the Company vote in favour of the transaction. Furthermore, on January 17th, 2011, ISS Proxy Advisory Services (formerly Riskmetrics) a leading provider of proxy research, advice and voting recommendations to many financial institutions, published a report recommending that their subscribers vote "FOR" the special resolution approving the plan of arrangement. Full details of the arrangement and certain other matters are included in the management information circular of DALSA dated January 5, 2011 (the “Information Circular”) that has been filed with the regulatory authorities and mailed to DALSA shareholders in accordance with applicable securities laws. Shareholders may also obtain a copy of the definitive agreement, Information Circular of DALSA, and other meeting materials at www.sedar.com.

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://www.gowebcasting.com/2178 . The phone numbers for those who wish to participate in the question and answer period are as follows:

Live Conference Access Information:
Local Access: 416-340-8527
Toll-Free Access: 877-240-9772

Instant Replay Access information:
Local Access: 905-694-9451
Toll-Free Access: 800-408-3053
Passcode: 2452505
Expiry Date: February 10, 2011

About DALSA Corporation
DALSA (TSX: DSA) is an international leader in high performance digital imaging and semiconductors with approximately 1000 employees worldwide, headquartered in Waterloo, Ontario, Canada. Established in 1980, the company designs, develops, manufactures and markets digital imaging products and solutions, in addition to providing semiconductor products and services. For more information, visit www.dalsa.com

For more information, please contact:

Patrick Myles
Vice President, Corporate Communications
DALSA Corporation
Tel: (519) 886-6001 Ext. 2177
E-mail: patrick.myles@dalsa.com
Internet: www.dalsa.com

Certain statements in this press release, including those relating to the company’s strategies, the completion of the anticipated acquisition of the Company by Teledyne by plan of arrangement, 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 include unanticipated issues associated with the satisfaction of the conditions to the arrangement transaction, issues associated with obtaining necessary regulatory approvals, including Court approval of the arrangement, and the terms and conditions of such approvals, and such other factors as 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 2010 annual Management’s Discussion and Analysis (“MD&A”) to understand the assumptions, risks and uncertainties inherent in forward looking information or statements. DALSA does not undertake any obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
 

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