DALSA Reports Fourth Quarter and Fiscal Year End 2005 Financial Results.WATERLOO, Ontario Coordinates: Waterloo is a city in Ontario, Canada. It is the smallest of the three cities in the Regional Municipality of Waterloo, and is adjacent to the larger city of Kitchener. -- DALSA Corporation (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :DSA (1) (Directory Server Agent) An X.500 program that looks up the address of a recipient in a Directory Information Base (DIB), also known as white pages. It accepts requests from the Directory User Agent (DUA) counterpart in the workstation. ), an international high performance semiconductor and electronics company, today reported revenue of $41.8 million in the fourth quarter, 2005, and net income of $0.9 million or $0.05 per share, diluted. For the year ended December 31, 2005, total revenue was $166.7 million, with net income of $8.6 million or $0.47 per share, diluted. The following table summarizes the key results for fiscal 2005 and compares them to 2004: ------------------------------------- (In millions of dollars, Fiscal Fiscal Increase/ except per share amounts) 2005 2004 (Decrease) ---------------------------------------------------------------------- Total Revenues $166.7 $168.6 (1.1%) ---------------------------------------------------------------------- Total Net Income $8.6 $19.8 (56.3%) ---------------------------------------------------------------------- Earnings Per Share (diluted) $0.47 $1.16 (59.5%) ---------------------------------------------------------------------- Gross Margin 42.0% 44.4% (2.4 p.p.)(a) ---------------------------------------------------------------------- Order Backlog at December 31st $60.0 $51.0 17.6% ---------------------------------------------------------------------- Cash Flow From Operations $19.0 $34.3 (44.7%) ---------------------------------------------------------------------- (a) percentage points "We are disappointed that our financial performance in the quarter was lower than expected, due primarily to a push out of orders by some customers," said Savvas Chamberlain, CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of DALSA Corporation. "Despite this we were able to generate cash from operations and increase our backlog, which is a positive indicator for 2006. I am also pleased to report that some of the orders from flat panel display A thin display screen for computer and TV usage. The first flat panels appeared on laptop computers in the mid-1980s, and the LCD technology became the standard. Stand-alone LCD screens became available for desktop computers in the mid-1990s and exceeded sales of CRTs for the first time customers that were pushed out are now shipping." "2006 will be an inflection point Inflection Point An event that changes the way we think and act. -Andy Grove, Founder of Intel. Notes: For example, the fall of the Berlin Wall was an inflection point in global politics and the commercialization of the Internet was an inflection point in technology. for the Company," Dr. Chamberlain added. "In our Digital Cinema business, for example, we expect to generate revenue from Origin camera rentals this year. Production cameras are now available for rental in our Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. facility and we are working with several customers to schedule shooting dates for upcoming projects. In our Semiconductor Business, we are looking forward to the staggered launch of MEMS (MicroElectroMechanical Systems) Tiny mechanical devices that are built onto semiconductor chips and are measured in micrometers. In the research labs since the 1980s, MEMS devices began to materialize as commercial products in the mid-1990s. production throughout the year, which will increase orders and revenue through 2006. In our traditional Digital Imaging Business, we are anticipating a rebound in some of our end markets, particularly in flat panel display inspection, where our latest generation products are already gaining traction. Throughout 2006, our focus will be on increasing revenue, generating cash from operations, and returning to our traditional level of profitability." In the fourth quarter, the Digital Imaging Business, which includes Digital Cinema, posted revenues of $29.8 million, down 6% from the fourth quarter of 2004. For the year, the Digital Imaging Business generated $116.6 million in revenue, a 13% increase over 2004. Net income was $1.4 million in the fourth quarter, down 68% compared to the same period last year. Net earnings for the year were $7.6 million, a 28% decrease from 2004. Digital Imaging revenues and earnings were lower in the quarter as several orders from flat panel display and professional photography customers were pushed out. Application Specific Contracts (ASC ASC Ambulatory surgery center, see there ) revenue, most of which is related to contracts for the semiconductor market, increased slightly to $2.4 million in the fourth quarter compared to the same quarter in 2004. Follow-on sales resulting from ASC contracts, which are included in standard product revenue, grew by 18% in 2005 over 2004. The Semiconductor Business posted revenue of $12.0 million in the fourth quarter, a 26% decrease from the same period last year, but within management's expectations. Total revenue for the year was $50.1 million, down 23.9% from 2004. The Semiconductor Business incurred a net loss in the quarter of $0.5 million, compared to a net income of $1.9 million in the fourth quarter of 2004. Net income for the year was $1.0 million, down 89.1% from 2004. Although the fourth quarter revenue levels were within management's expectations, the overall decrease in revenues compared to 2004 is primarily due to lower shipments to certain key traditional CMOS (Complementary Metal Oxide Semiconductor) Pronounced "c-moss." The most widely used integrated circuit design. It is found in almost every electronic product from handheld devices to mainframes. wafer processing customers who have experienced disruptions or changes in their operations. The Company continues to pursue new growth opportunities to offset the decline in the older CMOS wafer processing business including the staggered launch of MEMS products in 2006. In the quarter, lower gross margin, higher R&D costs associated with the launch of the proprietary MEMS processes, and employee severance and termination benefit costs resulted in negative earnings. The R&D spending level is expected to return to the target range as MEMS products move into full production and revenues increase. The Company's order backlog was $60.0 million at the end of the year, up 18% from the end of 2004, and up 4% from the third quarter of 2005. Management views this increase as a positive sign for the outlook on revenue for 2006, as the backlog traditionally decreases through the end of the year. The backlog for Digital Imaging standard products increased mainly due to orders received for delivery in the first quarter of 2006 for cameras for flat panel display inspection equipment. In the Semiconductor Business, management expects the staggered launch of MEMS production to increase orders and revenue through 2006. Overall gross margin in the quarter was 42.7%, down 3.2 percentage points from the fourth quarter of last year and 0.7 percentage points from the third quarter of 2005. In the Digital Imaging Business, gross margin was 51.6%, a decrease of 2.7 percentage points, year-over-year. The decrease is mainly due to lower sales levels, a decrease in average selling prices The average sales price of goods or commodities. Especially used in the retail sector and technology distribution. , and a write-down of raw material purchased in foreign currencies to current exchange rates, which had an after tax impact of two cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , diluted. Despite these factors, the Company was able to maintain gross margin for the Digital Imaging Business within its target range of 50% to 55% due to the introduction of new higher margin products and through the implementation of improvements in the Company's operations. Gross margin in the Semiconductor Business was 22.2%, which is lower than the Company's goal of 25% to 35%. The decrease is due to lower capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. and a reduction of sales of certain high margin products. Management has identified and is implementing cost reduction initiatives which, in addition to selected price increases and the staggered launch of MEMS production through 2006, are expected to return the gross margin percentage to the business model range. Cash provided from operating activities was $4.7 million in the quarter compared to $9.8 million in the same period of 2004. Management's goal is to continue to be cash flow positive from operations throughout 2006 and 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 capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and debt service requirements in 2006. For further detail, please refer to the Fourth Quarter 2005 Financial Statements, accompanying notes, and Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial at the DALSA website. The address is http://www.dalsa.com/investor/2005/DSA_2005Q4_release.pdf Investor Conference Call A conference call to discuss the Company's Fourth Quarter financial results will be held this afternoon at 5:00pm ET. 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/012606/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 / International Number: 416-850-9150 North American Toll-Free Number: 1-866-809-4939 Instant Replay Access information: Local Dial-In Number: 402-220-7735 Toll-Free Dial-In Number: 1-800-766-3735 Passcode: 4254668 Expiry: February 9, 2006 About DALSA Corporation DALSA is an international high performance semiconductor and electronics company that designs, develops, manufactures, and markets digital imaging products and solutions, in addition to providing semiconductor products and services. DALSA's core competencies A core competency is something that a firm can do well and that meets the following three conditions specified by Hamel and Prahalad (1990):
Set of computational techniques for analyzing, enhancing, compressing, and reconstructing images. Its main components are importing, in which an image is captured through scanning or digital photography; analysis and manipulation of the image, accomplished 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 Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. under the symbol "DSA". The Company has its corporate offices in Waterloo, ON and approximately 1000 employees world-wide. This press release contains forward looking statements based on assumptions, uncertainties and management's best estimates of future events. Actual results may differ materially from those currently anticipated. Investors are cautioned that such forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 The Ontario Securities Commission (OSC) is a regulatory agency which administers and enforces securities legislation in the Canadian province of Ontario. The OSC is an Ontario Crown corporation which reports to the Ontario legislature through the Minister of Finance. and other regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities . 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. DALSA Corporation (TSX:DSA) |
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