DALSA Reports Third Quarter 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 third quarter revenues of $43.9 million and net income of $3.0 million, or $0.16 earnings per share, diluted. During the quarter the Company generated $11.6 million in cash from operations and increased its net cash position by $7.7 million. The following table summarizes the key results for the third quarter of 2005 and compares them to the same quarter last year: --------------------------------------------------------------------- (In millions of dollars, Increase/ except per share) amounts) Q3, 2005 Q3, 2004 (Decrease) --------------------------------------------------------------------- Total Revenues $43.9 $44.1 (0.4%) --------------------------------------------------------------------- Total Net Income $3.0 $5.4 (44.9%) --------------------------------------------------------------------- Earnings Per Share (diluted) $0.16 $0.32 (50.0%) --------------------------------------------------------------------- Gross Margin 43.4% 45.4% (2.0) p.p.(i) --------------------------------------------------------------------- Order Backlog at September 30th $57.8 $65.9 (12.3%) --------------------------------------------------------------------- Cash Flow From Operations $11.6 $10.9 $0.7 --------------------------------------------------------------------- (i) percentage points "Despite lower than expected revenue in the quarter, the Company was profitable and generated cash in both legs of the business," 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. "Although Management continues to see softness in some of its end markets, which may slow our revenue growth in the near term, we anticipate that these sectors will return to their traditional growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. and we will benefit from our strong market and technology position. In the interim, we are making the necessary adjustments to our cost structure to maintain our business model for both legs of the business while continuing to be cash flow positive from operations." The Digital Imaging Business posted revenue in the third quarter of $31.6 million, up 27% from the third quarter of 2004. Revenues from the Company's DALSA Coreco division and a higher level of sales from Application Specific Contracts contributed to the increase. Revenue growth in the quarter was slower than expected due to the delay in the placement of a number of large orders by customers. The Company is experiencing softness in some Digital Imaging end markets, particularly in semiconductor inspection and 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 inspection, which is affecting sales growth. Net income in the Digital Imaging Business was $2.5 million in the third quarter, up 30% from the same period last year. Included in net income for the quarter is a loss from the Company's Digital Cinema initiative of $0.9 million, or 5 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. . The Semiconductor Business posted revenue of $12.3 million in the third quarter, down 36% compared to the third quarter of 2004, which was a peak period for the broader semiconductor marketplace. Although Management was planning for lower shipments to two significant customers in the quarter, the deliveries were lower than expected as these customers continued to see softness in their end markets. Net income was $0.5 million, down 85% from the same quarter in 2004. The Semiconductor Business backlog increased during the third quarter due to a general increase in orders from existing customers as well as orders from new 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. customers. The Company continues to provide new MEMS customers with sampling prototype and qualification products and expects the staggered launch of MEMS production to increase orders and revenue through 2006. Overall gross margins in the quarter were 43.4%, down 2 percentage points from the third quarter of 2004 and within the Company's target range of 40% to 45%. In the Digital Imaging Business gross margins were 52.8%, up slightly from the same period last year. In the Semiconductor Business, gross margins decreased by 15.7 percentage points compared to the same quarter last year 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 product mix. Adjustments to the Company's Cost Structure To adjust the Company's cost structure to its present revenue level, while still satisfying the business model, the Company is reducing staffing levels by 7% to 9% from the start of the third quarter through attrition, layoffs and non-renewal of contracts. This includes a reduction in staffing levels of approximately 55 to 60 employees subsequent to the end of the third quarter. Management expects employee severance and termination benefits costs of approximately $700,000 in the fourth quarter of 2005 and annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. cost savings of about $3.0 million per year. A significant portion of the reduction in staffing levels occurred in the Semiconductor Business. The total number of employees at the location after the changes is expected to be approximately 360 down from a peak of about 440 employees at the beginning of the year. Digital Cinema Update The Company previously reported on its efforts to resolve a technical issue relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc an optical component within the Origin camera. Work on this issue progressed at a high priority within the Company during the quarter. The improvements, demonstrated to date on a limited number of sample cameras, allow the cameras to operate over a broader range of shooting conditions. Cameras are expected to be available for selected rental projects early in 2006. During the time that the Company has spent resolving this technical issue the staff in 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. has continued their work in other areas. The Company continues to earn revenue from the rental of other equipment at the DALSA Digital Cinema Center, including high definition digital camera equipment. Customers continue to use the Origin camera on several test shoots to evaluate the camera for potential revenue generating projects. This has included the preparation and review with customers of quotes for the rental of the camera and related equipment. The industry continues to progress on establishing workflow required for the post-production of the images produced by the Origin camera, with recent announcements of new 4K workflow coming on-line. Recently, Origin footage was featured in the first international demonstration of real-time collaborative 4K digital workflow In print publishing, using the computer to lay out text and illustrations prior to creating film negatives for every page or going directly to plate. Prior to digital workflow, the typesetting and pre-press stages were far more time consuming and labor-intensive. between San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. and Japan in September. Financial Goals Due to continued softness in some of the Company's end markets, Management expects revenue in the fourth quarter to be in the range of $43.5 to 47.5 million, which is lower than the Company's previous goal of $53 to $58 million. Earnings are expected to be at a similar level as the third quarter of 2005, less employee severance and termination benefits costs. For further detail, please refer to the Third 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_2005Q3_release.pdf Investor Conference Call A conference call to discuss the results will be held this afternoon, Thursday October 27, 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/102705/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: 416-850-9150 Toll-Free Access: 1-866-809-4939 Instant Replay Access information: Local Access: 402-220-7737 Toll-Free Access: 1-800-766-3394 Passcode: 1514480 Expiry Date: November 9, 2005 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 (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. 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. 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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