DALSA announces initiatives to improve operating results

SEPTEMBER 7, 2007--DALSA Corporation (Waterloo, ON, Canada) has announced plans to increase the profitability of its core operations through several initiatives.

Sep 7th, 2007

SEPTEMBER 7, 2007--DALSA Corporation (Waterloo, ON, Canada; www.dalsa.com), an international leader in high performance digital imaging and semiconductors, has announced plans to increase the profitability of its core operations through several specific initiatives. The goal is to facilitate net earnings of greater than 10% in the digital imaging and semiconductor businesses moving into 2008. In the two core businesses, the company will focus on products that provide margins necessary to support the R&D, marketing, and sales efforts that will fuel continued growth.

Within digital imaging, the company will begin to divest its operations in Colorado Springs, CO, USA. The company will immediately explore strategic alternatives for the x-ray imaging business activities that currently take place at the Colorado location. In addition, the company will transfer production and R&D related to industrial products to other DALSA facilities, where it will be carried out more efficiently and at a lower cost. This will result in a net reduction in staffing levels. The company will continue to participate in Life Sciences markets with existing and future products, and will be exiting only certain camera products that combine non-strategic x-ray detection with certain complex and costly optics components.

Commented Brian Doody, CEO of DALSA, "Despite our strong and growing brand, product, and technology position in our digital imaging and semiconductor businesses, we are anticipating flat to slightly negative sales growth in the short term, due mainly to the impact of foreign exchange and softness in some key end markets. However, with the planned changes, including those highlighted today, we expect to increase the profitability of our core businesses heading into 2008. We have an excellent and valuable team in Colorado Springs, which has created assets that include attractive technologies and applications. However, the development of those assets as a line of business would distract management from concentrating on more strategic growth opportunities within digital imaging."

To reduce overall operating costs within the corporation, certain infrastructure functions will become more centralized. This action will reduce duplication of efforts among the business units in administrative areas and allow business-unit management to concentrate on important value-adding activities with customers, products, and technology.

One of the impacts of the above changes will be the reduction of the workforce in the digital imaging and semiconductor businesses by approximately 8% to 9% compared to that in place at end of 2Q07, with the staff reductions already underway at several locations through a combination of attrition, retirement, and selective termination. Certain assets, including equipment and inventory, will be revalued as a result of changes in product offerings and focus. Charges related to this restructuring will be heavily dependent on the final structure of the divestiture of the Colorado Springs location and will be reported and described with the release of the company's third-quarter 2007 results at the end of October.

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