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Delphax Reports Q3 Results, Record Revenue with 23% Increase

Wednesday, August 14, 2002

Press release from the issuing company

MINNEAPOLIS, Aug. 13 -- Delphax Technologies Inc. today reported record sales of $13.5 million for its third fiscal quarter ended June 30, 2002, a 23 percent increase from $11.0 million for the same period a year ago. Revenues from maintenance, spares and supplies increased 187 percent over the year-earlier period but were offset by a 67 percent decline in equipment revenues. As a result of the reduced equipment revenues and increased operating expenses primarily due to the acquisition of its Canadian subsidiary, the company reported a net loss of $458,000, or $0.07 per share, compared with net income of $452,000, or $0.07 per share for the year earlier quarter. "We continue to be adversely affected by the conservatism in capital goods acquisition rampant in the industry," said Jay Herman, chairman and chief executive officer. "We had originally expected to return to profitability in the second half of this fiscal year. The continued uncertainty in purchasing activity suggests that the recovery may not occur until the end of the calendar year. "Despite disappointing equipment sales, the third quarter was extremely positive in terms of our progress in carrying out our strategic plan to build future growth and profitability on the strength of the unique assets gained through our recent Canadian acquisition. In June, we announced an agreement with LexisNexis Matthew Bender, a leader in the legal publishing industry, which established the first major reference site for the Delphax high-speed CR Series publishing system. We also recorded our first sale of an RS330(TM) roll-fed digital print system to Bexar County, Texas, for the production of voter registration cards, tax statements, court documents, and other similar applications -- a whole new market for our roll-fed systems. "Furthermore, revenues from maintenance, spares and supplies rose to $11.2 million this quarter from $3.9 million in the third fiscal quarter a year ago and up from $9.8 million last quarter, signifying progress toward our strategic objective of increasing our service business to sustain future growth for the company. While most of the year over year increase was due to incremental revenues generated by the company's recent Canadian acquisition, approximately $1.0 million of the increase was attributable to increased usage of the Imaggia installed base." For the nine months ended June 30, 2002, sales increased 17 percent to $38.4 million from $32.8 million a year earlier. The company reported a net loss of $399,000, or $0.06 per share, for the nine months, compared with net income of $1.1 million or $0.18 per share, for the same period a year ago.




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