MINNEAPOLIS, Feb. 13 -- Delphax Technologies Inc. today reported that sharply increased service-related revenues lifted sales for the first quarter ended December 31, 2002, to a record $15.5 million, up 31 percent from $11.8 million a year earlier. Results for the quarter, however, include a $1.2 million restructuring charge related to the previously announced consolidation of the company's North American manufacturing and engineering operations in Mississauga, Ontario. The resulting net loss for the quarter was $1.1 million, or $0.18 per share, compared with net income of $0.6 million, or $0.10 per share, in the first quarter of 2002. The $1.2 million charge for restructuring expenses cut earnings by approximately $0.19 per share, the company said. As previously announced, the company expects to complete the consolidation of its North American manufacturing and engineering operations at its Canadian subsidiary by the end of calendar 2003, resulting in the elimination of annual operating expenses of more than $1.6 million. The expense reduction could have an impact on operating results as early as the company's fiscal 2003 third quarter ending June 30, 2003. First quarter sales of printing equipment were $3.2 million, an improvement from the prior quarter, but a significant decline from the $6.4 million for the same period a year ago, a reflection of the continued softness in capital goods purchases during the current period of economic uncertainty. Revenues from maintenance, spares and supplies increased 130 percent to $12.3 million from $5.3 million in the first quarter a year ago, primarily because of the company's December 2001 acquisition of its Canadian subsidiary, increased usage of the Imaggia installed base, and the on-going revenue generated by the company's new CR Series high-speed digital presses. "Despite continuing economic constraints on major capital purchases, our first quarter equipment sales were the strongest and most diversified since the first half of last year," said Jay Herman, chairman and chief executive officer. "In addition to our previously disclosed sale of a CR Series press to DP Direct Ltd, we are also pleased to report the sale of our first CR Series digital press to Modis Digitaldruck GmbH in Frankfurt, Germany, a highly regarded commercial publisher that has also ordered a second CR Series press to be delivered this summer. Check printing customers also contributed to our increased sales during the quarter -- a second Imaggia digital press to Relizon, and two new Checktronic digital printers and one Foliotronic finishing system to a customer in Mexico. "It's clear that even in an extremely limited market for equipment sales, our underlying business model is functioning. Despite a 50 percent year-to- year decline in equipment sales, we were still marginally profitable for the quarter, excluding the restructuring charge. "While we are encouraged by these developments, we continue to feel the impact of the economic slowdown on buying decisions and have not yet seen clear-cut evidence of a meaningful turnaround. We believe that our integration initiative and expanded product offering have positioned us well to capitalize on current opportunities as well as gain market share based on pent-up demand in a more certain economy."