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Delphax Technologies Reports Profitable Third Quarter

Press release from the issuing company

MINNEAPOLIS, Aug. 3 -- Delphax Technologies Inc. today reported net sales of $13.2 million for its third fiscal quarter ended June 30, 2005, an increase of 4.5 percent from $12.6 million for the same period in fiscal 2004. Third-quarter net income was $288,000, or $0.05 per share, compared with a net loss of $451,000, or $0.07 per share, for the third quarter of fiscal 2004. For the first nine months of fiscal 2005, net sales were $39.0 million, compared with $41.5 million in the same period last year. Net income was $31,000, or $0.00 per share, vs. $289,000, or $0.05 per share, in the first nine months of 2004. "We believe our third-quarter performance is further evidence that we have been able to adjust for the unusually slow economic recovery of our industry," said Jay Herman, chairman and chief executive officer. "We have taken the steps we felt necessary to operate profitably within this difficult environment, at the same time working to meet all of the critical challenges that go with entering a new, larger market with major new products. While the broad market recovery continued to be limited during our third quarter, we are pleased to be able to report our first year-to-year improvement in service- related revenues in the last five quarters. "We've managed our expenses to the point where we've been able to show profitability in the second and third quarters of this year even at the depressed level of equipment revenues. We believe we've been able to do this without undermining development and marketing efforts that are essential to our longer-term strategic success in the emerging commercial digital printing marketplace." Expense reductions accounted for most of the favorable swing of $920,000 in the company's third-quarter operating income line -- from an operating loss of $246,000 in the third quarter of fiscal 2004 to operating income of $674,000 in the third quarter this year. Included in third-quarter results was the sale of a high-speed CR Series press to Toray Engineering, Delphax Technologies' new distributor in Japan. Toray purchased the press -- the first CR Series press sold in Japan -- to demonstrate its capabilities to potential Japanese commercial printing customers. Delphax Technologies Inc. will discuss its third quarter results in a conference call for investors and analysts today, Wednesday, Aug. 3, 2005, at 3:30 p.m. Central Time. To participate in the conference call, please call 1-303-205-0066 shortly before 3:30 p.m. Central Time and ask for the DELPHAX conference call. To listen to a taped replay of the conference, call 1-303-590-3000 and enter the pass code 11036637#. The replay will be available beginning at 5:30 p.m. on Aug. 3, and will remain active through Aug. 17, 2005.