MINNEAPOLIS, May 10, 2007 -- Delphax Technologies Inc., a global provider of high-speed digital printing systems, today reported near-break-even results for the second quarter and first half of fiscal 2007 in a continuation of its recovery from unusually deep losses in the second half of fiscal 2006. The company reported net sales of $11.3 million for the second quarter ended March 31, 2007, compared with $12.8 million for the same period a year earlier. Second-quarter operating income improved to $190,000 from $78,000 for the second quarter of fiscal 2006. The fiscal 2007 second-quarter net loss was $62,000, or $0.01 per share, compared with a net loss of $314,000, or $0.05 per share, for the second quarter of fiscal 2006. For the six months ended March 31, 2007, net sales were $23.0 million, compared with $25.6 million for the same period of fiscal 2006. Operating income increased to $456,000 from $388,000 for the first six months of fiscal 2006. The net loss was reduced to $15,000, or $0.00 per share, from $470,000, or $0.07 per share. "Having substantially tightened our cost structure, our dominant challenges in fiscal 2007 are to complete new financing and to staff our sales force so that we can execute our new refocused sales initiatives," said Dieter P. Schilling, president and chief executive officer. "We've made good progress on both fronts in recent weeks. "As we announced in late March, we have entered into an agreement with a fund managed by Whitebox Advisors, LLC, to provide $7 million of financing in two phases to address both short-term and long-term capital needs. After closing the first phase of the financing on March 26, 2007, we are working to close the second phase later this quarter or early in our fiscal fourth quarter. "Following the announcements of our improving financial results and our progress on new financing, we achieved what we regard as a recruiting breakthrough with the hiring of four strong, experienced sales professionals -- an essential step in carrying out our refocused sales approach. Our recovering financial performance appears to be restoring our credibility with prospective employees and customers concerned about the deep losses we reported in fiscal 2006." Fiscal 2007 second-quarter sales of maintenance, spares and supplies were $11.0 million, down from $11.2 million for the second quarter of fiscal 2006, but up sequentially from $10.7 million in the first quarter of fiscal 2007. Equipment sales were $322,000 for the fiscal 2007 second quarter, down from $1.6 million a year earlier and $947,000 in the fiscal 2007 first quarter. "While no major systems were sold during the second quarter," Schilling continued, "we did ship a CR2000 to a major European book publisher under an arrangement in which revenue will be recognized over the term of a five-year lease. We expect to complete the installation and acceptance process in the next few weeks and begin to see service and supplies revenue shortly thereafter." Gross margin for the second quarter of fiscal 2007 totaled $3.4 million compared with $4.1 million for the second quarter of fiscal 2006. The gross margin rate for the fiscal 2007 second quarter was 30 percent versus 32 percent for the same quarter last year. For the six months ended March 31, 2007, gross margin was $6.5 million compared with $8.1 million for the first six months of fiscal 2006. The gross margin rate for the first six months of fiscal 2007 was 28 percent compared with 32 percent for the same period last year. Operating expenses for the fiscal 2007 second quarter decreased 19 percent to $3.2 million from $4.0 million for the same quarter in fiscal 2006, reflecting the restructuring of the company at the end of fiscal 2006 and a continued focus on expense control and cash management. For the second consecutive quarter, the company achieved an operating profit -- $190,000 for the second quarter of fiscal 2007 compared with operating income of $78,000 for the second quarter of fiscal 2006. For the first six months of fiscal 2007, the company had operating income of $456,000 compared with $388,000 for the first six months of fiscal 2006. For the quarter ended March 31, 2007, the company recorded foreign exchange gains of $69,000 compared with foreign exchange losses of $133,000 for the same period in fiscal 2006. For the first half of fiscal 2007, the company recorded gains of $185,000 compared with losses of $228,000 for the first half of fiscal 2006. "We are pleased to be reporting better financial results than we did in fiscal 2006," Schilling said. "However, we know that we still have more work to do, particularly in getting our new sales team trained and working effectively in the field. We believe that once that happens, we will begin to see improved equipment sales results."