Waterloo, Ontario, January 31, 2008 - DALSA Corporation (TSX:DSA), an international leader in high performance digital imaging and semiconductors, today reported revenues of $47.3 million for the quarter ended December 31, 2007, and net income of $2.3 million or $0.12 per share, diluted. The following table summarizes the key results for the fourth quarter of 2007 and compares them to the same quarter of 2006:

* percentage points

“Our results this quarter are a strong indication that we are on our way to returning the company to its traditional levels of profitability,” commented Brian Doody, Chief Executive Officer of DALSA Corporation. “In our core businesses, we are seeing strong product demand, not only in key areas such as flat panel display and MEMS, but across the board. I am also pleased to report that the initiatives we recently undertook to improve our operating results have begun to have a positive impact on gross margins and profitability. Furthermore, our record order backlog gives me confidence about our prospects in 2008.”

“I am happy to report that in our Digital Cinema business our Origin cameras are now available in the upgraded Origin II platform,” added Doody. “The enhancements to image quality and usability separate us further from all other digital cinematography cameras. With bookings in place for our enhanced stable of cameras, I look forward to 2008 as our year for Digital Cinema market success.”

In the fourth quarter, Digital Imaging revenues were $26.8 million, up 18.4% from the third quarter of this year. Several large and long awaited flat panel display capital equipment contracts were awarded to our customers in the fourth quarter, driving orders for delivery of our cameras and frame grabber products in the fourth quarter and into the first half of 2008. Due to increased sales and improved product mix, standard product margins in the quarter were 53.5%, down 1.4 percentage points from the fourth quarter of 2006, but higher than the previous three quarters. Net earnings in Digital Imaging were $2.6 million, representing 9.8% of revenue. The division exited the quarter with a strong order backlog of $28.5, up $4.1 million from the third quarter of this year. 

Revenues in our Semiconductor business were $20.1 million, up 20.9% from the third quarter of 2007. MEMS revenues were a record $5.7 million, fueled by a ramp up of shipments of products to new MEMS customers. We also benefited from strong shipments to a large CMOS wafer customer who, as we had announced in December, recently placed several large orders for delivery in Q4 and throughout 2008. Gross margins rebounded in the quarter to 35.2%, up 8.6 percentage points from the same quarter last year. The increase is due to higher sales levels, more favourable product mix, cost reductions, and improved yield. Net income in the Semiconductor Business was $1.5 million, the highest level since the second quarter of 2006. The backlog at the end of the quarter was $51.4 million, up $12.3 million from the third quarter. This increase is primarily due to two large orders in MEMS and CMOS wafer processing that we announced in December as well as two new image sensor contracts in the area of photogrammetry and professional digital still cameras.

In the Digital Cinema unit, revenues were $0.4 million, down approximately $0.1 million from the third quarter of 2007. The majority of the revenue came from the rental of HD/SD equipment. The division incurred a net loss of $1.8 million, $0.3 million lower than the third quarter of 2007.   

Cash provided by operations was $4.5 million in the fourth quarter of 2007, an increase of $2.1 million over the third quarter. After property and equipment additions we reported a free cash flow of $4.0 million in the current quarter. 

In the fourth quarter, as part of the normal course issuer bid we announced in August, we repurchased and cancelled 358,711 common shares of the Company at a weighted average purchase price of $8.44. In total, we have repurchased and cancelled 384,722 shares, representing approximately 2% of the outstanding shares of the company, at a weighted average purchase price of $8.56.

For further detail, please refer to the fourth quarter 2007 Financial Statements, accompanying notes, and Management’s Discussion and Analysis at the DALSA website. The address is /public/corp//investor/2007/DSA_2007Q4_release.pdf

Investor Conference Call
A conference call to discuss the company’s fourth quarter 2007 financial results will be held this afternoon at 5:00pm ET. The conference call, followed by the question and answer period, will be broadcast live and open to anyone interested in listening at http://events.onlinebroadcasting.com/dalsa/013108/index.php.

The phone numbers for those who wish to participate in the question and answer period are as follows:

Live Conference Access Information:
Local Access: 416-641-6130
Toll-Free Access: 866-540-8136

Instant Replay Access information:
Local Access: 416-695-5800
Toll-Free Access: 800-408-3053
Passcode: 3247760
Expiry Date: Feb 07, 2008

About DALSA Corporation
DALSA is an international leader in high performance digital imaging and semiconductors with approximately 1000 employees world-wide. Established in 1980, the company designs, develops, manufactures, and markets digital imaging products and solutions, in addition to providing semiconductor products and services. DALSA's core competencies are in specialized integrated circuit and electronics technology, software, and highly engineered semiconductor wafer processing. Products and services include image sensor components (CCD and CMOS); electronic digital cameras; vision processors; image processing software; and semiconductor wafer foundry services for use in MEMS, high-voltage semiconductors, image sensors and mixed-signal CMOS chips. DALSA is listed on the Toronto Stock Exchange under the symbol “DSA” and has its corporate offices in Waterloo, Ontario, Canada.

For more information, please contact:

Patrick Myles
Director, Corporate Communications
DALSA Corporation
Tel: (519) 886-6001 Ext. 2177
Fax: (519) 886-3972
E-mail: [email protected]
Internet: www.dalsa.com

Some of the statements in this presentation, including those relating to the company’s strategies and other statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, or similar expressions, are forward-looking statements within the meaning of securities law. Actual results may differ materially from those currently anticipated. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Important factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements are detailed from time to time in DALSA’s periodic reports filed with the Ontario Securities Commission and other regulatory authorities. Investors should read review the Business Risks and Prospects sections of the DALSA 2006 annual Management’s Discussion and Analysis (“MD&A”) to understand the assumptions, risks and uncertainties inherent in forward looking information or statements. DALSA has no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.