REDMOND, WA--(Marketwire - Aug 1, 2012) - Data I/O Corporation (NASDAQ: [ DAIO ]), the leading provider of e-MMC, Flash and Microcontroller device programming and IP management solutions used in wireless, consumer electronics and automotive electronics, today announced financial results for the second quarter ended June 30, 2012.

Highlights

• Revenue of $5.4 million and a loss of $57,000 for the quarter
• Backlog of $1.1 million at end of quarter
• Added a new director, Brian Crowley, CEO of Bsquare Corporation
• Revenue increased $1.7 million over first quarter 2012

Financial Results
Revenues for the second quarter of 2012 were $5.4 million, down 22 percent compared with $6.8 million in the second quarter of 2011. Revenues were up from the $3.7 million in the first quarter of 2012. Operating loss for the second quarter was $482,000. We received tax and interest refunds from German tax authorities of $425,000. Net loss in the second quarter of 2012 was $57,000, or ($0.01) per share, compared with net income of $398,000 or $0.04 per diluted share, in the second quarter of 2011. 

The Company believes the decline in orders and revenue relates primarily to reduced capital spending resulting from a downturn in Asia-based electronics manufacturing and economic uncertainty related to the European sovereign debt situation. On a regional basis, Asia had the largest revenue decline dropping 59%, while Europe declined 4% and the Americas increased 13% compared to revenues in the second quarter of 2011. Data I/O ended the second quarter with a backlog of $1.1 million, compared to $1.4 million at the end of the second quarter of 2011 and $1.6 million at the end of the previous quarter on March 31, 2012. 

Orders for the second quarter of 2012 were $5.2 million compared with $7.3 million in the second quarter of 2011. On a regional basis, orders in Asia and Europe were down 63% and 21% compared to the second quarter of 2011; however, orders from the Americas were up 19% compared to the second quarter of 2011.

"We were pleased with the performance of our new channels in South America," stated Fred Hume, President and CEO. "Compared to the first quarter of 2012, orders increased by almost $1 million, with Americas up $662,000 and Europe up $529,000, but Asia having a further decline of $244,000. We were pleased to see programming center orders for automated equipment as those orders represent a return of capacity related demand." 

Gross margin as a percentage of sales in the second quarter of 2012 was 54.9%, compared with 58.5% in the second quarter of 2011. The decrease compared to the second quarter of 2011 was primarily due to the decreased sales volume in relation to fixed manufacturing costs offset in part by favorable variances. Gross margin improved by 2 percentage points compared to 52.8% in the first quarter of 2012, primarily due to the sales volume increase.

Operating expenses decreased by $68,000 in the second quarter of 2012 compared to the same period in 2011. Research and Development increased by $152,000 in the second quarter of 2012 compared to the same period in 2011 due to costs related to the Azido initiative, less engineering charged to operations, and higher patent related costs, offset in part by a reduction in consultants and contractors expenses. Selling, General and Administrative expenses declined $219,000 primarily attributable to lower professional fees, lower incentive compensation, offset by higher sales commissions related to sales channel mix.

Income taxes for the quarter reflect a tax refund of $318,000 that was received from Germany as the Company prevailed in issues from the late 1990's related to an acquisition. These refunds resulted in associated interest income of $107,000.

The Company's cash position at June 30, 2012 decreased during the second quarter to $11 million. The use of cash was primarily attributable to funding a $1.7 million increase in accounts receivable to $3.6 million at June 30, 2012. Inventories were at $4.6 million at June 30, 2012, up from $4.5 million at March 31, 2012. Deferred revenue was $1.4 million at June 30, 2012, compared to $1.2 million at March 31, 2012. This increase was primarily due to a PS system shipped, but not yet recognizable as revenue. The Company remains debt free. As of June 30, 2012, the Company had 7.7 million shares outstanding.

"As previously announced, we were pleased to add Brian Crowley, CEO of Bsquare Corporation, to the Board of Directors," said Fred Hume. "His extensive executive management experience and knowledge of the software industry and the device programming market including alternative methods to socketed programming makes him a valuable addition to our Board."

Conference Call Information
A conference call discussing the second quarter and 2012 financial results will follow this release today at 2 p.m. Pacific Time/5 p.m. Eastern Time. To listen to the conference call, please dial (612) 234-9960 passcode: DAIO. A taped replay will be made available approximately one hour after the conclusion of the call and will remain available for one week. To access the replay, please dial (320) 365-3844, access code: 255212. The conference call will also be simultaneously web cast over the Internet; visit the News and Events section of the Data I/O Corporation website at [ http://www.dataio.com ] to access the call from the site. This web cast will be recorded and available for replay on the Data I/O Corporation website approximately two hours after the conclusion of the conference call.

About Data I/O Corporation
Celebrating 40 years of expertise in delivering intellectual property to programmable devices, Data I/O offers complete, integrated manufacturing solutions in wireless, automotive, programming center, semiconductor, and industrial control market segments for OEM, ODM, EMS and semiconductor companies. Data I/O is the leader in programming and provides hardware and software solutions for turn-key programming and device testing services, as well as in-system (on-board), in-line (right before use at the SMT line), or in-socket (off-line) programming. These solutions are scalable for small, medium and large volume applications with different device mixes. Data I/O Corporation has headquarters in Redmond, Wash., with sales and services worldwide. For further information, visit the company's website at [ http://www.dataio.com ].

Forward-LookingStatement -- Safe Harbor
Statements in this news release concerning expected revenue, expected margins, expected income or loss, orders and financial positions, cash position, share repurchases, new products and any other statement that may be construed as a prediction of future performance or events are forward-looking statements which involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements. These factors include uncertainties as to ability to record revenues based upon the timing of product deliveries and installations, accrual of expenses, changes in economic conditions and other risks including those described in the Company's filings on Forms 10K and 10Q with the Securities and Exchange Commission (SEC), press releases and other communications.