Data I/O Announces Second Quarter Results

REDMOND, WA -- (MARKET WIRE) -- Jul 24, 2008 -- Data I/O Corporation (NASDAQ: DAIO), the leading provider of manual and automated device programming systems, today announced financial results for the second quarter of 2008.

Revenues for the second quarter of 2008 were $8.0 million compared with $5.8 million in the second quarter of 2007, an increase of 39%. Compared to the first quarter of 2008, revenues for the second quarter of 2008 were up 30%. In accordance with U.S. generally accepted accounting principles (GAAP), net income for the second quarter of 2008 was $1.2 million, or $0.13 per diluted share, compared with a net loss of ($1.1) million, or ($0.13) per share for the second quarter of 2007.

Orders were $8.8 million, the highest level in 8 years. We experienced strong sales in our automated systems, especially from the Pro-Line RoadRunner product line and in the wireless segment. Operating expenses for the second quarter of 2008 were $3.5 million, including accrued bonuses of $300,000, compared with $3.9 million and no bonus accruals, in the second quarter of 2007. Gross margin was up $1.7 million due primarily to higher sales volume, restructure savings and product mix offset in part by unfavorable factory variances.

"We are particularly delighted with the sales performance during the second quarter," said Fred Hume, president and CEO. "This increased our backlog at the end of the second quarter to $2.5 million up from $1.5 million at the end of the first quarter, and positions us well going into the third quarter."

"We are extremely pleased to have introduced and delivered to a major automotive customer the Pro-Line RoadRunner XLF, an all new version of our RoadRunner family of on-line just-in-time programming systems," said Hume. This version is targeted at users of larger package size Flash based microcontroller devices, particularly in the automotive segment.

Conference Call Information

A conference call discussing the second quarter of 2008 financial results will follow this release today at 2:00 p.m. Pacific time/5:00 p.m. Eastern time. To listen to the conference call, please dial (612) 288-00340 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: 953414. The conference call will also be simultaneously webcast over the Internet; visit the News and Events section of the Data I/O Corporation website at to access the call from the site. This webcast 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

With over 35 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 provides hardware and software solutions for turnkey 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

Forward-Looking Statement

Statements in this news release concerning future results from operations, financial position, economic conditions, product releases 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 levels of orders, ability to record revenues, market acceptance of new products, changes in economic conditions and market demand, pricing and other activities by competitors, and other risks including those described from time to time in the Company's filings on Forms 10K and 10Q with the Securities and Exchange Commission (SEC), press releases and other communications.

                           DATA I/O CORPORATION

(in thousands except
 per share data)            Second Quarter           Six Months Ended
                        -----------------------  -------------------------
                         6/30/-  6/30/-  Percent   6/30/-  6/30/-  Percent
                          2008    2007   Change     2008     2007   Change
                        ------  ------  -------  -------  -------  -------
Net sales               $8,023  $5,778     38.9% $14,211  $11,806     20.4%
Gross margin             4,558   2,838     60.6%   8,320    6,158     35.1%
Gross margin as percent
 of sales                 56.8%   49.1%     7.7%    58.5%    52.2%     6.4%
Operating expenses:
  Research &
   development           1,166   1,286     -9.3%   2,265    2,657    -14.8%
  Selling, general and
   administrative        2,287   2,027     12.8%   4,315    4,565     -5.5%
  Provision for
   business restructure     (2)    632                 7      832
                        ------  ------           -------  -------
Operating income(loss)   1,107  (1,107)            1,733   (1,896)
  Non-operating income
   (expense)               115      31             2,163       41
                        ------  ------           -------  -------
Income(loss) from
 operations before
 taxes                   1,222  (1,076)            3,896   (1,855)
  Income tax
   expense(benefit)         19       3                52        9
                        ------  ------           -------  -------
Net income(loss)        $1,203  (1,079)          $ 3,844   (1,864)
                        ======  ======           =======  =======

                        ------  ------           -------  -------
Total diluted
 earnings(loss) per
 share                          $  0.13      (0.13)                    $    0.42        (0.22)
                                                ======    ======                      =======    =======

Diluted  weighted
  average  shares
  outstanding                          9,091      8,562                          9,062        8,527

                                          CONDENSED  BALANCE  SHEET
                                                    (in  thousands)
                                                                                  6/30/-    12/31/-
                                                                                      2008          2007
                                                                                -------    -------
Cash  and  cash
  equivalents                                                        $10,764    $  7,637
Accounts  receivable,
  net                                                                            6,938        5,299
Inventories                                                              5,061        4,980
Other  current  assets                                                255            323
Land,  building  and
  equipment                                                                2,240        2,257
Other  long-term  assets                                            122            124
                                                                                -------    -------
          Total  assets                                              $25,380    $20,620
                                                                                =======    =======

Current  liabilities                                          $  5,665    $  5,177
Long  term  debt                                                            302            357
Shareholders'  equity                                          19,413      15,086
                                                                                -------    -------
            liabilities  and
            equity                                                        $25,380    $20,620
                                                                                =======    =======

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