Data I/O Announces Results for Third Quarter 2011
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Data I/O Announces Results for Third Quarter 2011

REDMOND, WA -- (MARKET WIRE) -- Oct 20, 2011 -- Data I/O Corporation (NASDAQ: DAIO), the leading provider of manual and automated device programming systems, today announced financial results for the third quarter ended September 30, 2011.

Highlights

Financial Results
Revenues for the third quarter of 2011 were $7.1 million, up 7 percent compared with $6.6 million in the third quarter of 2010 and $6.8 million in the second quarter of 2011. Europe was the company's strongest geographic region, with sales increasing 39% compared to the third quarter of 2010. On a product basis, sales increased 23% for Data I/O's automated systems, which were partially offset by a decline in non-automated systems compared to the third quarter of 2010. Americas continued to recover with 13% growth in the third quarter 2011, while Asia revenues were down following strong growth in the first and second quarters of 2011. Net income for the third quarter of 2011 was $130,000 or $0.01 per diluted share, compared with net income of $833,000, or $0.09 per diluted share, in the third quarter of 2010.

"Automotive business drove the European sales for the quarter," said Fred Hume, President and CEO. "The PS family with its rich feature and software options was the primary choice of automotive and programming center customers. We look forward to the November Productronica trade show in Munich, Germany, when we will be able to introduce new capabilities for our PS family."

Gross margin as a percentage of sales in the third quarter of 2011 was 55.9 percent, compared with 57.9 percent in the third quarter of 2010 and 58.5 percent in the second quarter of 2011. This gross margin decrease compared to the third quarter of 2010 was primarily due to the impact of increased direct materials cost as a result of the overall product mix. Operating expenses were $3.6 million compared to $2.9 million in the third quarter of 2010. This reflects approximately $250,000 of expense related to Azido, our new name for the software technology purchase we announced back in May, $200,000 of increased contractor and consultant related expense, and $128,000 less contract software engineering development costs charged to cost of sales.

Net non-operating expense of $165,000 included $178,000 of currency exchange volatility related expense primarily related to cash accounts denominated in US dollars in foreign subsidiaries and inter-company balances denominated in other currencies. Data I/O ended the quarter with a backlog of $1.3 million, compared to $1.7 million at September 30, 2010 and $1.4 million at the end of the second quarter of 2011.

The Company's cash position at September 30, 2011 increased $1.4 million during the quarter to $18.4 million. Accounts receivable decreased to $4.8 million at September 30, 2011 compared to $5.5 million at September 30, 2010 and $5.3 million at June 30, 2011 primarily due to improved collections. Inventories were at $3.8 million at September 30, 2011, down slightly from $3.9 million at both September 30, 2010 and June 30, 2011.

A share repurchase program was authorized with provisions to buy back up to $1 million dollars of stock over four quarters. The program will be established under a 10b5-1 plan under the Exchange Act to provide flexibility to make purchases throughout the period.

"We are pleased to report continued revenue growth for the quarter. The accelerated investment in our product initiatives continued in the third quarter, but accelerated spending will now be scaled back," Mr. Hume added. "During the third quarter, we were able to launch RoadRunner 3 and Factory Integration Software for the RoadRunner family, the first of our internal software development initiatives. The Company expects to reduce its use of contractors and consultants by over $250,000 in the fourth quarter compared to the third quarter. We continue to make good progress developing the use of and offerings for Azido. Overall, while we note the expressed uncertainty and lack of visibility discussed in the media for the electronics industry, we believe that our sales prospect funnels continue to be strong."

Conference Call Information
A conference call discussing the third quarter of 2011 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 (877) 941-2934. 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: 220446. 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
With almost 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-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, release schedules, 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.

- Summary Financial Data Attached -

                            DATA I/O CORPORATION                            
                   CONSOLIDATED STATEMENTS OF OPERATIONS                    
                  (in thousands, except per share amounts)                  
                                (UNAUDITED)                                 
                                                                            
                                  Three Months Ended    Nine Months Ended   
                                    September 30,         September 30,     
                                --------------------- --------------------- 
                                   2011       2010       2011       2010    
                                ---------- ---------- ---------- ---------- 
                                                                            
Net Sales                       $    7,051 $    6,605 $   20,943 $   19,448 
Cost of goods sold                   3,108      2,781      8,827      8,021 
                                ---------- ---------- ---------- ---------- 
  Gross margin                       3,943      3,824     12,116     11,427 
Operating expenses:                                                         
  Research and development           1,482        957      4,109      2,868 
  Selling, general and                                                      
   administrative                    2,101      1,912      6,490      5,725 
                                ---------- ---------- ---------- ---------- 
    Total operating expenses         3,583      2,869     10,599      8,593 
                                ---------- ---------- ---------- ---------- 
  Gain on sale of assets                 -         10          -         13 
                                ---------- ---------- ---------- ---------- 
    Operating income (loss)            360        965      1,517      2,847 
Non-operating income (expense):                                             
  Interest income                       13         13         45         30 
  Interest expense                       -         (3)        (2)        (9)
  Foreign currency transaction                                              
   gain (loss)                        (178)       (44)      (244)      (221)
                                ---------- ---------- ---------- ---------- 
  Total non-operating income                                                
   (loss)                             (165)       (34)      (201)      (200)
                                ---------- ---------- ---------- ---------- 
Income (loss) before income                                                 
 taxes                                 195        931      1,316      2,647 
Income tax (expense) benefit           (65)       (98)      (255)      (246)
                                ---------- ---------- ---------- ---------- 
Net income (loss)               $      130 $      833 $    1,061 $    2,401 
                                ========== ========== ========== ========== 
                                                                            
                                                                            
  Basic earnings (loss) per                                                 
   share                        $     0.01 $     0.09 $     0.12 $     0.27 
  Diluted earnings (loss) per                                               
   share                        $     0.01 $     0.09 $     0.11 $     0.26 
Weighted-average basic shares        9,270      9,018      9,159      8,917 
Weighted-average diluted shares      9,391      9,148      9,323      9,110 
                                                                            



                            DATA I/O CORPORATION                            
                         CONSOLIDATED BALANCE SHEETS                        
                      (in thousands, except share data)                     
                                                                            
                                                 (Unaudited)                
                                                September 30,  December 31, 
                                                    2011           2010     
                                               -------------- --------------
                                                                            
ASSETS                                                                      
CURRENT ASSETS:                                                             
  Cash and cash equivalents                    $       18,380 $       18,942
  Trade accounts receivable, net of allowance                               
   for doubtful accounts of $131 and $138               4,775          4,975
  Inventories                                           3,798          3,570
  Other current assets                                    456            528
                                               -------------- --------------
    TOTAL CURRENT ASSETS                               27,409         28,015
                                                                            
Property, plant and equipment - net                     1,201          1,256
Intangible software technology - net                    2,904               
Other assets                                               98            153
                                               -------------- --------------
    TOTAL ASSETS                               $       31,612 $       29,424
                                               -------------- --------------
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                        
  Accounts payable                             $        1,293 $        1,234
  Accrued compensation                                  1,234          1,578
  Deferred revenue                                      1,447          1,572
  Other accrued liabilities                               703            770
  Accrued costs of business restructuring                   -             58
  Income taxes payable                                     78            108
  Current portion long-term debt                            -             92
                                               -------------- --------------
    TOTAL CURRENT LIABILITIES                           4,755          5,412
                                                                            
Long-term other payables                                  305             47
Long-term debt                                              -              -
                                                                            
COMMITMENTS                                                                 
                                                                            
STOCKHOLDERS' EQUITY                                                        
  Preferred stock -                                                         
    Authorized, 5,000,000 shares, including                                 
     200,000 shares of Series A Junior                                      
     Participating                                                          
    Issued and outstanding, none                            -              -
  Common stock, at stated value -                                           
    Authorized, 30,000,000 shares                                           
    Issued and outstanding, 9,270,560 and                                   
     9,027,867 shares                                  23,534         22,172
Accumulated earnings (deficit)                          1,961            900
Accumulated other comprehensive income                  1,057            893
                                               -------------- --------------
    TOTAL STOCKHOLDERS' EQUITY                         26,552         23,965
                                               -------------- --------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $       31,612 $       29,424
                                               ============== ==============
                                                                            

CONTACT:

Joel Hatlen
Vice President and Chief Financial Officer
Data I/O Corporation
6464 185th Ave. NE, Suite 101
Redmond, WA 98052
(425) 881-6444

Email Contact

Hayden IR
Brett Maas
Managing Partner
(646) 536-7331 
Email: 
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Dave Fore
Client Manager & Senior Research Analyst
(206) 450-2151 
Email: 
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