Xerium Technologies Inc. (XRM) filed Quarterly Report for the period ended 2009-06-30.
Xerium Technologies is a leading global manufacturer and supplier of two products used primarily in the production of paper: clothing and roll covers. The company which operates around the world under a variety of brand names owns a broad portfolio of patented and proprietary technologies to provide customers with tailored solutions and products integral to production all designed to optimize performance and reduce operational costs. Xerium Technologies Inc. has a market cap of $55.3 million; its shares were traded at around $1.13 with and P/S ratio of 0.1.
Highlight of Business Operations:
On December 29, 2008, we were notified by the NYSE that we were not in compliance with two NYSE standards for continued listing of our common stock on the exchange because the average closing price of our common stock was less than $1.00 per share over a consecutive 30 trading day period, and our average total market capitalization was less than $75 million over the same period and our most recently reported stockholders’ equity was less than $75 million.
With respect to the $1.00 minimum price standard, we initially had six months from the date of receipt of the notification from the NYSE to bring our share price and average share price over $1.00. However, the NYSE suspended the $1.00 minimum price requirement through June 30, 2009. On July 8, 2009, we announced that we were notified by the NYSE that because our closing price and average share price for the 30 days ended June 29, 2009 was above $1.00, we are no longer considered to be below the $1.00 continued listing criterion. However, the Company’s stock price has since varied above and below $1.00 and, should we fall out of compliance again, we would have six months to regain compliance.
The Company has 18 months from the original non-compliance notification date on December 29, 2008 in which to regain compliance with the NYSE’s revised $50 million market capitalization and $50 million stockholders’ equity requirement. Failure to make progress consistent with the plan or to regain compliance with the continued listing standards could result in our common stock being delisted from the NYSE.
The level of research and development spending is driven by market demand for technology enhancements, including both specific customer needs and general market requirements, as well as by our own analysis of applied technology opportunities. With the exception of purchases of equipment and similar capital items used in our research and development activities, all research and development is expensed as incurred. Research and development expenses were $2.7 million and $3.2 million for the three months ended June 30, 2009 and 2008, respectively.
Currency fluctuations have a greater effect on the level of our net sales than on the level of our income from operations. For example, for the three months ended June 30, 2009 as compared with the three months ended June 30, 2008, the change in the value of the U.S. Dollar against the currencies we conduct our business in resulted in currency translation decreases in net sales and income from operations of $17.0 million and $2.0 million, respectively. Although the results for the three months ended June 30, 2009 reflect a period in which the value of the U.S. Dollar increased against the currencies in which we conduct the majority of our non-U.S. Dollar denominated business as compared to the three months ended June 30, 2008, we would expect a similar but opposite effect in a period in which the value of the U.S. Dollar decreases. For any period in which the value of the U.S. Dollar changes relative to other currencies, we would expect our income from operations to be proportionately affected less than our net sales.
During the first quarter of 2009, we continued our program of streamlining our operating structure and recorded restructuring expenses of approximately $0.7 million in connection therewith. Additionally, during 2009 we sold our rolls manufacturing facility in Sweden at a gain of approximately $1.2 million, which was partially offset by approximately $0.6 million of costs incurred to continue with actions related to the closure of manufacturing facilities announced prior to the first quarter of 2009. During the second quarter of 2009, essentially all of the $1.0 million of restructuring expenses we recorded were related to streamlining our operating structure. We expect to incur restructuring expenses of approximately $3 million during the remainder of 2009, primarily related to continuing our program of streamlining our operating structure.
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