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Arrhythmia Research Technology Inc Reports Operating Results (10-Q)

August 16, 2010 | About:
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10qk

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Arrhythmia Research Technology Inc (HRT) filed Quarterly Report for the period ended 2010-08-16.

Arrhythmia Research Technology Inc has a market cap of $12.17 million; its shares were traded at around $4.55 with a P/E ratio of 30.33 and P/S ratio of 0.58. The dividend yield of Arrhythmia Research Technology Inc stocks is 2.64%. Arrhythmia Research Technology Inc had an annual average earning growth of 3.8% over the past 10 years.HRT is in the portfolios of Jim Simons of Renaissance Technologies LLC.
This is the annual revenues and earnings per share of HRT over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of HRT.


Highlight of Business Operations:

Revenue for the three months ended June 30, 2010 was $5,782,279 versus $5,371,439 for the three months ended June 30, 2009, an increase of 7.7%. Revenues related to the customization of the Company s SAECG product accounted for $50,000 in the three months ended June 30, 2010. Micron s medical sensors and snaps with silver surcharge revenue increased by $855,000 and high volume precision molded products and other miscellaneous sales decreased by $68,000. The increase in revenues from sensors and snaps is due to increased volume in sensors and higher silver surcharge. Revenue from the Micron Integrated Technology s (MIT) product life cycle management programs decreased $426,327. MIT s revenue is derived from the custom molding, precision metal machining and mold making activities. The revenue declines reflect timing delays with a defense industry product line and lower tooling sales partially offset by increases in medical molding and precision machining. RMDDx did not contribute to revenues for the three months ended June 30, 2010.

Revenue for the six months ended June 30, 2010 was $11,367,639 versus $10,054,893 for the six months ended June 30, 2009, an increase of 13%. Revenues related to the customization of the Company s SAECG product accounted for $100,000 in the six months ended June 30, 2010. Micron s medical sensors and snaps with silver surcharge revenue increased by $1,207,904 and high volume precision molded products and other miscellaneous sales decreased by $14,979. The increase in revenues from sensors and snaps is due to increased volume in sensors and higher silver surcharge. Revenue from the Micron Integrated Technology s (MIT) product life cycle management programs increased $19,822. MIT s revenue is derived from the custom molding, precision metal machining and mold making activities. The revenue increases reflect higher volume of defense industry products, custom molding and precision machining partially offset by lower tooling sales. RMDDx did not contribute to revenues for the six months ended June 30, 2010.

Cost of sales was $4,687,802 or 81.1% for the three months ended June 30, 2010 as compared to $4,496,306 or 83.7% for the same period in 2009. Cost of sales was $9,289,014 or 81.7% for the six months ended June 30, 2010 as compared to $8,235,447 or 81.9% for the same period in 2009. The reduction of costs remains a priority of management. The increased cost of silver negatively affects margins as the higher cost increases both the revenues and cost of sales. The cost of sales excluding silver has improved more than 35%. The cost improvements were the result of the ongoing lean manufacturing projects and capital investment. Management continues to investigate ways to improve the overall gross margin by elimination of low contribution products while increasing sales of higher margin products.

General and administrative expense was $671,862 for the three months ended June 30, 2010 as compared to $512,391 for the same period in 2009. The general and administrative expense was 11.6% of sales in the three months ended June 30, 2010 and 9.5% for the same period in 2009. General and administrative expense was $1,275,859 for the six months ended June 30, 2010 as compared to $1,087,895 for the same period in 2009. The general and administrative expense was 11.2% of sales in the six months ended June 30, 2010 and 10.8% for the same period in 2009. Approximately $80,000 was expended in the due diligence and transactional costs in the merger and acquisition activities in the three months ended June 30, 2010. The other increased expenses included bad debt expense, personnel costs, and RMDDx s travel and administrative expenses. As of the June 30, 2010 measurement date, the Company is not an accelerated filer; therefore, the expense related to auditor attestation for Section 404b of the Sarbanes-Oxley Act of 2002 will not be incurred in 2010.

Research and development expense was $47,138 for the three months ended June 30, 2010 as compared to $57,716 for the same period in 2009. The research and development expense was 0.8% of sales in the three months ended June 30, 2010 as compared to 1.1% in the same period in 2009. Research and development expense was $102,811 for the six months ended June 30, 2010 as compared to $126,463 for the same period in 2009. The research and development expense was 0.9% of sales in the six months ended June 30, 2010 as compared to 1.3% in the same period in 2009. Less than 50% of the expense was related to ART s SAECG software, Predictor™. The customization of the software is paid by ART s customers, and therefore is included as a cost of goods sold. The remaining portion of the research and development expense is associated with continued work on process improvements to Micron s sensor and snap product line. This work is expected to continue through the end of 2010.

Other income (expense), net was $144,647 versus expense of ($5,377) for the three months ended June 30, 2010 and 2009, respectively. Interest income in the period ended June 30, 2010 was offset by a gain on the disposal of assets of $1,413 compared with a gain on disposal of assets of $400 and interest expense of $10,081 associated with an equipment note in the period ended June 30, 2009. The acquisition of RMDDx resulted in a onetime non-cash gain of $146,288 in the period due to purchase accounting.

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