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Aehr Test Systems Reports Operating Results (10-Q)

October 14, 2009 | About:
10qk

10qk

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Aehr Test Systems (AEHR) filed Quarterly Report for the period ended 2009-08-31.

Aehr Test Systems develops manufactures and sells systems which aredesigned to reduce the cost of testing DRAMs and other memory devices perform reliability screening or burn-in of complex logic and memory devices and enable IC manufacturers to perform test and burn-in of bare die. Leveraging its expertise as a long-time leading provider of burn-in equipment with over 2000 systems installed worldwide the Company has developed and introduced two innovative product families the MTX system and the DiePak-Registered Trademark- carrier. Aehr Test Systems has a market cap of $10.06 million; its shares were traded at around $1.18 with and P/S ratio of 0.47.

Highlight of Business Operations:

Approximately 81%, 15% and 4% of our net sales for fiscal 2009 were

denominated in U.S. Dollars, Japanese Yen and Euros, respectively. Although a

large percentage of net sales to European customers is denominated in U.S.

Dollars, substantially all sales to Japanese customers are denominated in Yen.

Because a substantial portion of our net sales is from sales of products for

delivery outside the United States, an increase in the value of the U.S. Dollar

relative to foreign currencies would increase the cost of our products compared

to products sold by local companies in such markets. In addition, since the

price is determined at the time a purchase order is accepted, we are exposed to

the risks of fluctuations in the U.S. Dollar exchange rate during the lengthy

period from the date a purchase order is received until payment is made. This

exchange rate risk is partially offset to the extent our foreign operations

incur expenses in the local currency. To date, we have not invested in

instruments designed to hedge currency risks. Our operating results could be

adversely affected by fluctuations in the value of the U.S. Dollar relative to

other currencies.





Three Months Ended

August 31,

-

2009 2008

- -



Net sales. . . . . . . . . . . . . . . . . 100.0 % 100.0 %

Cost of sales. . . . . . . . . . . . . . . 104.5 49.2

- -

Gross (loss) profit. . . . . . . . . . . . (4.5) 50.8

- -

Operating expenses:

Selling, general and administrative. . . 103.5 21.5

Research and development . . . . . . . . 74.3 15.3

Gain on sale of bankruptcy claim . . . . (259.3) -

- -

Total operating expenses . . . . (81.5) 36.8

- -

Income from operations . . . . . . . . . . 77.0 14.0



Our operations and performance depend significantly on worldwide economic

conditions. The current financial turmoil affecting the banking system and

financial markets has resulted in a tightening of the credit markets and a

weakening global economy which are contributing to slowdowns in the

semiconductor manufacturing industry in which we operate. Specifically, we

have experienced a lengthening of the sales cycle and we have also received

requests from some of our customers to defer delivery of equipment.

Difficulties in obtaining capital and deteriorating market conditions pose a

risk that some of our customers may not be able to obtain necessary financing

on reasonable terms which could result in lower sales for the Company. For

example, prior to the Spansion bankruptcy, Spansion accounted for approximately

80% of our revenues. Since declaring bankruptcy, Spansion has accounted for

less than 5% of our revenues. Customers with liquidity issues may lead to

additional bad debt expense for the Company. These conditions may also

similarly affect our key suppliers, which could impact their ability to deliver

parts and result in delays on our products.



The semiconductor manufacturing industry is highly concentrated, with a

relatively small number of large semiconductor manufacturers and contract

assemblers accounting for a substantial portion of the purchases of

semiconductor equipment. Sales to the Company's five largest customers

accounted for approximately 81% and 98% of its net sales in the three months

ended August 31, 2009 and 2008, respectively. Four customers accounted for

approximately 29%, 18%, 15% and 13% of the Company's net sales in the three

months ended August 31, 2009, respectively. One customer, Spansion Inc.,

accounted for approximately 88% of the Company's net sales in the three months

ended August 31, 2008. No other customers represented more than 10% of the

Company's net sales for either fiscal 2009 or fiscal 2008.



Approximately 72% and 61% of our net sales for fiscal 2009 and 2008,

respectively, were attributable to sales to customers for delivery outside of

the United States. We operate sales, service and limited manufacturing

organizations in Japan and Germany and a sales and support organization in

Taiwan. We expect that sales of products for delivery outside of the United

States will continue to represent a substantial portion of our future revenues.

Our future performance will depend, in significant part, upon our ability to

continue to compete in foreign markets which in turn will depend, in part, upon

a continuation of current trade relations between the United States and foreign

countries in which semiconductor manufacturers or assemblers have operations.

A change toward more protectionist trade legislation in either the United

States or such foreign countries, such as a change in the current tariff

structures, export compliance or other trade policies, could adversely affect

our ability to sell our products in foreign markets. In addition, we are

subject to other risks associated with doing business internationally,

including longer receivable collection periods and greater difficulty in

accounts receivable collection, the burden of complying with a variety of

foreign laws, difficulty in staffing and managing global operations, risks of

civil disturbance or other events which may limit or disrupt markets,

international exchange restrictions, changing political conditions and monetary

policies of foreign governments.



Approximately 81%, 15% and 4% of our net sales for fiscal 2009 were

denominated in U.S. Dollars, Japanese Yen and Euros, respectively. Although a

large percentage of net sales to European customers are denominated in U.S.

Dollars, substantially all sales to Japanese customers are denominated in Yen.

Because a substantial portion of our net sales is from sales of products for

delivery outside the United States, an increase in the value of the U.S. Dollar

relative to foreign currencies would increase the cost of our products compared

to products sold by local companies in such markets. In addition,



Read the The complete Report

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