Aetrium Inc. (ATRM, Financial) filed Quarterly Report for the period ended 2009-09-30.
Aetrium Inc. designs manufactures and markets a variety of electromechanical equipment used in the handling and testing ofmicroelectronic components including integrated circuits and other forms of electronic components. The company's primary focus is on high volume electronic component types and on the latest package designs. Aetrium's products are purchased primarily by semiconductor manufacturers and their assembly and test subcontractors and are used in the test assembly and packaging portion of semiconductor manufacturing. Aetrium Inc. has a market cap of $30 million; its shares were traded at around $2.83 with and P/S ratio of 1.7.
Selling, General and Administrative. Selling, general and administrative expenses for the nine months ended September 30, 2009 were $3.6 million compared with $5.0 million for the comparable period in 2008, a 27% decrease. Compensation costs decreased $0.7 million in 2009 primarily due to a workforce reduction implemented in December 2008, wage reductions for all employees implemented in January 2009 and the elimination of all profit-related incentives. Commissions expense, warranty expense and travel costs decreased $0.1 million, $0.2 million, and $0.3 million, respectively, due primarily to lower sales and reduced sales and service activities. Selling, general and administrative expenses for the three months ended September 30, 2009 were $1.3 million compared with $1.8 million for the comparable period in 2008, a 27% decrease. The decrease in 2009 was due primarily to lower wages, commissions and travel costs.
Research and Development. Research and development expenses for the nine months ended September 30, 2009 were $1.7 million compared with $2.3 million for the comparable period in 2008, a 27% decrease. Compensation costs decreased $0.2 million in 2009 primarily due to a workforce reduction implemented in December 2008, wage reductions for all employees implemented in January 2009 and the elimination of all profit-related incentives. Contract services decreased $0.3 million as such costs were reduced in response to lower sales levels. Travel expenses decreased $0.1 million due to cost containment efforts. Research and development expenses for the three months ended September 30, 2009 were $0.6 million compared with $0.8 million for the comparable period in 2008, a 14% decrease. The decrease in 2009 was due primarily to lower wages and travel costs. Research and development expenses represented 27.7% of total net sales for the nine month period ended September 30, 2009 compared with 15.8% of total net sales for the comparable period in 2008. New product development is an essential part of our strategy to gain market share. Over time, we expect to invest approximately 12% to 15% of our revenues in research and development, although we may exceed this range in periods of reduced revenues as was the case in fiscal year 2008 and the first nine months of 2009.
Income Taxes. We recorded an income tax benefit of $182,000 and $1,023,000 for the three and nine months ended September 30, 2009, respectively, and income tax expense of $148,000 and $43,000 for the three and nine months ended September 30, 2008, respectively. The effective tax rates of approximately 35% and 37% for 2009 and 2008, respectively, were based on the estimated annual effective tax rate for the entire year and reflect primarily the federal statutory rate of 34% plus estimated net state income taxes. The tax rate used in future periods may change based on our estimates of future pretax income or loss and other factors.
Cash and cash equivalents decreased by approximately $1.2 million in the nine months ended September 30, 2009. We used $1.2 million in cash to fund operating activities during this period. The major components of cash flows from operating activities were our net loss of $1.9 million, a $1.0 million increase in deferred income taxes, a $0.3 million increase in other current assets, a $0.2 million decrease in accounts payable and a $0.2 million decrease in other accrued liabilities, partially offset by $0.5 million in non-cash depreciation and share-based compensation expense, a $0.7 million decrease in accounts receivable, and a $1.2 million decrease in inventories. The increase in other current assets consists primarily of past due rents owing from a subtenant as described in Note 9 to our consolidated financial statements. Inventories and accounts payable decreased primarily due to significantly reduced inventory purchases in 2009 compared with the fourth quarter of 2008 in response to lower sales levels. The decrease in other accrued liabilities includes the payment of severance costs associated with a workforce reduction we implemented in December 2008 and a reduction in accrued warranty due to lower sales volume. Accounts receivable decreased primarily due to a significant decrease in net sales in the third quarter of 2009 compared with the fourth quarter of
Cash and cash equivalents increased by approximately $0.4 million in the nine months ended September 30, 2008. We generated $0.5 million in cash from operating activities during this period. The major components of cash flows from operating activities were our net income of $0.1 million, $0.4 million in non-cash depreciation and share-based compensation expense, and a $2.1 million decrease in accounts receivable, partially offset by a $1.3 million increase in inventories, a $0.3 million decrease in accounts payable, a $0.2 million decrease in accrued compensation, a $0.2 million decrease in deferred revenue, and a $0.1 million decrease in accrued no-charge equipment improvements. Accounts receivable decreased primarily due to a significant decrease in net sales in the third quarter of 2008 compared with the fourth quarter of 2007. Inventories increased due to selective increases of certain inventories in 2008 to meet anticipated customer delivery requirements, an increase in the number of demonstration equipment units used for new customer evaluations, and lower-than-anticipated net sales. Accounts payable decreased primarily due to reduced inventory purchases in the third quarter of 2008 compared with the fourth quarter of 2007. Accrued compensation decreased primarily due to lower profit-related incentives. Deferred revenue decreased to zero as revenue recognition criteria were satisfied for items that had been deferred at December 31, 2007 and there were no deferred revenue items at September 30, 2008. Accrued no-charge equipment improvements decreased due to the shipment of certain items accrued in prior periods. Net cash provided by investing activities in the nine months ended September 30, 2008 was not significant. Net cash used in financing activities in the nine months ended September 30, 2008 amounted to $0.1 million, primarily related to the repurchase of shares of common stock in connection with stock option exercises.
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Aetrium Inc. designs manufactures and markets a variety of electromechanical equipment used in the handling and testing ofmicroelectronic components including integrated circuits and other forms of electronic components. The company's primary focus is on high volume electronic component types and on the latest package designs. Aetrium's products are purchased primarily by semiconductor manufacturers and their assembly and test subcontractors and are used in the test assembly and packaging portion of semiconductor manufacturing. Aetrium Inc. has a market cap of $30 million; its shares were traded at around $2.83 with and P/S ratio of 1.7.
Highlight of Business Operations:
Net Sales. Net sales for the nine months ended September 30, 2009 were $6.0 million compared with $14.4 million for the same period in 2008, a 58% decrease. Net sales for the three months ended September 30, 2009 were $3.0 million compared with $5.5 million for the same period in 2008, a 45% decrease. Net sales in 2009 decreased across all our product lines as a result of the weak economic conditions and semiconductor equipment industry slowdown that began in 2008 and continued into 2009. Sales of test handlers were $2.9 million in the first nine months of 2009 compared with $9.2 million for the same period in 2008, a decrease of 69%. Sales of reliability test equipment products were $1.2 million in the first nine months of 2009 compared with $1.5 million in the same period in 2008, a decrease of 19%. Sales of change kits and spare parts were $1.9 million in the first nine months of 2009 compared with $3.6 million for the same period in 2008, a decrease of 49%.Selling, General and Administrative. Selling, general and administrative expenses for the nine months ended September 30, 2009 were $3.6 million compared with $5.0 million for the comparable period in 2008, a 27% decrease. Compensation costs decreased $0.7 million in 2009 primarily due to a workforce reduction implemented in December 2008, wage reductions for all employees implemented in January 2009 and the elimination of all profit-related incentives. Commissions expense, warranty expense and travel costs decreased $0.1 million, $0.2 million, and $0.3 million, respectively, due primarily to lower sales and reduced sales and service activities. Selling, general and administrative expenses for the three months ended September 30, 2009 were $1.3 million compared with $1.8 million for the comparable period in 2008, a 27% decrease. The decrease in 2009 was due primarily to lower wages, commissions and travel costs.
Research and Development. Research and development expenses for the nine months ended September 30, 2009 were $1.7 million compared with $2.3 million for the comparable period in 2008, a 27% decrease. Compensation costs decreased $0.2 million in 2009 primarily due to a workforce reduction implemented in December 2008, wage reductions for all employees implemented in January 2009 and the elimination of all profit-related incentives. Contract services decreased $0.3 million as such costs were reduced in response to lower sales levels. Travel expenses decreased $0.1 million due to cost containment efforts. Research and development expenses for the three months ended September 30, 2009 were $0.6 million compared with $0.8 million for the comparable period in 2008, a 14% decrease. The decrease in 2009 was due primarily to lower wages and travel costs. Research and development expenses represented 27.7% of total net sales for the nine month period ended September 30, 2009 compared with 15.8% of total net sales for the comparable period in 2008. New product development is an essential part of our strategy to gain market share. Over time, we expect to invest approximately 12% to 15% of our revenues in research and development, although we may exceed this range in periods of reduced revenues as was the case in fiscal year 2008 and the first nine months of 2009.
Income Taxes. We recorded an income tax benefit of $182,000 and $1,023,000 for the three and nine months ended September 30, 2009, respectively, and income tax expense of $148,000 and $43,000 for the three and nine months ended September 30, 2008, respectively. The effective tax rates of approximately 35% and 37% for 2009 and 2008, respectively, were based on the estimated annual effective tax rate for the entire year and reflect primarily the federal statutory rate of 34% plus estimated net state income taxes. The tax rate used in future periods may change based on our estimates of future pretax income or loss and other factors.
Cash and cash equivalents decreased by approximately $1.2 million in the nine months ended September 30, 2009. We used $1.2 million in cash to fund operating activities during this period. The major components of cash flows from operating activities were our net loss of $1.9 million, a $1.0 million increase in deferred income taxes, a $0.3 million increase in other current assets, a $0.2 million decrease in accounts payable and a $0.2 million decrease in other accrued liabilities, partially offset by $0.5 million in non-cash depreciation and share-based compensation expense, a $0.7 million decrease in accounts receivable, and a $1.2 million decrease in inventories. The increase in other current assets consists primarily of past due rents owing from a subtenant as described in Note 9 to our consolidated financial statements. Inventories and accounts payable decreased primarily due to significantly reduced inventory purchases in 2009 compared with the fourth quarter of 2008 in response to lower sales levels. The decrease in other accrued liabilities includes the payment of severance costs associated with a workforce reduction we implemented in December 2008 and a reduction in accrued warranty due to lower sales volume. Accounts receivable decreased primarily due to a significant decrease in net sales in the third quarter of 2009 compared with the fourth quarter of
Cash and cash equivalents increased by approximately $0.4 million in the nine months ended September 30, 2008. We generated $0.5 million in cash from operating activities during this period. The major components of cash flows from operating activities were our net income of $0.1 million, $0.4 million in non-cash depreciation and share-based compensation expense, and a $2.1 million decrease in accounts receivable, partially offset by a $1.3 million increase in inventories, a $0.3 million decrease in accounts payable, a $0.2 million decrease in accrued compensation, a $0.2 million decrease in deferred revenue, and a $0.1 million decrease in accrued no-charge equipment improvements. Accounts receivable decreased primarily due to a significant decrease in net sales in the third quarter of 2008 compared with the fourth quarter of 2007. Inventories increased due to selective increases of certain inventories in 2008 to meet anticipated customer delivery requirements, an increase in the number of demonstration equipment units used for new customer evaluations, and lower-than-anticipated net sales. Accounts payable decreased primarily due to reduced inventory purchases in the third quarter of 2008 compared with the fourth quarter of 2007. Accrued compensation decreased primarily due to lower profit-related incentives. Deferred revenue decreased to zero as revenue recognition criteria were satisfied for items that had been deferred at December 31, 2007 and there were no deferred revenue items at September 30, 2008. Accrued no-charge equipment improvements decreased due to the shipment of certain items accrued in prior periods. Net cash provided by investing activities in the nine months ended September 30, 2008 was not significant. Net cash used in financing activities in the nine months ended September 30, 2008 amounted to $0.1 million, primarily related to the repurchase of shares of common stock in connection with stock option exercises.
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