BTU INTERNATIONAL INC. designs manufacturers sells and services thermal processing equipment and related process controls for use in the electronics the power generation and other industries. It is the major supplier of solder reflow systems used in printed circuit board surface mount applications. It is a principal worldwide supplier of systems used in: low temperature curing/encapsulation; hybr id integrated circuit manufacturing; integrated circuit packaging sealing and mounting; and processing multi-chip modules. Btu International Inc. has a market cap of $47.2 million; its shares were traded at around $5.14 with and P/S ratio of 0.6.
Highlight of Business Operations:Selling, General and Administrative (SG&A) SG&A expenses decreased by $1.7 million or 26.3% from $6.4 million in Q3 2008 to $4.7 million in Q3 2009. Approximately half of this Q3 2009 decrease versus Q3 2008 occurred in commission expense as the result of decreased revenue. The other half of the Q3 2009 reductions versus Q3 2008 occurred in each of the expense functions of service, sales and administration as the Company took several cost reduction actions to reduce expenses. SG&A expenses for the first nine months of 2009 versus the same period in 2008 decreased by $4.3 million or 24.2% from $17.7 million to $13.4 million. This reduction was primarily due to lower commissions on decreased sales and lower expenses in the Companys service, sales and administrative functions as a result of the aforementioned cost reduction actions.
Foreign Exchange loss The foreign exchange loss in Q3 2009 was $4,000 as compared to $151,000 in Q3 2008. For the first nine months of 2009 and 2008 foreign exchange losses were $ 239,000 and $422,000, respectively. The Companys primary exposure to foreign exchange losses result from U.S. dollar denominated balance sheet accounts recorded at the Companys China and UK operations.
Income Taxes During the three and nine months ended September 27, 2009, we recorded an income tax provision of approximately $ 238,000 and $419,000, respectively as compared to $197,000 and $603,000 respectively for the three and nine months ended September 28, 2008. The Companys income tax provision primarily relates to income and withholding taxes related to our China operations.
As of September 27, 2009, the Company had $24.8 million in cash and cash equivalents, a decrease of $2.7 million versus $27.5 million at the end of 2008.
During the nine months ended September 27, 2009, the Company used net cash resources of approximately $1.6 million for operating activities. The use of cash was primarily the result of a net loss of $10.7 million, a $1.1 million decrease in accounts payable, and a $0.7 million decrease in current liabilities; offset by a $4.1 million decrease in accounts receivable, adding back depreciation, amortization and stock based compensation of $2.5 million, a $3.8 million decrease in inventory and a $0.5 million decrease in other current assets.
On March 30, 2006, the Company entered into a mortgage note that is secured by its real property in Billerica, MA. The amount of the mortgage note executed was $10 million. The mortgage note requires monthly payments of $76,280, which includes interest calculated at the rate of 6.84% per annum. This mortgage note payable has a balloon payment of $6.8 million due and payable at maturity on December 23, 2015. The mortgage note had an outstanding balance at September 27, 2009 of approximately $9.1 million.
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