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Bolt Technology Corp. Reports Operating Results (10-Q)

February 09, 2010 | About:
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10qk

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Bolt Technology Corp. (BOLT) filed Quarterly Report for the period ended 2009-12-31.

Bolt Technology Corp. has a market cap of $87.1 million; its shares were traded at around $10.02 with a P/E ratio of 11 and P/S ratio of 1.8.

Highlight of Business Operations:

For the six month period ended December 31, 2009, cash flow from investing activities was $1,328,000 due to proceeds received from matured short-term investments of $2,041,000, partially offset by a final RTS earn-out payment of $627,000 and capital expenditures of $86,000 for new and replacement equipment.

Consolidated sales for the six month period ended December 31, 2009 totaled $15,708,000, a decrease of $9,145,000 or 37% from the six month period ended December 31, 2008. Sales in all three reportable segments decreased: sales of seismic energy sources decreased by $3,490,000 (31%), sales of underwater cables and connectors decreased by $4,701,000 (46%), and sales of seismic energy source controllers decreased by $954,000 (29%). The above sales decreases are due to lower marine seismic exploration activity caused by the global economic slowdown.

Selling, general and administrative expenses decreased by $269,000 or 6% in the six month period ended December 31, 2009 from the six month period ended December 31, 2008, primarily due to expense reductions in the following areas: compensation costs ($136,000); freight out ($61,000); and travel and entertainment ($55,000).

Consolidated sales for the three month period ended December 31, 2009 totaled $8,675,000, a decrease of $4,915,000 or 36% from the three month period ended December 31, 2008. Sales in all three reportable segments decreased: sales of seismic energy sources decreased by $2,280,000 (34%), sales of underwater cables and connectors decreased by $2,235,000 (44%), and sales of seismic energy source controllers decreased by $400,000 (23%). The above sales decreases are due to lower marine seismic exploration activity caused by the global economic slowdown.

Selling, general and administrative expenses decreased by $14,000 or 1% in the three month period ended December 31, 2009 from the three month period ended December 31, 2008, primarily due to lower compensation costs ($81,000) and travel and entertainment expense ($45,000), partially offset by higher trade show expense ($107,000).

Management establishes the inventory valuation reserve by reviewing the inventory for items that should be reserved in full based on a lack of usage for a specified period of time and for which future demand is not forecasted and establishes an additional reserve for slow moving inventory based on varying percentages of the cost of the items. The reserve for inventory valuation at December 31, 2009 and June 30, 2009 was $763,000 and $651,000, respectively. At December 31, 2009 and June 30, 2009, approximately $2,264,000 and $1,777,000, respectively, of the raw materials and sub-assemblies inventory were considered slow moving and subject to a reserve provision equal to all or a portion of the cost, less an estimate for scrap value. In certain instances, this inventory has been unsold for more than five years from date of manufacture or purchase, and in other instances the Company has more than a five-year supply of inventory on hand based on recent sales volume. At December 31, 2009, the cost of inventory for which the Company has more than a five-year supply on hand and the cost of inventory for which the Company has had no sales during the last five years amounted to approximately $1,263,000. Management believes that this inventory is properly valued and appropriately reserved. Even if management s estimate were incorrect, that would not result in a cash outlay since the cash required to manufacture or purchase the older inventory was expended in prior years.

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