2003 3rd Quarter Report
To Our Stockholders:
Profits increased 62% in the third quarter of 2003 to $139,000, or $0.11 per share. Sales in the quarter were $3,062,000, a 3% increase over the third quarter of 2002.
These results were led by both sales and margin improvement in our export markets as well as in our domestic abrasive etching market. The strong increase in earnings occurred in spite of a $94,000 write down of inventory and accounts receivable. This write down is consistent with our policy of maintaining adequate reserves and writing down impaired assets in a timely manner. Net earnings were positively affected by a lower tax rate related to the preferential treatment of export sales.
The company’s financial health remains excellent. Year to date, we have generated a positive net cash flow of $866,000 and now hold cash and cash equivalents of $1,250,000. Although cash flow is affected by investments and the timing of payments, we believe these results reflect the strength of our business.
During the quarter we introduced our reformulated RapidMask™ photoresist films to customers in North America and Asia and the reaction has exceeded our expectations. The new RapidMask not only makes abrasive etching an easier process, but these films give our customers the ability to take etched products to a new level of quality. We are actively investigating the applications of this new technology to the architectural, gift/collectables, and signage markets.
Our technical staff is currently working on our metal imaging technology, improved screen print technologies and further improvements to RapidMask.
I am optimistic for the rest of this year and believe we are laying the groundwork for growth and further improvement in profits for 2004 and beyond.
For the Board of Directors,
William C. Ulland Chairman, President & CEO