2008 1st Quarter Report
To Our Stockholders:
The first quarter of 2008 was a substantial improvement over the first quarter of 2007 in both sales and operating profit. Sales were $3,781,000, an 8% increase over the first quarter of last year and operating income was $47,000 compared to a small loss for the first quarter of last year. Net earnings were $106,000 or $0.05 per share, $33,000 below the first quarter of 2007, which benefited from a one-time $55,000 gain on the sale of our interests in Apprise Technologies and a $55,000 income tax benefit, while the first quarter of 2008 was hit with a one-time cost of $68,000 for an employee severance obligation.
Revenue growth was led by sales to Europe and Asia, with a significant contribution from our new Photo Machining venture. The weak dollar has helped our export business, while the slow US economy has had some negative effect on domestic sales.
Sales of our Digital Texturing products have been slow to materialize reflecting both continuing product development and the depressed condition of the domestic automotive industry, which was our initial target market. We are now broadening our sales efforts to include the international automotive industry and the non-automotive US mold making market.
I anticipate that Digital Texturing will contribute to earnings later this year and that sales and earnings from Photo Machining will continue to grow throughout the year.
On April 7th we purchased 11 acres, with an option on an additional 4 acres, from the city of Duluth for $366,000. A 35,000 square foot manufacturing and warehouse facility is being constructed on this brown field site.
For the Board of Directors,
William C. Ulland Chairman, President & CEO
Condensed Statements of Operations (Unaudited)
For the Three Months Ended March 31, 2008 and 2007
Three Months Ended
Sales $3,780,848 $3,507,767
Costs and expenses 3,733,728 3,511,434
Income (Loss) from Operations 47,120 (3,667)
Gain on sale of investment – 55,159
Interest Income 43,675 32,907
Income before income taxes $ 90,765 $ 84,399
Federal and state income tax benefit (expense) 14,843 54,698
Net income 105,638 139,097
Earnings per common share-diluted $ 0.05 $ 0.07
Average shares outstanding-diluted 2,069,129 2,064,511
Condensed Balance Sheets
As of March 31, 2008 and December 31, 2007
Assets 3/31/08 12/31/07
Current assets $9,397,635 $9,315,737
Property, plant and equipment, net 1, 403,373 1,320,591
Investment in non-marketable
equity securities 855,201 855,201
Intangible assets 492,825 479,888
Deferred income taxes 11,000 11,000
Liabilities and Equity
Current liabilities $ 922,774 $ 936,703
Long term debt – –
Stockholders’ equity 11,237,260 11,045,714