2008 2nd Quarter Report
To Our Stockholders:
Although the slow economy bit into our second quarter sales, down 1% to $4,330,000 from the same period a year ago, earnings set a second quarter record, up 8% to $358,000 or $0.17 per share. Income from operations was up 24% for the quarter and 34% for the six month period compared to the same periods in 2007. Compared to the first quarter of 2008 sales were up 15% and earnings up 23%.
Given the softening economy, these results are encouraging. Both sales and earnings for the company were the second best quarterly results on record.
In July we took delivery of production equipment for our new Digital Texturing enterprise. The fluid deposition machine is currently being readied for production and is so far meeting our expectations. We also continue to make progress with our PhotoMachining technology and expect that business to continue to grow in the second half, helped by some anticipated significant orders from the aerospace industry.
These new technologies are beginning to translate into sales which should help offset the current weak domestic demand for our traditional products and, I believe, will position us for significant growth in the future.
We have broken ground on a 35,000 square foot facility in Duluth, which will house our new technologies. The project is on budget and we plan to take occupancy before the end of the year.
During the second quarter, we sold our last block of auction rate securities at no loss. These funds will be used to finance the construction of our new facility.
For the Board of Directors,
William C. Ulland Chairman, President & CEO
Condensed STATEMENTS OF OPERATIONS (unaudited)
For the Three Months and Six Months Ended June 30, 2008 and 2007
Three Months Ended Six Months Ended
6/30/08 6/30/07 6/30/08 6/30/07
Net Sales $4,330,059 $4,374,677 $8,110,907 $7,882,444
Costs and expenses 3,791,173 3,934,716 7,524,901 7,446,150
Income from operations 538,886 439,961 586,006 436,294
Gain on sale of investment – – – 55,159
Interest income 23,697 36,724 67,372 69,631
Income before income taxes 562,583 476,685 653,378 561,084
Federal and state tax expense 204,146 145,283 189,303 90,585
Net income $ 358,437 $ 331,402 $ 464,075 $ 470,499
Earnings per common share-diluted $ 0.17 $ 0.16 $ 0.22 $ 0.23
Average shares outstanding-diluted 2,080,617 2,064,698 2,068,292 2,056,762
Condensed Balance Sheets
As of June 30, 2008 and December 31, 2007
Current assets $ 9,300,221 $ 9,315,737
Property, plant and equipment, net 2,391,985 1,320,591
Investment in non-marketable
equity securities 855,201 855,201
Intangible assets 486,163 479,888
Deferred income taxes 11,000 11,000
Liabilities and Stockholders’ Equity
Current liabilities $ 1,376,334 $ 936,703
Long term debt – –
Stockholders’ equity 11,668,236 11,045,714