Revenues for the fourth quarter of 2008 were $5.6 million, compared with $7.7 million in the fourth quarter of 2007. In accordance with US generally accepted accounting principles (GAAP), net income in the fourth quarter of 2008 was $78,000, or $0.01 per diluted share, compared with net income of $1,090,000, or $0.12 per diluted share in the fourth quarter of 2007. Net income for the fourth quarter includes a restructuring charge primarily related to severance of $535,000. It also includes equity compensation expense under FAS 123R of $100,000. Equity compensation expense for the full year was $401,000. This compares with $316,000 for 2007.
Gross margin as a percentage of sales in 2008 was 58.8%, compared with 56.1% in the prior year. This gross margin percentage improvement was primarily due to increased sales volume, favorable variances between the two periods and savings relating to restructuring actions. The company’s cash position improved by $5.7 million, with December 31, 2008 at $13.3 million compared to $7.6 million at December 31, 2007. Backlog at the end of the quarter was $2 million.
“While we were obviously disappointed with the general state of the electronics industry in the fourth quarter,” said Fred Hume, president and chief executive officer, “there were several notable accomplishments. We added sales representatives, a variable expense, to improve our sales coverage in the Americas. We had success in acquiring new customers and had strong orders from European customers. During the fourth quarter we also took action to further reduce our operating expense to bring our estimated revenue breakeven under $5 million per quarter while increasing our cash reserves to $13.3 million. We were successful in adjusting the expense structure early enough such that the related savings allowed us to remain profitable in the fourth quarter and we are well positioned going into 2009.”
