ElectroSensors Inc. (ELSE, Financial) filed Quarterly Report for the period ended 2009-09-30.
Electro-Sensors, Inc. is engaged in three distinct business lines: the manufacture and distribution of industrial production monitoring and process control systems through its Controls Division, the manufacture and distribution of small gas torches and related accessories through its Microflame, Inc. subsidiary, and the development and distribution of PC-based software for both automated survey processing and hand printed character recognition through its AutoData Systems division. Electrosensors Inc. has a market cap of $10 million; its shares were traded at around $2.98 with and P/S ratio of 1.5. The dividend yield of Electrosensors Inc. stocks is 5.4%.
General and administrative costs increased $5,000, or 1.9%, for the three months ended September 30, 2009 compared to the same period in 2008. For the nine months ended September 30, 2009, general and administrative costs decreased $28,000, or 3.2%, when compared to the same period in 2008. Of the increase for the three months ended September 30, 2009, the Production Monitoring Division contributed an increase of $3,000, or 1.2%, and the AutoData Systems Division had an increase of $2,000, or 13.3%. The decrease for the nine months ended September 30, 2009 was due to a decrease in costs of $29,000, or 3.5%, from the Production Monitoring Division, offset by an increase in the AutoData Systems Division of $1,000, or 1.8%. For the three months ended September 30, 2009, the increase in general and administrative expenses from the Production Monitoring Division was due to increases in employee benefits, doubtful account write-offs, stock handling fees, and legal and professional fees (due to IRS mandatory employee benefit plan document restatements), offset by a decrease in computer supplies and maintenance. The increase in stock handling fees was due to such fees now being allocated evenly over each quarter in 2009, whereas all such fees had been expensed in the first quarter of 2008. The increase in the AutoData Systems Division was due to such an increase in stock handling fees. For the nine months ended September 30, 2009, the decrease in general and administrative expenses from the Production Monitoring Division was due to decreases in computer supplies and maintenance, charitable contributions, and stock handling fees, offset by increases in employee benefits, doubtful account writeoffs, and legal and professional fees. The increase in the AutoData Systems Division was due to last years adjustment for the decline in the allowance for doubtful accounts, offset by a decrease in computer supplies and maintenance.
The Production Monitoring Division had income before income taxes of $263,000 for the three months ended September 30, 2009 compared to $336,000 for the same period in 2008, a decrease of $73,000, or 21.7%. For the nine months ended September 30, 2009, the Production Monitoring Division had income before income taxes of $239,000 compared to $869,000 for the same period in 2008, a decrease of $630,000, or 72.5%. The decrease in income before income taxes for the three months ended September 30, 2009 was mainly due to a decrease in net sales, a decrease in the gross margin (primarily due to the increase of relative sales volume of lower margin, higher-priced items), and a decrease in interest income (due to the decrease in interest rates on Treasury Bills). The decrease in net income before income taxes for the nine months ended September 30, 2009 was primarily due to a decrease in the gross margin, an increase in the percentage of operating expenses to net sales (from 43.7% of net sales in 2008 to 50.9% of net sales in 2009) and a decrease in interest income.
The AutoData Systems Division had a loss before income taxes of $4,000 for the three months ended September 30, 2009 compared to an income before income taxes of $34,000 for same period in 2008, a decrease of $38,000, or 111.8%. This decrease in income before income taxes was due primarily to a decrease in sales and an increase in the percentage of operating expenses to net sales (from 66.0% of net sales in 2008 to 94.4% of net sales in 2009). For the nine months ended September 30, 2009, the AutoData Systems Division had a loss before income taxes of $46,000 compared to an income before income taxes of $35,000 for the same period in 2008, a decrease of $81,000, or 231.4%. This decrease in income before income taxes was due primarily to a decrease in sales and an increase in the percentage of operating expenses to net sales (from 79.9% of net sales in 2008 to 104.8% of net sales in 2009).
ESI Investment Company had income before taxes of $7,000 for the three-month period ended September 30, 2009 compared to $25,000 for the same period in 2008, a decrease of $18,000, or 72.0%. ESI Investment Company had income before taxes of $13,000 for the nine-month period ended September 30, 2009 compared to income before income taxes of $37,000 for the same period in 2008, a decrease of $24,000, or 64.9%. The decrease for the three-month period ended September 30, 2009 was due to a decrease in interest income from Treasury Bills. The decrease for the nine-month period ended September 30, 2009 was due to a decrease in interest income on Treasury Bills, offset by a decrease in recognized losses of investments (See Non-Operating Income).
Cash used for financing activities was $394,000 and $398,000 for the nine months ended September 30, 2009 and 2008, respectively. During the nine-month periods ended September 30, 2009 and 2008, the Company paid aggregate dividends of $404,000 each year. In 2009, one employee exercised a stock option which provided cash of $2,000. There were no such exercises of stock options in 2008. During the nine-month periods ended September 30, 2009 and 2008, the Company had $8,000 and $6,000, respectively, in stock purchases under the Employee Stock Purchase Plan.
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Electro-Sensors, Inc. is engaged in three distinct business lines: the manufacture and distribution of industrial production monitoring and process control systems through its Controls Division, the manufacture and distribution of small gas torches and related accessories through its Microflame, Inc. subsidiary, and the development and distribution of PC-based software for both automated survey processing and hand printed character recognition through its AutoData Systems division. Electrosensors Inc. has a market cap of $10 million; its shares were traded at around $2.98 with and P/S ratio of 1.5. The dividend yield of Electrosensors Inc. stocks is 5.4%.
Highlight of Business Operations:
Selling and marketing costs decreased $15,000, or 4.2%, for the three months ended September 30, 2009 when compared to the same period in 2008. For the nine months ended September 30, 2009, selling and marketing costs decreased $154,000, or 13.4%, when compared to the same period in 2008. Of the decrease for the three months ended September 30, 2009, the AutoData Systems Division had a decrease of $2,000, or 5.4%, and the Production Monitoring Division had a decrease of $13,000, or 4.0%. Of the decrease for the nine months ended September 30, 2009, the Production Monitoring Division had a decrease of $123,000, or 12.1%, and the AutoData Systems Division had a decrease of $31,000, or 23.7%. For the three months ended September 30, 2009, the decrease in the AutoData Systems Division expenses was due to a decrease in sales commissions and advertising. The decrease in the Production Monitoring Division was due to a decrease in advertising, travel expenses, and sales representative commissions, offset by an increase in contractor personnel. For the nine months ended September 30, 2009, decreases in sales representative commissions, advertising, travel, and tradeshow, offset by an increase in contract personnel expenses, are the predominant expenses that decreased in the Production Monitoring Division based on discretionary cost reductions and a decline in sales. Marketing efforts are continuing to be directed to our core industries and to industries that are receiving funds in connection with the federal economic stimulus package. The decrease in selling and marketing costs in the AutoData Systems Division was due to decreased wages due to a reduction in staff, sales commissions, and advertising.General and administrative costs increased $5,000, or 1.9%, for the three months ended September 30, 2009 compared to the same period in 2008. For the nine months ended September 30, 2009, general and administrative costs decreased $28,000, or 3.2%, when compared to the same period in 2008. Of the increase for the three months ended September 30, 2009, the Production Monitoring Division contributed an increase of $3,000, or 1.2%, and the AutoData Systems Division had an increase of $2,000, or 13.3%. The decrease for the nine months ended September 30, 2009 was due to a decrease in costs of $29,000, or 3.5%, from the Production Monitoring Division, offset by an increase in the AutoData Systems Division of $1,000, or 1.8%. For the three months ended September 30, 2009, the increase in general and administrative expenses from the Production Monitoring Division was due to increases in employee benefits, doubtful account write-offs, stock handling fees, and legal and professional fees (due to IRS mandatory employee benefit plan document restatements), offset by a decrease in computer supplies and maintenance. The increase in stock handling fees was due to such fees now being allocated evenly over each quarter in 2009, whereas all such fees had been expensed in the first quarter of 2008. The increase in the AutoData Systems Division was due to such an increase in stock handling fees. For the nine months ended September 30, 2009, the decrease in general and administrative expenses from the Production Monitoring Division was due to decreases in computer supplies and maintenance, charitable contributions, and stock handling fees, offset by increases in employee benefits, doubtful account writeoffs, and legal and professional fees. The increase in the AutoData Systems Division was due to last years adjustment for the decline in the allowance for doubtful accounts, offset by a decrease in computer supplies and maintenance.
The Production Monitoring Division had income before income taxes of $263,000 for the three months ended September 30, 2009 compared to $336,000 for the same period in 2008, a decrease of $73,000, or 21.7%. For the nine months ended September 30, 2009, the Production Monitoring Division had income before income taxes of $239,000 compared to $869,000 for the same period in 2008, a decrease of $630,000, or 72.5%. The decrease in income before income taxes for the three months ended September 30, 2009 was mainly due to a decrease in net sales, a decrease in the gross margin (primarily due to the increase of relative sales volume of lower margin, higher-priced items), and a decrease in interest income (due to the decrease in interest rates on Treasury Bills). The decrease in net income before income taxes for the nine months ended September 30, 2009 was primarily due to a decrease in the gross margin, an increase in the percentage of operating expenses to net sales (from 43.7% of net sales in 2008 to 50.9% of net sales in 2009) and a decrease in interest income.
The AutoData Systems Division had a loss before income taxes of $4,000 for the three months ended September 30, 2009 compared to an income before income taxes of $34,000 for same period in 2008, a decrease of $38,000, or 111.8%. This decrease in income before income taxes was due primarily to a decrease in sales and an increase in the percentage of operating expenses to net sales (from 66.0% of net sales in 2008 to 94.4% of net sales in 2009). For the nine months ended September 30, 2009, the AutoData Systems Division had a loss before income taxes of $46,000 compared to an income before income taxes of $35,000 for the same period in 2008, a decrease of $81,000, or 231.4%. This decrease in income before income taxes was due primarily to a decrease in sales and an increase in the percentage of operating expenses to net sales (from 79.9% of net sales in 2008 to 104.8% of net sales in 2009).
ESI Investment Company had income before taxes of $7,000 for the three-month period ended September 30, 2009 compared to $25,000 for the same period in 2008, a decrease of $18,000, or 72.0%. ESI Investment Company had income before taxes of $13,000 for the nine-month period ended September 30, 2009 compared to income before income taxes of $37,000 for the same period in 2008, a decrease of $24,000, or 64.9%. The decrease for the three-month period ended September 30, 2009 was due to a decrease in interest income from Treasury Bills. The decrease for the nine-month period ended September 30, 2009 was due to a decrease in interest income on Treasury Bills, offset by a decrease in recognized losses of investments (See Non-Operating Income).
Cash used for financing activities was $394,000 and $398,000 for the nine months ended September 30, 2009 and 2008, respectively. During the nine-month periods ended September 30, 2009 and 2008, the Company paid aggregate dividends of $404,000 each year. In 2009, one employee exercised a stock option which provided cash of $2,000. There were no such exercises of stock options in 2008. During the nine-month periods ended September 30, 2009 and 2008, the Company had $8,000 and $6,000, respectively, in stock purchases under the Employee Stock Purchase Plan.
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