So that you may know, a different view from the 2nd Qtr 10Q:
"...Maintenance and consumable revenue combined were up 125% in the 1997 period as compared with the 1996 period, and constitute the most rapidly growing component of the Company's product mix.
Second quarter 1997 sales were impacted by several developments. The
Company was unable to ramp up manufacturing of the FDM 8000 due to vendor supply delays. Sales of the FDM 1650 product were lower than anticipated due to weak sales in Europe, primarily caused by the strong dollar, and to lower than expected productivity in the Company's eastern region, where a number of new sales representatives were established. Lastly, Genisys sales were disappointing due to technical issues that impacted the reliability of the systems in the
field. The Company believes that the vendor supply issue that limited sales of the FDM 8000 in the second quarter of 1997 will be resolved in the third quarter of 1997, allowing the Company to more closely meet demand for this product. The difficult European situation of a strong US dollar coupled with sluggish growth indicates that sales may remain weak in the European arena. The new members of the domestic sales team should be more productive in the second half of 1997 as
they are further out on their learning curve. The technical issues relating to the Genisys product continue to be addressed. The most significant of the Genisys problems was a pump plugging condition that is believed to have been addressed by the filtration of all Genisys consumable raw materials prior to fabrication into the final wafer modeling material product. Sales of the Genisys product are not expected to resume meaningful growth until later in 1997.
Gross margins increased by $1,205,254, or 35.0%, to $4,651,832 for the three months ended June 30, 1997, from $3,446,578 for the three months ended June 30, 1996. As a percentage of sales, gross margins increased to 66.8% for the three months ended June 30, 1997, as compared with 64.8% for the three months ended June 30, 1996. The Company's gross margin was positively impacted by the shift in product mix to the FDM 2000 and 8000, coupled with the strong growth of high-margin maintenance and consumable revenues. Margins were negatively impacted by increased manufacturing overhead costs, which were up 56% in the three months ended June 30, 1997 as compared with the comparable 1996 period. " |
