Eltek Reports Second Quarter 2010 Financial Results
Eltek Ltd. (NASDAQ: ELTK), the leading Israeli manufacturer of advanced flex-rigid circuitry solutions, announced today its financial results for the quarter ended June 30, 2010.
Second Quarter 2010:
Revenues for the quarter ended June 30, 2010 were $9.0 million, an increase of 6% from the revenues of $8.4 million recorded in the second quarter of 2009.
Gross profit for the second quarter of 2010 was $1.3 million (14% of revenues), similar to the gross profit of $1.3 million (16% of revenues) in the second quarter of 2009. The decrease in gross margins is primarily attributable to the lower exchange rates of the US dollar and the Euro compared to the NIS, which was partially offset by the increase in revenues.Operating loss for the second quarter of 2010 was $203,000 compared with an operating loss of $118,000 in the second quarter of 2009. Net loss for the second quarter of 2010 was $509,000 or ($0.08) per fully diluted share, compared with a net loss of $183,000 or ($0.03) per fully diluted share in the second quarter of 2009. First six months of 2010: Revenues for the first six months ended June 30, 2010 were $18.6 million, an increase of 4% from revenues of $17.9 million recorded in the first six months of 2009. Gross profit for the first six months of 2010 was $2.3 million (12% of revenues), compared to gross profit of $3 million (17% of revenues) in the first six months of 2009. Operating loss for the first six months of 2010 was $762,000 compared with an operating profit of $47,000 in the first six months of 2009. Net loss for the first six months of 2010 was $1.2 million or ($0.13) per fully diluted share, compared with a net loss of $78,000, or ($0.01) per fully diluted share in the first six months of 2009. Due to ongoing losses in recent periods, the amount of the Company’s shareholders’ equity is below the required level under the financial covenants with two of its banks. Although compliance with the financial covenants will next be measured based on the Company’s audited financial statements as of December 31, 2010, and the Company continues with its efforts to increase revenues and improve production efficiency, the losses incurred in the first six months of 2010 may likely result in non compliance at year end. As a result, accounting standards require the Company to re-classify at this time its bank debt in the amount of $ 1.4 million from long term to short term. Based on past experience, where the Company was granted waivers from these banks in similar situations of non-compliance with financial covenants, the Company intends to re-apply, if necessary, for a waiver from the banks. There can be no assurance that the banks will grant the requested waivers. Failure to successfully obtain the waivers or additional capital may have a material adverse effect on the Company’s business, results of operations and financial position.
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