Three Months Ended June 30, % of Change Between 2012 2011 Periods Revenues % of Revenues % of in Total in Total Thousands Revenues Thousands Revenues Unaudited Unaudited Revenues OEM of Heat Management Solutions $ 7,036 31.8% $ 6,337 31.8% 11.0% Heat Transfer Services and Products 7,104 32.1% 6,606 33.2% 7.5% MRO services for Aviation Components 5,636 25.5% 4,985 25.1% 13.1% OEM of Electric Motion Systems 2,677 12.1% 2,958 14.9% (9.5)% Eliminations (326) (1.5)% (992) (5.0)% (67.1)% Total revenues $ 22,127 100.0% $ 19,894 100.0% 11.2%
Six Months Ended June 30, % of Change Between 2012 2011 Periods Revenues % of Revenues % of in Total in Total Thousands Revenues Thousands Revenues Unaudited Unaudited Revenues OEM of Heat Management Solutions $ 14,720 34.4% $ 13,977 33.8% 5.3% Heat Transfer Services and Products 13,887 32.4% 13,073 31.7% 6.2% MRO services for Aviation Components 10,639 24.9% 9,784 23.7% 8.7% OEM of Electric Motion Systems 4,479 10.5% 6,528 15.8% (31.4)% Eliminations (921) (2.2)% (2,065) (5.0)% (55.4)% Total revenues $ 42,804 100.0% $ 41,297 100.0% 3.6%For the six months ended June 30, 2012, TAT announced revenues of $42.8 million with a net loss of $3.6 million compared to revenues of $41.3 million with a net income of $2.1 million for the six months ended June 30, 2011 - an increase of 3.6% in revenues. The net loss reported for the six month period ended June 30, 2012 is the result of the above mentioned $1.0 million impairment charge of goodwill in TAT's OEM for Electric Motion Systems operating segment and the $3.3 million impairment charge with respect to TAT's investment in FAvS (see further below). Excluding the impairment charges net profit for 2012 period was $0.7 million. During the six months ended June 30, 2012, revenues were impacted by the increase in revenues in all our significant operating segments - the OEM of Heat Management Solutions segment, the Heat Transfer Services and Products segment and the MRO Services for Aviation Components segment; while revenues in the OEM of Electric Motion Systems significantly decreased due to growing weakness in the relevant defense markets. As mentioned above, this decrease is a continuation of the decrease in revenues this segment had experienced during 2011. Impairment of goodwill: While the Company performs its annual impairment test in September each year, or more frequently when events and circumstances indicate that impairment may have occurred, during the quarter ended June 30, 2012, management believed that there were indicators of impairment of goodwill in its OEM of Electric Motion System operating segment as of June 30, 2012, primarily due to a decline in future forecasted sales levels and profitability margins resulting from the continued weakness in the defense industry. Accordingly, the Company performed an impairment test of goodwill for this operating segment, with the assistance of a third party valuation. Based on the results of this test, the Company determined that the entire balance of goodwill included in this operating segment was impaired and recorded an impairment charge of $1.0 million. Investment in FAvS: In June, 2012, FAvS entered into a transaction with its controlling stockholder, Aaron Hollander ("Hollander"), pursuant to which FAvS borrowed $3 million from Hollander, secured by a third lien on the assets of FAvS. The loan bears interest at 10% and in addition Hollander was issued warrants to purchase shares of Class A Common Stock of FAvS, representing 15% of FAvS post-exercise shareholders' equity, at an exercise price of $7.00 per share. Pursuant to the terms and conditions of the transaction, management believed that there were indicators of impairment with respect to TAT's investment in FAvS. Accordingly, the Company performed an impairment test of its investment in FAvS, with the assistance of a third party valuation. Based on the results of this test the Company determined that its investment in FAvS was impaired by $3.3 million. The impairment was due to a decline in FAvS' profitability margins and future forecasted sales levels. Mr. Itsik Maaravi, TAT's CEO commented: "The results of 2012 second quarter reflect the continuation of the improving trend, Quarter over Quarter and from the previous quarter, in our most significant operating segments - the OEM of Heat Management Solutions and Heat Transfer Services and Products, as well as in our MRO for Aviation Components operating segment. In each of these segments we continued to increase revenues and gross margins compared to the second quarter of 2011 and the first half of 2011. These improvements are attributable to the increase in our marketing and sales activities during 2010 and 2011 as well as to our rigorous and continuing activity to improve our production flow and yields.