FLOW » Topics » Fiscal year 2008 compared to fiscal year 2007

These excerpts taken from the FLOW 10-K filed Jun 26, 2009.
Fiscal year 2008 compared to fiscal year 2007
 
Sales growth of $30.8 million or 14% was primarily driven by increased adoption of waterjet cutting and cleaning technology in the global markets and increased sales of 87,000 psi systems. The strengthening of the Brazilian Real versus the U.S. dollar improved our competitive position in Latin America markets. Excluding the impact of foreign currency changes, sales increased $20.2 million or 10% in 2008.
 
Total system sales were up $21.3 million or 14%. Excluding sales to the aerospace industry and Applications segment, system sales increased 22%. Consumable parts sales increased $9.5 million or 16% due to the increased installed base of systems and improved parts availability as well as the use of Flowparts.com and Floweuropeparts.com, our easy-to-use internet order entry systems. Flowparts.com has been deployed in the United States for three years and Floweuropeparts.com has been deployed in Europe for approximately two years.
 
Operating income growth of $12.1 million was primarily driven by the higher sales discussed above along with lower operating expenses related to the timing of new product launches. In fiscal year 2006, we incurred expenses related to new core product development such as Stonecraftertm, the 87,000 psi pump and the 55,000 psi Husky. Additionally, there were lower professional fees for legal, audit, and consulting fees for assistance with Sarbanes-Oxley related compliance during fiscal year 2008.
 
Fiscal year 2008 compared to fiscal year 2007
 
Sales growth of $30.8 million or 14% was primarily driven by increased adoption of waterjet cutting and cleaning technology in the global markets and increased sales of 87,000 psi systems. The strengthening of the Brazilian Real versus the U.S. dollar improved our competitive position in Latin America markets. Excluding the impact of foreign currency changes, sales increased $20.2 million or 10% in 2008.
 
Total system sales were up $21.3 million or 14%. Excluding sales to the aerospace industry and Applications segment, system sales increased 22%. Consumable parts sales increased $9.5 million or 16% due to the increased installed base of systems and improved parts availability as well as the use of Flowparts.com and Floweuropeparts.com, our easy-to-use internet order entry systems. Flowparts.com has been deployed in the United States for three years and Floweuropeparts.com has been deployed in Europe for approximately two years.
 
Operating income growth of $12.1 million was primarily driven by the higher sales discussed above along with lower operating expenses related to the timing of new product launches. In fiscal year 2006, we incurred expenses related to new core product development such as Stonecraftertm, the 87,000 psi pump and the 55,000 psi Husky. Additionally, there were lower professional fees for legal, audit, and consulting fees for assistance with Sarbanes-Oxley related compliance during fiscal year 2008.
 
Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
Sales increased $36.7 million or 20% over the prior year and constituted 88% of total sales primarily due to the following:
 
  •  Increased market awareness and adoption of waterjet technology and the positive market reception to our 87k high pressure pump;
 
  •  Strong demand for our spare parts due to increased number of systems in service; and
 
  •  The benefit of a favorable currency impact mainly attributable to a stronger Euro and Brazilian Real versus the U.S. dollar. Excluding the impact of foreign currency changes, sales increased $28.3 million or 16% compared to fiscal year 2007.
 
Gross margin for the year ended April 30, 2008 amounted to $97.9 million or 45% of sales compared to $81.9 million or 46% of sales in the prior year. Generally, comparison of gross margin rates will vary period over period based on changes in our product sales mix and prices, which includes product mix, standard systems versus consumable parts mix and levels of production volume. Excluding the impact of foreign currency changes, gross margin increased $13 million over the prior year.
 
Operating expense changes consisted of the following:
 
  •  An increase in sales and marketing expenses of $3.6 million 10% as a result of increased investment in sales staff globally as well as an increase in commission expense driven by higher sales;
 
  •  A reduction in research and engineering costs of $402,000 or 6% related to the timing of new product launches. The prior year comparative period included engineering expenses to support new core product development such as Stonecraftertm, the 87,000 psi pump, and the 55,000 psi pump; and
 
  •  A reduction in general and administrative expenses of $935,000 or 8% primarily attributable to lower legal and consulting expenses including a $475,000 benefit from an insurance recovery related to the theft in our Korean operation. Prior year general and administrative expenses included Asia investigation expenses.
 
  •  Excluding the impact of foreign currency changes, operating expenses decreased $13 million or 16% over the prior year.
 
Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
Sales increased $36.7 million or 20% over the prior year and constituted 88% of total sales primarily due to the following:
 
  •  Increased market awareness and adoption of waterjet technology and the positive market reception to our 87k high pressure pump;
 
  •  Strong demand for our spare parts due to increased number of systems in service; and
 
  •  The benefit of a favorable currency impact mainly attributable to a stronger Euro and Brazilian Real versus the U.S. dollar. Excluding the impact of foreign currency changes, sales increased $28.3 million or 16% compared to fiscal year 2007.
 
Gross margin for the year ended April 30, 2008 amounted to $97.9 million or 45% of sales compared to $81.9 million or 46% of sales in the prior year. Generally, comparison of gross margin rates will vary period over period based on changes in our product sales mix and prices, which includes product mix, standard systems versus consumable parts mix and levels of production volume. Excluding the impact of foreign currency changes, gross margin increased $13 million over the prior year.
 
Operating expense changes consisted of the following:
 
  •  An increase in sales and marketing expenses of $3.6 million 10% as a result of increased investment in sales staff globally as well as an increase in commission expense driven by higher sales;
 
  •  A reduction in research and engineering costs of $402,000 or 6% related to the timing of new product launches. The prior year comparative period included engineering expenses to support new core product development such as Stonecraftertm, the 87,000 psi pump, and the 55,000 psi pump; and
 
  •  A reduction in general and administrative expenses of $935,000 or 8% primarily attributable to lower legal and consulting expenses including a $475,000 benefit from an insurance recovery related to the theft in our Korean operation. Prior year general and administrative expenses included Asia investigation expenses.
 
  •  Excluding the impact of foreign currency changes, operating expenses decreased $13 million or 16% over the prior year.
 
Fiscal
year 2008 compared to fiscal year 2007



 



Sales growth of $30.8 million or 14% was primarily driven
by increased adoption of waterjet cutting and cleaning
technology in the global markets and increased sales of 87,000
psi systems. The strengthening of the Brazilian Real versus the
U.S. dollar improved our competitive position in Latin
America markets. Excluding the impact of foreign currency
changes, sales increased $20.2 million or 10% in 2008.


 



Total system sales were up $21.3 million or 14%. Excluding
sales to the aerospace industry and Applications segment, system
sales increased 22%. Consumable parts sales increased
$9.5 million or 16% due to the increased installed base of
systems and improved parts availability as well as the use of
Flowparts.com and Floweuropeparts.com, our easy-to-use internet
order entry systems. Flowparts.com has been deployed in the
United States for three years and Floweuropeparts.com has been
deployed in Europe for approximately two years.


 



Operating income growth of $12.1 million was primarily
driven by the higher sales discussed above along with lower
operating expenses related to the timing of new product
launches. In fiscal year 2006, we incurred expenses related to
new core product development such as
Stonecraftertm,

the 87,000 psi pump and the 55,000 psi Husky. Additionally,
there were lower professional fees for legal, audit, and
consulting fees for assistance with Sarbanes-Oxley related
compliance during fiscal year 2008.


 




Fiscal
year 2008 compared to fiscal year 2007



 



Sales growth of $30.8 million or 14% was primarily driven
by increased adoption of waterjet cutting and cleaning
technology in the global markets and increased sales of 87,000
psi systems. The strengthening of the Brazilian Real versus the
U.S. dollar improved our competitive position in Latin
America markets. Excluding the impact of foreign currency
changes, sales increased $20.2 million or 10% in 2008.


 



Total system sales were up $21.3 million or 14%. Excluding
sales to the aerospace industry and Applications segment, system
sales increased 22%. Consumable parts sales increased
$9.5 million or 16% due to the increased installed base of
systems and improved parts availability as well as the use of
Flowparts.com and Floweuropeparts.com, our easy-to-use internet
order entry systems. Flowparts.com has been deployed in the
United States for three years and Floweuropeparts.com has been
deployed in Europe for approximately two years.


 



Operating income growth of $12.1 million was primarily
driven by the higher sales discussed above along with lower
operating expenses related to the timing of new product
launches. In fiscal year 2006, we incurred expenses related to
new core product development such as
Stonecraftertm,

the 87,000 psi pump and the 55,000 psi Husky. Additionally,
there were lower professional fees for legal, audit, and
consulting fees for assistance with Sarbanes-Oxley related
compliance during fiscal year 2008.


 




Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
Sales decreased $5.9 million or 17% over the prior year and constituted 12% of total sales. Sales in the advanced segment will fluctuate year over year for various reasons such as the timing of contract awards, timing of project design and manufacturing schedule, shipment to the customers, and finally installation of the system. The decline when compared to the prior year was due to delayed aerospace contract awards. Excluding the impact of foreign currency changes, sales decreased $7.7 million or 23% compared to fiscal year 2007.
 
Gross margin for the year ended April 30, 2008, amounted to $4.9 million or 18% of sales compared to $9.0 million or 26% of sales in the prior year. The comparative percentage margin decline is

23


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attributable to expenses mainly as a result of inventory write-downs of $740,000 and severance costs of $234,000 incurred related to the cessation of the pursuit of non-waterjet automation systems. Excluding the impact of foreign currency changes, gross margin decreased $4.3 million over the prior year.
 
Operating expense changes consisted of the following:
 
  •  A decrease in sales and marketing expenses of $810,000 or 19% primarily due to lower customer support costs driven by lower aerospace sales when compared to the prior year offset by bad debt expenses of $413,000 during the current year related to non-waterjet automation customers;
 
  •  A reduction in research and engineering expenses of $210,000 or 9% as a result of a reduction in staff during the year; and
 
  •  An increase in general and administrative expenses of $600,000 or 16% attributable to higher management fee allocation in the current year when compared to the prior year as well as severance costs taken during the year.
 
  •  Excluding the impact of foreign currency changes, operating expenses decreased $2.3 million over the prior year.
 
Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
Sales decreased $5.9 million or 17% over the prior year and constituted 12% of total sales. Sales in the advanced segment will fluctuate year over year for various reasons such as the timing of contract awards, timing of project design and manufacturing schedule, shipment to the customers, and finally installation of the system. The decline when compared to the prior year was due to delayed aerospace contract awards. Excluding the impact of foreign currency changes, sales decreased $7.7 million or 23% compared to fiscal year 2007.
 
Gross margin for the year ended April 30, 2008, amounted to $4.9 million or 18% of sales compared to $9.0 million or 26% of sales in the prior year. The comparative percentage margin decline is

23


Table of Contents

attributable to expenses mainly as a result of inventory write-downs of $740,000 and severance costs of $234,000 incurred related to the cessation of the pursuit of non-waterjet automation systems. Excluding the impact of foreign currency changes, gross margin decreased $4.3 million over the prior year.
 
Operating expense changes consisted of the following:
 
  •  A decrease in sales and marketing expenses of $810,000 or 19% primarily due to lower customer support costs driven by lower aerospace sales when compared to the prior year offset by bad debt expenses of $413,000 during the current year related to non-waterjet automation customers;
 
  •  A reduction in research and engineering expenses of $210,000 or 9% as a result of a reduction in staff during the year; and
 
  •  An increase in general and administrative expenses of $600,000 or 16% attributable to higher management fee allocation in the current year when compared to the prior year as well as severance costs taken during the year.
 
  •  Excluding the impact of foreign currency changes, operating expenses decreased $2.3 million over the prior year.
 
Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



Sales increased $36.7 million or 20% over the prior year
and constituted 88% of total sales primarily due to the
following:


 




































  • 

Increased market awareness and adoption of waterjet technology
and the positive market reception to our 87k high pressure pump;
 
  • 

Strong demand for our spare parts due to increased number of
systems in service; and
 
  • 

The benefit of a favorable currency impact mainly attributable
to a stronger Euro and Brazilian Real versus the
U.S. dollar. Excluding the impact of foreign currency
changes, sales increased $28.3 million or 16% compared to
fiscal year 2007.


 



Gross margin for the year ended April 30, 2008 amounted to
$97.9 million or 45% of sales compared to
$81.9 million or 46% of sales in the prior year. Generally,
comparison of gross margin rates will vary period over period
based on changes in our product sales mix and prices, which
includes product mix, standard systems versus consumable parts
mix and levels of production volume. Excluding the impact of
foreign currency changes, gross margin increased
$13 million over the prior year.


 



Operating expense changes consisted of the following:


 














































  • 

An increase in sales and marketing expenses of $3.6 million
10% as a result of increased investment in sales staff globally
as well as an increase in commission expense driven by higher
sales;
 
  • 

A reduction in research and engineering costs of $402,000 or 6%
related to the timing of new product launches. The prior year
comparative period included engineering expenses to support new
core product development such as
Stonecraftertm,

the 87,000 psi pump, and the 55,000 psi pump; and
 
  • 

A reduction in general and administrative expenses of $935,000
or 8% primarily attributable to lower legal and consulting
expenses including a $475,000 benefit from an insurance recovery
related to the theft in our Korean operation. Prior year general
and administrative expenses included Asia investigation expenses.
 
  • 

Excluding the impact of foreign currency changes, operating
expenses decreased $13 million or 16% over the prior year.


 




Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



Sales increased $36.7 million or 20% over the prior year
and constituted 88% of total sales primarily due to the
following:


 




































  • 

Increased market awareness and adoption of waterjet technology
and the positive market reception to our 87k high pressure pump;
 
  • 

Strong demand for our spare parts due to increased number of
systems in service; and
 
  • 

The benefit of a favorable currency impact mainly attributable
to a stronger Euro and Brazilian Real versus the
U.S. dollar. Excluding the impact of foreign currency
changes, sales increased $28.3 million or 16% compared to
fiscal year 2007.


 



Gross margin for the year ended April 30, 2008 amounted to
$97.9 million or 45% of sales compared to
$81.9 million or 46% of sales in the prior year. Generally,
comparison of gross margin rates will vary period over period
based on changes in our product sales mix and prices, which
includes product mix, standard systems versus consumable parts
mix and levels of production volume. Excluding the impact of
foreign currency changes, gross margin increased
$13 million over the prior year.


 



Operating expense changes consisted of the following:


 














































  • 

An increase in sales and marketing expenses of $3.6 million
10% as a result of increased investment in sales staff globally
as well as an increase in commission expense driven by higher
sales;
 
  • 

A reduction in research and engineering costs of $402,000 or 6%
related to the timing of new product launches. The prior year
comparative period included engineering expenses to support new
core product development such as
Stonecraftertm,

the 87,000 psi pump, and the 55,000 psi pump; and
 
  • 

A reduction in general and administrative expenses of $935,000
or 8% primarily attributable to lower legal and consulting
expenses including a $475,000 benefit from an insurance recovery
related to the theft in our Korean operation. Prior year general
and administrative expenses included Asia investigation expenses.
 
  • 

Excluding the impact of foreign currency changes, operating
expenses decreased $13 million or 16% over the prior year.


 




Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
General and administrative expenses decreased by $3.0 million or 14% primarily due to lower professional fees for legal, audit and Sarbanes Oxley related compliance costs which were $5.4 million in fiscal year 2008 compared to $8.9 million in the prior year.
 
Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
General and administrative expenses decreased by $3.0 million or 14% primarily due to lower professional fees for legal, audit and Sarbanes Oxley related compliance costs which were $5.4 million in fiscal year 2008 compared to $8.9 million in the prior year.
 
Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



Sales decreased $5.9 million or 17% over the prior year and
constituted 12% of total sales. Sales in the advanced segment
will fluctuate year over year for various reasons such as the
timing of contract awards, timing of project design and
manufacturing schedule, shipment to the customers, and finally
installation of the system. The decline when compared to the
prior year was due to delayed aerospace contract awards.
Excluding the impact of foreign currency changes, sales
decreased $7.7 million or 23% compared to fiscal year 2007.


 



Gross margin for the year ended April 30, 2008, amounted to
$4.9 million or 18% of sales compared to $9.0 million
or 26% of sales in the prior year. The comparative percentage
margin decline is



23





Table of Contents






attributable to expenses mainly as a result of inventory
write-downs of $740,000 and severance costs of $234,000 incurred
related to the cessation of the pursuit of non-waterjet
automation systems. Excluding the impact of foreign currency
changes, gross margin decreased $4.3 million over the prior
year.


 



Operating expense changes consisted of the following:


 














































  • 

A decrease in sales and marketing expenses of $810,000 or 19%
primarily due to lower customer support costs driven by lower
aerospace sales when compared to the prior year offset by bad
debt expenses of $413,000 during the current year related to
non-waterjet automation customers;
 
  • 

A reduction in research and engineering expenses of $210,000 or
9% as a result of a reduction in staff during the year; and
 
  • 

An increase in general and administrative expenses of $600,000
or 16% attributable to higher management fee allocation in the
current year when compared to the prior year as well as
severance costs taken during the year.
 
  • 

Excluding the impact of foreign currency changes, operating
expenses decreased $2.3 million over the prior year.


 




Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



Sales decreased $5.9 million or 17% over the prior year and
constituted 12% of total sales. Sales in the advanced segment
will fluctuate year over year for various reasons such as the
timing of contract awards, timing of project design and
manufacturing schedule, shipment to the customers, and finally
installation of the system. The decline when compared to the
prior year was due to delayed aerospace contract awards.
Excluding the impact of foreign currency changes, sales
decreased $7.7 million or 23% compared to fiscal year 2007.


 



Gross margin for the year ended April 30, 2008, amounted to
$4.9 million or 18% of sales compared to $9.0 million
or 26% of sales in the prior year. The comparative percentage
margin decline is



23





Table of Contents






attributable to expenses mainly as a result of inventory
write-downs of $740,000 and severance costs of $234,000 incurred
related to the cessation of the pursuit of non-waterjet
automation systems. Excluding the impact of foreign currency
changes, gross margin decreased $4.3 million over the prior
year.


 



Operating expense changes consisted of the following:


 














































  • 

A decrease in sales and marketing expenses of $810,000 or 19%
primarily due to lower customer support costs driven by lower
aerospace sales when compared to the prior year offset by bad
debt expenses of $413,000 during the current year related to
non-waterjet automation customers;
 
  • 

A reduction in research and engineering expenses of $210,000 or
9% as a result of a reduction in staff during the year; and
 
  • 

An increase in general and administrative expenses of $600,000
or 16% attributable to higher management fee allocation in the
current year when compared to the prior year as well as
severance costs taken during the year.
 
  • 

Excluding the impact of foreign currency changes, operating
expenses decreased $2.3 million over the prior year.


 




Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



General and administrative expenses decreased by
$3.0 million or 14% primarily due to lower professional
fees for legal, audit and Sarbanes Oxley related compliance
costs which were $5.4 million in fiscal year 2008 compared
to $8.9 million in the prior year.


 




Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



General and administrative expenses decreased by
$3.0 million or 14% primarily due to lower professional
fees for legal, audit and Sarbanes Oxley related compliance
costs which were $5.4 million in fiscal year 2008 compared
to $8.9 million in the prior year.


 




These excerpts taken from the FLOW 10-K filed Jul 14, 2008.
Fiscal year 2008 compared to fiscal year 2007
 
In fiscal year 2008:
 
Sales increased $1.4 million or 10% over the prior year and constituted 6% of total sales. This increase was primarily as a result of the benefit of a favorable foreign currency impact based on prior year average Canadian Dollar exchange rates.
 
Gross margin for the year ended April 30, 2008 amounted to $1.4 million or 9% of sales compared to $1.7 million or 13% of sales in the prior year. The comparative percentage margin decline is attributable to expenses mainly as a result of inventory write-downs of $399,000 and severance costs of $234,000 incurred related to the cessation of the pursuit of non-waterjet automation systems.
 
Operating expenses and changes consisted of the following:
 
  •  An increase in sales and marketing expenses of $311,000 or 18% primarily due to bad debt expenses of $413,000 during the current year offset by a decrease in staffing costs during the current fiscal year;
 
  •  A reduction in research and engineering costs of $43,000 or 14%; and
 
  •  An increase in general and administrative expenses of $844,000 or 49% attributable to higher management fee allocation in the current year when compared to the prior year as well as severance expenses incurred during the current fiscal year. Additionally, based on our plans to close our Burlington, Ontario manufacturing facility in order to establish a single facility for designing and building advanced systems in Jeffersonville, Indiana, we recorded an impairment charge of $97,000 related to the impairment of long-lived assets in accordance with Statement of Financial Accounting Standard No. 144 (“FAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets”.
 
Fiscal
year 2008 compared to fiscal year 2007



 



In fiscal year 2008:


 



Sales increased $1.4 million or 10% over the prior year and
constituted 6% of total sales. This increase was primarily as a
result of the benefit of a favorable foreign currency impact
based on prior year average Canadian Dollar exchange rates.


 



Gross margin for the year ended April 30, 2008 amounted to
$1.4 million or 9% of sales compared to $1.7 million
or 13% of sales in the prior year. The comparative percentage
margin decline is attributable to expenses mainly as a result of
inventory write-downs of $399,000 and severance costs of
$234,000 incurred related to the cessation of the pursuit of
non-waterjet automation systems.


 



Operating expenses and changes consisted of the following:


 




































  • 

An increase in sales and marketing expenses of $311,000 or 18%
primarily due to bad debt expenses of $413,000 during the
current year offset by a decrease in staffing costs during the
current fiscal year;
 
  • 

A reduction in research and engineering costs of $43,000 or
14%; and
 
  • 

An increase in general and administrative expenses of $844,000
or 49% attributable to higher management fee allocation in the
current year when compared to the prior year as well as
severance expenses incurred during the current fiscal year.
Additionally, based on our plans to close our Burlington,
Ontario manufacturing facility in order to establish a single
facility for designing and building advanced systems in
Jeffersonville, Indiana, we recorded an impairment charge of
$97,000 related to the impairment of long-lived assets in
accordance with Statement of Financial Accounting Standard
No. 144 (“FAS 144”), “Accounting for
the Impairment or Disposal of Long-Lived Assets”.


 




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