INTEST CORP

Previous wording

As discussed further in Note 3 to our consolidated financial statements in this Report, on March 12, 2024 we entered into a stock purchase agreement to acquire all of the outstanding capital shares of Alfamation, a leading global provider of state-of-the-art test and measurement solutions for the automotive, life sciences and specialty consumer electronics markets. Alfamation was founded in 1991 and is headquartered in Milan, Italy. Alfamation also has a small sales and service subsidiary based in Suzhou City, China. Alfamation is included in our Electronic Test operating segment. The aggregate purchase price was approximately EUR 20 million comprised of EUR 18 million in cash, or $19.0 million, and 187,432 shares of our common stock valued at $2.1 million based on the closing price of our stock on the date of acquisition. The cash portion of the purchase price is subject to customary working capital adjustments. This resulted in an additional payment of EUR 129,000, or $141,000 for assets delivered at closing in excess of agreed upon thresholds. This equates to a total purchase price of approximately $21.9 million. The liabilities assumed in connection with the acquisition included debt of approximately EUR 10.3 million, or $11.3 million. The debt assumed is discussed further in Note 10 to our consolidated financial statements in this Report.

Current wording

As discussed further in Note 3 to our consolidated financial statements in this Report, on March 12, 2024 we entered into a stock purchase agreement to acquire all of the outstanding capital shares of Alfamation, a leading global provider of state-of-the-art test and measurement solutions for the automotive, life sciences and specialty consumer electronics markets. Alfamation was founded in 1991 and is headquartered in Milan, Italy. Alfamation also has a small sales and service subsidiary based in Suzhou City, China. Alfamation is included in our Electronic Test operating segment. The aggregate purchase price was approximately EUR 20 million comprised of EUR 18 million in cash, or $19.7 million, and 187,432 shares of our common stock valued at $2.1 million based on the closing price of our stock on the date of acquisition. The cash portion of the purchase price is subject to customary working capital adjustments. This resulted in an additional payment of EUR 129,000, or $141,000 for assets delivered at closing in excess of agreed upon thresholds. This equates to a total purchase price of approximately $21.9 million. The liabilities assumed in connection with the acquisition included debt of approximately EUR 10.3 million, or $11.3 million. The debt assumed is discussed further in Note 10 to our consolidated financial statements in this Report.

Previous wording

Total consolidated revenue for the three months ended June 30, 2024 was $34.0 million compared to $32.6 million for the same period in 2023 and $29.8 million for the three months ended March 31, 2024. Alfamation, which we acquired on March 12, 2024 as discussed under Acquisition above, contributed $9.7 million of revenue in the second quarter of 2024 and $1.4 million of revenue in the first quarter of 2024. This revenue is primarily from the auto/EV market, and, to a lesser extent, the life sciences market. The balance of our business had relatively flat or reduced revenue levels in the second quarter of 2024 as compared to the same period in 2023 primarily reflecting weak demand from both front-end and back-end semi customers. As discussed in the Overview, the semi market is highly cyclical resulting in significant swings in demand when period to period comparisons are to different points in a given cycle. The semi market is currently in a period of weakened demand which began to impact us in the second half of 2023 resulting in significantly reduced revenue levels from our customers in this market. There are indications from certain of our back-end semi customers that demand seems to be stabilizing in that market. We have not yet seen any similar indications from our front-end semi customers.

Current wording

Compared with the same period in 2023, our consolidated revenue for the third quarter of 2024 decreased $669,000. The $5.4 million in revenue contributed by Alfamation in combination with a $1.1 million increase in revenue from the industrial market and a $1.3 million increase in revenue for other markets helped to offset a $7.1 million decline in revenue from the semi market as that market remains in a period of reduced demand. Compared with the same period in 2023, our consolidated revenue for the nine months ended September 30, 2024 decreased $1.3 million, reflecting an $18.5 million decline from the semi market which was partially offset by the revenue contributed by Alfamation and, to a lesser extent, a $2.8 million increase from the industrial market. As discussed in the Overview section above, the semi market is highly cyclical resulting in significant swings in demand when period to period comparisons are to different points in a given cycle. The current period of weakened demand began to impact us in the second half of 2023 resulting in significantly reduced revenue levels from our customers in this market. There are indications from certain of our back-end semi customers that demand seems to be stabilizing in that market. We have not yet seen any similar indications from our front-end semi customers.

Previous wording

At June 30, 2024, our backlog of unfilled orders for all products was approximately $47.7 million compared with approximately $44.6 million at June 30, 2023 and $55.5 million at March 31, 2024. Our backlog at June 30, 2024 and March 31, 2024 included $16.3 million and $22.8 million, respectively, of backlog for Alfamation. Our backlog includes customer orders that we have accepted, substantially all of which we expect to deliver in the next twelve months. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period.

Current wording

At September 30, 2024, our backlog of unfilled orders for all products was approximately $45.5 million compared with approximately $40.5 million at September 30, 2023 and $47.7 million at June 30, 2024. Our backlog at September 30, 2024 and June 30, 2024 included $14.7 million and $16.3 million, respectively, of backlog for Alfamation. Our backlog includes customer orders that we have accepted, substantially all of which we expect to deliver in the next twelve months. While backlog is calculated on the basis of firm purchase orders, a customer may cancel an order or accelerate or postpone currently scheduled delivery dates. Our backlog may be affected by the tendency of customers to rely on short lead times available from suppliers, including us, in periods of depressed demand. In periods of increased demand, there is a tendency towards longer lead times that has the effect of increasing backlog. As a result, our backlog at a particular date is not necessarily indicative of sales for any future period.

Previous wording

In early October 2023, Hamas attacked Israel and Israel formally declared war in response to the attack. The conflict is ongoing, and it is unclear when it might end. Ambrell has a sole source supplier of capacitors used in certain of our induction heating products that is located in Israel. This supplier is the sole source supplier of capacitors for numerous induction companies, and currently there are no viable alternatives available. We have been in frequent contact with our supplier since the conflict with Hamas began. We maintain a two-to-three month safety stock on these items. Our supplier has indicated that they have large stock available at more than one facility in Israel, so they believe they have redundancies in place that will help ensure that the supply chain to their customers is uninterrupted. We continue to monitor the situation closely and are staying in close contact with our supplier. However, there can be no assurance that the situation will not worsen which could impact our ability to ship certain of our induction heating products which could have a material impact on our future results of operations.

Current wording

In early October 2023, Hamas attacked Israel and Israel formally declared war in response to the attack. The conflict with Hamas and others in the region is ongoing, and it is unclear when it might end. Ambrell has a sole source supplier of capacitors used in certain of our induction heating products that is located in Israel. This supplier is the sole source supplier of capacitors for numerous induction companies, and currently there are no viable alternatives available. We have been in frequent contact with our supplier since the conflict with Hamas began. We maintain a two-to-three month safety stock on these items. Our supplier has indicated that they have large stock available at more than one facility in Israel, so they believe they have redundancies in place that will help ensure that the supply chain to their customers is uninterrupted. We continue to monitor the situation closely and are staying in close contact with our supplier. However, there can be no assurance that the situation will not worsen which could impact our ability to ship certain of our induction heating products which could have a material impact on our future results of operations.

Previous wording

The ongoing war between Russia and Ukraine continues to contribute to global inflationary pressures and the availability of certain raw materials produced in that region, further exacerbating global supply chain challenges that emerged after the onset of the COVID-19 pandemic. Acculogic purchases certain material from a key sole-source supplier in Belarus, which is bordered by Russia to the east and northeast and Ukraine to the south. At present, we are still receiving shipments from this supplier, and we estimate that we have a six-to-nine-month supply of these parts that we are maintaining. We are currently in the process of qualifying an alternate supplier for these parts. We received prototype sample parts from the alternate supplier which we are now evaluating. We expect to complete this evaluation by the fourth quarter of 2024.

Current wording

The ongoing war between Russia and Ukraine continues to contribute to global inflationary pressures and the availability of certain raw materials produced in that region, further exacerbating global supply chain challenges that emerged after the onset of the COVID-19 pandemic. Acculogic purchases certain material from a key sole-source supplier in Belarus, which is bordered by Russia to the east and northeast and Ukraine to the south. At present, we are still receiving shipments from this supplier, and we estimate that we have a three-to-four-month supply of these parts that we are maintaining. We are currently in the process of qualifying an alternate supplier for these parts. We received prototype sample parts from the alternate supplier which we are now evaluating. We expect to complete this evaluation by the first quarter of 2025. We are also looking for additional alternate suppliers for these parts in North America.

Previous wording

Please refer to Part 1, Item 1A of our 2023 Form 10-K for further discussion of the risks associated with our business operations, including risks associated with foreign operations.

Current wording

Please refer to Part I, Item 1A., “Risk Factors” of our 2023 Form 10-K for further discussion of the risks associated with our business operations, including risks associated with foreign operations.

Previous wording

Gross Margin. Our consolidated gross margin was 42% of revenue for the six months ended June 30, 2024 as compared to 47% of revenue for the same period in 2023. The decrease in our gross margin primarily reflects changes in product mix. The mix of products sold in the first half of 2024 had both relatively higher component material costs as a percentage of revenue and a higher labor component to the total cost than the mix of products sold in the same period in 2023. To a lesser extent, the decrease in our gross margin is a result of our fixed operating costs increasing in both absolute dollar terms and as a percentage of revenue in the first half of 2024 as compared to the same period in 2023. The increase in fixed operating costs is a result of the acquisition of Alfamation, which accounted for approximately $1.1 million of our fixed operating costs during the first half of 2024. The fixed operating costs for the balance of our business declined somewhat compared to the same period in 2023, primarily reflecting lower facility related costs.

Current wording

Gross Margin. Our consolidated gross margin was 46% of revenue for the three months ended September 30, 2024 as compared to 47% of revenue for the same period in 2023. The decrease in our gross margin primarily reflects higher fixed operating costs and increased direct labor as a result of the costs attributable to Alfamation. The fixed operating costs for the balance of our business were relatively unchanged. The increase in fixed operating costs and direct labor attributable to Alfamation was partially offset by lower average component material costs, reflecting changes in product mix.

Previous wording

Engineering and Product Development Expense. Engineering and product development expense was $2.2 million for the three months ended June 30, 2024 compared to $2.0 million for the same period in 2023, an increase of $235,000 or 12%. Alfamation accounted for approximately $462,000 of our engineering expense during the second quarter of 2024. In the balance of our business, there were decreases in spending on material used in product development projects in the second quarter of 2024 as compared to the same period in 2023.

Current wording

Engineering and Product Development Expense. Engineering and product development expense was $2.2 million for the three months ended September 30, 2024 compared to $1.8 million for the same period in 2023, an increase of $380,000 or 21%. The increase primarily reflects the additional costs attributable to Alfamation. The costs for the balance of our business were relatively unchanged.

Previous wording

General and Administrative Expense. General and administrative expense was $7.1 million for the three months ended June 30, 2024 compared to $5.0 million for the same period in 2023 an increase of $2.1 million, or 42%. Alfamation accounted for approximately $1.9 million of our general and administrative expense during the second quarter of 2024, which included $401,000 of amortization of acquired intangible assets. In the balance of our business, higher costs related to our corporate development activities were partially offset by lower salary and benefits expense and reduced accruals for profit-based bonuses.

Current wording

General and Administrative Expense. General and administrative expense was $7.1 million for the three months ended September 30, 2024 compared to $5.9 million for the same period in 2023 an increase of $1.2 million, or 20%. Alfamation accounted for approximately $1.7 million of our general and administrative expense during the third quarter of 2024, which included $459,000 of amortization of acquired intangible assets. In addition, during the third quarter of 2023, we recorded a $358,000 decrease in contingent consideration related to our acquisition of Acculogic which we completed in December 2021. There was no similar adjustment in the third quarter of 2024. The remainder of the change in general and administrative expense in the balance of our business primarily reflects a reduction in costs associated with corporate development activities in the third quarter of 2024 as compared to the same period in 2023.

Previous wording

Income Tax Expense. For the three months ended June 30, 2024, we recorded income tax expense of $66,000 compared to income tax expense of $572,000 for the same period in 2023. Our effective tax rate was 22% for the three months ended June 30, 2024 compared to 17% for the same period in 2023. On a quarterly basis, we record income tax expense or benefit based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses.

Current wording

Income Tax Expense. For the three months ended September 30, 2024, we recorded income tax expense of $74,000 compared to income tax expense of $446,000 for the same period in 2023. Our effective tax rate was 13% for the three months ended September 30, 2024 compared to 16% for the same period in 2023. On a quarterly basis, we record income tax expense or benefit based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses.

Previous wording

Selling Expense. Selling expense was $8.7 million for the six months ended June 30, 2024 compared to $9.1 million for the same period in 2023, a decrease of $421,000, or 5%. The decrease primarily reflects lower commissions on the lower revenue level. This decrease was partially offset by higher salary and benefits expense, increased travel costs and $278,000 of costs attributable to Alfamation.

Current wording

Selling Expense. Selling expense was $13.0 million for the nine months ended September 30, 2024 compared to $13.4 million for the same period in 2023, a decrease of $435,000, or 3%. The decrease primarily reflects lower commissions on the lower revenue level and reduced costs for third-party services. This decrease was partially offset by increased travel costs and costs attributable to Alfamation.

Previous wording

Engineering and Product Development Expense. Engineering and product development expense was $4.2 million for the six months ended June 30, 2024 compared to $3.9 million for the same period in 2023, an increase of $313,000 or 8%. Alfamation accounted for a $464,000 increase in our engineering costs. This increase was partially offset by decreases in spending on material used in product development projects during the first half of 2024 as compared to the same period in 2023.

Current wording

Engineering and Product Development Expense. Engineering and product development expense was $6.4 million for the nine months ended September 30, 2024 compared to $5.7 million for the same period in 2023, an increase of $693,000 or 12%. The increase primarily reflects the additional costs attributable to Alfamation. The costs for the balance of our business were relatively unchanged in total. Increases in salary and benefits expense and the use of third-party resources was offset by declines in spending on materials used in product development and lower legal fees related to our intellectual property.

Previous wording

General and Administrative Expense. General and administrative expense was $13.2 million for the six months ended June 30, 2024 compared to $10.2 million for the same period in 2023, an increase of $2.9 million or 29%. Alfamation accounted for approximately $2.1 million of our general and administrative expense during the first half of 2024, which included $503,000 of amortization of acquired intangible assets. In the balance of our business, higher costs related to our corporate development activities, including costs related to the acquisition of Alfamation, increased fees for professionals that assist us with various compliance related matters and higher salaries and benefits expense were partially offset by reduced accruals for profit-based bonuses and reduced costs related to our stock-based compensation awards as the probable achievement estimates for certain performance-based awards were adjusted down during the first half of 2024.

Current wording

General and Administrative Expense. General and administrative expense was $20.2 million for the nine months ended September 30, 2024 compared to $16.1 million for the same period in 2023, an increase of $4.1 million or 26%. Alfamation accounted for approximately $3.8 million of our general and administrative expense during the first nine months of 2024, which included $962,000 of amortization of acquired intangible assets. In addition, during the first nine months of 2023, we recorded a $358,000 decrease in contingent consideration related to our acquisition of Acculogic which we completed in December 2021. This compares to recording a $50,000 reduction in contingent consideration during comparable period in 2024. In the balance of our business, increased fees for professionals that assist us with various compliance related matters and higher salaries and benefits expense were partially offset by reduced accruals for profit-based bonuses and reduced costs related to our stock-based compensation awards as the probable achievement estimates for certain performance-based awards were adjusted down during the first nine months of 2024.

Previous wording

Income Tax Expense. For the six months ended June 30, 2024, we recorded income tax expense of $191,000 compared to income tax expense of $1.1 million for the same period in 2023. Our effective tax rate was 18% for the six months ended June 30, 2024 compared to 17% for the same period in 2023. On a quarterly basis, we record income tax expense or benefit based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses.

Current wording

Income Tax Expense. For the nine months ended September 30, 2024, we recorded income tax expense of $265,000 compared to income tax expense of $1.6 million for the same period in 2023. Our effective tax rate was 16% for the nine months ended September 30, 2024 compared to 17% for the same period in 2023. On a quarterly basis, we record income tax expense or benefit based on the expected annualized effective tax rate for the various taxing jurisdictions in which we operate our businesses.

Previous wording

As discussed more fully in the Overview, our business and results of operations are substantially dependent upon the demand for ATE by semiconductor manufacturers and companies that specialize in the testing of ICs. The cyclical and volatile nature of demand for ATE makes estimates of future revenues, results of operations and net cash flows difficult.

Current wording

As discussed more fully in the Overview section above, our business and results of operations are substantially dependent upon the demand for ATE by semiconductor manufacturers and companies that specialize in the testing of ICs. The cyclical and volatile nature of demand for ATE makes estimates of future revenues, results of operations and net cash flows difficult.

Previous wording

On September 20, 2022, we further amended the Loan Agreement by entering into a Third Amendment to Amended and Restated Loan and Security Agreement (the Loan Agreement as amended by the Third Amendment, the “Third Amended Loan Agreement”) and the Third Amended and Restated Delayed Draw Term Note 1A. Under the Third Amended Loan Agreement, the maximum loan amount that we may borrow under the Term Note increased from $25 million to $50.5 million, which raises the available funding at March 31, 2024 to $30 million. On May 2, 2024 we further amended our Third Amended Loan Agreement by entering into a Fourth Amendment to the Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”). Under the Amended Loan Agreement, the period during which we may request advances under the Term Note is extended until May 2, 2026, and the Term Note and revolving credit facility maturity date is extended from September 19, 2027 to May 2, 2031. At June 30, 2024, we had not borrowed any amounts under the $10 million Revolving Facility. Our borrowings under the Term Note are discussed below and occurred prior to entering into the Amended Loan Agreement. The principal balance of the Revolving Facility and the principal balance of any amount drawn under the Term Note accrues interest based on the Secured Overnight Financing Rate or a bank-defined base rate plus an applicable margin, depending on leverage. The Amended Loan Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA of not more than 3.0 to 1.0 and a fixed charge coverage ratio of not less than 1.25 to 1.0. Our obligations under the Amended Loan Agreement are secured by liens on substantially all of our tangible and intangible assets. At June 30, 2024, we were in compliance with all of the covenants included in the Credit Facility, except for the fixed charge coverage ratio financial covenant which was 1.16 to 1.0 for the quarter ended June 30, 2024, for which we have received a one-time waiver from M&T.

Current wording

On September 20, 2022, we further amended the Loan Agreement by entering into a Third Amendment to Amended and Restated Loan and Security Agreement (the Loan Agreement as amended by the Third Amendment, the “Third Amended Loan Agreement”) and the Third Amended and Restated Delayed Draw Term Note 1A. Under the Third Amended Loan Agreement, the maximum loan amount that we may borrow under the Term Note increased from $25 million to $50.5 million, which raises the available funding at September, 2024 to $30 million. On May 2, 2024 we further amended our Third Amended Loan Agreement by entering into a Fourth Amendment to the Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”). Under the Amended Loan Agreement, the period during which we may request advances under the Term Note is extended until May 2, 2026, and the Term Note and revolving credit facility maturity date is extended from September 19, 2027 to May 2, 2031. At September 30, 2024, we had not borrowed any amounts under the $10 million Revolving Facility. Our borrowings under the Term Note are discussed below and occurred prior to entering into the Amended Loan Agreement. The principal balance of the Revolving Facility and the principal balance of any amount drawn under the Term Note accrues interest based on the Secured Overnight Financing Rate or a bank-defined base rate plus an applicable margin, depending on leverage. The Amended Loan Agreement includes customary affirmative, negative and financial covenants, including a maximum ratio of consolidated funded debt to consolidated EBITDA of not more than 3.0 to 1.0 and a fixed charge coverage ratio of not less than 1.25 to 1.0. Our obligations under the Amended Loan Agreement are secured by liens on substantially all of our tangible and intangible assets. At September 30, 2024, we were in compliance with all of the covenants included in the Credit Facility including the debt covenants of the Amended Loan Agreement.

Previous wording

On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At June 30, 2024, it was approximately 7.4% based on current leverage.

Current wording

On December 29, 2021, we drew $8.5 million under the Term Note to finance the acquisition of Acculogic. We did not enter into an interest rate swap agreement with M&T related to this draw. The annual interest rate we expect to pay for this draw under the Term Note is variable. At September 30, 2024, it was approximately 7.0% based on current leverage.

Previous wording

At June 30, 2024, the total debt assumed in connection with the acquisition of Alfamation was valued at $11.1 million. The acquisition is discussed further in Note 3. This debt is comprised of both fixed and variable rate bank issued term loans as well as $4.8 million of short-term variable rate financing backed by Alfamation’s accounts receivable. This debt is spread across a number of different institutions with monthly, quarterly or half-yearly repayment schedules. The average interest rate being paid at June 30, 2024 was 2.8% for fixed rate debt and 5.0% for variable rate debt. The average rate for total debt at June 30, 2024 was 4.2%.

Current wording

In connection with the acquisition of Alfamation, as discussed further in Note 3, we assumed debt which totaled $11.3 million as of the acquisition date. The debt acquired is comprised of both fixed and variable rate bank issued term loans as well as short-term variable rate financing backed by Alfamation’s accounts receivable. This debt is spread across a number of different institutions with monthly, quarterly or half-yearly repayment schedules.

Previous wording

Total interest expense for the six months ended June 30, 2024 and 2023 related to our various debt arrangements was $393 and $358, respectively.

Current wording

Total interest expense for the nine months ended September 30, 2024 and 2023 related to our various debt arrangements was $612,000 and $526,000, respectively.

Previous wording

As of June 30, 2024, $7.8 million, or 38%, of our cash and cash equivalents was held by our foreign subsidiaries. We currently expect our cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations in the next twelve months to be sufficient to support our short-term working capital requirements and other corporate requirements. Our Revolving Facility is discussed in Note 10 to our consolidated financial statements in this Report.

Current wording

As of September 30, 2024, $8.2 million, or 46%, of our cash and cash equivalents was held by our foreign subsidiaries. We currently expect our cash and cash equivalents, in combination with the borrowing capacity available under our Revolving Facility and the anticipated net cash to be provided by our operations in the next twelve months to be sufficient to support our short-term working capital requirements and other corporate requirements. Our Revolving Facility is discussed in Note 10 to our consolidated financial statements in this Report.

Previous wording

Operating Activities. For the six months ended June 30, 2024, we recorded net earnings of $892,000. Net cash used in operations during this period was $3.0 million. During the six months ended June 30, 2024, we had non-cash charges of $2.8 million for depreciation and amortization which included $685,000 of amortization related to our ROU assets. Our operating lease liabilities declined $765,000 during this same period. During the six months ended June 30, 2024, we recorded $913,000 for amortization of deferred compensation expense related to stock-based awards. Excluding the impact of the acquired assets, during the first six months of 2024, accounts receivable increased $5.7 million, accounts payable increased $1.9 million and inventories decreased $2.0 million. During this same period, prepaid expenses and other current assets decreased $1.3 million, customer deposits and deferred revenue (including deferred revenue, net of current portion) declined $936,000 and domestic and foreign taxes payable decreased $851,000. All of these fluctuations represent normal variations due to varying timing of payments, receipt of cash from customers and normal accruals that are standard in our business operations.

Current wording

Operating Activities. For the nine months ended September 30, 2024, we recorded net earnings of $1.4 million and net cash provided by operations was $1.2 million. During this same period, we had non-cash charges of $4.5 million for depreciation and amortization which included $1.0 million of amortization related to our ROU assets and our operating lease liabilities declined $1.2 million. During the nine months ended September 30, 2024, we recorded $1.5 million for amortization of deferred compensation expense related to stock-based awards. Excluding the impact of the acquired assets, during the first nine months of 2024, accounts receivable increased $3.7 million and accounts payable decreased $1.0 million while inventories were relatively unchanged. During this same period, domestic and foreign income taxes payable declined $817,000, prepaid expenses and other current assets decreased $569,000, and accrued wages and benefits declined $533,000. All of these fluctuations represent normal variations due to varying timing of payments, receipt of cash from customers and normal accruals that are standard in our business operations.

Previous wording

Investing Activities. During the six months ended June 30, 2024, we paid $18.7 million in net cash for the acquisition of Alfamation which is discussed in more detail in Note 3 to our consolidated financial statements in this Report. Purchases of property and equipment were $656,000, during this period, representing capital expenditures in the normal course of business. We have no significant commitments for capital expenditures for the balance of 2024; however, depending upon changes in market demand or manufacturing and sales strategies, we may make such purchases or investments as we deem necessary and appropriate. These additional cash requirements would be funded by our cash and cash equivalents, anticipated net cash to be provided by operations and our revolving credit facility.

Current wording

Investing Activities. During the nine months ended September 30, 2024, we paid $18.7 million in net cash for the acquisition of Alfamation which is discussed in more detail in Note 3 to our consolidated financial statements in this Report. Purchases of property and equipment were $1.2 million during this period, representing capital expenditures in the normal course of business. We have no significant commitments for capital expenditures for the balance of 2024; however, depending upon changes in market demand or manufacturing and sales strategies, we may make such purchases or investments as we deem necessary and appropriate. These additional cash requirements would be funded by our cash and cash equivalents, anticipated net cash to be provided by operations and our revolving credit facility.

Previous wording

Financing Activities. During the six months ended June 30, 2024, we made principal payments on our long-term debt totaling $2.1 million. There were no other significant amounts used by or received from financing activities during the quarter.

Current wording

Financing Activities. During the nine months ended September 30, 2024, we repaid $5.5 million of long-term debt, $1.9 million of short-term debt and we used $1.0 million to repurchase stock. There were no other significant amounts used by or received from financing activities during the quarter.