Aetrium Divests Unprofitable Product Lines

St. Paul, MN - Aetrium Incorporated recently announced that effective December 31, 2006 it is selling the product lines being manufactured at its Dallas, TX facility, which were some of its lowest revenue and less strategic product lines, including burn-in board loaders and turret-based test handlers. The divestiture will allow Aetrium to concentrate all of its product development and customer support efforts on its higher revenue, more strategic and more successful gravity feed test handlers and reliability test equipment. The Dallas operation and product lines are being acquired by a group that includes senior management of Aetrium's Dallas operation, who will operate the business as a privately-held company under the name of WEB Technology, Inc.

As part of the sale, Aetrium transferred all intellectual property, inventory, equipment and other assets associated with the divested product lines to WEB Technology. WEB Technology will assume responsibility for all liabilities and obligations related to the installed base of the divested product lines, including all product warranty obligations, and has agreed to provide ongoing customer support, including field service, spare parts and device kits.

Aetrium anticipates that it will record special charges related to the divestiture in its fourth quarter ending December 31, 2006, in the range of $4.2 to $4.6M, most of which will be non-cash related. The Dallas operation has approximately 30 employees. Most of those employees have agreed to become employees of WEB Technology. Revenue associated with the divested operation amounted to approximately $2.3M in the first nine months of 2006, or approximately 9 percent of Aetrium's total revenue for that period. In total, the divested product lines have been unprofitable for several quarters.

"The need for this change of course has become increasingly clear over the past year, as we have seen disappointing revenues and continuing losses from our Dallas operation. It became more apparent as the year progressed that the products from our Dallas operation were no longer a good long term strategic fit," said Joseph C. Levesque, president and chief executive officer. "We have carefully structured a deal with WEB Technology that we believe provides a win/win solution for the two companies and the best possible outcome for our customers and our employees. I believe that the senior management of Web Technology and the employees that have elected to join the new company have the knowledge and motivation necessary to create a successful, streamlined, and long term business opportunity while ensuring seamless warranty coverage and other necessary support for their customers."

"This is an important strategic change for Aetrium at a time of both challenge and opportunity," continued Levesque. "We have experienced strong growth in revenues and profitability in the last several quarters. The semiconductor industry is currently going through what we believe will be a short term correction that is likely to continue into early 2007. As a result we are experiencing a reduction in demand for our equipment that is affecting our current quarter. The changes announced today, in addition to lowering our overall cost structure, will allow us to focus all of our efforts on our fastest growing and more successful gravity feed test handlers and reliability tester product lines. Our primary goal, as always, is to maximize total shareholder value, and we believe that this divestiture furthers that goal."

SOURCE: Aetrium