Note 1 - Nature of Operations

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Nature of Operations [Text Block]

(1)

  

NATURE OF OPERATIONS

We are an independent designer, manufacturer and marketer of thermal, mechanical and electrical products that are primarily used by semiconductor manufacturers in conjunction with automatic test equipment ("ATE") in the testing of integrated circuits ("ICs" or "semiconductors"). We also market our thermal products in markets outside the ATE market, such as the automotive, consumer electronics, defense/aerospace, energy, industrial and telecommunications markets.

The consolidated entity is comprised of inTEST Corporation (parent) and our wholly-owned subsidiaries. We have

three

reportable segments, which are also our reporting units: Thermal Products, Mechanical Products and Electrical Products. We manufacture our products in the U.S. Marketing and support activities are conducted worldwide from our facilities in the U.S., Germany and Singapore.

The semiconductor market in which we operate is characterized by rapid technological change, competitive pricing pressures and cyclical as well as seasonal market patterns. This market is subject to significant economic downturns at various times. Our financial results are affected by a wide variety of factors, including, but not limited to, general economic conditions worldwide and in the markets in which we operate, economic conditions specific to the semiconductor market and the other markets we serve, our ability to safeguard patented technology and intellectual property in a rapidly evolving market, downward pricing pressures from customers, and our reliance on a relatively few number of customers for a significant portion of our sales. In addition, we are exposed to the risk of obsolescence of our inventory depending on the mix of future business and technological changes within the markets that we serve. In

January

2016,

we implemented a workforce reduction, as discussed further in Note

3,

which was a key element in restructuring our Mechanical Products segment with the goal of returning this segment to profitability. These efforts were substantially completed during

2016

and we did not incur any further significant costs associated with these efforts. We also continue to implement an acquisition strategy that

may

cause us to incur substantial expense in reviewing and evaluating potential transactions. We

may

or

may

not be successful in locating suitable businesses to acquire. In addition, if we are able to complete an acquisition, we

may

not be able to successfully integrate the acquired business with our existing business and we

may

not be able to operate the acquired business profitably. As a result of these or other factors, we

may

experience significant period-to-period fluctuations in future operating results.