UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 27, 2005
PERFORMANCE TECHNOLOGIES, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-27460 16-1158413
(Commission File Number) (I.R.S. Employer Identification No.)
205 Indigo Creek Drive, Rochester, New York 14626
(Address of principal executive offices) (Zip Code)
(585) 256-0200
(Registrant's telephone number,
including area code)
(Not Applicable)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act(17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b)under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On October 27, 2005, Performance Technologies, Incorporated issued a press
release announcing its results of operations for the three and nine months
ending September 30, 2005. A copy of the press release is being furnished as
Exhibit 99.1 to this Form 8-K.
(c) Exhibits.
(99.1) Press release issued by Performance Technologies, Incorporated on October
27, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
PERFORMANCE TECHNOLOGIES, INCORPORATED
October 31, 2005 By:/s/ Donald L. Turrell
-------------------------------
Donald L. Turrell
President and
Chief Executive Officer
October 31, 2005 By:/s/ Dorrance W. Lamb
-------------------------------
Dorrance W. Lamb
Chief Financial Officer and
Vice President of Finance
Exhibit 99.1
For more information contact:
Dorrance W. Lamb
Chief Financial Officer
Performance Technologies
585-256-0200 ext. 276
http://www.pt.com
finance@pt.com
--------------
Performance Technologies Announces
Third Quarter 2005 Financial Results
"Company reports 14% sequential revenue growth and improving margins."
ROCHESTER, NY - October 27, 2005 -- Performance Technologies, Inc. (Nasdaq NM:
PTIX), a leading developer of platforms, components, software and services for
the communications, military and commercial markets, today announced its
financial results for the third quarter 2005.
Revenue in the third quarter 2005 amounted to $12.3 million, compared to $10.8
million in the second quarter 2005 and $11.6 million in the corresponding
quarter a year earlier. Revenue for the nine months ended September 30, 2005
amounted to $36.3 million, compared to $40.4 million during the corresponding
period in 2004.
GAAP Information
Net income for the third quarter 2005 totaled $.9 million, or $.07 per diluted
share based on 13.1 million shares outstanding. Net income for the third quarter
2004 totaled $1.4 million, or $.11 per diluted share, based on 13.0 million
shares outstanding.
Net income for the nine months ended September 30, 2005 totaled $2.2 million, or
$.17 per diluted share based on 13.1 million shares outstanding. For the nine
months ended September 30, 2004, net income totaled $4.0 million, or $.30 per
diluted share based on 13.4 million shares outstanding.
Non-GAAP Information
Management believes that the Company's results excluding non-recurring items
("Non-GAAP") provide another measure of its operations as non-recurring items
result from facts and circumstances that vary in frequency, amounts and cause.
There were no differences between GAAP and Non-GAAP net income and diluted
earnings per share for the third quarter 2005 and for the nine months ended
September 30, 2005.
Non-GAAP net income for the third quarter 2004 totaled $.2 million, or $.02 per
diluted share based on 13.0 million shares outstanding. This Non-GAAP net income
excluded the gain realized on the sale of the Company's minority interest in
Momentum Computer, Inc., which amounted to $1.2 million, or $.09 per diluted
share.
Non-GAAP net income for the nine months ended September 30, 2004 totaled $3.0
million, or $.22 per diluted share based on 13.4 million shares outstanding.
This Non-GAAP net income excluded in-process research and development expense
associated with the acquisition of Mapletree Networks in the first quarter 2004
and the gain on sale of the minority interest in Momentum Computer, Inc.
Cash and investments amounted to $29.9 million and $25.6 million at September
30, 2005 and December 31, 2004, respectively, and the Company had no long-term
debt at either date.
The following contains forward-looking statements within the meaning of the
Securities Act of 1933 and Securities Exchange Act of 1934 and is subject to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The Company is a leading developer of platforms, components, software and
services for the embedded systems market. This marketplace is comprised of
several sectors, with telecommunications being the largest. A breakdown of
applications that utilize the Company's products and platforms include:
Voice-over-IP (VoIP) representing approximately 40%, wireless infrastructure
representing 40%, and the balance spread across various communications, military
and commercial requirements.
The Company's products are sold as individual components or can be provided as
fully integrated, purpose built, packet-based platforms for the embedded
communications marketplace. When sold as integrated platforms (Advanced Managed
Platforms) these products offer customers distinct cost advantages, increase
overall system reliability and performance, and improve time-to-market for their
products. The Company's Advanced Managed Platforms, based on the PICMG 2.16
standard, are applicable to the broader embedded systems market, not just
telecommunications. Since the introduction of the Advanced Managed Platform in
2003, this product line has realized more than 30 new design wins, with each
expected to generate greater than $.5 million of annualized revenue when
reaching production volumes. While only a small number of these design wins had
reached production levels at the beginning of 2005, an increasing number of
these design wins are moving to production this year.
Several new products recently introduced by the Company include an AdvancedTCA
(ATCA) Advanced Managed Platform offering, a variety of media and
packet-processing slot components and a new cost-effective IP-STP signaling
system, which began shipping to telecom operators this quarter. Management
believes these products provide both innovative solutions to customers and
high-growth prospects for future Company revenue.
The Company's wireless infrastructure business is reliant upon carrier spending
to upgrade networks to next-generation equipment. During the third quarter 2005,
actual shipments by the Company to the telecommunications equipment providers
for domestic wireless network infrastructure were comparable to the preceding
quarter.
"Sequentially, our earnings and revenue showed significant improvement in the
third quarter, despite shipments for domestic wireless network infrastructure
remaining relatively flat in the quarter," said Donald Turrell, president and
chief executive officer. "We believe the third quarter's revenue growth reflects
a material strengthening of our business and we anticipate accelerated spending
for wireless network infrastructure to begin in the fourth quarter. If this
expected spending occurs and the other components of our business continue their
recent improvements, we expect to see positive and meaningful growth for our
business as we complete the fiscal year."
In October 2004, management announced commencement of a plan to centralize its
multi-location operations and to streamline the organization. By the end of the
first quarter 2005, the Company had completed centralization of all sales,
marketing and accounting functions into corporate operations resulting in
anticipated annualized savings of $1.3 million per year. During the third
quarter 2005, the transition of the remaining manufacturing functions into the
Rochester manufacturing operation was completed resulting in anticipated
annualized savings of $.7 million per year. During the third quarter 2005, the
Company incurred a charge of $.1 million related to these restructuring efforts.
A portion of the savings realized under this plan will be reinvested to
stimulate future growth.
During the first quarter 2005, the Company announced that its current president
and chief executive officer, Donald Turrell, will leave the Company's executive
management at the end of 2005. The Succession Committee of the Board of
Directors has retained an executive search firm to assist in the process of
identifying qualified individuals for this position and candidates have been
interviewed. Mr. Turrell will maintain active involvement throughout the
transition of the Company's change in leadership and expects to remain as a
board member thereafter.
Guidance
The Company's integrated platforms, components, software solutions and services
are incorporated into current and next-generation embedded communications
infrastructure. Traditionally, design wins have been an important metric for
management to judge the Company's product acceptance in its marketplace. Design
wins, if implemented, reach production volumes at varying rates, generally
beginning twelve to eighteen months after the design win occurs. A variety of
risks such as schedule delays, cancellations, changes in customer markets and
economic conditions can adversely affect a design win before production is
reached, or during deployment. During the third quarter 2005, the Company
realized six design wins for its Advanced Managed Platforms, IPnexus(TM) and
SEGway(TM) product families. Each is expected to generate greater than $.5
million of annualized revenue when reaching production volumes.
During weak or uncertain economic periods, the visibility for customer orders is
limited which frequently causes delays in the placement of orders. These factors
often result in a substantial portion of the Company's revenue being derived
from orders placed within a quarter and shipped in the final month of the same
quarter. Unfortunately, forward-looking visibility for customer orders continues
to be very limited.
The Company provides guidance related to earnings per share expected in future
quarters. Any additional information provided, such as revenue forecasts, is
provided as supplementary information to the earnings per share guidance.
Management expects diluted earnings per share in the fourth quarter to be in the
range of $.10 to $.13. Based upon the current business mix, the current backlog
and review of sales forecasts, revenue is forecasted to be in the range of $13.0
million to $14.0 million in the fourth quarter. Gross margin is expected to be
approximately 50.0% to 51.5% and the effective income tax rate for the fourth
quarter is expected to be 26%.
More in-depth discussions of the Company's strategy and financial performance
can be found in the Company's Annual and Quarterly Reports, on Form 10-K and
Form 10-Q, as filed with the Securities and Exchange Commission.
About Performance Technologies
Performance Technologies (Nasdaq NM: PTIX) develops platforms, components and
software solutions for the world's evolving communications infrastructure. Our
broad customer base includes companies in the communications, military and
commercial markets. Serving the industry for more than 20 years, our complete
line of packet-based products enables equipment manufacturers and service
providers to offer highly available and fully-managed systems with
time-to-market, performance and cost advantages.
Performance Technologies is headquartered in Rochester, New York. Additional
operational and engineering facilities are located in San Diego and San Luis
Obispo, California; Norwood, Massachusetts and Ottawa, Canada. For more
information, visit www.pt.com.
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. This press release contains
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and is subject to the safe harbor provisions of those
Sections.
These forward-looking statements are subject to certain risks and uncertainties,
and the Company's actual results could differ materially from those discussed in
the forward-looking statements. These risks and uncertainties include, among
other factors, general business and economic conditions, rapid technological
changes accompanied by frequent new product introductions, competitive
pressures, dependence on key customers, the attainment of design wins,
fluctuations in quarterly and annual results, the reliance on a limited number
of third party suppliers, limitations of the Company's manufacturing
arrangements, the protection of the Company's proprietary technology, the
dependence on key personnel, potential delays associated with the purchase and
implementation of an advanced planning and scheduling system, and potential
impairments of investments. These statements should be read in conjunction with
the audited Consolidated Financial Statements, the Notes thereto, and
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company as of December 31, 2004, as reported in its Annual
Report on Form 10-K, and other documents as filed with the Securities and
Exchange Commission.
###
A conference call will be held on Friday, October 28, 2005 at 10:00 a.m. eastern
time to discuss the Company's financial performance for the third quarter 2005.
All institutional investors can participate in the conference by dialing (877)
323-2093. The conference call will be available simultaneously for all other
investors at (800) 565-0813. A digital recording of the call may be accessed one
hour after the completion of the conference from October 28 through November 1,
2005. Participants should dial (888) 509-0081, or for international or local
participants, dial (416) 695-5275. A live Webcast of the conference call will be
available on the Performance Technologies' Web site at www.pt.com and will be
archived to the site within two hours after the completion of the call.
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2005 2004
------------------ ------------------
(unaudited)
Current assets:
Cash and cash equivalents $10,599,000 $10,361,000
Investments 19,325,000 15,250,000
Accounts receivable 9,833,000 10,185,000
Inventories 6,753,000 6,573,000
Prepaid income taxes 260,000 771,000
Prepaid expenses and other assets 248,000 801,000
Deferred taxes 3,105,000 3,088,000
------------------ ------------------
Total current assets 50,123,000 47,029,000
Property, equipment and improvements 2,014,000 2,186,000
Software development costs 4,430,000 3,653,000
Investment in unconsolidated company 248,000
Goodwill 4,143,000 4,143,000
------------------ ------------------
Total assets $60,958,000 $57,011,000
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,949,000 $ 1,476,000
Accrued expenses 4,283,000 3,916,000
------------------ ------------------
Total current liabilities 6,232,000 5,392,000
Deferred taxes 1,582,000 1,198,000
------------------ ------------------
Total liabilities 7,814,000 6,590,000
------------------ ------------------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 13,636,000 13,476,000
Retained earnings 43,212,000 41,978,000
Treasury stock (3,837,000) (5,188,000)
Accumulated other comprehensive income 22,000
------------------ ------------------
Total stockholders' equity 53,144,000 50,421,000
------------------ ------------------
Total liabilities and stockholders'
equity $60,958,000 $57,011,000
================== ==================
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2005 AND 2004
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
Sales $12,343,000 $11,560,000 $36,302,000 $40,400,000
Cost of goods sold 6,153,000 6,608,000 18,531,000 20,849,000
----------- ----------- ----------- -----------
Gross profit 6,190,000 4,952,000 17,771,000 19,551,000
----------- ----------- ----------- -----------
Operating expenses:
Selling and marketing 1,342,000 1,568,000 4,187,000 4,769,000
Research and development 2,677,000 2,398,000 7,550,000 7,610,000
General and administrative 1,131,000 993,000 3,658,000 3,535,000
Restructuring charges 53,000 12,000 249,000 12,000
In-process research and
development 218,000
----------- ----------- ----------- -----------
Total operating expenses 5,203,000 4,971,000 15,644,000 16,144,000
----------- ----------- ----------- -----------
Income(loss)from operations 987,000 (19,000) 2,127,000 3,407,000
Other income, net 333,000 182,000 958,000 471,000
----------- ----------- ----------- -----------
Income before income taxes,
equity in income of
unconsolidated company and
gain on sale of investment 1,320,000 163,000 3,085,000 3,878,000
Income tax provision 383,000 51,000 895,000 1,270,000
----------- ----------- ----------- -----------
Income before equity in income
of unconsolidated company and
gain on sale of investment 937,000 112,000 2,190,000 2,608,000
Equity in income of
unconsolidated company 90,000 182,000
Gain on sale of investment in
unconsolidated company, net
of tax 1,169,000 1,169,000
----------- ----------- ----------- -----------
Net income $ 937,000 $ 1,371,000 $ 2,190,000 $ 3,959,000
=========== =========== =========== ===========
Basic earnings per share $ .07 $ .11 $ .17 $ .31
=========== =========== =========== ===========
Weighted average common shares 12,872,000 12,758,000 12,848,000 12,702,000
=========== =========== =========== ===========
Diluted earnings per share $ .07 $ .11 $ .17 $ .30
=========== =========== =========== ===========
Weighted average common and
common equivalent shares 13,079,000 13,047,000 13,125,000 13,369,000
=========== =========== =========== ===========