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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, 2004
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.)
Item 2.02 Results of Operations and Financial Conditions
On October 27, 2004, Performance Technologies, Incorporated issued a press
release announcing its results of operations for the quarter and nine months
ended September 30, 2004. A copy of the related press release is being
furnished as Exhibit 99.1 to this Form 8-K.
Item 9.01 Financial Statements and Exhibits
(c) Exhibits.
(99.1) Press release issued by Performance Technologies, Incorporated on
October 27, 2004.
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 29, 2004 By:/s/ Donald L. Turrell
---------------------------
Donald L. Turrell
President and
Chief Executive Officer
October 29, 2004 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
finance@pt.com
Performance Technologies Announces Third Quarter 2004 Financial Results
ROCHESTER, N.Y.-- October 27,2004 -- Performance Technologies, Inc.
(Nasdaq NM: PTIX), a leading supplier of integrated platforms for the
communications, military and commercial markets today announced its financial
results for the third quarter 2004.
Revenue in the third quarter 2004 amounted to $11.6 million, compared to $13.1
million in the corresponding quarter a year earlier. Revenue for the nine months
ended September 30, 2004 amounted to $40.4 million, compared to $36.7 million
during the corresponding period in 2003. The Company's revenue and earnings in
2004 include the Voice Technology Group's (VTG) operations (Mapletree Networks,
Inc.) from the date purchased on January 23, 2004. VTG products generated
revenue for the third quarter and nine months ended September 30, 2004 amounting
to $.4 million and $1.9 million, respectively.
GAAP Earnings Basis
Net income for the third quarter 2004 amounted to $1.4 million, or $.11 per
diluted share based on 13.0 million shares outstanding. Net income for the third
quarter 2003 amounted to $1.0 million, or $.07 per diluted share, based on 13.0
million shares outstanding.
Net income for the nine months ended September 30, 2004 totaled $4.0 million, or
$.30 per diluted share based on 13.4 million shares outstanding. For the nine
months ended September 30, 2003, net income amounted to $1.9 million, or $.15
per diluted share based on 12.6 million shares outstanding.
Non-GAAP Information
Management believes that the Company's results excluding non-recurring items
provide better comparability of its operations because non-recurring items
result from facts and circumstances that vary in frequency, amounts and cause.
During the third quarter 2004, the Company sold its minority interest in
Momentum Computer, Inc. and realized a gain of $1.2 million, or $.09 per diluted
share. Excluding this gain, net income for the third quarter 2004 amounted to
$.2 million, or $.02 per diluted share.
During the first quarter 2004, the Company completed the purchase of assets of
Mapletree Networks and recorded in-process research and development costs
associated with this acquisition in the amount of $.2 million, or $.02 per
diluted share.
Net income for the nine months ended September 30, 2004 amounted to $3.0
million, or $.22 per diluted share excluding in-process research and development
expense and the gain on sale of the minority interest in Momentum Computer,
Inc., based on 13.4 million shares outstanding.
Cash amounted to $21.4 million and $29.6 million at September 30, 2004 and
December 31, 2003, 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 are subject to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995.
For the past two years, the Company's product strategy has been focused on
developing and delivering a family of fully managed, integrated platforms which
incorporate the Company's components and software for embedded applications. The
product family, known as the IPnexus Advanced Managed Platforms(TM),
specifically addresses equipment manufacturers' requirements to procure
platforms with increased levels of system integration, migrate from older
proprietary to more contemporary open-standards platforms, and improve
time-to-market for new products. Management believes the Company is well
positioned to address these market requirements with arguably the most
comprehensive range of platforms, integrated components and software available
in the targeted embedded systems marketplace today.
"As we approach the end of 2004, we are pleased with how the Company is
delivering on its committed strategy to provide managed platforms to our target
markets," said Don Turrell, president and chief executive officer. "This
accomplishment provides a robust generation of fully integrated platform
solutions as well as industry leading components and software. We believe this
addresses a growing interest among customers to acquire more complete advanced
solutions and, in turn, is expected to generate positive future financial
returns for our Company and our stockholders," continued Mr. Turrell.
The next phase of the Company's product strategy is to further develop and
deliver integrated products and platforms targeted at specific applications
within the communications market. Based on market data, management has
identified voice-over-IP infrastructure and media server/service platforms as
growing more rapidly than the overall communications market and these areas can
benefit from the Company's capabilities and technologies. Within the next three
to twelve months, the Company will introduce several new products directed at
these specific market applications.
During the third quarter, the Company completed the sale of its minority
investment in Momentum Computer, Inc. for $2.1 million and realized a gain of
$1.2 million, or $.09 per diluted share. Cash received in the fourth quarter
2004 from the sale amounted to $3.1 million, including the payoff of a $1.0
million note receivable.
As a result of selling its minority interest in Momentum Computer, Inc. for a
gain, and by maintaining tight control over expenses, the Company exceeded its
original earnings per share guidance for the third quarter. However, during the
second and third quarters, many sectors of the telecommunications market
continued to exhibit weakness over prior quarters. From the Company's
perspective, telecom spending appears to have continued on certain projects and
technologies, but not necessarily across the broad telecommunications
infrastructure.
The weakness in the telecommunications market places pressure on the Company's
revenue and operating earnings. Despite this weakness, management continues to
believe the Company is strategically positioned to improve financial performance
when target markets become more positive. Nonetheless, management is formulating
actions and taking steps to reduce annualized expenses by approximately $2.0
million with a primary focus on eliminating redundancy in the Company's
multi-location operations and to streamline the organization. During the third
quarter 2004, the Company began incorporating the Voice Technology Group (VTG)
into corporate operations with the integration of the VTG sales and
administrative functions. This action is expected to be completed within the
next thirty days. During the third quarter, the Company incurred a charge of
less than $.1 million related to this restructuring effort. Additional charges
related to further restructuring actions are expected in the fourth quarter
2004.
Guidance
The Company's integrated platforms, components and software solutions are
incorporated into current and next-generation embedded systems 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. In addition, during weak or uncertain economic periods, the
visibility for customer's 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 on customer orders continues to be very limited. During the third
quarter 2004, the Company realized six design wins for its Advanced Managed
Platforms, IPnexus(TM), SEGway(TM) and UniPorte(TM) Architecture product
families with each expected to generate greater than $.5 million of annualized
revenue when reaching production volumes.
Based upon the current business mix, the current backlog and review of sales
forecasts, management expects revenue to be in the range of $12.0 million to
$13.0 million in the fourth quarter 2004. Gross margin is expected to be
approximately 45.0% to 47.5% and diluted earnings per share in the fourth
quarter is expected to be $.02 to $.05, excluding any restructuring charges. The
effective income tax rate for the fourth quarter is expected to be 31%.
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 integrated 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 http://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 enterprise-wide software 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, 2003, 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 Thursday, October 28, 2004 at 10:00 a.m.
eastern time, to discuss the Company's financial performance for the third
quarter. All institutional investors can participate in the conference call by
dialing (877) 323-2093. The conference call will also be available
simultaneously for all other investors at (888) 280-8349. A digital recording
will be available one hour after the completion of the conference from October
28 through October 29, 2004. To access, participants should dial (888) 509-0081
or for international/local participants, dial (416) 695-5275. A live Webcast of
the conference call will also be available on the Performance Technologies Web
site at http://www.pt.com. The Webcast will be archived to the Web site within
two hours after the completion of the call.
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2004 2003
----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $21,439,000 $29,589,000
Accounts receivable 9,111,000 7,857,000
Inventories 7,407,000 5,443,000
Prepaid expenses and other assets 3,617,000 626,000
Deferred taxes 1,944,000 1,714,000
----------- -----------
Total current assets 43,518,000 45,229,000
Property, equipment and improvements 2,162,000 2,432,000
Software development costs 3,658,000 2,597,000
Note receivable from unconsolidated company 2,300,000 1,000,000
Investment in unconsolidated company 402,000
Goodwill 5,474,000
----------- -----------
Total assets $57,112,000 $51,660,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,398,000 $1,231,000
Income taxes payable 461,000 1,760,000
Accrued expenses 3,292,000 4,019,000
----------- -----------
Total current liabilities 5,151,000 7,010,000
Deferred taxes 1,047,000 698,000
----------- -----------
Total liabilities 6,198,000 7,708,000
----------- -----------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 12,858,000 12,863,000
Retained earnings 43,195,000 40,532,000
Treasury stock (5,254,000) (9,536,000)
Accumulated other comprehensive loss (18,000) (40,000)
----------- -----------
Total stockholders' equity 50,914,000 43,952,000
Total liabilities and stockholders' ----------- -----------
equity $57,112,000 $51,660,000
=========== ===========
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Sales $11,560,000 $13,060,000 $40,400,000 $36,735,000
Cost of goods sold 6,608,000 6,516,000 20,849,000 19,062,000
----------- ----------- ----------- -----------
Gross profit 4,952,000 6,544,000 19,551,000 17,673,000
----------- ----------- ----------- -----------
Operating expenses:
Selling and marketing 1,568,000 1,514,000 4,769,000 4,322,000
Research and
development 2,398,000 2,513,000 7,610,000 7,291,000
General and
administrative 993,000 1,168,000 3,535,000 3,430,000
Restructuring charge 12,000 12,000
In-process research and
development 218,000
Total operating ----------- ----------- ----------- -----------
expenses 4,971,000 5,195,000 16,144,000 15,043,000
----------- ----------- ----------- -----------
Income (loss) from
operations (19,000) 1,349,000 3,407,000 2,630,000
Other income, net 182,000 150,000 471,000 404,000
Income before income taxes,
equity in income (loss) of
unconsolidated company
and gain on sale of
investment 163,000 1,499,000 3,878,000 3,034,000
Income tax provision 51,000 465,000 1,270,000 941,000
Income before equity in
income (loss) of
unconsolidated company
and gain on sale
of investment 112,000 1,034,000 2,608,000 2,093,000
Equity in income (loss)
of unconsolidated company 90,000 (79,000) 182,000 (177,000)
Gain on sale of investment
in unconsolidated
company, net of tax 1,169,000 1,169,000
----------- ----------- ----------- -----------
Net income $ 1,371,000 $ 955,000 $ 3,959,000 $ 1,916,000
=========== =========== =========== ===========
Basic earnings per
share $ .11 $ .08 $ .31 $ .16
=========== =========== =========== ===========
Weighted average common
shares 12,758,000 12,236,000 12,702,000 12,220,000
=========== =========== =========== ===========
Diluted earnings per
share $ .11 $ .07 $ .30 $ .15
=========== =========== =========== ===========
Weighted average common
and common equivalent
shares 13,047,000 13,004,000 13,369,000 12,556,000
=========== =========== =========== ===========