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): April 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 April 27, 2005, Performance Technologies, Incorporated issued a press release
announcing its results of operations for the quarter ending March 31, 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 April 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
April 29, 2005 By:/s/ Donald L. Turrell
------------------------
Donald L. Turrell
President and Chief
Executive Officer
April 29, 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 First Quarter 2005
Financial Results
"Company reports $.08 earnings per share for the latest period"
ROCHESTER, NY - April 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 first quarter 2005.
Revenue in the first quarter 2005 amounted to $13.2 million, compared to
$15.6 million in the corresponding quarter a year earlier.
GAAP Information
Net income for the first quarter 2005 amounted to $1.0 million, or $.08 per
diluted share based on 13.2 million shares outstanding. During the first
quarter 2005, the Company recorded a restructuring charge amounting to less than
$.1 million, or $.00 per diluted share related to cost improvement efforts.
Net income for the first quarter 2004 amounted to $1.6 million, or $.11 per
diluted share based on 13.6 million shares outstanding.
Non-GAAP Information
Management believes that the Company's results excluding non-recurring items
provide better comparability of its operations as non-recurring items result
from facts and circumstances that vary in frequency, amounts and cause.
Net income for the first quarter 2004 amounted to $1.8 million, or $.13 per
diluted share excluding non-recurring expenses, based on 13.6 million shares
outstanding. During the first quarter 2004, the Company recorded in-process
research and development costs associated with an acquisition in the amount of
$.2 million, or $.02 per diluted share.
Cash, cash equivalents and investments amounted to $27.3 million and $25.6
million at March 31, 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 are 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 which are sold as individual products or can be mixed and matched to
construct highly integrated, packet-based platforms for the embedded systems
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 embedded systems market addressed by the Company is comprised of several
sectors, with telecommunications being the largest. The telecommunications
market is dependent upon carrier spending to upgrade network infrastructure to
next-generation equipment. As the Company entered 2005, there were
announcements by major domestic wireless carriers for new spending programs
directed at upgrading networks to the third generation (3G) of mobile network
capabilities. During the first quarter, the Company received indications,
forecasts and orders from a number of the largest (tier 1) telecommunications
equipment providers for equipment to meet these requirements. While the actual
deployments associated with network upgrades and expansions during the first
quarter were somewhat slower than originally thought, it appears these
3G deployments are occurring. Current forecast and schedules on a number of
these programs suggest the latter part of 2005 will see increased deployment
activities.
The Company's products, particularly its Advanced Managed Platforms, are
applicable to the broader embedded systems market, not just telecommunications.
Since its introduction in 2003, this product line has realized more than 25 new
design wins of varying sizes. As of March 2005, a small number of these design
wins had reached production levels. Based on discussions with customers,
management expects to see an increase in Advanced Managed Platform shipments
beginning in the next quarter.
In October 2004, management began formulating a plan to reduce annualized
expenses by approximately $2.0 million with a primary focus on centralizing its
multi-location operations and streamlining the organization. During the fourth
quarter 2004, the Company completed integration of the Voice Technology
Group (VTG) sales, marketing and administrative functions into its corporate
operations. During the first quarter 2005, the Company completed integration
of the accounting functions for VTG and the Computing Products Group into
corporate accounting in Rochester, New York and began transitioning the
manufacturing operations for these groups to its Rochester headquarters. The
manufacturing transition for VTG is expected to be completed during the second
quarter 2005 and for Computing Products by the end of the third quarter 2005.
When this centralization plan is completed, operating expenses are expected to
be reduced by $1.3 million annually and manufacturing overhead (cost of goods)
is expected to be reduced by $.7 million annually. During the first
quarter 2005, the Company incurred a charge of $.1 million related to these
restructuring efforts. Additional charges related to restructuring actions are
expected in the range of $.05 million to $.25 million during the remainder
of 2005. While the Company continues to pursue its centralization plan, some
part of these savings will be reinvested to stimulate future growth.
During the first quarter, the Company announced that current president and
chief executive officer, Donald Turrell, will leave the Company's executive
management at the end of 2005. As part of the succession plan developed by the
Board of Directors, Mr. Turrell will remain as a board member and will maintain
active involvement throughout the transition of the Company's change in
leadership.
Guidance
The Company's integrated platforms, components, software solutions and services
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 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 first quarter 2005, the Company realized 5 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.
Based upon the current business mix, the current backlog and review of sales
forecasts, management expects revenue to be in the range of $13.0 million to
$14.0 million in the second quarter 2005. Gross margin is expected to be
approximately 45.5% to 48.0% and diluted earnings per share in the second
quarter is expected to be $.05 to $.09, excluding any restructuring charges.
The effective income tax rate for the second quarter is expected to be 29%.
The second quarter's guidance reflects a change in the revenue mix from the
first quarter and a temporary increase in manufacturing staffing (to accomplish
the manufacturing transition for the computing products). Shipments of
computing products and integrated platforms (with gross margins averaging 35%
to 45%) are expected to increase by more than $1.5 million in the second
quarter, while shipments of switching and communications products (with gross
margins averaging 50% to 75%) are expected to decline by more than $1.5 million.
The forecasted increase in integrated platforms shipments in the second quarter
reflects improving traction on the Company's focused strategy, which includes
providing customers with more complete solutions. The forecasted decrease in
switching and communications products reflects a decline and push-out of certain
shipments related to 3G deployments by domestic carriers.
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 Thursday, April 28, 2005 at 10:00 a.m. eastern
time to discuss the Company's financial performance for the first 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 (888) 280-8349. A digital recording of the call may be
accessed one hour after the completion of the conference from April 28 through
May 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
March 31, December 31,
2005 2004
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 13,862,000 $ 10,361,000
Investments 13,400,000 15,250,000
Accounts receivable 11,215,000 10,185,000
Inventories 6,219,000 6,573,000
Prepaid income taxes 514,000 771,000
Prepaid expenses and other assets 549,000 801,000
Deferred taxes 3,089,000 3,088,000
------------ -----------
Total current assets 48,848,000 47,029,000
Property, equipment and improvements 2,034,000 2,186,000
Software development costs 3,903,000 3,653,000
Goodwill 4,143,000 4,143,000
------------ ------------
Total assets $ 58,928,000 $ 57,011,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,543,000 $ 1,476,000
Accrued expenses 4,278,000 3,916,000
------------ ------------
Total current liabilities 5,821,000 5,392,000
Deferred taxes 1,200,000 1,198,000
------------ ------------
Total liabilities 7,021,000 6,590,000
------------ ------------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 13,625,000 13,476,000
Retained earnings 42,287,000 41,978,000
Treasury stock (4,138,000) (5,188,000)
Accumulated other comprehensive income 22,000
------------ ------------
Total stockholders' equity 51,907,000 50,421,000
------------ ------------
Total liabilities and stockholders'
equity $ 58,928,000 $ 57,011,000
============ ============
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(unaudited)
Three Months Ended
March 31,
2005 2004
------------ ------------
Sales $ 13,157,000 $ 15,566,000
Cost of goods sold 6,462,000 7,588,000
------------ ------------
Gross profit 6,695,000 7,978,000
------------ ------------
Operating expenses:
Selling and marketing 1,477,000 1,628,000
Research and development 2,545,000 2,591,000
General and administrative 1,433,000 1,343,000
Restructuring charges 57,000
In-process research and development 218,000
------------ ------------
Total operating expenses 5,512,000 5,780,000
------------ ------------
Income from operations 1,183,000 2,198,000
Other income, net 295,000 138,000
------------ ------------
Income before income taxes and equity
in income of unconsolidated company 1,478,000 2,336,000
Income tax provision 429,000 791,000
------------ ------------
Income before equity in income of
unconsolidated company 1,049,000 1,545,000
Equity in income of unconsolidated
company 12,000
------------ ------------
Net income $ 1,049,000 $ 1,557,000
============ ============
Basic earnings per share $ .08 $ .12
============ ============
Weighted average common shares 12,809,000 12,606,000
============ ============
Diluted earnings per share $ .08 $ .11
============ ============
Weighted average common and
common equivalent shares 13,216,000 13,637,000
============ ============