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): July 28, 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 7. Financial Statements and Exhibits
(c) Exhibits.
(99.1) Press release issued by Performance Technologies,
Incorporated on July 28, 2004.
Item 12. Results of Operations and Financial Condition.
On July 28, 2004, Performance Technologies, Incorporated announced its
results of operations for the quarter and six months ended June 30, 2004. A copy
of the related press release is being furnished as Exhibit 99.1 to this Form
8-K.
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
July 30, 2004 By:/s/ Donald L. Turrell
---------------------------
Donald L. Turrell
President and
Chief Executive Officer
July 30, 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
http://www.pt.com
fiannce@pt.com
Performance Technologies Announces Second Quarter 2004 Financial Results
'Quarterly Profit Increased 46% from Year Earlier'
ROCHESTER, N.Y. - July 28, 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
second quarter 2004.
Revenue in the second quarter 2004 amounted to $13.3 million, compared to $12.6
million in the corresponding quarter a year earlier. Revenue for the six months
ended June 30, 2004 amounted to $28.8 million, compared to $23.7 million during
the respective period in 2003. The Company's financial results in 2004 include
the Voice Technology Group's operations (Mapletree Networks(R)) from the date of
acquisition on January 23, 2004.
GAAP Earnings Basis
Net income for the second quarter 2004 amounted to $1.0 million, or $.08 per
diluted share based on 13.4 million shares outstanding. Net income for the
second quarter 2003 amounted to $.7 million, or $.06 per diluted share, based on
12.4 million shares outstanding.
Net income for the six months ended June 30, 2004 totaled $2.6 million, or $.19
per diluted share based on 13.5 million shares outstanding. For the six months
ended June 30, 2003, net income amounted to $1.0 million, or $.08 per diluted
share based upon 12.3 million shares outstanding.
Non-GAAP Information
Management believes that the Company's results excluding non-recurring expense
provide better comparability of its operations because non-recurring expenses
result from facts and circumstances that vary in frequency, amounts and cause.
Net income for the six months ended June 30, 2004 amounted to $2.8 million, or
$.21 per diluted share excluding non-recurring expense, based on 13.5 million
shares outstanding. During the first quarter 2004, the Company completed the
purchase of Mapletree Networks and recorded in-process research and development
costs associated with this acquisition in the amount of $.2 million (after-tax),
or $.02 per diluted share. For the six months ended June 30, 2003, net income
amounted to $1.0 million, or $.08 per diluted share based upon 12.3 million
shares outstanding.
Cash amounted to $21.6 million and $29.6 million at June 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.
The Company met its earnings per share guidance for the second quarter by
maintaining tight control over expenses. Revenue in the second quarter was less
than forecasted for two reasons: First, the Company's largest customer over the
past fifteen months unexpectedly reduced its second quarter requirement for
product to $.6 million, from $3.3 million in the first quarter. Second, revenue
from the Voice Technology Group, acquired in January 2004, was also less than
expected, amounting to $.4 million in the second quarter 2004, compared to $1.2
million in the first quarter. Had revenue from both of these sources met
forecasted expectations, the Company's revenue for the second quarter would have
surpassed the Company's guidance for the quarter.
"We are disappointed with the lower than anticipated revenue in the second
quarter," said Donald Turrell, president and chief executive officer. "However,
it is important to realize that the largest part of our business continues to
show considerable revenue growth and momentum. Furthermore, we are seeing
increasing interest in our integrated platform products and positive feedback
from the market regarding the addition of the Voice Technology products into our
platform product portfolio."
During the quarter, the Company was engaged with customers and prospective
customers in a growing number of field trials for Performance Technologies'
platforms and products. In addition, "design win" metrics for the quarter
included four successful integrated platform design wins. Platform "design wins"
are an especially important indicator of continuing progress in the Company's
strategy to fuel growth by transitioning from being an embedded components
supplier, to an integrated platform supplier.
During the second quarter, there were six new product introductions, including
extensions to the Company's popular IPnexus(TM) Advanced Managed Platform line,
its portfolio of Voice Technology products and its new Mini-STP as part of its
Signaling Systems product family. To complement these introductions, there were
announcements of seven recent customer design wins which covered the entire
range of the Company's products. This customer activity demonstrates continued
acceptance of the Company's product technology and validation of its overall
integrated platform strategy.
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 economic periods, the visibility for
customers' 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 second quarter 2004,
the Company realized four design wins (as noted above) for its IPnexus,
SEGway(TM)and UniPorte Architecture product families.
At the current time, it appears that the Company's largest customer (noted
earlier) will not be ordering meaningful volumes of product until the pending
merger of one of its customers is resolved. Therefore, the Company is not
forecasting additional product shipments to this customer in the third quarter.
The newly acquired Voice Technology Group (VTG) generated second quarter revenue
of $.4 million, was not profitable on an operating basis, and is now not
forecasted to be profitable for 2004. As a result, management believes the
contingent earn out component of the Mapletree Networks purchase agreement will
not be paid. During the third quarter, the Company will begin to integrate VTG
into the Company's operations.
Based upon the current business mix, the current backlog and review of sales
forecasts, management expects revenue to be in the range of $13.5 million to
$14.5 million in the third quarter 2004. Gross margin is expected to be
approximately 49.5% to 51.0% and diluted earnings per share in the third quarter
is expected to be $.06 to $.09. The effective income tax rate for the third
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 recent 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 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, July 29, 2004 at 10:00 a.m. eastern
time to discuss the Company's financial performance for the second quarter. All
institutional investors can participate in the conference call by dialing (800)
683-1585. The conference call will also be available simultaneously for all
other investors at (800) 683-1525. A digital recording will be available one
hour after the completion of the conference from July 29 through August 2, 2004.
To access, participants should dial (877) 519-4471 or for international/local
participants, dial (973) 341-3080 and enter the PIN 4987181. A live Webcast of
the conference call will also be available on the Performance Technologies Web
site at 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
June 30, December 31,
2004 2003
----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $21,582,000 $29,589,000
Accounts receivable 10,875,000 7,857,000
Inventories 7,746,000 5,443,000
Prepaid expenses and other assets 375,000 626,000
Deferred taxes 1,686,000 1,714,000
----------- -----------
Total current assets 42,264,000 45,229,000
Property, equipment and improvements 2,266,000 2,432,000
Software development costs 3,436,000 2,597,000
Notes receivable from unconsolidated
companies 2,300,000 1,000,000
Investment in unconsolidated company 494,000 402,000
Goodwill 5,474,000
----------- -----------
Total assets $56,234,000 $51,660,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,419,000 $ 1,231,000
Income taxes payable 407,000 1,760,000
Accrued expenses 3,146,000 4,019,000
----------- -----------
Total current liabilities 5,972,000 7,010,000
Deferred taxes 785,000 698,000
----------- -----------
Total liabilities 6,757,000 7,708,000
----------- -----------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 12,829,000 12,863,000
Retained earnings 41,930,000 40,532,000
Treasury stock (5,382,000) (9,536,000)
Accumulated other comprehensive loss (33,000) (40,000)
----------- -----------
Total stockholders' equity 49,477,000 43,952,000
----------- -----------
Total liabilities and stockholders'
equity $56,234,000 $51,660,000
=========== ===========
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Sales $13,273,000 $12,636,000 $28,839,000 $23,675,000
Cost of goods sold 6,653,000 6,510,000 14,241,000 12,546,000
----------- ----------- ----------- -----------
Gross profit 6,620,000 6,126,000 14,598,000 11,129,000
----------- ----------- ----------- -----------
Operating expenses:
Selling and marketing 1,572,000 1,446,000 3,200,000 2,808,000
Research and
development 2,621,000 2,471,000 5,212,000 4,778,000
General and
administrative 1,199,000 1,199,000 2,542,000 2,262,000
In-process research
and development 218,000
Total operating ----------- ----------- ----------- -----------
expenses 5,392,000 5,116,000 11,172,000 9,848,000
----------- ----------- ----------- -----------
Income from operations 1,228,000 1,010,000 3,426,000 1,281,000
Other income, net 151,000 127,000 289,000 254,000
Income before income
taxes and equity in
income (loss) of ----------- ----------- ----------- -----------
unconsolidated company 1,379,000 1,137,000 3,715,000 1,535,000
Income tax provision 428,000 308,000 1,219,000 423,000
Income before equity in ----------- ----------- ----------- -----------
income (loss) of
unconsolidated company 951,000 829,000 2,496,000 1,112,000
Equity in income (loss) of
unconsolidated company 80,000 (125,000) 92,000 (151,000)
----------- ----------- ----------- -----------
Net income $ 1,031,000 $ 704,000 $ 2,588,000 $ 961,000
=========== =========== =========== ===========
Basic earnings per share $ .08 $ .06 $ .20 $ .08
=========== =========== =========== ===========
Weighted average common
shares 12,742,000 12,192,000 12,674,000 12,212,000
=========== ========== =========== ===========
Diluted earnings per
share $ .08 $ .06 $ .19 $ .08
=========== ========== =========== ===========
Weighted average common
and common
equivalent shares 13,422,000 12,429,000 13,529,000 12,332,000
=========== ========== =========== ===========