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 and Exchange Act of 1934
Date of report (Date of earliest event reported): October 23, 2003
PERFORMANCE TECHNOLOGIES, INCORPORATED
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
0-27460 16-1158413
(Commission File No.) (IRS Employer Identification
No. of Incorporation)
205 Indigo Creek Drive, Rochester, NY 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, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
(99.1) Press release issued by Performance Technologies, Incorporated
on October 23, 2003.
Item 12. Results of Operations and Financial Condition.
On October 23, 2003, Performance Technologies, Incorporated announced its
results of operations for the quarter and nine months ended September 30, 2003.
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
October 23, 2003 By:/s/ Donald L. Turrell
-----------------------------
Donald L. Turrell
President and
Chief Executive Officer
October 23, 2003 By:/s/ Dorrance W.Lamb
-----------------------------
Dorrance W. Lamb
Chief Financial Officer and
Vice President, 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 Reports Continued Revenue and
Profit Growth in the Third Quarter
"Achieved Substantial Revenue and Earnings Progress
Year-Over-Year"
ROCHESTER, NY - October 23, 2003 -- Performance Technologies, Inc. (Nasdaq NM:
PTIX), a leading developer of embedded computing products and system-level
solutions for the communications, military and commercial markets, today
announced financial results for third quarter 2003.
Revenue in the third quarter 2003 was $13.1 million, compared to $4.0 million in
the corresponding quarter a year earlier. The Computing Products Group, acquired
in October 2002, contributed $4.3 million to revenue in this period. Net income
for the third quarter 2003 amounted to $1.0 million, or $.07 per diluted share,
compared to a net loss amounting to $1.2 million, or $(.10) per diluted share
for the third quarter 2002, based on 13.0 million and 12.3 million shares
outstanding, respectively. Third quarter 2002 results included expenses
associated with a restructuring charge amounting to $.4 million (pre-tax), or
$.02 per diluted share, and the class action settlement cost amounting to $.1
million (pre-tax), or $.01 per diluted share.
Revenue for the nine months ended September 30, 2003 was $36.7 million, compared
to $17.0 million in the corresponding period a year earlier. The Computing
Products Group, acquired in October 2002, contributed $15.4 million to revenue
in this period. Net income for the first nine months of 2003 amounted to $1.9
million, or $.15 per diluted share, compared to a net loss amounting to $.4
million, or $(.03) per diluted share for the first nine months of 2002, based on
12.6 million and 12.4 million shares outstanding, respectively. Results for the
first nine months of 2002 included restructuring charges amounting to $.6
million (pre-tax), or $.03 per diluted share, and the class action settlement
cost amounting to $.1 million (pre-tax), or $.01 per share.
Cash and marketable securities amounted to $26.0 million at September 30, 2003,
compared to $24.1 million at December 31, 2002 and no long-term debt existed 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.
Performance Technologies Reports Continued Revenue and Profit Growth in the
Third Quarter Page 2
Early in 2003, a corporate-wide effort was launched to reposition the Company to
deliver fully managed, system-level platform solutions. This effort achieved an
important milestone during the third quarter with the release of the IPnexusTM
Advanced Managed Platform product line. This new line of platform solutions
specifically addresses equipment manufacturers' requirements for an increased
level of system integration and services from suppliers. This growing
opportunity for the Company is the result of downsized engineering staffs and
increased time-to-market pressures placed on equipment manufacturers. The
Company's strategy addresses this trend by effectively enabling customers to
replace proprietary or legacy platforms with the latest generation of fully
managed system functionality.
"The Company has made significant progress in establishing itself as a
comprehensive system-level platform and solutions supplier over the past twelve
months as is evidenced by the recent design win announcements with Sun
Microsystems and Stratus Technologies, both expected to be multi-million dollar
revenue customers during 2004," said Donald Turrell, president and chief
executive officer. "However, due to our customers' normal product cycles, none
of the design wins associated with the Company's system-level solutions have yet
to reach production. The potential revenue and earnings growth driven by this
strategy is expected to be realized in 2004 and beyond. Thus far this year,
management is pleased with the Company's positive revenue and profit growth; all
of which is occurring in an environment where our customers' revenues have not
yet begun to grow. We are also pleased with the significant upturn in the design
activity the Company is experiencing as we penetrate the market with our
expanded product and platform offering."
Guidance
The Company's products are integrated 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 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 difficult economic periods, a substantial
portion of the Company's revenue is frequently derived from orders placed within
the quarter and shipped in the final month of the quarter.
In the Company's target markets, capital spending appeared to stabilize during
the fourth quarter 2002, however, very few companies in the Company's target
markets are currently experiencing revenue growth. Starting in 2003, certain of
the Company's customers began moving projects toward production and since
mid-year, the Company's sales organization has seen a broad acceleration in
design activity. During the third quarter 2003, the Company realized six design
wins for its IPnexus and SEGwayTM product families. Unfortunately,
forward-looking visibility on customer orders continues to be very limited.
Based upon the current business mix, the current backlog and review of sales
forecasts, management expects revenue to be $12.0 million to $13.0 million in
the fourth quarter 2003. Gross margin is expected to be approximately 50.5% to
52.5%, reflecting continuing sequential improvement, and diluted per share
earnings for the fourth quarter is expected to be between $.05 and $.08. The
effective income tax rate for the fourth quarter is assumed to be 31%. The
fourth quarter revenue guidance does not reflect orders from a customer that has
contributed greater than 10% of the Company's revenue in each of the first three
quarters of this year. This customer typically provides very little visibility
on future orders but ordinarily would have placed orders for the fourth quarter
by this time. Should this customer place orders, of the usual magnitude, for
delivery in the fourth quarter, management would expect the Company to exceed
this revenue and earnings guidance by a material amount.
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.
Performance Technologies Reports Continued Revenue and Profit Growth in the
Third Quarter Page 3
About Performance Technologies
Performance Technologies (Nasdaq NM: PTIX) is a leading developer of unified
embedded computing products and system-level solutions for the communications,
military and commercial markets. Serving the industry for over 20 years, our
packet-based products enable equipment manufacturers and carriers to provide
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 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 or unexpected
changes in technologies, cancellation or delay of customer orders including
those relating to design wins, changes in the product or customer mix of sales,
delays in new product development, customer acceptance of new products and
customer delays in qualification of products. 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, 2002, 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 24, 2003 at 10:00 a.m. EDT to
discuss the Company's financial performance for the third quarter. All
interested institutional investors can participate in the conference call by
dialing (888) 423-7081. The conference call will also be available
simultaneously for all other investors at (888) 701-8678. The conference ID
number is 3438724. A digital recording will be available two hours after the
completion of the conference from October 24 through October 27, 2003. To access
Encore, US/Canada participants should dial (800) 642-1687 or for
International/Local participants, dial (706) 645-9291 and enter the conference
ID 3438724. 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
September 30, December 31,
2003 2002
---------------- ----------------
(unaudited)
Current assets:
Cash and cash equivalents $ 25,997,000 $ 22,077,000
Marketable securities 2,006,000
Accounts receivable 6,627,000 6,622,000
Inventories 6,341,000 4,550,000
Prepaid expenses and other assets 403,000 942,000
Deferred taxes 1,667,000 1,574,000
---------------- ----------------
Total current assets 41,035,000 37,771,000
Property, equipment and improvements 2,617,000 3,012,000
Software development costs 2,468,000 2,068,000
Note receivable from unconsolidated company 1,000,000 1,000,000
Investment in unconsolidated company 1,080,000 1,353,000
---------------- ----------------
Total assets $ 48,200,000 $ 45,204,000
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,414,000 $ 1,926,000
Income taxes payable 1,108,000 502,000
Accrued expenses 3,515,000 3,213,000
---------------- ----------------
Total current liabilities 6,037,000 5,641,000
Deferred taxes 781,000 754,000
---------------- ----------------
Total liabilities 6,818,000 6,395,000
---------------- ----------------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 10,448,000 10,961,000
Retained earnings 42,481,000 40,565,000
Treasury stock (11,622,000) (12,782,000)
Accumulated other comprehensive loss (58,000) (68,000)
---------------- ----------------
Total stockholders' equity 41,382,000 38,809,000
---------------- ----------------
Total liabilities and stockholders' equity $ 48,200,000 $ 45,204,000
================ ================
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2003 AND 2002
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
--------------- ---------------- --------------- ----------------
Sales $13,060,000 $ 3,955,000 $36,735,000 $16,981,000
Cost of goods sold 6,516,000 2,216,000 19,062,000 7,544,000
--------------- ---------------- --------------- ----------------
Gross profit 6,544,000 1,739,000 17,673,000 9,437,000
--------------- ---------------- --------------- ----------------
Operating expenses:
Selling and marketing 1,514,000 855,000 4,322,000 3,128,000
Research and development 2,513,000 1,576,000 7,291,000 4,757,000
General and administrative 1,168,000 558,000 3,430,000 1,717,000
Restructuring charge 410,000 573,000
Class action legal settlement 143,000 143,000
--------------- ---------------- --------------- ----------------
Total operating expenses 5,195,000 3,542,000 15,043,000 10,318,000
--------------- ---------------- --------------- ---------------
Income (loss) from operations 1,349,000 (1,803,000) 2,630,000 (881,000)
Other income, net 150,000 95,000 404,000 332,000
--------------- ---------------- --------------- ----------------
Income (loss) before income taxes and
equity loss in unconsolidated company 1,499,000 (1,708,000) 3,034,000 (549,000)
Income tax provision (benefit) 465,000 (529,000) 941,000 (170,000)
--------------- ---------------- --------------- ----------------
Income (loss) before equity in loss of
unconsolidated company 1,034,000 (1,179,000) 2,093,000 (379,000)
Equity in loss of unconsolidated
company, net of tax (79,000) (12,000) (177,000) (12,000)
--------------- ---------------- --------------- ----------------
Net income (loss) $ 955,000 $(1,191,000) $ 1,916,000 $ (391,000)
=============== ================ =============== ================
Basic earnings (loss) per share $ .08 $ (.10) $ .16 $ (.03)
=============== ================ =============== ================
Weighted average common shares 12,236,000 12,281,000 12,220,000 12,260,000
=============== ================ =============== ================
Diluted earnings (loss) per share $ .07 $ (.10) $ .15 $ (.03)
=============== ================ =============== ================
Weighted average common and
common equivalent shares 13,004,000 12,281,000 12,556,000 12,406,000
=============== ================ =============== ================