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): February 9, 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)
Item 2.02 Results of Operations and Financial Condition
On February 9, 2005, Performance Technologies, Incorporated issued a press
release announcing its results of operations for the quarter and year ending
December 31, 2004. 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 February 9, 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
February 11, 2005 By:/s/ Donald L. Turrell
---------------------------
Donald L. Turrell
President and
Chief Executive Officer
February 11, 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 Fourth Quarter and 2004
Financial Results
"Company reports $.07 earnings per share in the latest period,
excluding non-recurring items."
ROCHESTER, NY - February 9, 2005 -- Performance Technologies, Inc. (Nasdaq NM:
PTIX), a leading supplier of integrated platforms, components and software
solutions for the communications, military and commercial markets today
announced its financial results for the fourth quarter and 2004.
Revenue in the fourth quarter 2004 amounted to $13.1 million, compared to $13.3
million in the corresponding quarter a year earlier. Revenue for 2004 amounted
to $53.5 million, compared to $50.0 million in 2003. The Company's revenue and
earnings in 2004 include the Voice Technology Group's (VTG) operations from the
date purchased on January 23, 2004. VTG products generated revenue for the
fourth quarter and year amounting to $.5 million and $2.5 million, respectively.
GAAP Information
Net loss for the fourth quarter 2004 amounted to $1.2 million, or $.09 per basic
share based on 12.8 million shares outstanding. Net income for the fourth
quarter 2003 amounted to $1.1 million, or $.09 per diluted share based on 13.2
million shares outstanding.
Net income for 2004 totaled $2.8 million, or $.21 per diluted share based on
13.2 million shares outstanding. Net income for 2003 amounted to $3.0 million,
or $.24 per diluted share based on 12.7 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 fourth quarter 2004 amounted to $.9 million, or $.07 per
diluted share excluding non-recurring items based on 13.1 million shares
outstanding. During the fourth quarter 2004, the Company recorded a valuation
charge related to a note receivable from an unaffiliated company in the amount
of $3.0 million, or $.15 per diluted share and a restructuring charge amounting
to $.2 million, or $.01 per diluted share related to improving the company's
cost structure. Net income for the fourth quarter 2003 amounted to $1.6 million,
or $.12 per diluted share excluding non-recurring expenses. During the fourth
quarter 2003, the Company recorded an incremental restructuring charge amounting
to $.1 million, or $.01 per diluted share for a facility closed during 2002. In
addition, the Company recorded an impairment charge on an equity investment in
the amount of $.4 million, or $.03 per diluted share.
Net income for 2004 amounted to $3.8 million, or $.29 per diluted share
excluding non-recurring items based on 13.2 million shares outstanding. For
2004, non-recurring items were recorded for in-process research and development
costs associated with an acquisition in the amount of $.2 million, or $.01 per
diluted share; sale of its investment in an unaffiliated company realizing a
gain of $1.2 million, or $.09 per diluted share; a valuation charge in the
amount of $3.0 million, or $.15 per diluted share related to a note receivable
from an unaffiliated company, and a restructuring charge amounting to $.2
million, or $.01 per diluted share related to improving the company's cost
structure. Net income for 2003 amounted to $3.5 million, or $.28 per diluted
share excluding non-recurring expenses. For 2003, non-recurring expenses were
recorded for an incremental restructuring charge amounting to $.1 million, or
$.01 per diluted share and for an impairment charge amounting to $.4 million, or
$.03 per diluted share.
Cash amounted to $25.6 million and $29.6 million at December 31, 2004 and 2003,
respectively, and the Company had no long-term debt at either date. During the
fourth quarter 2004, the Company received payments amounting to $1.7 million
representing a reduction of the original purchase price paid for Mapletree
Networks Inc., and $3.1 million from the sale of its interest in an unaffiliated
company and payment of a related note receivable.
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.
Two years ago, management began implementing a product strategy to strengthen
the Company's position as a supplier of fully managed platform solutions for the
embedded marketplace. The launch of the Advanced Managed Platform product line
in September 2003 marked the introduction of an extensive family of platform
solutions that specifically address equipment manufacturers' requirements for
increased levels of system integration and services. Management believes the
Company is well positioned, offering the most comprehensive range of platforms,
integrated components, software and services available in the embedded
marketplace today.
Since the introduction of the Advanced Managed Platform, the Company has
realized more than twenty-five design wins of varying sizes for its integrated
platform products. As of December 2004,a small number of these design wins had
reached production levels. Based on discussions with customers, management
expects a number of these design wins to reach production during 2005 and
contribute meaningfully to the Company's revenue.
The next phase of the Company's strategy will entail combining hardware and
software elements from its field-proven product portfolio to form intelligent
solutions offering additional value and capabilities. By leveraging the advanced
features of the Company's NexusWare software, media processing products, SS7/IP
signaling software, and its extensive line of computing and embedded platform
components, management plans to provide a set of integrated products for
selected IP-based applications forecasted for higher growth. Targeted
application markets include media gateway, media server, wireless,
voice-over-cable and satellite communications. Since October 2004, the Company
has introduced four new products in support of this integrated technology
strategy and expects to launch additional high-value products through 2006.
"After several quarters of uncertain conditions in our target markets, the
fourth quarter showed positive signs of increased customer demand for our
products," said Donald Turrell, president and chief executive officer.
"Management is optimistic that the network infrastructure upgrades announced
late in 2004 by several major communications carriers, along with our decision
to combine our advanced product technology to form higher-value products, will
be important contributors to the Company's performance in 2005 and beyond."
During most of 2004, uncertainty in the telecommunications sector using the
Company's products and services placed pressure on revenue and operating
earnings. Despite this weakness, management continues to believe the Company is
strategically positioned to improve its financial performance when target
markets become more positive. Nonetheless, management began formulating plans
and taking steps in October 2004 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, the Company
completed integration of the VTG sales, marketing and administrative functions
into its corporate operations and during the first quarter 2005, management
expects to complete the integration of the VTG accounting and manufacturing
operations into the existing Rochester, NY, headquarters. Also during the first
quarter 2005, the Company began transitioning the accounting and manufacturing
operations of the Computing Products Group in San Luis Obispo, CA, to its
Rochester headquarters. This transition is expected to be completed by the end
of the third quarter 2005. During the fourth quarter 2004, the Company incurred
a charge of $.2 million, or $.01 per diluted share related to these
restructuring efforts. Additional charges related to restructuring actions are
expected during 2005.
As of December 31, 2004, the Company held a note receivable in an early-stage
company developing voice-over-IP equipment in the amount of $3.0 million
(including $.4 million of committed funding in January 2005). While results from
their operations improved in 2004 and interest payments have been received, the
early-stage company has not raised sufficient outside capital to date to assure
its future as a going concern. Therefore, in accordance with GAAP, during the
fourth quarter 2004, the Company recorded a valuation charge related to this
note receivable in the amount of $3.0 million, or $.15 per diluted share as
collection of this note is doubtful.
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'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 fourth quarter 2004, the Company realized eight design wins for its
Advanced Managed Platforms, IPnexus(TM), SEGway(TM) and UniPorte(TM)
Architecture product families, 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 $13.0 million to
$14.0 million in the first quarter 2005. Gross margin is expected to be
approximately 48.5% to 51.0% and diluted earnings per share in the first quarter
is expected to be $.06 to $.10, excluding any restructuring charges. The
effective income tax rate for the first quarter is expected to be 29%.
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 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, February 10, 2005 at 10:00 a.m.
eastern time to discuss the Company's financial performance for the fourth
quarter and 2004. 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 February 10
through February 12, 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
December 31, December 31,
2004 2003
------------------ -------------------
(unaudited)
Current assets:
Cash and cash equivalents $ 25,611,000 $ 29,589,000
Accounts receivable 10,185,000 7,857,000
Inventories 6,573,000 5,443,000
Prepaid income taxes 1,101,000
Prepaid expenses and other assets 801,000 626,000
Deferred taxes 3,088,000 1,714,000
------------------ -------------------
Total current assets 47,359,000 45,229,000
Property, equipment and improvements 2,186,000 2,432,000
Software development costs 3,653,000 2,597,000
Notes receivable from unconsolidated
companies, net of valuation allowance 1,000,000
Investment in unconsolidated company 402,000
Goodwill 4,143,000
------------------ -------------------
Total assets $ 57,341,000 $ 51,660,000
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,476,000 $1,231,000
Income taxes payable 1,760,000
Accrued expenses 3,916,000 4,019,000
------------------ -------------------
Total current liabilities 5,392,000 7,010,000
Deferred taxes 1,198,000 698,000
------------------ -------------------
Total liabilities 6,590,000 7,708,000
------------------ -------------------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 13,476,000 12,863,000
Retained earnings 42,308,000 40,532,000
Treasury stock (5,188,000) (9,536,000)
Accumulated other comprehensive
income (loss) 22,000 (40,000)
------------------ -------------------
Total stockholders' equity 50,751,000 43,952,000
------------------ -------------------
Total liabilities and
stockholders' equity $ 57,341,000 $ 51,660,000
================== ===================
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2004 AND 2003
Three Months Ended Twelve Months Ended
December 31, December 31,
2004 2003 2004 2003
----------- ----------- ----------- ------------
(unaudited) (unaudited) (unaudited)
Sales $13,089,000 $13,257,000 $53,489,000 $49,992,000
Cost of goods sold 7,178,000 6,231,000 28,027,000 25,293,000
----------- ----------- ----------- ------------
Gross profit 5,911,000 7,026,000 25,462,000 24,699,000
----------- ----------- ----------- ------------
Operating expenses:
Selling and marketing 1,634,000 1,559,000 6,403,000 5,881,000
Research and development 2,633,000 2,202,000 10,243,000 9,493,000
General and administrative 1,251,000 1,209,000 4,786,000 4,639,000
Restructuring charge 205,000 118,000 217,000 118,000
In-process research and
development 218,000
----------- ----------- ----------- ------------
Total operating expenses 5,723,000 5,088,000 21,867,000 20,131,000
----------- ----------- ----------- ------------
Income from operations 188,000 1,938,000 3,595,000 4,568,000
Note receivable valuation
charge (3,000,000) (3,000,000)
Other income, net 276,000 118,000 747,000 522,000
----------- ----------- ----------- ------------
(Loss) income before income
taxes, equity in income
(loss) of unconsolidated
company, gain on sale of
investment and impairment
of minority interest
investment (2,536,000) 2,056,000 1,342,000 5,090,000
Income tax (benefit) provision (1,357,000) 493,000 (87,000) 1,339,000
----------- ----------- ----------- ------------
(Loss) income before equity
in income (loss) of
unconsolidated company,
gain on sale of investment
and impairment of minority
interest investment (1,179,000) 1,563,000 1,429,000 3,751,000
Equity in income (loss) of
unconsolidated company (37,000) 182,000 (309,000)
Gain on sale of investment in
unconsolidated company,
net of tax 1,169,000
Impairment of minority interest
investment (392,000) (392,000)
----------- ----------- ----------- ------------
Net (loss) income $(1,179,000) $1,134,000 $2,780,000 $3,050,000
=========== =========== =========== ============
Basic earnings per share $ (.09) $ .09 $ .22 $ .25
=========== =========== =========== ============
Weighted average common shares 12,775,000 12,374,000 12,720,000 12,259,000
=========== =========== =========== ============
Diluted earnings per share $ (.09) $ .09 $ .21 $ .24
=========== =========== =========== ============
Weighted average common and
common equivalent shares 12,775,000 13,183,000 13,219,000 12,692,000
=========== =========== =========== ============