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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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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, 2006
PERFORMANCE TECHNOLOGIES, INCORPORATED
Commission file number 0-27460
Incorporated pursuant to the Laws of the State of Delaware
Internal Revenue Service - Employer Identification No. 16-1158413
205 Indigo Creek Drive, Rochester, New York 14626
(585)256-0200
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, 2006, Performance Technologies, Incorporated issued a press release
announcing its results of operations for the quarter ending March 31, 2006. 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, 2006.
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
May 2, 2006 By /s/ Michael P. Skarzynski
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Michael P. Skarzynski
President and Chief Executive Officer
May 2, 2006 By /s/ Dorrance W. Lamb
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Dorrance W. Lamb
Chief Financial Officer and
Senior Vice President of Finance
Exhibit 99.1
For more information contact:
Dorrance W. Lamb
SVP and Chief Financial Officer
Performance Technologies
585-256-0200 ext. 7276
http://www.pt.com
finance@pt.com
Performance Technologies Announces
First Quarter 2006 Financial Results
"First quarter earnings were within guidance."
ROCHESTER, NY - April 27, 2006 -- Performance Technologies, Inc. (Nasdaq NM:
PTIX), a leading developer of communications platforms and systems for the
communications, defense and homeland security, and commercial markets, today
announced its financial results for the first quarter 2006.
Financial Information
Revenue in the first quarter 2006 amounted to $12.2 million, compared to $13.2
million in the first quarter 2005.
Net income for the first quarter 2006 totaled $.5 million, or $.04 per diluted
share based on 13.3 million shares outstanding and included restructuring
charges of $.4 million, or $.02 per diluted share, primarily relating to the
Company's closing of its Norwood engineering center. Net income for the first
quarter 2005 amounted to $1.0 million, or $.08 per diluted share based on 13.2
million shares outstanding and included restructuring charges of $.1 million, or
$.00 per diluted share.
On January 1, 2006, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 123 (revised 2004) - Share-Based Payment. Under this
accounting standard, the Company is required to recognize and record
compensation expense related to the granting of stock options. As a result, the
Company recorded stock compensation expense of $.1 million, or $.01 per diluted
share in the first quarter 2006.
On January 4, 2006, the Company announced its plan to close its engineering
center in Norwood, Massachusetts and to transition the voice processing
engineering to other Company operations. During the first quarter 2006, the
Company recorded restructuring charges of $.4 million, or $.02 per diluted share
primarily related to this restructuring effort.
Cash and investments amounted to $33.0 million, or approximately $2.50 per
share, at March 31, 2006 and December 31, 2005. The Company had no long-term
debt at either date.
Business Overview
The following contains forward-looking statements within the meaning of the
Securities Act of 1933 and Securities Exchange Act of 1934 and is subject to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
The Company is a leading developer of platforms, systems and software solutions
for the communications market. It targets three vertical markets:
telecommunications, defense and homeland security, and commercial. Of the three
vertical markets served, telecommunications is the largest. A breakdown of the
telecommunications applications that utilize the Company's products includes:
Voice-over-IP (VoIP) representing approximately 40%, wireless infrastructure
represents 40%, and the remaining 20% is spread across IP multimedia systems and
other applications.
Telecommunications carriers and equipment suppliers are experiencing a wave of
mergers, notably the announcements of the AT&T-BellSouth merger and the
Alcatel-Lucent merger. Investments by U.S. wireless carriers in third generation
mobile networks were selective during the first quarter and some network
carriers were also trimming their capital budgets. Furthermore, some of the
Company's leading customers experienced declines in sales for the quarter from
the prior year, which ranged from 9% to 14%, while other customers experienced
increases in sales which ranged from 7% to 18%. These industry conditions
resulted in lower than expected sales of the Company's products from the prior
year.
The Company's goal is to drive sustained and profitable revenue growth. The
Company expects to achieve this objective through a combination of organic
growth and acquisitions. A company-wide transformation began in early 2006 which
will establish the foundation upon which the Company can reach its aggressive
growth goals. The transformation will move the Company from its traditional
engineering and technology focus, to a new emphasis on sales and marketing.
Management is highly focused on these objectives.
"Since the beginning of 2006, we have initiated a number of actions to propel
the Company in a new direction," said Michael Skarzynski, president and chief
executive officer. "These actions included adding strategic sales account
responsibilities to every member of the management team. In addition, several
new sales people have been hired and we have completed the first phase of
transitioning voice processing engineering to other PTI operations."
Guidance
The Company provides guidance only on earnings per share expected in the next
quarter. Management expects diluted earnings per share in the second quarter
2006 to be $.05 to $.08. This earnings per share guidance excludes restructuring
charges and any impact of the Restriction of Certain Hazardous Substances
Directive ("RoHS") issued by the European Union which becomes effective on July
1, 2006. There is a possibility of non-compliant inventory being written off as
a result of this legislation.
Any additional information provided, such as revenue forecasts, is provided as
supplementary information to the earnings per share guidance. Based upon the
current business mix, the current backlog and review of sales forecasts, revenue
is expected to be in the range of $12.0 million to $13.0 million in the second
quarter 2006. Gross margin is expected to be approximately 51.0% to 52.5% and
the effective corporate income tax rate for the second quarter 2006 is expected
to be 27%.
In the second quarter 2006, the Company expects to hire additional sales,
marketing and engineering staff to meet the goals of its strategy. In addition,
management expects to complete the second phase of the transition plan for the
voice processing operations and to close its Norwood engineering center at the
end of June 2006.
The Company works with customers to design its systems, platforms, blades and
software solutions into their communications infrastructure products. Design
wins have been an important metric for management to judge the Company's product
acceptance in its marketplace. Design wins, if successfully implemented by our
customers, 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.
During the first quarter 2006, the Company realized three design wins for its
Advanced Managed Platform and SEGway(TM) product families. Each design win is
expected to generate at least $0.5 million of annualized revenue when reaching
production volumes. 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. Forward-looking visibility for customer orders
continues to be very limited.
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 and systems for
the world's evolving communications infrastructure. Our broad customer base
includes global technology companies in the communications, defense and homeland
security, and commercial markets. Serving the industry for 25 years, our
complete line of embedded and system-level 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
engineering facilities are located in San Diego and San Luis Obispo, California;
and Ottawa, Ontario (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 can 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 and
obtaining orders as a result, fluctuations in quarterly and annual results, the
reliance on a limited number of third party suppliers, limitations of the
Company's manufacturing capacity and arrangements, the protection of the
Company's proprietary technology, the dependence on key personnel, changes in
critical accounting estimates, potential impairments related to investments and
foreign regulations. 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, 2005, as reported in its Annual Report on Form 10-K,
and other documents as filed with the Securities and Exchange Commission.
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A conference call will be held on Friday, April 28, 2006 at 10:00 a.m. eastern
time to discuss the Company's financial performance for the first quarter 2006.
All institutional investors can participate in the conference by dialing (866)
250-5144 or (416) 849-6163. The conference call will be available simultaneously
for all other investors at (866) 500-7713 or (416) 849-2692. A digital recording
of the call may be accessed immediately after the completion of the conference
from April 28 through May 2, 2006. Participants should dial (888) 567-0341 or
(402) 220-4372 using passcode 8240294. 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
(unaudited)
ASSETS
March 31, December 31,
2006 2005
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Current assets:
Cash and cash equivalents $11,670,000 $11,803,000
Investments 21,275,000 21,150,000
Accounts receivable 9,076,000 9,523,000
Inventories 7,745,000 7,148,000
Prepaid expenses and other assets 457,000 470,000
Deferred taxes 3,445,000 3,272,000
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Total current assets 53,668,000 53,366,000
Property, equipment and improvements 2,201,000 2,004,000
Software development costs 3,300,000 3,182,000
Investment in unconsolidated company 248,000 248,000
Goodwill 4,143,000 4,143,000
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Total assets $63,560,000 $62,943,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,268,000 $ 1,836,000
Income taxes payable 385,000 244,000
Accrued expenses 4,379,000 4,438,000
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Total current liabilities 6,032,000 6,518,000
Deferred taxes 1,184,000 1,138,000
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Total liabilities 7,216,000 7,656,000
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Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 14,252,000 13,903,000
Retained earnings 42,694,000 42,601,000
Treasury stock (735,000) (1,350,000)
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Total stockholders' equity 56,344,000 55,287,000
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Total liabilities and stockholders'
equity $63,560,000 $62,943,000
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PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005
(unaudited)
Three Months Ended
March 31,
2006 2005
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Sales $12,168,000 $13,157,000
Cost of goods sold 5,957,000 6,462,000
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Gross profit 6,211,000 6,695,000
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Operating expenses:
Selling and marketing 1,358,000 1,477,000
Research and development 2,777,000 2,545,000
General and administrative 1,204,000 1,433,000
Stock compensation 115,000
Restructuring charges 435,000 57,000
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Total operating expenses 5,889,000 5,512,000
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Income from operations 322,000 1,183,000
Other income, net 334,000 295,000
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Income before income taxes 656,000 1,478,000
Income tax provision 110,000 429,000
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Net income $ 546,000 $ 1,049,000
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Basic earnings per share $ .04 $ .08
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Weighted average common shares 13,098,000 12,809,000
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Diluted earnings per share $ .04 $ .08
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Weighted average common and
common equivalent shares 13,329,000 13,216,000
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