þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the quarterly period ended March 31, 2007
|
||
or
|
||
o
|
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
|
|
|
|
For
the transition period from to
|
|
|
|
Delaware
(State
or other Jurisdiction of
Incorporation
or Organization)
|
|
02-0415170
(I.R.S.
Employer Identification No.)
|
|
|
|
55
Executive Drive
Hudson,
New Hampshire
(Address
of Principal Executive Offices)
|
|
03051-4903
(Zip
Code)
|
PAGE
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Consolidated
Financial Statements
|
|
Consolidated
Balance Sheets as of March 31, 2007 and December 30, 2006
(Unaudited)
|
3
|
|
Consolidated
Statements of Income for the three months ended March 31, 2007 and
April
1, 2006 (Unaudited)
|
4
|
|
Consolidated
Statements of Cash Flows for the three months ended March 31, 2007
and
April 1, 2006 (Unaudited)
|
5
|
|
Notes
to Consolidated Financial Statements (Unaudited)
|
6
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
25
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
36
|
Item
4.
|
Controls
and Procedures
|
38
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
40
|
Item
1A.
|
Risk
Factors
|
40
|
Item
6.
|
Exhibits
|
40
|
Signatures
|
41
|
|
ITEM
1. CONSOLIDATED FINANCIAL STATEMENTS
|
|||||||
PRESSTEK,
INC.AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
(in
thousands, except share data)
|
|||||||
(Unaudited)
|
|||||||
|
March
31,
|
December
30,
|
|||||
2007
|
2006
|
||||||
ASSETS
|
|||||||
Current
assets
|
|||||||
Cash
and cash equivalents
|
$
|
5,711
|
$
|
9,449
|
|||
Accounts
receivable, net
|
56,601
|
53,158
|
|||||
Inventories,
net
|
52,607
|
46,050
|
|||||
Deferred
income taxes
|
4,416
|
4,162
|
|||||
Other
current assets
|
3,392
|
2,600
|
|||||
Assets
of discontinued operations
|
1,685
|
3,321
|
|||||
Total
current assets
|
124,412
|
118,740
|
|||||
Property,
plant and equipment, net
|
41,799
|
42,194
|
|||||
Goodwill
|
20,280
|
20,280
|
|||||
Intangible
assets, net
|
8,006
|
8,741
|
|||||
Deferred
income taxes
|
7,515
|
7,515
|
|||||
Other
noncurrent assets
|
759
|
544
|
|||||
Total
assets
|
$
|
202,771
|
$
|
198,014
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
liabilities
|
|||||||
Current
portion of long-term debt and capital lease obligation
|
$
|
7,038
|
$
|
7,037
|
|||
Line
of credit
|
22,000
|
15,000
|
|||||
Accounts
payable
|
28,946
|
27,126
|
|||||
Accrued
expenses
|
11,178
|
10,471
|
|||||
Deferred
revenue
|
7,943
|
7,901
|
|||||
Liabilities
of discontinued operations
|
1,393
|
3,707
|
|||||
Total
current liabilities
|
78,498
|
71,242
|
|||||
Long-term
debt and capital lease obligation, less current portion
|
13,777
|
15,535
|
|||||
Total
liabilities
|
92,275
|
86,777
|
|||||
Commitments
and contingencies (See Note 20)
|
|||||||
Stockholders'
equity
|
|||||||
Preferred
stock, $0.01 par value, 1,000,000 shares authorized, no shares
issued
|
-
|
-
|
|||||
Common
stock, $0.01 par value, 75,000,000 shares authorized, 35,678,781
and
|
|||||||
35,662,318
shares issued and outstanding at March 31, 2007 and
|
|||||||
December
30, 2006, respectively
|
357
|
357
|
|||||
Additional
paid-in capital
|
109,167
|
108,769
|
|||||
Accumulated
other comprehensive income
|
136
|
297
|
|||||
Retained
earnings
|
836
|
1,814
|
|||||
Total
stockholders' equity
|
110,496
|
111,237
|
|||||
Total
liabilities and stockholders' equity
|
$
|
202,771
|
$
|
198,014
|
|||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|||||||
-3-
|
PRESSTEK,
INC. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
STATEMENTS OF INCOME
|
|||||||
(in
thousands, except per-share data)
|
|||||||
(Unaudited)
|
|||||||
|
Three
months ended
|
||||||
|
March
31,
|
April
1,
|
|||||
2007
|
2006
|
||||||
Revenue
|
|||||||
Product
|
$
|
55,236
|
$
|
55,143
|
|||
Service
and parts
|
9,916
|
12,184
|
|||||
Total
revenue
|
65,152
|
67,327
|
|||||
Cost
of revenue
|
|||||||
Product
|
38,946
|
38,257
|
|||||
Service
and parts
|
7,698
|
8,285
|
|||||
Total
cost of revenue
|
46,644
|
46,542
|
|||||
Gross
profit
|
18,508
|
20,785
|
|||||
Operating
expenses
|
|||||||
Research
and development
|
1,634
|
1,545
|
|||||
Sales,
marketing and customer support
|
9,864
|
8,997
|
|||||
General
and administrative
|
6,254
|
5,335
|
|||||
Amortization
of intangible assets
|
707
|
776
|
|||||
Restructuring
and other charges
|
335
|
-
|
|||||
Total
operating expenses
|
18,794
|
16,653
|
|||||
Operating
income (loss)
|
(286
|
)
|
4,132
|
||||
Interest
and other income (expense), net
|
(897
|
)
|
(552
|
)
|
|||
Income
(loss) before income taxes
|
(1,183
|
)
|
3,580
|
||||
Provision
(benefit) for income taxes
|
(317
|
)
|
602
|
||||
Income
(loss) from continuing operations
|
(866
|
)
|
2,978
|
||||
Loss
from discontinued operations, net of tax
|
(112
|
)
|
(254
|
)
|
|||
Net
income (loss)
|
$
|
(978
|
)
|
$
|
2,724
|
||
Earnings
(loss) per share - basic
|
|||||||
Income
(loss) from continuing operations
|
$
|
(0.03
|
)
|
$
|
0.09
|
||
Loss
from discontinued operations
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
$
|
0.08
|
|||
Earnings
(loss) per share - diluted
|
|||||||
Income
(loss) from continuing operations
|
$
|
(0.03
|
)
|
$
|
0.09
|
||
Loss
from discontinued operations
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
$
|
0.08
|
|||
Weighted
average shares outstanding
|
|||||||
Weighted
average shares outstanding - basic
|
35,663
|
35,438
|
|||||
Dilutive
effect of options
|
-
|
492
|
|||||
Weighed
average shares outstanding - diluted
|
35,663
|
35,930
|
|||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|||||||
-4-
|
PRESSTEK,
INC. AND SUBSIDIARIES
|
|||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|||||||
(in
thousands)
|
|||||||
(Unaudited)
|
|||||||
|
Three
months ended
|
||||||
|
March
31,
|
April
1,
|
|||||
2007
|
2006
|
||||||
Operating
activities
|
|||||||
Net
income (loss)
|
$
|
(978
|
)
|
$
|
2,724
|
||
Add
loss from discontinued operations
|
112
|
254
|
|||||
Income
(loss) from continuing operations
|
(866
|
)
|
2,978
|
||||
Adjustments
to reconcile net income (loss) to net cash provided by (used in)
operating
activities:
|
|||||||
Depreciation
|
1,729
|
1,755
|
|||||
Amortization
of intangible assets
|
708
|
776
|
|||||
Restructuring
and other charges
|
335
|
-
|
|||||
Provision
for warranty costs
|
405
|
960
|
|||||
Provision
for accounts receivable allowances
|
54
|
317
|
|||||
Stock
compensation expense
|
306
|
31
|
|||||
Deferred
income taxes
|
(254
|
)
|
-
|
||||
Loss
on disposal of assets
|
30
|
45
|
|||||
Changes
in operating assets and liabilities, net of effects from business
acquisitions and divestitures:
|
|||||||
Accounts
receivable
|
(3,734
|
)
|
(4,511
|
)
|
|||
Inventories
|
(6,556
|
)
|
4,734
|
||||
Other
current assets
|
(792
|
)
|
(1,552
|
)
|
|||
Other
noncurrent assets
|
27
|
(18
|
)
|
||||
Accounts
payable
|
1,819
|
2,032
|
|||||
Accrued
expenses
|
5
|
(6,221
|
)
|
||||
Deferred
revenue
|
42
|
1,019
|
|||||
Net
cash provided by (used in) operating activities
|
(6,742
|
)
|
2,345
|
||||
Investing
activities
|
|||||||
Purchase
of property, plant and equipment
|
(1,330
|
)
|
(1,306
|
)
|
|||
Business
acquisitions, net of cash acquired
|
(38
|
)
|
(332
|
)
|
|||
Investment
in patents and other intangible assets
|
(3
|
)
|
(37
|
)
|
|||
Net
cash used in investing activities
|
(1,371
|
)
|
(1,675
|
)
|
|||
Financing
activities
|
|||||||
Net
proceeds from issuance of common stock
|
92
|
1,129
|
|||||
Repayments
of term loan and capital lease
|
(1,757
|
)
|
(1,760
|
)
|
|||
Net
borrowings under line of credit agreement
|
7,000
|
964
|
|||||
Net
cash provided by financing activities
|
5,335
|
333
|
|||||
Cash
provided by (used in) discontinued operations
|
|||||||
Operating
activities
|
(789
|
)
|
(684
|
)
|
|||
Investing
activities
|
-
|
(49
|
)
|
||||
Financing
activites
|
-
|
-
|
|||||
Net
cash used in discontinued operations
|
(789
|
)
|
(733
|
)
|
|||
Effect
of exchange rate changes on cash and cash equivalents
|
(171
|
)
|
33
|
||||
Net
increase (decrease) in cash and cash equivalents
|
(3,738
|
)
|
303
|
||||
Cash
and cash equivalents, beginning of period
|
9,449
|
5,615
|
|||||
Cash
and cash equivalents, end of period
|
$
|
5,711
|
$
|
5,918
|
|||
Supplemental
disclosure of cash flow information
|
|||||||
Cash
paid for interest
|
$
|
762
|
$
|
476
|
|||
Cash
paid for income taxes
|
$
|
163
|
$
|
245
|
|||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|||||||
-5-
|
|
|
March
31,
2007
|
April
1,
2006
|
|
||||
Revenue
|
|
$
|
195
|
$
|
3,238
|
|
||
Loss
before income taxes
|
|
(188
|
)
|
(258
|
)
|
|
||
Benefit
for income taxes
|
|
(76
|
)
|
(4
|
)
|
|
||
Loss
from discontinued operations
|
|
$
|
(112
|
)
|
$
|
(254
|
)
|
|
Loss
per share
|
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
|
|
|
March
31, 2007
|
|
December
30, 2006
|
|
||
|
|
||||||
Receivables,
net
|
|
$
|
1,592
|
|
$
|
1,875
|
|
Inventories,
net
|
|
93
|
|
|
1,446
|
|
|
Total
current assets
|
|
$
|
1,685
|
|
$
|
3,321
|
|
|
|
|
|
|
|
||
Accounts
payable
|
|
$
|
--
|
|
$
|
2,126
|
|
Accrued
expenses
|
|
1,393
|
|
|
1,581
|
|
|
Total
current liabilities
|
|
$
|
1,393
|
|
$
|
3,707
|
|
|
|
|
|
|
|
|
|
March
31,
2007
|
December
30,
2006
|
||||||
Accounts
receivable
|
$
|
59,706
|
$
|
56,152
|
|||
Less
allowances
|
(3,105
|
)
|
(2,994
|
)
|
|||
$
|
56,601
|
$
|
53,158
|
March
31,
2007
|
December
30,
2006
|
||||||
Raw
materials
|
$
|
4,550
|
$
|
3,434
|
|||
Work
in process
|
7,451
|
7,102
|
|||||
Finished
goods
|
40,606
|
35,514
|
|||||
$
|
52,607
|
$
|
46,050
|
March
31,
2007
|
December
30,
2006
|
||||||
Land
and improvements
|
$
|
2,286
|
$
|
2,286
|
|||
Buildings
and leasehold improvements
|
29,435
|
29,428
|
|||||
Production
and other equipment
|
56,720
|
56,462
|
|||||
Office
furniture and equipment
|
7,288
|
7,263
|
|||||
Construction
in process
|
2,929
|
1,886
|
|||||
Total
property, plant and equipment, at cost
|
98,658
|
97,325
|
|||||
Accumulated
depreciation
|
(56,859
|
)
|
(55,131
|
)
|
|||
$
|
41,799
|
$
|
42,194
|
March
31, 2007
|
December
30, 2006
|
||||||||||||
Cost
|
Accumulated
amortization
|
Cost
|
Accumulated
amortization
|
||||||||||
Patents
and intellectual property
|
$
|
11,250
|
$
|
7,454
|
$
|
11,277
|
$
|
7,206
|
|||||
Trade
names
|
2,360
|
1,952
|
2,360
|
1,776
|
|||||||||
Customer
relationships
|
4,583
|
1,620
|
4,583
|
1,443
|
|||||||||
Software
licenses
|
450
|
362
|
450
|
325
|
|||||||||
License
agreements
|
750
|
217
|
750
|
169
|
|||||||||
Non-compete
covenants
|
100
|
53
|
100
|
48
|
|||||||||
Loan
origination fees
|
332
|
161
|
332
|
144
|
|||||||||
$
|
19,825
|
$
|
11,819
|
$
|
19,852
|
$
|
11,111
|
Remainder
of fiscal 2007
|
$
|
1,680
|
||
Fiscal
2008
|
$
|
1,375
|
||
Fiscal
2009
|
$
|
1,228
|
||
Fiscal
2010
|
$
|
1,047
|
||
Fiscal
2011
|
$
|
792
|
||
Fiscal
2012
|
$
|
500
|
||
Thereafter
|
$
|
697
|
March
31,
2007
|
December
30,
2006
|
||||||
Term
loan
|
$
|
20,750
|
$
|
22,500
|
|||
Line
of credit
|
22,000
|
15,000
|
|||||
Capital
lease obligation
|
65
|
72
|
|||||
42,815
|
37,572
|
||||||
Less
current portion
|
(29,038
|
)
|
(22,037
|
)
|
|||
Long-term
debt
|
$
|
13,777
|
$
|
15,535
|
Remainder
of 2007
|
$
|
27,280
|
||
2008
|
$
|
7,035
|
||
2009
|
$
|
8,500
|
March
31,
2007
|
December
30,
2006
|
||||||
Accrued
payroll and employee benefits
|
$
|
4,116
|
$
|
5,642
|
|||
Accrued
warranty
|
1,667
|
1,729
|
|||||
Accrued
integration costs
|
469
|
511
|
|||||
Accrued
restructuring
|
395
|
233
|
|||||
Accrued
royalties
|
336
|
276
|
|||||
Other
|
4,195
|
2,080
|
|||||
$
|
11,178
|
$
|
10,471
|
Balance
at December 30, 2006
|
$
|
1,729
|
||
Accruals
for warranties
|
405
|
|||
Utilization
of accrual for warranty costs
|
(467
|
)
|
||
Balance
at March 31, 2007
|
$
|
1,667
|
March
31,
2007
|
December
30,
2006
|
||||||
Deferred
service revenue
|
$
|
7,559
|
$
|
7,505
|
|||
Deferred
product revenue
|
384
|
396
|
|||||
$
|
7,943
|
$
|
7,901
|
Balance
December
30,
2006
|
Utilization
|
Currency
Translation
|
Balance
March
31,
2007
|
||||||||||
Severance
and fringe benefits
|
$
|
487
|
$
|
(29
|
)
|
$
|
(4
|
)
|
$
|
454
|
|||
Lease
termination and other costs
|
24
|
(9
|
)
|
--
|
15
|
||||||||
$
|
511
|
$
|
(38
|
)
|
$
|
(4
|
)
|
$
|
469
|
Balance
December
30,
2006
|
Charged
to expense
|
Utilization
|
Reversal-
changes
in
estimate
|
Balance
March
31,
2007
|
||||||||||||
Severance
and fringe benefits
|
$
|
233
|
$
|
335
|
$
|
(173
|
)
|
--
|
$
|
395
|
Three
months ended
|
Three
months ended
|
||||||
March
31, 2007
|
April
1, 2006
|
||||||
Risk-free
interest rate
|
4.74
|
%
|
4.40
|
%
|
|||
Volatility
|
48.15
|
%
|
53.13
|
%
|
|||
Expected
life (in years)
|
0.25
|
0.25
|
|||||
Dividend
yield
|
--
|
--
|
Three
months ended
|
||||
March
31, 2007
|
||||
Risk-free
interest rate
|
4.45
|
%
|
||
Volatility
|
48.52
|
%
|
||
Expected
life (in years)
|
4.54
|
|||
Dividend
yield
|
--
|
Shares
|
Weighted
average
exercise
price
|
Weighted
average remaining contractual life
|
Aggregate
intrinsic value
|
|||||||||||||
Outstanding
at December 30, 2006
|
2,956,350
|
$
|
9.01
|
|||||||||||||
Granted
|
483,333
|
$
|
6.09
|
|||||||||||||
Exercised
|
0
|
$
|
0.00
|
|||||||||||||
Canceled/expired
|
(324,775
|
)
|
$
|
7.65
|
||||||||||||
Outstanding
at March 31, 2007
|
3,114,908
|
$
|
8.69
|
5.66
|
$
0.7 million
|
|||||||||||
Exercisable
at March 31, 2007
|
2,529,908
|
$
|
9.12
|
4.78
|
$
0.7 million
|
Three
months ended
|
|||||||
March
31,
2007
|
April
1,
2006
|
||||||
Interest
income
|
$
|
8
|
$
|
27
|
|||
Interest
expense
|
(762
|
)
|
(476
|
)
|
|||
Other
income (expense), net
|
(143
|
)
|
(103
|
)
|
|||
$
|
(897
|
)
|
$
|
(552
|
)
|
Three
months ended
|
|||||||
March
31,
2007
|
April
1,
2006
|
||||||
Net
income (loss)
|
$
|
(978
|
)
|
$
|
2,724
|
||
Changes
in accumulated other comprehensive income:
|
|||||||
Unrealized
foreign currency translation gains (losses)
|
(161
|
)
|
39
|
||||
Comprehensive
income (loss)
|
$
|
(1,139
|
)
|
$
|
2,763
|
· |
Presstek
is
primarily engaged in the development, manufacture, sale and servicing
of
our patented digital imaging systems and patented printing plate
technologies as well as traditional, analog systems and related equipment
and supplies for the graphic arts and printing industries, primarily
the
short-run, full-color market
segment.
|
· |
Lasertel
manufactures and develops high-powered laser diodes and related laser
products for Presstek and for sale to external
customers.
|
Three
months ended
|
|||||||
March
31,
2007
|
April
1,
2006
|
||||||
Revenue
|
|||||||
Presstek
|
$
|
63,463
|
$
|
66,136
|
|||
Lasertel
|
3,022
|
2,602
|
|||||
Total
revenue, including intersegment
|
66,485
|
68,738
|
|||||
Intersegment
revenue
|
(1,333
|
)
|
(1,411
|
)
|
|||
$
|
65,152
|
$
|
67,327
|
||||
Revenue
from external customers
|
|||||||
Presstek
|
$
|
63,463
|
$
|
66,136
|
|||
Lasertel
|
1,689
|
1,191
|
|||||
$
|
65,152
|
$
|
67,327
|
||||
Operating
income (loss)
|
|||||||
Presstek
|
$
|
(172
|
)
|
$
|
4,841
|
||
Lasertel
|
(114
|
)
|
(709
|
)
|
|||
$
|
(286
|
)
|
$
|
4,132
|
March
31,
2007
|
December
30,
2006
|
||||||
Presstek
|
$
|
189,215
|
$
|
184,510
|
|||
Lasertel
|
13,556
|
13,504
|
|||||
$
|
202,771
|
$
|
198,014
|
Three
months ended
|
|||||||
March
31,
2007
|
April
1,
2006
|
||||||
United
States
|
$
|
36,911
|
$
|
44,688
|
|||
United
Kingdom
|
8,210
|
6,491
|
|||||
Canada
|
3,650
|
3,533
|
|||||
Germany
|
1,777
|
2,908
|
|||||
Japan
|
2,031
|
1,741
|
|||||
All
other
|
12,573
|
7,966
|
|||||
$
|
65,152
|
$
|
67,327
|
March
31,
2007
|
December
30,
2006
|
||||||
United
States
|
$
|
77,316
|
$
|
78,077
|
|||
United
Kingdom
|
757
|
894
|
|||||
Canada
|
286
|
303
|
|||||
$
|
78,359
|
$
|
79,274
|
|
•
|
|
our
expectations of our financial and operating performance in 2007 and
beyond;
|
|
|
||
|
•
|
|
the
adequacy of internal cash and working capital for our
operations;
|
|
|
||
|
•
|
|
manufacturing
constraints and difficulties;
|
|
|
||
|
•
|
|
the
introduction of competitive products into the
marketplace;
|
|
|
||
|
•
|
|
management’s
plans and goals for our subsidiaries;
|
|
|
||
|
•
|
|
the
ability of the Company and its divisions to generate positive cash
flows
in the near-term, or to otherwise be profitable;
|
|
|
||
|
•
|
|
our
ability to produce commercially competitive products;
|
|
|
||
|
•
|
|
the
strength of our various strategic partnerships, both on manufacturing
and
distribution;
|
|
|
||
|
•
|
|
our
ability to secure other strategic alliances and
relationships;
|
|
|
||
|
•
|
|
our
expectations regarding the Company’s strategy for growth, including
statements regarding the Company’s expectations for continued product mix
improvement;
|
|
|
||
|
•
|
|
our
expectations regarding the balance, independence and control of our
business;
|
|
|
||
|
•
|
|
our
expectations and plans regarding market penetration, including the
strength and scope of our distribution channels and our expectations
regarding sales of Direct Imaging presses or computer-to-plate
devices;
|
|
|
||
|
•
|
|
the
commercialization and marketing of our technology;
|
|
|
||
|
•
|
|
our
expectations regarding performance of existing, planned and recently
introduced products;
|
|
|
||
|
•
|
|
the
adequacy of our intellectual property protections and our ability
to
protect and enforce our intellectual property rights;
and
|
|
|
||
|
•
|
|
the
expected effect of adopting recently issued accounting standards,
among
others.
|
|
•
|
|
market
acceptance of and demand for our products and resulting
revenues;
|
|
|
||
|
•
|
|
our
ability to meet our stated financial objectives;
|
|
|
|
•
|
|
our
dependency on our strategic partners, both on manufacturing and
distribution;
|
|
|
||
|
•
|
|
the
introduction of competitive products into the
marketplace;
|
|
|
||
|
•
|
|
shortages
of critical or sole-source component
supplies;
|
|
|
||
|
•
|
|
the
availability and quality of Lasertel’s laser diodes;
|
|
•
|
|
the
performance and market acceptance of our recently-introduced products,
and
our ability to invest in new product development;
|
|
|
||
|
•
|
|
manufacturing
constraints or difficulties (as well as manufacturing difficulties
experienced by our sub-manufacturing partners and their capacity
constraints); and
|
|
|
||
|
•
|
|
the
impact of general market factors in the print industry generally
and the
economy as a whole, including the potential effects of
inflation.
|
· |
provide
advanced digital print solutions through the development and manufacture
of digital laser imaging equipment and advanced technology chemistry-free
printing plates, which we call consumables, for commercial and in-plant
print providers targeting the growing market for high quality, fast
turnaround short-run color
printing;
|
· |
are
a leading sales and services company delivering Presstek digital
solutions
and solutions from other manufacturing partners through our direct
sales
and service force and through distribution partners
worldwide;
|
· |
manufacture
semiconductor solid state laser diodes for Presstek imaging applications
and for use in external applications;
and
|
· |
manufacture
and distribute printing plates for conventional print
applications.
|
· |
Presstek
is
primarily engaged in the development, manufacture, sale and servicing
of
our business solutions using patented digital imaging systems and
patented
printing plate technologies. We also provide traditional, analog
systems
and related equipment and supplies for the graphic arts and printing
industries.
|
· |
Lasertel
manufactures and develops high-powered laser diodes and related laser
products for Presstek and for sale to external
customers.
|
Three
months ended
|
|||||||||||||
March
31, 2007
|
April
1, 2006
|
||||||||||||
%
of
revenue
|
%
of
revenue
|
||||||||||||
Revenue
|
|||||||||||||
Product
|
$
|
55,236
|
84.8
|
$
|
55,143
|
81.9
|
|||||||
Service
and parts
|
9,916
|
15.2
|
12,184
|
18.1
|
|||||||||
Total
revenue
|
65,152
|
100.0
|
67,327
|
100.0
|
|||||||||
Cost
of revenue
|
|||||||||||||
Cost
of product
|
38,946
|
59.8
|
38,257
|
56.8
|
|||||||||
Cost
of service and parts
|
7,698
|
11.8
|
8,285
|
12.3
|
|||||||||
Total
cost of revenue
|
46,644
|
71.6
|
46,542
|
69.1
|
|||||||||
Gross
margin
|
18,508
|
28.4
|
20,785
|
30.9
|
|||||||||
Operating
expenses
|
|||||||||||||
Research
and product development
|
1,634
|
2.5
|
1,545
|
2.3
|
|||||||||
Sales,
marketing and customer support
|
9,864
|
15.1
|
8,997
|
13.4
|
|||||||||
General
and administrative
|
6,254
|
9.6
|
5,335
|
7.9
|
|||||||||
Amortization
of intangible assets
|
707
|
1.1
|
776
|
1.2
|
|||||||||
Restructuring
and other charges
|
335
|
0.5
|
--
|
--
|
|||||||||
Total
operating expenses
|
18,794
|
28.8
|
16,653
|
24.8
|
|||||||||
Operating
income (loss)
|
(286
|
)
|
(0.4
|
)
|
4,132
|
6.1
|
|||||||
Interest
and other expense, net
|
(897
|
)
|
(1.4
|
)
|
(552
|
)
|
(0.8
|
)
|
|||||
Provision
for income taxes
|
(317
|
)
|
(0.5
|
)
|
602
|
0.9
|
|||||||
Income
(loss) from continuing operations
|
(866
|
)
|
(1.3
|
)
|
2,978
|
4.4
|
|||||||
Loss
from discontinued operations, net of tax
|
(112
|
)
|
(0.2
|
)
|
(254
|
)
|
(0.4
|
)
|
|||||
Net
income (loss)
|
$
|
(978
|
)
|
(1.5
|
)
|
$
|
2,724
|
4.0
|
|
|
March
31,
2007
|
April
1,
2006
|
|
||||
Revenue
|
|
$
|
195
|
$
|
3,238
|
|
||
Loss
before income taxes
|
|
(188
|
)
|
(258
|
)
|
|
||
Provision
(benefit) for income taxes
|
|
(76
|
)
|
(4
|
)
|
|
||
Loss
from discontinued operations
|
|
$
|
(112
|
)
|
$
|
(254
|
)
|
|
Loss
per share
|
|
$
|
(0.00
|
)
|
$
|
(0.01
|
)
|
|
· |
On
February 28, 2007, the Company announced the appointment of Jeffrey
A.
Cook as Senior Vice President and Chief Financial Officer of the
Company,
succeeding Moosa E. Moosa, who departed from the Company effective
as of
that date.
|
· |
Effective
April 3, 2007, the Audit Committee of the Board of Directors established
a
Financial Reporting Task Force to develop a corrective action plan
to
ensure full remediation of the material weakness. This task force,
which
reports directly to the Audit Committee and is led by the Senior
Vice
President and Chief Financial Officer, is scheduled to meet in May
2007 to
establish specific action plans to address remediation matters.
|
· |
During
March 2007, a new Financial Reporting Manager was appointed to manage
all
SEC-related activities including accounting guidance and periodic
reporting.
|
· |
The
Company is undertaking a review to ensure that the finance, accounting
and
tax functions are staffed in accordance with the required competencies
and
has strengthened
the Finance organization by the addition of personnel to address
complex
accounting and financial reporting requirements.
|
· |
A
Director of Internal Audit position, reporting directly to the Audit
Committee, has been filled with an individual with significant industry
experience. In addition to other duties, this position will participate
in
Financial Task Force activities and be responsible for reviewing
and
validating compliance with all remedial
actions.
|
· |
The
Company has begun an initiative to provide additional training to
finance,
accounting and tax professionals regarding new and evolving areas
in U.S.
GAAP.
|
· |
The
Company implemented a process that ensures the timely review and
approval
of complex accounting transactions by qualified accounting
personnel.
|
· |
The
Company introduced a requirement that analysis of all significant
non-routine transactions must be reviewed by senior financial
management.
|
Exhibit
No.
|
Description
|
10.1
|
Employment
Agreement by and between Presstek, Inc. and Jeffrey Cook dated February
27, 2007 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K, filed
March 2, 2007, hereby incorporated by reference.)
|
10.2
|
Employment
Agreement by and between Presstek, Inc. and Jeffrey Jacobson dated
May 10,
2007.
|
10.3
|
Stock
Option Agreement by and between Presstek, Inc. and Jeffrey Jacobson
dated
May 10, 2007.
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
PRESSTEK,
INC.
(Registrant)
|
|
Date:
May 15, 2007
|
/s/
Jeffrey A. Cook
|
Jeffrey
A. Cook
Senior
Vice President and Chief Financial Officer
(Duly
Authorized Officer and Principal Financial Officer)
|
Exhibit
No.
|
Description
|
10.1
|
Employment
Agreement by and between Presstek, Inc. and Jeffrey Cook dated February
27, 2007 (Previously filed as Exhibit 99.1 to Presstek’s Form 8-K, filed
March 2, 2007, hereby incorporated by reference.)
|
10.2
|
Employment
Agreement by and between Presstek, Inc. and Jeffrey Jacobson dated
May 10,
2007.
|
10.3
|
Stock
Option Agreement by and between Presstek, Inc. and Jeffrey Jacobson
dated
May 10, 2007.
|
31.1
|
Certification
of the Chief Executive Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
31.2
|
Certification
of the Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302
of the
Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|
32.2
|
Certification
of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350,
as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
|