þ
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the quarterly period ended September 27, 2008
|
||
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.)
|
10
Glenville Street
Greenwich,
Connecticut
(Address
of Principal Executive Offices)
|
06831
(Zip
Code)
|
PAGE
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Item
1.
|
Consolidated
Financial Statements
|
3
|
Consolidated
Balance Sheets as of September 27, 2008 and December 29, 2007
(Unaudited)
|
3
|
|
Consolidated
Statements of Operations for the three and nine months ended September 27,
2008 and September 29, 2007 (Unaudited)
|
4
|
|
Consolidated
Statements of Cash Flows for the nine months ended September 27, 2008 and
September 29, 2007 (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
4.
|
Controls
and Procedures
|
39
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1.
|
Legal
Proceedings
|
42
|
Item
6.
|
Exhibits
|
43
|
Signatures
|
44
|
|
ITEM
1. CONSOLIDATED FINANCIAL STATEMENTS
|
||||||||
PRESSTEK,
INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
(in
thousands, except share data)
|
||||||||
(Unaudited)
|
||||||||
September
27,
|
December
29,
|
|||||||
2008
|
2007
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
and cash equivalents
|
$ | 2,634 | $ | 12,558 | ||||
Accounts
receivable, net
|
34,911 | 41,094 | ||||||
Inventories
|
43,439 | 45,010 | ||||||
Assets
of discontinued operations
|
13,727 | 16,689 | ||||||
Deferred
income taxes
|
7,356 | 6,740 | ||||||
Other
current assets
|
4,453 | 4,594 | ||||||
Total
current assets
|
106,520 | 126,685 | ||||||
Property,
plant and equipment, net
|
25,773 | 29,049 | ||||||
Goodwill
|
19,891 | 19,891 | ||||||
Intangible
assets, net
|
4,481 | 5,209 | ||||||
Deferred
income taxes
|
9,463 | 11,124 | ||||||
Other
noncurrent assets
|
569 | 869 | ||||||
Total
assets
|
$ | 166,697 | $ | 192,827 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Current
portion of long-term debt and capital lease obligation
|
$ | 3,246 | $ | 7,035 | ||||
Line
of credit
|
11,890 | 20,000 | ||||||
Accounts
payable
|
14,761 | 17,312 | ||||||
Accrued
expenses
|
15,500 | 23,212 | ||||||
Deferred
revenue
|
6,902 | 7,100 | ||||||
Liabilities
of discontinued operations
|
5,995 | 2,776 | ||||||
Total
current liabilities
|
58,294 | 77,435 | ||||||
Long-term
debt and capital lease obligation, less current portion
|
834 | 8,500 | ||||||
Other
long-term liabilities
|
58 | - | ||||||
Total
liabilities
|
59,186 | 85,935 | ||||||
Commitments
and contingencies (See Note 19)
|
||||||||
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, 36,619,078
and
|
||||||||
36,565,474
shares issued and outstanding at September 27, 2008 and
|
||||||||
December
29, 2007, respectively
|
366 | 366 | ||||||
Additional
paid-in capital
|
117,426 | 115,884 | ||||||
Accumulated
other comprehensive income (loss)
|
(871 | ) | 1,032 | |||||
Accumulated
deficit
|
(9,410 | ) | (10,390 | ) | ||||
Total
stockholders' equity
|
107,511 | 106,892 | ||||||
Total
liabilities and stockholders' equity
|
$ | 166,697 | $ | 192,827 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
PRESSTEK,
INC. AND SUBSIDIARIES
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||||||||
(in
thousands, except per-share data)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27,
|
September
29,
|
September
27,
|
September
29,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Revenue
|
||||||||||||||||
Product
|
$ | 40,288 | $ | 48,174 | $ | 124,764 | $ | 158,414 | ||||||||
Service
and parts
|
8,246 | 9,488 | 26,170 | 29,276 | ||||||||||||
Total
revenue
|
48,534 | 57,662 | 150,934 | 187,690 | ||||||||||||
Cost
of revenue
|
||||||||||||||||
Product
|
25,589 | 34,457 | 78,659 | 112,696 | ||||||||||||
Service
and parts
|
6,096 | 8,097 | 19,561 | 24,568 | ||||||||||||
Total
cost of revenue
|
31,685 | 42,554 | 98,220 | 137,264 | ||||||||||||
Gross
profit
|
16,849 | 15,108 | 52,714 | 50,426 | ||||||||||||
Operating
expenses
|
||||||||||||||||
Research
and development
|
1,059 | 1,212 | 3,697 | 3,789 | ||||||||||||
Sales,
marketing and customer support
|
7,088 | 9,315 | 22,411 | 29,810 | ||||||||||||
General
and administrative
|
5,932 | 8,796 | 18,321 | 23,603 | ||||||||||||
Amortization
of intangible assets
|
258 | 517 | 823 | 1,819 | ||||||||||||
Restructuring
and other charges
|
374 | 399 | 1,569 | 1,527 | ||||||||||||
Total
operating expenses
|
14,711 | 20,239 | 46,821 | 60,548 | ||||||||||||
Operating
income (loss)
|
2,138 | (5,131 | ) | 5,893 | (10,122 | ) | ||||||||||
Interest
and other income (expense), net
|
(359 | ) | (285 | ) | (646 | ) | (1,610 | ) | ||||||||
Income
(loss) from continuing operations before income taxes
|
1,779 | (5,416 | ) | 5,247 | (11,732 | ) | ||||||||||
Provision
(benefit) for income taxes
|
1,153 | (2,732 | ) | 2,731 | (3,541 | ) | ||||||||||
Income
(loss) from continuing operations
|
626 | (2,684 | ) | 2,516 | (8,191 | ) | ||||||||||
Loss
from discontinued operations, net of tax
|
(431 | ) | (932 | ) | (1,536 | ) | (1,233 | ) | ||||||||
Net
income (loss)
|
$ | 195 | $ | (3,616 | ) | $ | 980 | $ | (9,424 | ) | ||||||
Earnings
(loss) per share - basic
|
||||||||||||||||
Income
(loss) from continuing operations
|
$ | 0.02 | $ | (0.07 | ) | $ | 0.07 | $ | (0.23 | ) | ||||||
Loss
from discontinued operations
|
(0.01 | ) | (0.03 | ) | (0.04 | ) | (0.03 | ) | ||||||||
$ | 0.01 | $ | (0.10 | ) | $ | 0.03 | $ | (0.26 | ) | |||||||
Earnings
(loss) per share - diluted
|
||||||||||||||||
Income
(loss) from continuing operations
|
$ | 0.02 | $ | (0.07 | ) | $ | 0.07 | $ | (0.23 | ) | ||||||
Loss
from discontinued operations
|
(0.01 | ) | (0.03 | ) | (0.04 | ) | (0.03 | ) | ||||||||
$ | 0.01 | $ | (0.10 | ) | $ | 0.03 | $ | (0.26 | ) | |||||||
Weighted
average shares outstanding
|
||||||||||||||||
Weighted
average shares outstanding - basic
|
36,603 | 36,545 | 36,586 | 36,080 | ||||||||||||
Dilutive
effect of options
|
13 | - | 12 | - | ||||||||||||
Weighed
average shares outstanding - diluted
|
36,616 | 36,545 | 36,598 | 36,080 | ||||||||||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
PRESSTEK,
INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||
(in
thousands)
|
||||||||
(Unaudited)
|
||||||||
Nine
months ended
|
||||||||
September
27,
|
September
29,
|
|||||||
2008
|
2007
|
|||||||
Operating
activities
|
||||||||
Net
income (loss)
|
$ | 980 | $ | (9,424 | ) | |||
Add
loss from discontinued operations
|
1,536 | 1,233 | ||||||
Income
(loss) from continuing operations
|
2,516 | (8,191 | ) | |||||
Adjustments
to reconcile net income (loss) to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
|
3,608 | 4,179 | ||||||
Amortization
of intangible assets
|
823 | 1,819 | ||||||
Restructuring
and other charges
|
166 | - | ||||||
Writedown
of asset to net realizable value
|
422 | - | ||||||
Provision
for warranty costs
|
350 | 2,854 | ||||||
Provision
for accounts receivable allowances
|
746 | 1,087 | ||||||
Stock
compensation expense
|
1,321 | 3,447 | ||||||
Deferred
income taxes
|
1,045 | (4,429 | ) | |||||
Loss
on disposal of assets
|
37 | 72 | ||||||
Changes
in operating assets and liabilities, net of effects from business
acquisitions and divestitures:
|
||||||||
Accounts
receivable
|
6,073 | 1,651 | ||||||
Inventories
|
1,381 | (3,247 | ) | |||||
Other
current assets
|
164 | (532 | ) | |||||
Other
noncurrent assets
|
(142 | ) | 70 | |||||
Accounts
payable
|
(2,612 | ) | (5,387 | ) | ||||
Accrued
expenses
|
(9,041 | ) | 1,717 | |||||
Restructuring
and other charges
|
981 | 1,527 | ||||||
Deferred
revenue
|
(187 | ) | (347 | ) | ||||
Net
cash provided by (used in) operating activities
|
7,651 | (3,710 | ) | |||||
Investing
activities
|
||||||||
Purchase
of property, plant and equipment
|
(946 | ) | (2,114 | ) | ||||
Business
acquisitions, net of cash acquired
|
- | (20 | ) | |||||
Investment
in patents and other intangible assets
|
(125 | ) | (58 | ) | ||||
Net
cash used in investing activities
|
(1,071 | ) | (2,192 | ) | ||||
Financing
activities
|
||||||||
Net
proceeds from issuance of common stock
|
221 | 3,069 | ||||||
Repayments
of term loan and capital lease
|
(11,455 | ) | (5,274 | ) | ||||
Net
borrowings (repayments) under line of credit agreement
|
(8,110 | ) | 6,000 | |||||
Net
cash provided by (used in) financing activities
|
(19,344 | ) | 3,795 | |||||
Cash
provided by (used in) discontinued operations
|
||||||||
Operating
activities
|
(3,145 | ) | (305 | ) | ||||
Investing
activities
|
7,811 | (419 | ) | |||||
Financing
activities
|
- | - | ||||||
Net
cash provided by (used in) discontinued operations
|
4,666 | (724 | ) | |||||
Effect
of exchange rate changes on cash and cash equivalents
|
(1,826 | ) | 667 | |||||
Net
decrease in cash and cash equivalents
|
(9,924 | ) | (2,164 | ) | ||||
Cash
and cash equivalents, beginning of period
|
12,558 | 9,547 | ||||||
Cash
and cash equivalents, end of period
|
$ | 2,634 | $ | 7,383 | ||||
Supplemental
disclosure of cash flow information
|
||||||||
Cash
paid for interest
|
$ | 1,384 | $ | 2,417 | ||||
Cash
paid for income taxes
|
$ | 547 | $ | 374 | ||||
The
accompanying notes are an integral part of these consolidated financial
statements.
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27 , 2008
|
September
29 , 2007
|
September
27 , 2008
|
September
29 , 2007
|
|||||||||||||
Revenues
from external customers
|
$ | -- | $ | -- | $ | -- | $ | 195 | ||||||||
Income
(loss) before income taxes
|
31 | 16 | 137 | (132 | ) | |||||||||||
Provision
(benefit) from income taxes
|
-- | 6 | 43 | (54 | ) | |||||||||||
Income
(loss) from discontinued operations
|
$ | 31 | $ | 10 | $ | 94 | $ | (78 | ) | |||||||
Earnings
(loss) per share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 |
September
27, 2008
|
December
29, 2007
|
|||||||
Receivables,
net
|
$ | 2 | $ | 15 | ||||
Total
current assets
|
$ | 2 | $ | 15 | ||||
Accounts
payable
|
$ | 189 | $ | 189 | ||||
Accrued
expenses
|
71 | 699 | ||||||
Total
current liabilities
|
$ | 260 | $ | 888 | ||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27 , 2008
|
September
29 , 2007
|
September
27 , 2008
|
September
29 , 2007
|
|||||||||||||
Revenues
from external customers
|
$ | 2,535 | $ | 1,950 | $ | 6,833 | $ | 5,825 | ||||||||
Loss
before income taxes
|
(733 | ) | (1,534 | ) | (2,636 | ) | (1,881 | ) | ||||||||
Benefit
from income taxes
|
(271 | ) | (592 | ) | (1,006 | ) | (726 | ) | ||||||||
Loss
from discontinued operations
|
$ | (462 | ) | $ | (942 | ) | $ | (1,630 | ) | $ | (1,155 | ) | ||||
Loss
per share
|
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | (0.03 | ) |
September
27, 2008
|
December
29, 2007
|
|||||||
Cash
and cash equivalents
|
$ | -- | $ | 691 | ||||
Receivables,
net
|
2,826 | 1,785 | ||||||
Inventories
|
4,766 | 4,074 | ||||||
Other
current assets
|
542 | 72 | ||||||
Property,
plant & equipment, net
|
4,692 | 8,974 | ||||||
Intangible
assets, net
|
899 | 1,078 | ||||||
Total
assets
|
$ | 13,725 | $ | 16,674 | ||||
Accounts
payable
|
$ | 733 | $ | 1,291 | ||||
Accrued
expenses
|
518 | 501 | ||||||
Deferred
revenue
|
-- | 96 | ||||||
Deferred
gain
|
4,484 | -- | ||||||
Total
Liabilities
|
$ | 5,735 | $ | $$1,888 |
3. FAIR VALUES OF FINANCIAL
INSTRUMENTS
|
September
27,
2008
|
December
29,
2007
|
|||||||
Accounts
receivable
|
$ | 37,233 | $ | 43,632 | ||||
Less
allowances
|
(2,322 | ) | (2,538 | ) | ||||
$ | 34,911 | $ | 41,094 |
September
27,
2008
|
December
29,
2007
|
|||||||
Raw
materials
|
$ | 3,287 | $ | 3,660 | ||||
Work
in process
|
5,248 | 4,939 | ||||||
Finished
goods
|
34,904 | 36,411 | ||||||
$ | 43,439 | $ | 45,010 |
September
27,
2008
|
December
29,
2007
|
|||||||
Land
and improvements
|
$ | 1,302 | $ | 1,363 | ||||
Buildings
and leasehold improvements
|
22,169 | 22,695 | ||||||
Production
and other equipment
|
42,368 | 42,204 | ||||||
Office
furniture and equipment
|
9,397 | 7,098 | ||||||
Construction
in process
|
406 | 2,355 | ||||||
Total
property, plant and equipment, at cost
|
75,642 | 75,715 | ||||||
Accumulated
depreciation and amortization
|
(49,869 | ) | (46,666 | ) | ||||
Net
property, plant and equipment
|
$ | 25,773 | $ | 29,049 |
September
27, 2008
|
December
29, 2007
|
|||||||||||||||
Cost
|
Accumulated
amortization
|
Cost
|
Accumulated
amortization
|
|||||||||||||
Patents
and intellectual property
|
$ | 9,435 | $ | 7,735 | $ | 9,360 | $ | 7,323 | ||||||||
Trade
names
|
2,360 | 2,360 | 2,360 | 2,360 | ||||||||||||
Customer
relationships
|
4,452 | 2,140 | 4,452 | 1,855 | ||||||||||||
Software
licenses
|
450 | 450 | 450 | 450 | ||||||||||||
License
agreements
|
750 | 353 | 750 | 296 | ||||||||||||
Non-compete
covenants
|
100 | 100 | 100 | 100 | ||||||||||||
Loan
origination fees
|
332 | 260 | 332 | 211 | ||||||||||||
$ | 17,879 | $ | 13,398 | $ | 17,804 | $ | 12,595 |
Remainder
of fiscal 2008
|
$ | 283 | ||
Fiscal
2009
|
$ | 1,033 | ||
Fiscal
2010
|
$ | 904 | ||
Fiscal
2011
|
$ | 677 | ||
Fiscal
2012
|
$ | 403 | ||
Fiscal
2013
|
$ | 384 | ||
Thereafter
|
$ | 317 |
September
27,
2008
|
December
29,
2007
|
|||||||
Term
loan
|
$ | 4,074 | $ | 15,500 | ||||
Line
of credit
|
11,890 | 20,000 | ||||||
Capital
lease obligation
|
6 | 35 | ||||||
15,970 | 35,535 | |||||||
Less
current portion
|
(15,136 | ) | (27,035 | ) | ||||
Long-term
debt
|
$ | 834 | $ | 8,500 |
Remainder
of 2008
|
$ | 10,706 | ||
2009
|
$ | 5,264 |
September
27,
2008
|
December
29,
2007
|
|||||||
Accrued
payroll and employee benefits
|
$ | 4,502 | $ | 5,478 | ||||
Accrued
warranty
|
2,844 | 3,534 | ||||||
Accrued
restructuring and other charges
|
676 | 1,592 | ||||||
Accrued
royalties
|
232 | 432 | ||||||
Accrued
income taxes
|
1,129 | 569 | ||||||
Accrued
legal
|
2,517 | 5,815 | ||||||
Accrued
professional fees
|
863 | 2,545 | ||||||
Other
|
2,737 | 3,247 | ||||||
$ | 15,500 | $ | 23,212 |
Balance
at December 29, 2007
|
$ | 3,534 | ||
Accruals
for warranties
|
350 | |||
Utilization
of accrual for warranty costs
|
(1,040 | ) | ||
Balance
at September 27, 2008
|
$ | 2,844 |
September
27,
2008
|
December
29,
2007
|
|||||||
Deferred
service revenue
|
$ | 5,973 | $ | 6,718 | ||||
Deferred
product revenue
|
929 | 382 | ||||||
$ | 6,902 | $ | 7,100 |
Balance
December
29,
2007
|
Charged
to expense
|
Utilization
|
Balance
September
27,
2008
|
|||||||||||||
Lease
termination and other costs
|
$ | -- | $ | 881 | $ | (881 | ) | $ | -- | |||||||
Executive
contractual obligations
|
904 | 223 | (763 | ) | 364 | |||||||||||
Severance
and fringe benefits
|
688 | 465 | (841 | ) | 312 | |||||||||||
$ | 1,592 | $ | 1,569 | $ | (2,485 | ) | $ | 676 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
Stock option plan
|
September
27, 2008
|
September
29, 2007
|
September
27, 2008
|
September
29, 2007
|
||||||||||||
2008
Plan
|
$ | 181 | $ | -- | $ | 181 | $ | -- | ||||||||
2003
Plan
|
116 | 420 | 555 | 1,061 | ||||||||||||
1998
Plan
|
42 | -- | 132 | -- | ||||||||||||
ESPP
|
30 | 16 | 66 | 60 | ||||||||||||
Restricted
Stock
|
-- | -- | -- | 1,500 | ||||||||||||
Non-plan,
non-qualified
|
129 | 213 | 387 | 826 | ||||||||||||
Total
|
$ | 498 | $ | 649 | $ | 1,321 | $ | 3,447 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27, 2008
|
September
29, 2007
|
September
27, 2008
|
September
29, 2007
|
|||||||||||||
Risk-free
interest rate
|
0.7 | % | 3.8 | % | 1.3 | % | 4.4 | % | ||||||||
Volatility
|
64.2 | % | 57.9 | % | 56.6 | % | 50.5 | % | ||||||||
Expected
life (in years)
|
0.25 | 0.25 | 0.25 | 0.25 | ||||||||||||
Dividend
yield
|
-- | -- | -- | -- |
Three
months ended
|
Six
months ended
|
|||||||||||||||
September
27, 2008
|
September
29, 2007
|
September
27, 2008
|
September
29, 2007
|
|||||||||||||
Risk-free
interest rate
|
3.3 | % | 4.2 | % | 3.3 | % | 4.5 | % | ||||||||
Volatility
|
49.4 | % | 60.97 | % | 49.4 | % | 60.97 | % | ||||||||
Expected
life (in years)
|
5.7 | 5.6 | 5.7 | 5.6 | ||||||||||||
Dividend
yield
|
-- | -- | -- | -- |
Shares
|
Weighted
average
exercise
price
|
Weighted
average remaining contractual life
|
Aggregate
intrinsic value
|
|||||||
Outstanding
at December 29, 2007
|
3,816,567 | $ | 8.26 | |||||||
Granted
|
928,609 | $ | 5.45 | |||||||
Exercised
|
(2,500 | ) | $ | 4.79 | ||||||
Canceled/expired
|
(397,400 | ) | $ | 12.30 | ||||||
Outstanding
at September 27, 2008
|
4,345,276 | $ | 7.29 |
6.9
years
|
$0.5
million
|
|||||
Exercisable
at September 27, 2008
|
2,407,670 | $ | 8.46 |
5.6
years
|
$0.2
million
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
|||||||||||||
Interest
income
|
$ | 16 | $ | 19 | $ | 95 | $ | 55 | ||||||||
Interest
expense
|
(165 | ) | (507 | ) | (810 | ) | (1,587 | ) | ||||||||
Other
income (expense), net
|
(210 | ) | 203 | 69 | (78 | ) | ||||||||||
$ | (359 | ) | $ | (285 | ) | $ | (646 | ) | $ | (1,610 | ) |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
|||||||||||||
Net
income (loss)
|
$ | 195 | $ | (3,616 | ) | $ | 980 | $ | (9,424 | ) | ||||||
Changes
in accumulated other comprehensive income:
|
||||||||||||||||
Unrealized
foreign currency translation gains (losses)
|
(1,737 | ) | 594 | (1,903 | ) | 865 | ||||||||||
Comprehensive
income (loss)
|
$ | (1,542 | ) | $ | (3,022 | ) | $ | (923 | ) | $ | (8,559 | ) |
·
|
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.
|
September
27,
2008
|
December
29,
2007
|
|||||||
Presstek
|
$ | 152,972 | $ | 176,153 | ||||
Lasertel
(assets of discontinued operations)
|
13,725 | 16,674 | ||||||
$ | 166,697 | $ | 192,827 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27,
2008
|
September
29,
2007
|
September
27,
2008
|
September
29,
2007
|
|||||||||||||
United
States
|
$ | 30,671 | $ | 37,262 | $ | 96,310 | $ | 114,449 | ||||||||
United
Kingdom
|
4,947 | 4,769 | 16,267 | 20,177 | ||||||||||||
Canada
|
1,848 | 3,426 | 6,242 | 10,988 | ||||||||||||
Germany
|
3,354 | 977 | 6,507 | 4,567 | ||||||||||||
Japan
|
801 | 1,068 | 2,133 | 4,663 | ||||||||||||
All
other
|
6,913 | 10,160 | 23,475 | 32,846 | ||||||||||||
$ | 48,534 | $ | 57,662 | $ | 150,934 | $ | 187,690 |
September
27,
2008
|
December
29,
2007
|
|||||||
United
States
|
$ | 59,539 | $ | 65,170 | ||||
United
Kingdom
|
515 | 752 | ||||||
Canada
|
123 | 220 | ||||||
$ | 60,177 | $ | 66,142 |
·
|
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
|
Nine
months ended
|
|||||||
September
27, 2008
|
September
29, 2007
|
September
27, 2008
|
September
29, 2007
|
|||||
%
of
revenue
|
%
of
revenue
|
%
of
revenue
|
%
of
revenue
|
|||||
Revenue
|
||||||||
Product
|
40,288
|
83.0
|
$
48,174
|
83.5
|
124,764
|
82.7
|
$
158,414
|
84.4
|
Service
and parts
|
8,246
|
17.0
|
9,488
|
16.5
|
26,170
|
17.3
|
29,276
|
15.6
|
Total
revenue
|
48,534
|
100.0
|
57,662
|
100.0
|
150,934
|
100.0
|
187,690
|
100.0
|
Cost
of revenue
|
||||||||
Cost
of product
|
25,589
|
52.7
|
34,457
|
59.8
|
78,659
|
52.1
|
112,696
|
60.0
|
Cost
of service and parts
|
6,096
|
12.6
|
8,097
|
14.0
|
19,561
|
13.0
|
24,568
|
13.1
|
Total
cost of revenue
|
31,685
|
65.3
|
42,554
|
73.8
|
98,220
|
65.1
|
137,264
|
73.1
|
Gross
profit
|
16,849
|
34.7
|
15,108
|
26.2
|
52,714
|
34.9
|
50,426
|
26.9
|
Operating
expenses
|
||||||||
Research
and development
|
1,059
|
2.2
|
1,212
|
2.1
|
3,697
|
2.5
|
3,789
|
2.0
|
Sales,
marketing and customer support
|
7,088
|
14.6
|
9,315
|
16.2
|
22,411
|
14.9
|
29,810
|
15.9
|
General
and administrative
|
5,932
|
12.2
|
8,796
|
15.2
|
18,321
|
12.1
|
23,603
|
12.6
|
Amortization
of intangible assets
|
258
|
0.5
|
517
|
0.9
|
823
|
0.5
|
1,819
|
1.0
|
Restructuring
and other charges
|
374
|
0.8
|
399
|
0.7
|
1,569
|
1.0
|
1,527
|
0.8
|
Total
operating expenses
|
14,711
|
30.3
|
20,239
|
35.1
|
46,821
|
31.0
|
60,548
|
32.3
|
Operating
income (loss)
|
2,138
|
4.4
|
(5,131)
|
(8.9)
|
5,893
|
3.9
|
(10,122)
|
(5.4)
|
Interest
and other expense, net
|
(359)
|
(0.7)
|
(285)
|
(0.5)
|
(646)
|
(0.4)
|
(1,610)
|
(0.9)
|
Income
(loss) from continuing
operations before income
taxes
|
1,779
|
3.7
|
(5,416)
|
(9.4)
|
5,247
|
3.5
|
(11,732)
|
(6.3)
|
Provision
(benefit) for income taxes
|
1,153
|
2.4
|
(2,732)
|
(4.7)
|
2,731
|
1.8
|
(3,541)
|
(1.9)
|
Income
(loss) from continuing operations
|
626
|
1.3
|
(2,684)
|
(4.7)
|
2,516
|
1.7
|
(8,191)
|
(4.4)
|
Income
(loss) from discontinued operations, net of tax
|
(431)
|
(0.9)
|
(932)
|
(1.6)
|
(1,536)
|
(1.0)
|
(1,233)
|
(0.6)
|
Net
income (loss)
|
195
|
0.4
|
$(3,616)
|
(6.3)
|
980
|
0.7
|
$(9,424)
|
(5.0)
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27 , 2008
|
September
29 , 2007
|
September
27 , 2008
|
September
29 , 2007
|
|||||||||||||
Revenue
|
$ | -- | $ | -- | $ | -- | $ | 195 | ||||||||
Income
(loss) before income taxes
|
31 | 16 | 137 | (132 | ) | |||||||||||
Provision
(benefit) from income taxes
|
-- | 6 | 43 | (54 | ) | |||||||||||
Income
(loss) from discontinued operations
|
$ | 31 | $ | 10 | $ | 94 | $ | (78 | ) | |||||||
Earnings
(loss) per share
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 |
September
27, 2008
|
December
29, 2007
|
|||||||
Receivables,
net
|
$ | 2 | $ | 15 | ||||
Total
current assets
|
$ | 2 | $ | 15 | ||||
Accounts
payable
|
$ | 189 | $ | 189 | ||||
Accrued
expenses
|
71 | 699 | ||||||
Total
current liabilities
|
$ | 260 | $ | 888 | ||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
27 , 2008
|
September
29 , 2007
|
September
27 , 2008
|
September
29 , 2007
|
|||||||||||||
Revenues
from external customers
|
$ | 2,535 | $ | 1,950 | $ | 6,833 | $ | 5,825 | ||||||||
Loss
before income taxes
|
(733 | ) | (1,534 | ) | (2,636 | ) | (1,881 | ) | ||||||||
Benefit
from income taxes
|
(271 | ) | (592 | ) | (1,006 | ) | (726 | ) | ||||||||
Loss
from discontinued operations
|
$ | (462 | ) | $ | (942 | ) | $ | (1,630 | ) | $ | (1,155 | ) | ||||
Loss
per share
|
$ | (0.01 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | (0.03 | ) |
September
27, 2008
|
December
29, 2007
|
|||||||
Cash
and cash equivalents
|
$ | -- | $ | 691 | ||||
Receivables,
net
|
2,826 | 1,785 | ||||||
Inventories
|
4,766 | 4,074 | ||||||
Other
current assets
|
542 | 72 | ||||||
Property,
plant & equipment, net
|
4,692 | 8,974 | ||||||
Intangible
assets, net
|
899 | 1,078 | ||||||
Total
assets
|
$ | 13,725 | $ | 16,674 | ||||
Accounts
payable
|
$ | 733 | $ | 1,291 | ||||
Accrued
expenses
|
518 | 501 | ||||||
Deferred
revenue
|
-- | 96 | ||||||
Deferred
gain
|
4,484 | -- | ||||||
Total
Liabilities
|
$ | 5,735 | $ | $$1,888 |
•
|
our
expectations of our financial and operating performance in 2008 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.
|
·
|
On
February 28, 2007, the Company announced the appointment of a new Chief
Financial Officer.
|
·
|
During
March, 2007, a new Financial Reporting Manager was appointed to manage all
SEC-related activities including accounting guidance and periodic
reporting.
|
·
|
In
the first quarter of 2007, the Company undertook a review to ensure that
the finance, accounting and tax functions are staffed in accordance with
the required competencies. Since that time, the Finance organization has
been strengthened by the addition of personnel, (including revenue
analysts, tax manager, senior accountants, and a Director of Accounting)
to address complex accounting and financial reporting requirements and has
substantially filled its hiring
objectives.
|
·
|
On
May 23, 2007, the Company appointed a Director of Internal Audit. The
Director of Internal Audit reports directly to the Audit Committee and has
responsibility for directing the internal audit function and leading
Sarbanes-Oxley compliance monitoring
activities.
|
·
|
Beginning
in the third quarter of fiscal 2007, additional training has been provided
to finance, accounting and tax professionals regarding new and evolving
areas in U.S. GAAP.
|
·
|
During
the fourth quarter of fiscal 2007, the Company implemented a process
designed to ensure the timely documentation, review, and approval of
complex accounting transactions by qualified accounting
personnel.
|
·
|
Beginning
in the third quarter of fiscal 2007, the Company requires that analysis of
all significant or non-routine transactions must be documented, reviewed,
and approved by senior financial
management.
|
·
|
During
the first quarter of fiscal 2008, the Company expanded the staffing of
their internal audit department. In addition, during the second quarter of
fiscal 2008, the Director of Internal Audit took the position of
VP-Corporate Controller and the Company hired a new European Finance
Director. The Company is continuing to evaluate their staffing
requirements.
|
·
|
During
the third quarter of fiscal 2008, the Company expanded the staffing of
their finance department through the addition of an Assistant
Controller.
|
·
|
Supported
by the services of subject matter experts and consultants, the Company’s
revenue recognition policy was strengthened to
include:
|
·
|
Enhanced
documentation requirements to support revenue transactions and their
related accounting treatment;
|
·
|
Tightening
of necessary approvals on any departures from standard terms and
conditions on sales and service agreements to include senior financial and
legal management;
|
·
|
Clarification
of revenue recognition treatment on distributor equipment
transactions.
|
·
|
Additional
training regarding revenue recognition practices was provided to all sales
personnel worldwide. Special training to communicate and strengthen
understanding of the revised revenue recognition policy will be conducted
in fiscal 2008.
|
·
|
Internal
controls, as they relate to our European operation, have been strengthened
and reinforced through additional training and supervision, the addition
of a full-time European revenue analyst, changes to credit practices, and
other control measures. In addition, certain personnel changes and
realignment of work responsibilities will be
implemented.
|
·
|
Revenue
recognition processes have been restructured to increase sales and
accounting personnel participation earlier in the process and improve
delivery of key information on equipment transaction terms and
conditions.
|
·
|
Review
and monitoring controls at Corporate-Finance on equipment transactions
involving foreign operations have been enhanced, including periodic
confirmation of key terms with
customers.
|
·
|
Additional
training of Company personnel has been performed and will continue to be
performed to ensure that key account reconciliations are performed,
documented, reviewed and approved as part of the monthly financial closing
process.
|
·
|
Review
and monitoring controls over key account reconciliations has been and will
continue to be enhanced to include detailed reviews of monthly
reconciliations and supporting documentation by Senior Corporate Finance
personnel.
|
·
|
Management
review controls have been and will continue to be enhanced to ensure that
all journal entries are reviewed and approved with appropriate supporting
documentation.
|
·
|
An
independent review, by appropriate management personnel, is performed and
documented in a detailed manner to determine that these complex
calculations are performed
accurately.
|
·
|
Enhanced
the spreadsheet controls over the mathematical accuracy of spreadsheets
for these inventory account
calculations.
|
Exhibit
No.
|
Description
|
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.
|
|
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.
|
|
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.
|
|
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: November
6, 2008
|
/s/ Jeffrey A. Cook
|
Jeffrey
A. Cook
Executive
Vice President and Chief Financial Officer
(Duly
Authorized Officer and Principal Financial Officer)
|
Exhibit
No.
|
Description
|
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.
|
|
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.
|
|
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.
|
|
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.
|
|