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): July 23, 2003
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, N.Y. 14626
(Address of principal executive offices) (Zip Code)
(585) 256-0200
Registrant's telephone number, including area code
(Not Applicable)
(Former name or former address, if changed since last report)
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
(99.1) Press release issued by Performance Technologies, Incorporated
on July 23, 2003.
Item 12. Results of Operations and Financial Condition.
On July 23, 2003, Performance Technologies, Incorporated announced
its results of operations for the quarter and six months ended June 30, 2003. A
copy of the related press release is being furnished as Exhibit 99.1 to this
Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
PERFORMANCE TECHNOLOGIES, INCORPORATED
July 23, 2003 By:/s/ Donald L. Turrell
-----------------------------
Donald L. Turrell
President and
Chief Executive Officer
July 23, 2003 By:/s/ Dorrance W.Lamb
-----------------------------
Dorrance W. Lamb
Chief Financial Officer and
Vice President, Finance
For more information contact: Exhibit 99.1
Dorrance W. Lamb
Chief Financial Officer
Performance Technologies
585-256-0200 ext. 276
http://www.pt.com
finance@pt.com
Performance Technologies Reports Continued Revenue and
Profit Growth in the Second Quarter
"14% Revenue Growth over First Quarter and a
91% Increase over the Second Quarter 2002"
ROCHESTER, NY - July 23, 2003 -- Performance Technologies, Inc. (Nasdaq NM:
PTIX), a leading developer of embedded computing products and system-level
solutions for the communications, military and commercial markets, today
announced financial results for the second quarter 2003.
Revenue in the second quarter 2003 was $12.6 million, compared to $6.6 million
in the second quarter 2002. For the second quarter 2003, the results of
operations include the Computing Products Group acquired in October 2002. Net
income for the second quarter 2003 amounted to $.7 million, or $.06 per diluted
share, compared to $.4 million, or $.03 per diluted share for the second quarter
2002, based on 12.4 million shares outstanding for each quarter.
Revenue for the six months ended June 30, 2003 was $23.7 million, compared to
$13.0 million in the corresponding period a year earlier. Net income amounted to
$1.0 million, or $.08 per diluted share for the first six months 2003, based on
12.3 million shares outstanding. Net income for the first six months 2002
amounted to $.8 million, or $.06 per diluted share including expenses associated
with a restructuring charge recorded in the first quarter amounting to $.2
million (pre-tax), or $.01 per diluted share. Excluding the restructuring
charge, net income for the first six months 2002 amounted to $.9 million, or
$.07 per diluted share, based on 12.5 million shares outstanding.
Cash and marketable securities amounted to $24.0 million at June 30, 2003,
compared to $24.1 million at the end of 2002, and no long-term debt existed at
either date.
The following contains forward-looking statements within the meaning of the
Securities Act of 1933 and Securities Exchange Act of 1934 and is subject to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
With the Computing Products Group acquisition in October 2002, the Company
substantially broadened its product offering to include computing and system
platform products, and more than doubled its addressable market. More
importantly, this acquisition enabled the Company to elevate its market position
as a more complete supplier to its customers. Furthermore, a new business
strategy was defined following the acquisition that management believes will
continue to drive the Company's growth. This strategy is to supply
"comprehensive" embedded system platforms incorporating multiple components from
the Company's product portfolio.
Performance Technologies Reports Continued Revenue and Profit Growth in the
Second Quarter Page 2
"The benefits of the Company's new business strategy are more evident and we are
confident that there is considerable opportunity to improve our future top and
bottom line performance," said Donald Turrell, President and Chief Executive
Officer. "Nine months after embarking on this expanded strategy, the Company is
realizing a number of measurable benefits with customers and our financial
performance is improving."
There are clear indications that Performance Technologies' products are being
evaluated for new programs earlier in the customer's design cycle. This
increases the opportunity for "pull-through" of the Company's entire product
line of network access, switching and signaling products into the customer's
final product design. One clear example of the success and growth potential of
this strategy is the Company's recent announcement of the Stratus Technologies
design win. This customer transitioned from considering one of the Company's
products before the Ziatech acquisition, to designing their next-generation,
high availability communications server solution with four distinct Performance
Technologies products. It was the Company's expanded product capabilities,
combined with our ability to assure system interoperability that resulted in
this significant design win.
Other measurable results of the new business strategy are revenue growth, margin
improvement and enhanced profitability that the Company realized during the
second quarter. The organization is focused on the continuation of this new
momentum. In addition, management continues to aggressively seek opportunities
to add acquired elements, products and technologies to its current capability.
Guidance
The Company's products are integrated into current and next-generation embedded
systems infrastructure. Traditionally, design wins have been an important metric
for management to judge the Company's product acceptance in its marketplace.
Typically, design wins reach production volumes at varying rates, generally
beginning twelve to eighteen months after the design win occurs. A variety of
risks such as schedule delays, cancellations and changes in customer markets and
economic conditions can adversely affect a design win before production is
reached or during deployment. While management still believes that design wins
are an important metric in evaluating the market acceptance of the Company's
products, unfortunately as the economy slowed in 2001 and 2002, fewer customers
were doing new design activity, and a smaller number of these design wins were
moving into production than in the past. In addition, during difficult economic
periods, frequently a substantial portion of the Company's revenue is derived
from orders placed within the quarter and shipped in the final month of the
quarter.
In the Company's target markets, capital spending appeared to stabilize during
the fourth quarter 2002, and beginning in 2003 certain customers appear to be
moving projects toward production. However, overall, new project development
culminating in actual design wins in the quarter was still sluggish. During the
second quarter 2003, the Company realized two new design wins for its IPnexusTM
(including rebranded ZiatechTM products) and SEGwayTM product families. In
addition, forward-looking visibility in the market is still limited.
Based upon the current business mix, the current backlog and review of sales
forecasts, management expects revenue to be $12.5 million to $13.5 million in
the third quarter 2003. Gross margin is expected to be approximately 47.5% to
49.5% and diluted earnings per share for the third quarter are expected to be
between $.05 and $.09. The effective income tax rate for the third quarter is
assumed to be 31%.
More in-depth discussions of the Company's strategy and financial performance
can be found in the Company's recent Annual and Quarterly Reports, on Form 10-K
and Form 10-Q, as filed with the Securities and Exchange Commission.
Performance Technologies Reports Continued Revenue and Profit Growth in the
Second Quarter Page 3
About Performance Technologies
Performance Technologies (Nasdaq NM: PTIX) is a leading developer of unified
embedded computing products and system-level solutions for the communications,
military and commercial markets. Serving the industry for over 20 years, our
packet-based products enable equipment manufacturers and carriers to provide
highly available and fully-managed systems with time-to-market, performance and
cost advantages.
Performance Technologies is headquartered in Rochester, New York. Additional
operational and engineering facilities are located in San Diego and San Luis
Obispo, California and Ottawa, Canada. For more information, visit www.pt.com.
Forward Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. This press release contains
forward-looking statements which reflect the Company's current views with
respect to future events and financial performance, within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 and is subject to the safe harbor provisions of those
Sections.
These forward-looking statements are subject to certain risks and uncertainties,
and the Company's actual results could differ materially from those discussed in
the forward-looking statements. These risks and uncertainties include, among
other factors, general business and economic conditions, rapid or unexpected
changes in technologies, cancellation or delay of customer orders including
those relating to design wins, changes in the product or customer mix of sales,
delays in new product development, customer acceptance of new products and
customer delays in qualification of products. These statements should be read in
conjunction with the audited Consolidated Financial Statements, the Notes
thereto, and Management's Discussion and Analysis of Financial Condition and
Results of Operations of the Company as of December 31, 2002, as reported in its
Annual Report on Form 10-K, and other documents as filed with the Securities and
Exchange Commission.
####
A conference call will be held on Thursday, July 24, 2003 at 10:00 a.m. EDT to
discuss the Company's financial performance for the second quarter 2003. All
interested institutional investors can participate in the conference call by
dialing (888) 423-7081. The conference call will also be available
simultaneously for all other investors at (888) 701-8678. The conference ID
number is 1703356. A digital recording will be available two hours after the
completion of the conference from July 24 through 26, 2003. To access Encore,
US/Canada participants should dial (800) 642-1687 or for International/Local
participants, dial (706) 645-9291 and enter the conference ID 1703356. A live
Webcast of the conference call will also be available on the Performance
Technologies Web site at www.pt.com. The Webcast will be archived to the Web
site within two hours after the completion of the call.
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
June 30, December 31,
2003 2002
-------------- --------------
(unaudited)
Current assets:
Cash and cash equivalents $23,994,000 $22,077,000
Marketable securities 2,006,000
Accounts receivable 5,617,000 6,622,000
Inventories 7,810,000 4,550,000
Prepaid expenses and other assets 360,000 942,000
Deferred taxes 1,626,000 1,574,000
-------------- --------------
Total current assets 39,407,000 37,771,000
Property, equipment and improvements 2,815,000 3,012,000
Software development costs 2,207,000 2,068,000
Note receivable from unconsolidated company 1,000,000 1,000,000
Investment in unconsolidated company 1,202,000 1,353,000
-------------- --------------
Total assets $46,631,000 $45,204,000
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,661,000 $ 1,926,000
Income taxes payable 650,000 502,000
Accrued expenses 2,884,000 3,213,000
-------------- --------------
Total current liabilities 6,195,000 5,641,000
Deferred taxes 774,000 754,000
-------------- --------------
Total liabilities 6,969,000 6,395,000
-------------- --------------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 10,890,000 10,961,000
Retained earnings 41,526,000 40,565,000
Treasury stock (12,825,000) (12,782,000)
Accumulated other comprehensive loss (62,000) (68,000)
-------------- --------------
Total stockholders' equity 39,662,000 38,809,000
-------------- --------------
Total liabilities and stockholders' equity $46,631,000 $45,204,000
============== ==============
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2003 AND 2002
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2003 2002 2003 2002
---------------- ---------------- --------------- ----------------
Sales $12,636,000 $6,619,000 $23,675,000 $13,026,000
Cost of goods sold 6,510,000 2,676,000 12,546,000 5,328,000
---------------- ---------------- --------------- ----------------
Gross profit 6,126,000 3,943,000 11,129,000 7,698,000
---------------- ---------------- --------------- ----------------
Operating expenses:
Selling and marketing 1,446,000 1,210,000 2,808,000 2,273,000
Research and development 2,471,000 1,683,000 4,778,000 3,181,000
General and administrative 1,199,000 582,000 2,262,000 1,159,000
Restructuring charge 163,000
---------------- ---------------- --------------- ---------------
Total operating expenses 5,116,000 3,475,000 9,848,000 6,776,000
---------------- ---------------- --------------- ---------------
Income from operations 1,010,000 468,000 1,281,000 922,000
Other income, net 127,000 121,000 254,000 237,000
---------------- ---------------- --------------- ----------------
Income before income taxes and equity in
loss of unconsolidated company 1,137,000 589,000 1,535,000 1,159,000
Income tax provision 352,000 182,000 476,000 359,000
---------------- ---------------- --------------- ----------------
Income before equity in loss of
unconsolidated company 785,000 407,000 1,059,000 800,000
Equity in loss of unconsolidated
company, net of tax (81,000) (98,000)
---------------- ---------------- --------------- ----------------
Net income $ 704,000 $ 407,000 $ 961,000 $ 800,000
================ ================ =============== ===============
Basic earnings per share $ .06 $ .03 $ .08 $ .07
================ ================ =============== ================
Weighted average common shares 12,192,000 12,261,000 12,212,000 12,249,000
================ ================ =============== ================
Diluted earnings per share $ .06 $ .03 $ .08 $ .06
================ ================ =============== ================
Weighted average common and
common equivalent shares 12,429,000 12,385,000 12,332,000 12,468,000
=============== ================ =============== ===============