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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): February 23, 2007
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 February 23, 2007, Performance Technologies, Incorporated issued a press
release announcing its results of operations for the quarter and year ending
December 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
February 23, 2007.
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 28, 2007 By /s/ John M. Slusser
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John M. Slusser
President and Chief Executive Officer
February 28, 2007 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
Fourth Quarter and 2006 Financial Results
"Company reports $.09 earnings per share for the latest quarter"
ROCHESTER, NY - February 23, 2007 -- Performance Technologies, Inc. (Nasdaq:
PTIX), a leading developer of communication platforms and systems, today
announced its financial results for the fourth quarter and 2006.
Financial Information
Revenue in the fourth quarter 2006 amounted to $12.4 million, compared to $13.3
million in the fourth quarter 2005. Revenue for 2006 amounted to $48.4 million,
compared to $49.6 million in 2005.
Net income for the fourth quarter 2006 amounted to $1.2 million, or $.09 per
diluted share, including stock-based compensation expense of $.05 million, or
$.00 per share, based on 13.3 million shares outstanding. Net income for the
fourth quarter 2005 amounted to $.9 million, or $.06 per diluted share,
including restructuring charges amounting to $.1 million, or $.01 per share and
an intangible asset write-off amounting to $1.4 million, or $.07 per share,
based on 13.3 million shares outstanding.
Net income for 2006 amounted to $1.5 million, or $.11 per diluted share,
including restructuring charges amounting to $1.8 million, or $.10 per share; a
charge for non-compliant "RoHS" inventory amounting to $.8 million, or $.05 per
share; stock compensation expense of $.5 million, or $.03 per share; and
discrete income tax benefits amounting to $.4 million, or $.03 per share, based
on 13.3 million shares outstanding. Net income for 2005 amounted to $3.0
million, or $.23 per diluted share, including restructuring charges amounting to
$.4 million, or $.02 per share and an intangible asset write-off amounting to
$1.4 million, or $.07 per share, based on 13.2 million shares outstanding.
During 2006, the Company recorded restructuring charges relating to relocating
its engineering center in San Luis Obispo, California to a smaller, less
expensive facility located in the same city, closing its Norwood, Massachusetts
engineering center, and severance costs associated with reductions-in-force.
During 2005, the Company recorded restructuring charges for severance costs
primarily related to its centralization efforts.
At December 31, 2006, cash and investments amounted to $35.2 million, or
approximately $2.64 per share, and the Company had no long-term debt.
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 global supplier of integrated IP-based platforms and solutions
for advanced communications networks and innovative computer system
architectures. It targets three vertical markets: telecommunications, defense
and homeland security, and commercial. Of the three vertical markets served,
telecommunications is the largest and represents approximately 75% of the
Company's business. An approximate breakdown of telecommunications applications
utilizing the Company's products is as follows: Voice-over-IP (VoIP) represents
40%, wireless infrastructure represents 40%, and the remaining 20% is spread
across IP multimedia and other applications.
The telecommunications market served by the Company depends upon carrier
spending to upgrade network infrastructure to next-generation equipment. During
the fourth quarter 2006, investments by U.S. wireless carriers in
next-generation mobile networks declined from the preceding quarter, which
impacted many of the Company's customers and competitors. The Company's largest
customer during 2006 sells directly into the U.S. wireless market and fourth
quarter shipments to this customer amounted to $1.2 million, compared to $2.5
million in the fourth quarter of 2005.
During 2006, the Company balanced its traditional engineering and technology
focus with a stronger emphasis on sales and marketing. In this endeavor, the
Company's sales organization was expanded, a new sales plan was instituted, more
experienced sales people were hired and new sales leadership was put in place.
Management believes the revitalization of the sales organization was a key
accomplishment in 2006.
In October 2006, Michael P. Skarzynski resigned as president, chief executive
officer and as a member of the Board of Directors. The Company's current
chairman, John M. Slusser became interim president and chief executive officer
following Mr. Skarzynski's resignation. In January 2007, Mr. Slusser was
appointed the permanent president and chief executive officer.
"The Company's financial performance in the fourth quarter met our
expectations," said John Slusser, president and chief executive officer. "As we
enter 2007, we are optimistic about the Company's prospects as we focus our
robust technology suite, strong employee team and capital assets on meaningful
future growth. While we are disappointed with the anticipated lower level of end
market spending during the first six months of 2007, we strongly believe that
the second half of 2007 can reflect growth based on anticipated customer
production deployments and expected solid gains from our reinvigorated sales
organization. In addition, the Company has embarked on a number of initiatives
to improve its market positioning and we will continue to examine strategies to
maximize our value proposition to customers, and successfully identify and
pursue growth opportunities."
Guidance
During weak or uncertain economic periods, the Company's visibility of 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. At the current time, forward-looking visibility of customer
orders is very limited.
The Company provides guidance only on earnings per share expected in the next
quarter. Because the Company is anticipating lower orders from customers serving
the wireless market and expects to increase its signaling investments,
management anticipates a loss per share in the first quarter 2007 in the range
of $.01 to $.06. This estimated loss per share excludes restructuring charges,
stock-based compensation expense and discrete income tax items. In the first
quarter 2007, stock-based compensation expense is expected to be approximately
$.1 million, excluding any stock options granted during the quarter.
The Company works closely with customers to incorporate its platforms, blades
and software solutions into their product designs. Such "design wins" have been
a useful metric for management to judge the Company's product acceptance in its
marketplace. Design wins, if successfully deployed 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. In 2006,
the Company began targeting design wins with major accounts. This approach may
lower the total number of design wins reported in the future although management
expects such design wins to generate higher, long-term value.
During the fourth quarter 2006, the Company realized three design wins for its
Advanced Managed Platform(TM) products. Each design win has the potential to
generate at least $.5 million of annualized revenue when reaching production
volumes.
More in-depth discussions of the Company's strategy and financial performance
can be found in the Company's periodic reports on Form 10-K and Form 10-Q, as
filed with the Securities and Exchange Commission.
About Performance Technologies
Performance Technologies (Nasdaq: PTIX - News) is a global supplier of
integrated IP-based platforms and solutions for advanced communications networks
and innovative computer system architectures. Our Embedded Systems Group offers
robust application-ready platforms that incorporate open-standards based
software and hardware, providing significantly accelerated end product
deployment benefits for equipment manufacturers. Our Signaling Systems Group
offers the SEGway(TM) product suite, which includes IP STPs, SS7 over IP
transport solutions, and signaling gateways that enable lower operating costs
through utilization of IP networks, thereby creating competitive advantages for
carriers in existing and emerging markets.
Performance Technologies is headquartered in Rochester, New York. Additional
engineering facilities are located in San Diego and San Luis Obispo, California;
and Kanata, Ontario, 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 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 filed by the Company with the Securities and Exchange
Commission.
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A conference call will be held on Friday, February 23rd at 5:00 p.m., New York
time, to discuss the Company's financial performance for the fourth quarter and
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 at the completion of
the conference from February 23 through February 27, 2007. Participants should
dial (866) 245-6755, or (416) 915-1035 using passcode 884130 to gain access to
the recording. 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
December 31, December 31,
2006 2005
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Current assets:
Cash and cash equivalents $10,518,000 $11,803,000
Investments 24,675,000 21,150,000
Accounts receivable 9,561,000 9,523,000
Inventories 5,678,000 7,148,000
Prepaid expenses and other assets 767,000 470,000
Deferred taxes 2,495,000 3,272,000
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Total current assets 53,694,000 53,366,000
Property, equipment and improvements 2,213,000 2,004,000
Software development costs 3,185,000 3,182,000
Deferred taxes 1,026,000
Investment in unconsolidated company 248,000
Goodwill 4,143,000 4,143,000
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Total assets $64,261,000 $62,943,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,460,000 $ 1,836,000
Income taxes payable 232,000 244,000
Accrued expenses 4,302,000 4,438,000
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Total current liabilities 5,994,000 6,518,000
Deferred taxes 1,138,000
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Total liabilities 5,994,000 7,656,000
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Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 14,699,000 13,903,000
Retained earnings 43,435,000 42,601,000
Treasury stock (1,350,000)
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Total stockholders' equity 58,267,000 55,287,000
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Total liabilities and
stockholders' equity $64,261,000 $62,943,000
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PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
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Sales $12,357,000 $13,331,000 $48,405,000 $49,633,000
Cost of goods sold 7,126,000 6,660,000 24,841,000 25,191,000
Cost of goods sold
- non RoHS inventory 801,000
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Gross profit 5,231,000 6,671,000 22,763,000 24,442,000
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Operating expenses:
Selling and marketing 1,518,000 1,707,000 5,922,000 5,894,000
Research and development 2,707,000 2,816,000 11,049,000 10,367,000
General and administrative 1,132,000 1,005,000 5,330,000 4,663,000
Restructuring charges (11,000) 122,000 1,775,000 370,000
Intangible asset write-off 1,360,000 1,360,000
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Total operating expenses 5,346,000 7,010,000 24,076,000 22,654,000
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(Loss) income from operations (115,000) (339,000) (1,313,000) 1,788,000
Other income, net 431,000 338,000 1,521,000 1,296,000
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Income (loss) before
income taxes 316,000 (1,000) 208,000 3,084,000
Income tax (benefit) provision (929,000) (856,000) (1,275,000) 39,000
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Net income $ 1,245,000 $ 855,000 $1,483,000 $ 3,045,000
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Basic earnings per share $ .09 $ .07 $ .11 $ .24
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Weighted average
common shares 13,272,000 12,995,000 13,202,000 12,885,000
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Diluted earnings per share $ .09 $ .06 $ .11 $ .23
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Weighted average common and
common equivalent shares 13,343,000 13,327,000 13,344,000 13,167,000
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