PERFORMANCE TECHNOLOGIES 
By ROCHESTER, N.Y., Aug. 4, 2011 /PRNewswire/ -- PT (NASDAQ: PTIX), a leading global provider of advanced network communications solutions, today announced its unaudited financial results for the second quarter 2011.
Revenue in the second quarter 2011 amounted to $8.5 million, compared to $7.4 million in the second quarter 2010. Revenue for the six months ended June 30, 2011 amounted to $18.1 million, compared to $14.8 million during the corresponding period in 2010.
On the basis of generally accepted accounting principles (GAAP), the net loss in the second quarter 2011 amounted to ($.5 million), or ($.04) per basic share, based on 11.1 million shares outstanding, including restructuring charges of $.01 per share and stock compensation expense of $.01 per share. The GAAP net loss in the second quarter 2010 amounted to ($2.0 million), or ($.18) per basic share, including restructuring charges of $.01 per share and stock compensation expense of $.01 per share, based on 11.1 million shares outstanding.
The GAAP net loss for the six months ended June 30, 2011 amounted to ($1.6 million), or ($.14) per basic share, including a restructuring charge of $.02 per share and stock-based compensation of $.02 per share, based on 11.1 million shares outstanding. The GAAP net loss for the six months ended June 30, 2010 amounted to ($3.9 million), or ($.35) per basic share, including a restructuring charge of $.01 per share; stock-based compensation of $.03 per share; and a discrete tax provision of $.01 per share, based on 11.1 million shares outstanding.
On a non-GAAP basis, the Company had net income in the second quarter 2011 amounting to $.03 million, or $.00 per basic share, compared to a net loss of ($1.6 million), or ($.15) per basic share in the second quarter 2010. The non-GAAP net loss for the six months ended June 30, 2011 amounted to ($.3 million), or ($.02) per basic share, compared to a net loss of ($3.1 million), or ($.28) per basic share in the six months ended June 30, 2010. Please refer to the reconciliations between GAAP and non-GAAP financial measures contained in this release.
On June 30, 2011, the Company's working capital position was $18.7 million including cash and investments amounting to $13.7 million, and the Company had no long-term debt.
"While the uneven economy continues to result in variability in our quarterly revenue, our first half 2011 revenues grew 22% over our prior year," said John Slusser, president and chief executive officer. "We are gratified to see that our expense reduction efforts are paying off as our quarterly net loss was greatly reduced. Our new product offerings are gaining market traction and I am especially pleased to see the early interest in our new Monterey platform. The signaling alliance we established in the first quarter with GENBAND also continues to further progress. We believe that our first half year-over-year revenue trend will continue in the second half and we are hopeful that the Company's operations will soon return to profitability."
Recent Highlights:
-- In early May 2011, PT and Tekelec agreed to voluntarily dismiss all
claims and defenses against each other, effectively ending the
litigation between the two companies.
-- In late May 2011, PT was pleased to publicly reveal that its previously
announced major international wireless carrier order amounting to nearly
$3 million was with Globacom, one of Africa's fastest growing mobile
telecommunications companies. Under this order, PT's SEGway(TM)
Signaling solutions will be deployed in Nigeria and Ghana and will
include both Mobile Number Portability (MNP) and Short Message Service
Defense (SMS-D) functions. Revenues from this order are anticipated to
be recognized during the second half of 2011 as the solutions are
installed.
-- In June 2011, PT announced a revolutionary new open-standards solution
set, code named Monterey. First of its kind in the industry, Monterey
is an enhanced application-ready system that combines compatibility with
the latest MicroTCA.4 standard with superset extensions including
increased backplane performance and higher available power budget. The
Monterey architecture leverages the latest trends in high-density
computing and high speed 10/40GbE fabrics in a compelling
cost-performance, space-efficient model that is ideally suited as the
foundation for a wide range of next-generation network communications
and services applications.
Business Overview:
The Company globally targets two primary vertical markets for its network communications products, namely telecommunications, and military, aerospace and government systems. The telecommunications market, historically our largest vertical market, is fundamentally driven by investments in network infrastructure by carriers and service providers. Telecommunications market revenues derived from our IPnexus® Application-Ready Systems products, which are sold to OEMs, depend primarily on broad, multi-year deployments of next-generation telecommunications infrastructure. Telecommunications market revenues generated from service providers purchasing our SEGway and Xpress(TM) product lines result from investments necessary to support existing and evolving service demands such as text messaging and the transition to Internet-based communications networks. Sales into the military, aerospace and government systems market are typically to prime contractors and system integrators that reflect investment levels by various government agencies and military branches in specific programs and projects requiring enhanced communications capabilities. The timing of military, aerospace and government systems shipments for the most part is highly unpredictable.
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 PT (www.pt.com)
PT (NASDAQ: PTIX) is a global supplier of advanced network communications solutions to carrier, government, and OEM markets. PT's portfolio includes IP-centric network elements and applications designed for high availability, scalability, and long life cycle deployments. The Company's entire line of offerings is anchored by IPnexus®, PT's own IP-native, highly integrated platforms and element management systems. OEMs and application developers, including PT itself, leverage the robust carrier- grade Linux® development environment and rich suite of communications protocols (PT's Nexusware®) of IPnexus Application-Ready Systems as a cornerstone component of their end product value proposition. PT's SEGway(TM) Signaling Solutions provide low cost, high density signaling, advanced routing, IP migration, gateway capabilities, SIP bridge, and core-to-edge distributed intelligence. The Company's Xpress(TM) NGN applications enable evolving Mobile 2.0, Multi-media, and IMS-based revenue generating services. PT is headquartered in Rochester, NY and maintains sales and engineering offices around the world.
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. The Company's future operating results are subject to various risks and uncertainties and could differ materially from those discussed in the forward-looking statements and may be affected by various trends and factors which are beyond the Company's control. These risks and uncertainties include, among other factors, business and economic conditions, rapid technological changes accompanied by frequent new product introductions, competitive pressures, dependence on key customers, inability to gauge order flows from customers, fluctuations in quarterly and annual results, the reliance on a limited number of third party suppliers, limitations of PT's manufacturing capacity and arrangements, the protection of PT's proprietary technology, errors or defects in our products, the effects of pending or threatened litigation, the dependence on key personnel, changes in critical accounting estimates, potential impairments related to investments, foreign regulations, and potential material weaknesses in internal control over financial reporting. In addition, during weak or uncertain economic periods, customers' visibility deteriorates causing delays in the placement of their orders. These factors often result in a substantial portion of PT's revenue being derived from orders placed within a quarter and shipped in the final month of the same quarter. Forward-looking statements should be read in conjunction with the most recent audited Consolidated Financial Statements, the Notes thereto, Risk Factors, and Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company, as contained in the Company's Annual Report on Form 10-K, and other documents filed with the Securities and Exchange Commission.
Non-GAAP Financial Measures
As a supplement to the GAAP-based consolidated financial statements contained in this press release, the Company is providing a presentation of non-GAAP financial measures which can be useful to investors to gain an overall understanding of the Company's current financial performance. Specifically, the Company believes the non-GAAP financial measures provide useful information to investors by excluding certain expenses the Company believes are not indicative of its core operating results. The non-GAAP financial measures exclude certain expenses such as the effects of (a) amortization of purchased intangible assets, (b) stock-based compensation, (c) restructuring costs, and (d) other legal costs.
Management utilizes a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions and forecasting and planning for future periods. We also consider the use of the non-GAAP financial measures to be helpful in assessing various aspects of our business operations.
Non-GAAP financial measures are not meant to be considered a substitute for the corresponding GAAP financial information and should not be considered in isolation from measures of financial performance prepared in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP financial information.
A reconciliation of non-GAAP measures to GAAP measures is included herein.
A conference call will be held on Friday, August 5, at 10:00 a.m., New York time, to discuss the results. All institutional investors can participate in the conference by dialing (866) 250-5144 or (416) 849-6163. The call will be available simultaneously for all other investors at (866) 494-3387 or (416) 915-1198. A digital recording of this conference call may be accessed immediately after its completion from August 5 through August 9, 2011. To access the recording, participants should dial (866) 245-6755 or (416) 915-1035 using passcode 847904. A live webcast of the conference call will be available on the PT website at www.pt.com and will be archived to the site within two hours after the completion of the call.
PT is a trademark of Performance Technologies, Inc. The names of actual companies, products, or services may be the trademarks, registered trademarks, or service marks of their respective owners in the United States and/or other countries.
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
June 30, December 31,
-------- ------------
2011 2010
---- ----
Current assets:
Cash and cash equivalents $11,222,000 $12,796,000
Investments 1,395,000 3,753,000
Accounts receivable 5,571,000 5,478,000
Inventories 6,623,000 7,787,000
Prepaid expenses and other assets 1,513,000 940,000
Prepaid income taxes 183,000 31,000
Fair value of foreign currency
hedges 10,000 17,000
------ ------
Total current assets 26,517,000 30,802,000
Investments 1,060,000 2,677,000
Property, equipment and
improvements, net 2,592,000 2,162,000
Software development costs, net 4,148,000 3,995,000
Purchased intangible assets, net 4,940,000 804,000
--------- -------
Total assets $39,257,000 $40,440,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $823,000 $2,756,000
Other payable 986,000
Deferred revenue 3,908,000 1,946,000
Accrued expenses 2,133,000 2,919,000
--------- ---------
Total current liabilities 7,850,000 7,621,000
Deferred income taxes 49,000 51,000
------ ------
Total liabilities 7,899,000 7,672,000
--------- ---------
Stockholders' equity:
Preferred stock
Common stock 133,000 133,000
Additional paid-in capital 17,210,000 17,042,000
Retained earnings 23,850,000 25,400,000
Accumulated other comprehensive
income (17,000) 11,000
Treasury stock (9,818,000) (9,818,000)
---------- ----------
Total stockholders' equity 31,358,000 32,768,000
---------- ----------
Total liabilities and stockholders'
equity $39,257,000 $40,440,000
=========== ===========
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(unaudited)
Three Months Ended
June 30,
2011 2010
---- ----
Sales $8,453,000 $7,449,000
Cost of goods sold 4,786,000 4,170,000
Gross profit 3,667,000 3,279,000
--------- ---------
Operating expenses:
Selling and marketing 1,458,000 2,034,000
Research and
development 1,569,000 1,892,000
General and
administrative 1,117,000 1,364,000
Restructuring charges 60,000 64,000
Total operating
expenses 4,204,000 5,354,000
--------- ---------
Loss from operations (537,000) (2,075,000)
Other income, net 15,000 41,000
------ ------
Loss before income
taxes (522,000) (2,034,000)
Income tax (benefit)
provision (70,000) (74,000)
Net loss $(452,000) $(1,960,000)
========= ===========
Basic loss per share $(.04) $(.18)
===== =====
Weighted average
common shares 11,116,000 11,116,000
========== ==========
Six Months Ended
June 30,
2011 2010
---- ----
Sales $18,125,000 $14,804,000
Cost of goods sold 9,965,000 7,627,000
Gross profit 8,160,000 7,177,000
--------- ---------
Operating expenses:
Selling and marketing 3,381,000 4,407,000
Research and
development 3,749,000 3,882,000
General and
administrative 2,609,000 2,672,000
Restructuring charges 182,000 127,000
Total operating
expenses 9,921,000 11,088,000
--------- ----------
Loss from operations (1,761,000) (3,911,000)
Other income, net 90,000 104,000
------ -------
Loss before income
taxes (1,671,000) (3,807,000)
Income tax (benefit)
provision (121,000) 53,000
Net loss $(1,550,000) $(3,860,000)
=========== ===========
Basic loss per share $(.14) $(.35)
===== =====
Weighted average
common shares 11,116,000 11,116,000
========== ==========
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
(unaudited)
Three Months Ended
June 30,
2011 2010
---- ----
Gross Profit Reconciliation
GAAP gross profit $3,667,000 $3,279,000
Amortization of purchased intangible
assets(a) 279,000
Stock-based compensation(b) 3,000 6,000
----- -----
Non-GAAP gross profit 3,949,000 3,285,000
--------- ---------
Non-GAAP gross profit percentage of
sales 46.7% 44.1%
Operating expense Reconciliation
GAAP operating expenses 4,204,000 5,354,000
Stock-based compensation (b) (76,000) (124,000)
Restructuring costs(c) (60,000) (64,000)
Other legal expenses(d) (67,000) (150,000)
------- --------
Non-GAAP operating expenses 4,001,000 5,016,000
--------- ---------
Net Loss Reconciliation
GAAP net loss (452,000) (1,960,000)
Amortization of purchased intangible
assets(a) 279,000
Stock-based compensation(b) 79,000 130,000
Restructuring costs(c) 60,000 64,000
Other legal expenses(d) 67,000 150,000
------ -------
Non-GAAP net income (loss) $33,000 $(1,616,000)
------- -----------
Loss per Common Share
GAAP basic net loss per common share $(.04) $(.18)
----- -----
Non-GAAP basic(e) net income (loss)
per $.00 $(.15)
common share ---- -----
Six Months Ended
June 30,
2011 2010
---- ----
Gross Profit Reconciliation
GAAP gross profit $8,160,000 $7,177,000
Amortization of purchased intangible
assets(a) 534,000
Stock-based compensation(b) 6,000 13,000
----- ------
Non-GAAP gross profit 8,700,000 7,190,000
--------- ---------
Non-GAAP gross profit percentage of
sales 48.0% 48.6%
Operating expense Reconciliation
GAAP operating expenses 9,921,000 11,088,000
Stock-based compensation (b) (162,000) (275,000)
Restructuring costs(c) (182,000) (127,000)
Other legal expenses(d) (414,000) (300,000)
-------- --------
Non-GAAP operating expenses 9,163,000 10,386,000
--------- ----------
Net Loss Reconciliation
GAAP net loss (1,550,000) (3,860,000)
Amortization of purchased intangible
assets(a) 534,000
Stock-based compensation(b) 168,000 288,000
Restructuring costs(c) 182,000 127,000
Other legal expenses(d) 414,000 300,000
------- -------
Non-GAAP net income (loss) $(252,000) $(3,145,000)
--------- -----------
Loss per Common Share
GAAP basic net loss per common share $(.14) $(.35)
----- -----
Non-GAAP basic(e) net income (loss)
per $(.02) $(.28)
common share ----- -----
The Non-GAAP financial measures above, and its reconciliation to our
GAAP results for the periods presented, reflect adjustments relating
to the following items:
(a) Amortization of purchased intangible assets - a non-cash
expense arising from the acquisition of intangible assets that the
Company is required to amortize over their expected useful life. The
value of purchased intangible assets increased significantly as a
result of the acquisition of the USP and SP2000 signaling
technologies acquired from GENBAND.
(b) Stock-based compensation costs - a non-cash expense incurred
in accordance with share-based compensation accounting guidance.
(c) Restructuring costs -costs incurred as a result of restructuring
activities taken to bring operating expenses more in line with
expected revenues.
(d) Other legal costs -expenses not indicative of core operating
activities.
(e) Basic and diluted net income per common share are identical for
the three months ended June 30, 2011
SOURCE PT
