ROCHESTER, N.Y., Oct. 27 /PRNewswire-FirstCall/ -- Performance
Technologies, Inc. (NASDAQ:PTIX), a leading provider of innovative
network communications solutions, today announced its financial
results for the third quarter 2009. Revenue in the third quarter
2009 amounted to $7.9 million, compared to $6.4 million in the
second quarter 2009 and $9.2 million in the third quarter 2008.
Revenue for the nine months ended September 30, 2009 amounted to
$21.2 million, compared to $31.4 million during the corresponding
period in 2008. The Company incurred a net loss in the third
quarter 2009 amounting to ($.3 million), or ($.03) per basic share,
based on 11.1 million shares outstanding. This loss includes a
discrete income tax benefit of $.01 per share, a restructuring
charge of $.02 per share and stock compensation expense of $.01 per
share. Net income in the third quarter 2008 amounted to $.02 per
diluted share, including stock-based compensation expense of $.01
per share and a discrete income tax benefit of $.03 per share,
based on 11.6 million shares outstanding. The Company incurred a
net loss for the nine months ended September 30, 2009 amounting to
($6.5 million), or ($.58) per basic share, based on 11.1 million
shares outstanding. This loss includes a non-cash income tax charge
amounting to $.30 per share for an income tax valuation allowance
recorded against the Company's United States deferred tax assets.
The loss also includes a restructuring charge of $.06 per share,
discrete income tax benefits of $.02 per share and stock-based
compensation expense of $.04 per share. Net income for the nine
months ended September 30, 2008 amounted to $.13 per diluted share,
including stock-based compensation expense of $.03 per share and a
discrete income tax benefit of $.03 per share, based on 11.7
million shares outstanding. The Company had 11.1 million common
shares outstanding at September 30, 2009. Under the Company's stock
repurchase programs, approximately .5 million shares of its common
stock were repurchased for an aggregate purchase price of $1.6
million during the twelve months ended September 30, 2009. Cash and
investments amounted to $29.9 million, or $2.69 per share, and the
Company had no long-term debt at September 30, 2009. "Although our
third quarter 2009 financial performance was in line with our
projections, it continued to reflect softness in global economic
conditions," said John Slusser, president and chief executive
officer. "Despite the current business climate, we were pleased
that we achieved our gross margin objectives, reduced our inventory
levels and saw a meaningful increase in sales from our aerospace
and defense market efforts. In addition, we appreciate the
continued support from our employees with regard to expense
control. In August, we offered a voluntary separation program to
all our U.S.-based employees as one element of our overall expense
management initiative. The third quarter restructuring charge
reflects the result of that program. Also during the quarter, we
invested in the future by licensing certain key technology building
blocks. These buildings blocks, in synergistic combination with our
captive technologies, will result in several new end market
products that we intend to initially announce within the next two
quarters." Business Overview and Guidance The Company globally
targets two primary vertical markets for its communications
products, namely telecommunications and aerospace and defense. 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 OEM and
application-ready systems products depend primarily on broad,
multi-year deployments of next-generation telecommunications
infrastructure. Telecommunications market revenues generated from
end solutions, such as our signaling products, are governed by
investments necessary to support existing and evolving service
demands such as the ongoing worldwide explosive growth in text
messaging. Sales into the aerospace and defense 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. John Slusser further remarked, "Global
economic conditions continue to make forward quarter forecasting
most challenging. While we continue to see healthy market interest
in our existing and evolving product portfolio, specific prediction
of when that interest will convert into revenues remains very
difficult. Although this demanding business climate will likely
exist for some period of time, we remain clearly focused on the
execution of our strategic plan for long-term growth. During the
fourth quarter, we will continue to augment and broaden the value
proposition of our network communications products in both our
telecommunications and aerospace and defense vertical markets. We
will also be further strengthening our sales and marketing efforts
through the combination of an organizational re-alignment, closely
tied to our ongoing product evolution, and by enhancing our
presence in several key emerging markets." The Company provides
guidance only on earnings per share expected in the next quarter.
The following statements reflect the Company's current views with
respect to future events and financial performance and are
forward-looking statements covered within the "safe harbor"
provisions described in the Private Securities Litigation Reform
Act. Actual results may differ materially from these
forward-looking statements. Given the current global economic
environment, the Company's estimates are subject to a higher level
of uncertainty than is customary. Furthermore, a substantial
portion of the Company's revenue is derived from orders placed
within a quarter and shipped in the final month of the same
quarter. Management anticipates fourth quarter 2009 financial
results to be in the range of a loss of ($.03) per share to a loss
of ($.10) per share. These per share estimates exclude stock-based
compensation expense and restructuring charges (if any). In the
fourth quarter 2009, stock-based compensation expense is expected
to be approximately $.01 per share, excluding any stock options
that may be granted during the quarter. 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 (http://www.pt.com/) Performance Technologies
(NASDAQ:PTIX) is a global supplier of advanced network
communications and control solutions to end users, application
developers and original equipment manufacturers that serve mission
critical telecommunications, aerospace and defense markets. The
Company provides remotely manageable, IP-centric network elements
specifically engineered for high availability, scalability, and
long life cycle deployments. Its products are built upon its own
U.S. manufactured hardware combined with the Company's NexusWare®
Carrier Grade Linux® operating system and software development
environment plus a broad suite of communications protocols and high
availability middleware. Performance Technologies' product
portfolio includes the SEGway(TM) suite of Signaling (SS7/SIP)
Transfer Points, Signaling Gateways and Bridges, and its IPnexus®
family of COTS-based application ready systems, WAN gateways, and
multi-protocol communications servers. Performance Technologies
maximizes the value proposition of its products by leveraging its
field proven systems, software and hardware technologies developed
over a twenty-eight year record of demonstrated innovation. A
tightly integrated combination of these technologies results in
measurable benefits to its customers through compelling
return-on-investment and substantially accelerated time to market
metrics. The Company is headquartered in Rochester, New York and
maintains centers of engineering excellence in San Diego and San
Luis Obispo, California, and Kanata, Ontario, Canada. It has sales
and marketing offices in the U.S. in Raleigh, Chicago, Dallas, and
San Jose and international offices in London, England and Shanghai,
China. 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 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 goodwill and 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 the Company'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 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 of December 31, 2008, as contained in the Company's
Annual Report on Form 10-K, and other documents filed with the
Securities and Exchange Commission. A conference call will be held
on Wednesday, October 28 at 10:00 a.m., New York time, to discuss
the Company's financial performance for the third quarter 2009. 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 October 28
through November 1, 2009. To access the recording, participants
should dial (866) 245-6755 or (416) 915-1035 using passcode 582895.
A live webcast of the conference call will be available on the
Performance Technologies website at http://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 September 30,
December 31, 2009 2008 ------------ ----------- Current assets:
Cash and cash equivalents $19,560,000 $29,218,000 Investments
6,284,000 2,450,000 Accounts receivable 5,473,000 6,677,000
Inventories 4,951,000 5,303,000 Prepaid income taxes 132,000
299,000 Prepaid expenses and other assets 737,000 796,000 Deferred
taxes 172,000 1,841,000 Fair value of foreign currency hedges
343,000 107,000 ----------- ----------- Total current assets
37,652,000 46,691,000 Investments 4,057,000 1,797,000 Property,
equipment and improvements 1,879,000 2,069,000 Software development
costs 5,123,000 3,840,000 Deferred taxes 778,000 Goodwill 4,143,000
4,143,000 ----------- ----------- Total assets $52,854,000
$59,318,000 =========== =========== LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $786,000 $922,000
Accrued expenses 4,189,000 4,549,000 ----------- ----------- Total
current liabilities 4,975,000 5,471,000 Deferred taxes 586,000
Income taxes payable 104,000 400,000 ----------- ----------- Total
liabilities 5,665,000 5,871,000 ----------- -----------
Stockholders' equity: Preferred stock Common stock 133,000 133,000
Additional paid-in capital 16,466,000 16,052,000 Retained earnings
40,188,000 46,689,000 Accumulated other comprehensive income
220,000 73,000 Treasury stock (9,818,000) (9,500,000) -----------
----------- Total stockholders' equity 47,189,000 53,447,000
----------- ----------- Total liabilities and stockholders' equity
$52,854,000 $59,318,000 =========== =========== PERFORMANCE
TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
2009 AND 2008 (unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2009 2008 2009 2008 ----------
---------- ----------- ----------- Sales $7,876,000 $9,181,000
$21,159,000 $31,387,000 Cost of goods sold 3,581,000 4,172,000
9,906,000 13,874,000 ---------- ---------- ----------- -----------
Gross profit 4,295,000 5,009,000 11,253,000 17,513,000 ----------
---------- ----------- ----------- Operating expenses: Selling and
marketing 1,628,000 1,907,000 5,262,000 6,147,000 Research and
development 1,830,000 2,210,000 5,932,000 6,894,000 General and
administrative 1,275,000 1,394,000 3,594,000 3,889,000
Restructuring charges 181,000 626,000 ---------- ----------
----------- ----------- Total operating expenses 4,914,000
5,511,000 15,414,000 16,930,000 ---------- ---------- -----------
----------- (Loss) income from operations (619,000) (502,000)
(4,161,000) 583,000 Other income, net 79,000 156,000 335,000
814,000 ---------- ---------- ----------- ----------- (Loss) income
before income taxes (540,000) (346,000) (3,826,000) 1,397,000
Income tax (benefit) provision (192,000) (602,000) 2,679,000
(86,000) ---------- ---------- ----------- ----------- Net (loss)
income $(348,000) $256,000 $(6,505,000) $1,483,000 ==========
========== =========== =========== Basic (loss) earnings per share
$(.03) $.02 $(.58) $.13 ========== ========== ===========
=========== Weighted average common shares 11,116,000 11,604,000
11,134,000 11,662,000 ========== ========== ========== ==========
Diluted earnings per share $.02 $.13 ========== ===========
Weighted average common and common equivalent shares 11,607,000
11,676,000 ========== =========== DATASOURCE: Performance
Technologies CONTACT: Dorrance W. Lamb, SVP and Chief Financial
Officer, Performance Technologies, +1-585-256-0200 ext. 7276, Web
Site: http://www.pt.com/
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