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PT Announces Third Quarter 2013 Financial Results

ROCHESTER, NY--(Marketwired - Nov 7, 2013) - PT ( NASDAQ : PTIX ), a leading global provider of advanced network communications solutions, today announced its unaudited financial results for the third quarter 2013.

Revenue in the third quarter 2013 amounted to $7.3 million, compared to $4.7 million in the third quarter 2012. Revenue for the nine months ended September 30, 2013 amounted to $20.7 million, compared to $18.0 million for the corresponding period in 2012.

On the basis of generally accepted accounting principles (GAAP), net income in the third quarter 2013 amounted to $.5 million, or $.04 per diluted share, including amortization of purchased intangible assets of $.02 per share and stock-based compensation expense of $.01 per share, based on 11.7 million shares outstanding. GAAP net loss in the third quarter 2012 amounted to ($1.7 million), or ($.15) per basic share, based on 11.1 million shares outstanding, including amortization of purchased intangible assets of $.03 per share and stock-based compensation expense of $.01 per share. 

The GAAP net loss for the nine months ended September 30, 2013 amounted to ($.2 million), or ($.02) per basic share, including amortization of purchased intangible assets of $.06 per share; a restructuring charge of $.02 per share; a charge for impairment of software development costs of $.01 per share; and stock-based compensation expense of $.02 per share, based on 11.1 million shares outstanding. The GAAP net loss for the nine months ended September 30, 2012 amounted to ($3.1 million), or ($.28) per basic share, including amortization of purchased intangible assets of $.08 per share and stock-based compensation expense of $.02 per share, based on 11.1 million shares outstanding. 

The non-GAAP net income in the third quarter 2013 amounted to $.8 million, or $.07 per diluted share, compared to a non-GAAP net loss in the third quarter 2012 of ($1.3 million), or ($.12) per basic share. The non-GAAP net income for the nine months ended September 30, 2013 amounted to $1.1 million, or $.10 per diluted share, compared to a net loss for the nine months ended September 30, 2012 of ($2.1 million), or ($.19) per basic share. Please refer to the reconciliations between GAAP and non-GAAP financial measures contained in this release.

On September 30, 2013, the Company had cash and investments amounting to $13.9 million, working capital of $16.3 million, and no long-term debt.

"We are pleased with the progress the Company is making this year in its financial performance and on its strategic plan," said John Slusser, president and chief executive officer. "Revenue has increased on a sequential and year-over-year basis and the Company has reported two sequential quarters of GAAP profitability. We are seeing important market dynamics in the telecommunications signaling space. Many service providers will need to provision next-generation Diameter signaling network architectures as well as ensure the ongoing reliability and cost effectiveness of existing SS7 signaling networks that are built upon an ever-growing list of discontinued, unsupported equipment. The unique ability of our SEGway® Signaling product portfolio to provide a state-of-the-art, unified end solution set encompassing both Diameter and SS7 signaling solidly positions PT to address these market dynamics. Our energies are squarely focused on pursuing this exciting market opportunity."

As part of its strategic realignment, which was initiated during the fourth quarter 2012, PT is well along in transitioning out of the general OEM platform business through a last-time buy and build program which ends for most customers at the end of 2013 and continues through 2014 for select customers. As of September 30, 2013, 85% of the last-time buy and build orders have been shipped, which amounted to approximately $5.9 million in revenue year-to-date.

About PT (www.pt.com)

PT ( NASDAQ : PTIX ) is a global supplier of advanced, high availability network communications solutions. Its SEGway® Diameter and SS7 Signaling Systems provide tightly integrated signaling and advanced routing capabilities and applications that uniquely span the mission critical demands of both existing and next-generation 4G LTE and IMS telecommunications networks. The Company's IPnexus® Multi-Protocol Gateways and Servers enable a broad range of IP-interworking in data acquisition, sensor, radar, and control applications for aviation, weather and other infrastructure networks. Established in 1981, PT is headquartered in Rochester, NY and markets and sells its products worldwide through its direct sales organization as well as through channel partners that include major telecommunications equipment vendors, government prime contractors and value-added resellers.

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 and the potential loss of 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, possible loss or significant curtailment of significant government contracts or subcontracts, possible effects related to compliance with new conflict-free mineral 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) impairment charge - capitalized software, (c) stock-based compensation costs, and (d) restructuring 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, November 8, at 10:00 a.m., New York time, to discuss the results. All institutional investors can participate in the conference by dialing (866) 494-3746 or (416) 915-1196. 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 November 8 through November 12, 2013. To access the recording, participants should dial (866) 245-6755 or (416) 915-1035 using passcode 439019. A live webcast of the conference call will be available for two weeks 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

 

 

 

September 30,
2013

 

December 31,
2012

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

10,394,000

 

$

7,546,000

 

Investments

 

 

1,457,000

 

 

4,794,000

 

Accounts receivable

 

 

5,862,000

 

 

3,775,000

 

Inventories

 

 

2,324,000

 

 

3,615,000

 

Prepaid expenses and other assets

 

 

829,000

 

 

932,000

 

Prepaid income taxes

 

 

146,000

 

 

206,000

 

Deferred income taxes

 

 

408,000

 

 

445,000

 

 

Total current assets

 

 

21,420,000

 

 

21,313,000

 

 

 

 

 

 

 

Investments

 

 

2,079,000

 

 

1,969,000

Property, equipment and improvements, net

 

 

1,777,000

 

 

1,683,000

Software development costs, net

 

 

3,544,000

 

 

3,716,000

Purchased intangible assets, net

 

 

2,133,000

 

 

2,835,000

 

 

Total assets

 

$

30,953,000

 

$

31,516,000

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

1,332,000

 

 

$

1,134,000

 

 

Accrued expenses

 

 

1,498,000

 

 

 

1,664,000

 

 

Deferred revenue

 

 

2,423,000

 

 

 

3,002,000

 

 

Fair value of foreign currency hedges

 

 

4,000

 

 

 

 

 

 

 

Total current liabilities

 

 

5,257,000

 

 

 

5,800,000

 

Deferred income taxes

 

 

663,000

 

 

 

696,000

 

 

 

Total liabilities

 

 

5,920,000

 

 

 

6,496,000

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

 

 

 

Preferred stock

 

 

 

 

 

 

 

 

 

Common stock

 

 

133,000

 

 

 

133,000

 

 

Additional paid-in capital

 

 

17,776,000

 

 

 

17,591,000

 

 

Retained earnings

 

 

16,756,000

 

 

 

17,099,000

 

 

Accumulated other comprehensive income

 

 

(7,000

)

 

 

15,000

 

 

Treasury stock

 

 

(9,625,000

)

 

 

(9,818,000

)

 

 

Total stockholders' equity

 

 

25,033,000

 

 

 

25,020,000

 

 

 

Total liabilities and stockholders' equity

 

$

30,953,000

 

 

$

31,516,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

 

(unaudited)

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales

 

$

7,287,000

 

 

$

4,671,000

 

 

$

20,679,000

 

 

$

18,045,000

 

Cost of goods sold

 

 

3,709,000

 

 

 

2,870,000

 

 

 

10,762,000

 

 

 

9,611,000

 

Impairment of software development costs

 

 

 

 

 

 

 

 

 

 

137,000

 

 

 

 

 

Gross profit

 

 

3,578,000

 

 

 

1,801,000

 

 

 

9,780,000

 

 

 

8,434,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing

 

 

1,264,000

 

 

 

1,322,000

 

 

 

3,999,000

 

 

 

4,410,000

 

 

Research and development

 

 

1,070,000

 

 

 

1,286,000

 

 

 

3,279,000

 

 

 

4,559,000

 

 

General and administrative

 

 

788,000

 

 

 

828,000

 

 

 

2,441,000

 

 

 

2,632,000

 

 

Restructuring charges

 

 

 

 

 

 

 

 

 

 

243,000

 

 

 

 

 

 

 

Total operating expenses

 

 

3,122,000

 

 

 

3,436,000

 

 

 

9,962,000

 

 

 

11,601,000

 

Income (loss) from operations

 

 

456,000

 

 

 

(1,635,000

)

 

 

(182,000

)

 

 

(3,167,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

 

28,000

 

 

 

42,000

 

 

 

9,000

 

 

 

41,000

 

Income (loss) before income taxes

 

 

484,000

 

 

 

(1,593,000

)

 

 

(173,000

)

 

 

(3,126,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax (benefit) provision

 

 

(4,000

)

 

 

80,000

 

 

 

12,000

 

 

 

12,000

 

 

 

Net income (loss)

 

$

488,000

 

 

$

(1,673,000

)

 

$

(185,000

)

 

$

(3,138,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per share

 

$

.04

 

 

$

(.15

)

 

$

(.02

)

 

$

(.28

)

Diluted income per share

 

$

.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used in basic net income (loss) per share

 

 

11,148,000

 

 

 

11,116,000

 

 

 

11,127,000

 

 

 

11,116,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares used in diluted net income per share

 

 

11,746,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES

 

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

 

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012

 

(unaudited)

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP gross profit

 

$

3,578,000

 

 

$

1,801,000

 

 

$

9,780,000

 

 

$

8,434,000

 

 

 

Amortization of purchased intangible assets(a)

 

 

234,000

 

 

 

302,000

 

 

 

702,000

 

 

 

891,000

 

 

 

Impairment charge - capitalized software(b)

 

 

 

 

 

 

 

 

 

 

137,000

 

 

 

 

 

 

 

Stock-based compensation(c)

 

 

5,000

 

 

 

4,000

 

 

 

16,000

 

 

 

10,000

 

 

 

 

Non-GAAP gross profit

 

 

3,817,000

 

 

 

2,107,000

 

 

 

10,635,000

 

 

 

9,335,000

 

 

 

 

Non-GAAP gross profit percentage of sales

 

 

52.4

%

 

 

45.1

%

 

 

51.4

%

 

 

51.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expense Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP operating expenses

 

 

3,122,000

 

 

 

3,436,000

 

 

 

9,962,000

 

 

 

11,601,000

 

 

 

Stock-based compensation (c)

 

 

(57,000

)

 

 

(57,000

)

 

 

(169,000

)

 

 

(176,000

)

 

 

Restructuring costs(d)

 

 

 

 

 

 

 

 

 

 

(243,000

)

 

 

 

 

 

 

 

Non-GAAP operating expenses

 

 

3,065,000

 

 

 

3,379,000

 

 

 

9,550,000

 

 

 

11,425,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss Reconciliation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP net income (loss)

 

 

488,000

 

 

 

(1,673,000

)

 

 

(185,000

)

 

 

(3,138,000

)

 

 

Amortization of purchased intangible assets(a)

 

 

234,000

 

 

 

302,000

 

 

 

702,000

 

 

 

891,000

 

 

 

Impairment charge - capitalized software(b)

 

 

 

 

 

 

 

 

 

 

137,000

 

 

 

 

 

 

 

Stock-based compensation(c)

 

 

62,000

 

 

 

61,000

 

 

 

185,000

 

 

 

186,000

 

 

 

Restructuring costs(d)

 

 

 

 

 

 

 

 

 

 

243,000

 

 

 

 

 

 

 

 

Non-GAAP net income (loss)

 

$

784,000

 

 

$

(1,310,000

)

 

$

1,082,000

 

 

$

(2,061,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP basic net income (loss) per common share

 

$

.04

 

 

$

(.15

)

 

$

(.02

)

 

$

(.28

)

 

Non-GAAP basic net income (loss) per common share

 

$

.07

 

 

$

(.12

)

 

$

.10

 

 

$

(.19

)

 

Non-GAAP diluted net income per common share

 

$

.07

 

 

 

 

 

 

$

.09

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Non-GAAP financial measures above, and the 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.

(b) Impairment charge - capitalized software: a non-cash charge incurred to write down the recorded balance of capitalized software development projects to their estimated net realizable value.

(c) Stock-based compensation costs: a non-cash expense incurred in accordance with share-based compensation accounting guidance.

(d) Restructuring costs: costs incurred as a result of restructuring activities taken to bring operating expenses more in line with expected revenues.