PT Announces Third Quarter 2013 Financial Results

PT Announces Third Quarter 2013 Financial Results 
"Company Reports GAAP Quarterly Profit and 56% Increase in Revenue in
the Third Quarter 2013, Compared to Same Quarter in 2012" 
ROCHESTER, NY -- (Marketwired) -- 11/07/13 --  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 mo
nths 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(R) 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(R) 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(R) 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 Com
pany 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,  December 31, 
                                                    2013           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 END
ED SEPTEMBER 30, 2013 AND 2012       
                                (unaudited)                                 
                                                                            
                            Three Months Ended         Nine Months Ended    
                               September 30,             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         Nine Months Ended    
                               September 30,             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.  
For more information contact: 
Dorrance W. Lamb
SVP and Chief Financial Officer 
PT 
585-256-0200 ext. 7276
http://www.pt.com
finance@pt.com 
 
 
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