SOURCE: PT

PT

May 02, 2013 16:38 ET

PT Announces First Quarter 2013 Financial Results

ROCHESTER, NY--(Marketwired - May 2, 2013) - PT (NASDAQ: PTIX), a leading global provider of advanced network communications solutions, today announced its unaudited financial results for the first quarter 2013.

Revenue in the first quarter 2013 amounted to $6.3 million, compared to $8.4 million in the first quarter 2012.

On the basis of generally accepted accounting principles (GAAP), the net loss in the first quarter 2013 amounted to ($.9 million), or ($.08) per basic share, based on 11.1 million shares outstanding, including restructuring costs of $.02 per share, amortization of purchased intangible assets of $.02 per share and stock-based compensation expense of $.01 per share. GAAP net income in the first quarter 2012 amounted to $.3 million, or $.03 per diluted share, based on 11.1 million shares outstanding, including stock compensation expense of $.01 per share and amortization of purchased intangible assets of $.03 per share.

The non-GAAP net loss in the first quarter 2013 amounted to ($.3 million), or ($.03) per basic share, compared to non-GAAP net income of $.6 million, or $.06 per diluted share in the first quarter 2012. Please refer to the reconciliations between GAAP and non-GAAP financial measures contained in this release.

On March 31, 2013, the Company had cash and investments amounting to $12.5 million, working capital of $16.5 million and no long-term debt.

"While we are pleased with our 19% sequential quarterly revenue growth and improvement in our working capital position, our objective firmly remains on driving to bottom line profitability," said John Slusser, president and chief executive officer. "As we execute our refined business strategy announced in January, we continue to make meaningful progress in our key 2013 initiative -- advancement of our SEGway Universal Diameter Router product line. During the quarter, we added new Diameter Routing capabilities and features, responded to several major Diameter RFIs/RFPs, quoted over a dozen Diameter opportunities and recognized our first Diameter revenues. We remain very enthusiastic about the opportunities in the Diameter Signaling space, recently further highlighted by the very positive feedback we received on our Signaling Evolution strategy during our participation at the Mobile World Congress, the CCA Global Expo and the Latin America LTE Summit. We expect to increase our sales and marketing investments in our Diameter product line to accelerate its penetration in this growing market."

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, potential material weaknesses in internal control over financial reporting, and the potential ramifications of our possible inability to comply with NASDAQ's continued listing requirements. 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 costs, and (c) 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, May 3, 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 May 3 through May 7, 2013. To access the recording, participants should dial (866) 245-6755 or (416) 915-1035 using passcode 817644. 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  
   
    March 31,
2013
    December 31,
2012
 
                 
Current assets:                
  Cash and cash equivalents   $ 9,004,000     $ 7,546,000  
  Investments     3,024,000       4,794,000  
  Accounts receivable     5,386,000       3,775,000  
  Inventories     3,246,000       3,615,000  
  Prepaid expenses and other assets     1,067,000       932,000  
  Prepaid income taxes     255,000       206,000  
  Deferred income taxes     444,000       445,000  
    Total current assets     22,426,000       21,313,000  
                 
Investments     453,000       1,969,000  
Property, equipment and improvements, net     1,629,000       1,683,000  
Software development costs, net     3,697,000       3,716,000  
Purchased intangible assets, net     2,601,000       2,835,000  
    Total assets   $ 30,806,000     $ 31,516,000  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY  
   
Current liabilities:                
  Accounts payable   $ 1,046,000     $ 1,134,000  
  Accrued expenses     1,481,000       1,664,000  
  Deferred revenue     3,367,000       3,002,000  
  Fair value of foreign currency hedges     15,000          
    Total current liabilities     5,909,000       5,800,000  
Deferred income taxes     704,000       696,000  
    Total liabilities     6,613,000       6,496,000  
                 
Stockholders' equity:                
  Preferred stock                
  Common stock     133,000       133,000  
  Additional paid-in capital     17,648,000       17,591,000  
  Retained earnings     16,233,000       17,099,000  
  Accumulated other comprehensive income     (3,000 )     15,000  
  Treasury stock     (9,818,000 )     (9,818,000 )
    Total stockholders' equity     24,193,000       25,020,000  
    Total liabilities and stockholders' equity   $ 30,806,000     $ 31,516,000  
                 
                 
   
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES  
CONSOLIDATED STATEMENTS OF OPERATIONS  
(unaudited)  
   
    Three Months Ended
March 31,
 
    2013     2012  
                 
Sales   $ 6,285,000     $ 8,356,000  
Cost of goods sold     3,456,000       3,797,000  
Gross profit     2,829,000       4,559,000  
                 
Operating expenses:                
  Selling and marketing     1,395,000       1,614,000  
  Research and development     1,181,000       1,697,000  
  General and administrative     849,000       950,000  
  Restructuring     243,000          
    Total operating expenses     3,668,000       4,261,000  
(Loss) income from operations     (839,000 )     298,000  
                 
Other expense, net     (9,000 )     (30,000 )
(Loss) income before income taxes     (848,000 )     268,000  
                 
Income tax provision (benefit)     18,000       (21,000 )
    Net (loss) income   $ (866,000 )   $ 289,000  
                 
                 
Basic (loss) income per share   $ (0.08 )   $ 0.03  
Diluted income per share           $ 0.03  
                 
Weighted average common shares used in basic and diluted income (loss) per share     11,116,000       11,116,000  
                 
                 
   
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES  
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES  
(unaudited)  
   
    Three Months Ended
March 31,
 
    2013     2012  
Gross Profit Reconciliation                
  GAAP gross profit   $ 2,829,000     $ 4,559,000  
    Amortization of purchased intangible assets(a)     234,000       279,000  
    Stock-based compensation(b)     5,000       3,000  
      Non-GAAP gross profit     3,068,000       4,841,000  
      Non-GAAP gross profit percentage of sales     48.8 %     57.9 %
                 
Operating Expense Reconciliation                
  GAAP operating expense     3,668,000       4,261,000  
    Stock-based compensation (b)     (52,000 )     (64,000 )
    Restructuring costs(c)     (243,000 )        
      Non-GAAP operating expenses     3,373,000       4,197,000  
                 
Net (Loss) Income Reconciliation                
  GAAP net (loss) income     (866,000 )     289,000  
    Amortization of purchased intangible assets(a)     234,000       279,000  
    Stock-based compensation (b)     57,000       67,000  
    Restructuring costs(c)     243,000          
      Non-GAAP net (loss) income   $ (332,000 )   $ 635,000  
                 
Net (Loss) Income per Common Share                
  GAAP basic and diluted(d) net (loss) income per share   $ (0.08 )   $ 0.03  
  Non-GAAP basic and diluted(d) net (loss) income per share   $ (0.03 )   $ 0.06  
                 
                 

The Non-GAAP 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. The amount 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) Basic and diluted net income per common share are identical for the three months ended March 31, 2012.

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