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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-27460
PERFORMANCE TECHNOLOGIES, INCORPORATED
(Exact name of registrant as specified in its charter)
-------------------
Registrant's telephone number, including area code: (716) 256-0200
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
The number of shares outstanding of the registrant's common stock was
7,246,543 as of April 27, 1999.
_____________________________________________________________
Cover Page of 11 Pages
<PAGE>
Performance Technologies, Incorporated and Subsidiaries
Index
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1999
(unaudited) and December 31, 1998 1
Consolidated Statements of Income For The Three Months
Ended March 31, 1999 and 1998 (unaudited) 2
Consolidated Statements of Cash Flows For The Three Months
Ended March 31, 1999 and 1998 (unaudited) 3
Notes to Consolidated Financial Statements For The Three
Months Ended March 31, 1999 (unaudited) 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 5
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 11,617,000 $ 25,627,000
Marketable securities 15,008,000
Accounts receivable, net 5,844,000 4,799,000
Inventories, net - Note C 5,322,000 4,425,000
Prepaid expenses and other 462,000 679,000
Deferred taxes 549,000 549,000
------------ ------------
Total current assets 38,802,000 36,079,000
Equipment and improvements, net 838,000 934,000
Software development, net 816,000 822,000
------------ ------------
Total assets $ 40,456,000 $ 37,835,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long term debt $ 12,000 $ 12,000
Accounts payable 1,657,000 1,932,000
Income taxes payable 1,233,000 507,000
Accrued expenses 2,377,000 1,838,000
------------ ------------
Total current liabilities 5,279,000 4,289,000
Long term debt, less current portion 3,000 6,000
Deferred taxes 288,000 288,000
------------ ------------
Total liabilities 5,570,000 4,583,000
------------ ------------
Stockholders' equity
Preferred stock
Common stock - Note B 75,000 75,000
Additional paid-in capital - Note B 13,284,000 13,250,000
Retained earnings 22,444,000 20,844,000
Treasury stock (917,000) (917,000)
------------ ------------
Total stockholders' equity 34,886,000 33,252,000
------------ ------------
Total liabilities and stockholders' equity $ 40,456,000 $ 37,835,000
============ ============
</TABLE>
1
<PAGE>
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
------------ ------------
<S> <C> <C>
Sales $ 8,113,000 $ 7,411,000
Cost of goods sold 3,135,000 2,863,000
------------ ------------
Gross profit 4,978,000 4,548,000
------------ ------------
Operating expenses:
Selling and marketing 1,060,000 893,000
Research and development 1,225,000 1,063,000
General and administrative 557,000 686,000
------------ ------------
Total operating expenses 2,842,000 2,642,000
------------ ------------
Income from operations 2,136,000 1,906,000
Other income, net 325,000 311,000
------------ ------------
Income before income taxes 2,461,000 2,217,000
Provision for income taxes 861,000 798,000
------------ ------------
Net income $ 1,600,000 $ 1,419,000
============ ============
Per share of common stock - Note D
Basic earnings per share $ .22 $ .20
============ ============
Diluted earnings per share $ .21 $ .18
============ ============
</TABLE>
2
<PAGE>
PERFORMANCE TECHNOLOGIES, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 1,600,000 $ 1,419,000
Non-cash adjustments:
Depreciation and amortization 179,000 145,000
Other 2,000 8,000
Changes in operating assets and liabilities:
Accounts receivable (1,045,000) 428,000
Inventories (897,000) (230,000)
Prepaid expenses 217,000 9,000
Accounts payable (275,000) 470,000
Accrued expenses 539,000 (483,000)
Income taxes payable 726,000 639,000
------------ ------------
Net cash provided by operating activities 1,046,000 2,405,000
------------ ------------
Cash flows from investing activities
Purchase of equipment and improvements, net (30,000) (60,000)
Capitalized software development (49,000) (172,000)
Purchase of marketable securities (15,008,000) (1,000,000)
Maturities of marketable securities 3,000,000
------------ ------------
Net cash (used) provided by investing
activities (15,087,000) 1,768,000
------------ ------------
Cash flows from financing activities
Repayment of notes payable (3,000) (3,000)
Proceeds from issuance of common stock 34,000 14,000
------------ ------------
Net cash provided by financing activities 31,000 11,000
------------ ------------
Net (decrease) increase in cash
and cash equivalents (14,010,000) 4,184,000
Cash and cash equivalents at beginning of period 25,627,000 8,833,000
------------ ------------
Cash and cash equivalents at end of period $ 11,617,000 $ 13,017,000
============ ============
</TABLE>
3
<PAGE>
Performance Technologies, Incorporated and Subsidiaries
Notes to Consolidated Financial Statements
For The Three Months Ended March 31, 1999
(Unaudited)
Note - A The unaudited Consolidated Financial Statements of Performance
Technologies, Incorporated and Subsidiaries (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, the
Consolidated Financial Statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. The results for the
interim periods are not necessarily indicative of the results to be expected for
the year. The accompanying Consolidated Financial Statements should be read in
conjunction with the audited Consolidated Financial Statements of the Company as
of December 31, 1998, as reported in its Annual Report on Form 10-K filed with
the Securities and Exchange Commission.
Note - B There were 7,243,243 and 7,239,493 shares issued and outstanding (net
of treasury shares held) at March 31, 1999 and December 31, 1998, respectively,
of the Company's $.01 par value Common Stock. During the three months ended
March 31, 1999, 3,750 common shares were issued upon the exercise of stock
options.
Note - C Inventories consisted of the following at March 31, 1999 and December
31, 1998:
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
----------- -----------
(unaudited)
<S> <C> <C>
Purchased parts and components $ 2,787,000 $ 1,905,000
Work in process 3,055,000 3,011,000
Finished goods 205,000 130,000
----------- -----------
6,047,000 5,046,000
Less: reserve for inventory obsolescence (725,000) (621,000)
----------- -----------
Net $ 5,322,000 $ 4,425,000
=========== ===========
</TABLE>
Note - D The following table illustrates the calculation of both basic and
diluted earnings per share for the three months ending March 31, 1999 and 1998:
<TABLE>
<CAPTION>
March 31, March 31,
1999 1998
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Basic earnings per share
Net income available to common stockholders $ 1,600,000 $ 1,419,000
=========== ===========
Weighted average common shares 7,242,593 7,272,508
=========== ===========
Basic earnings per share $ .22 $ .20
=========== ===========
Diluted earnings per share
Net income available to common stockholders $ 1,600,000 $ 1,419,000
=========== ===========
Weighted average common and common
equivalent shares 7,486,404 7,673,640
=========== ===========
Diluted earnings per share $ .21 $ .18
=========== ===========
</TABLE>
4
<PAGE>
Performance Technologies, Incorporated and Subsidiaries
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
In 1999, the Company achieved its highest first quarter operating results since
becoming a public company in January 1996. Diluted earnings per share for the
first quarter increased 17%, to $.21 per share, from $.18 per share in the first
quarter 1998. Net income increased 13%, to $1.6 million, from $1.4 million for
the first quarter 1998. Revenue was $8.1 million for the first quarter 1999,
compared to $7.4 million for the same period in 1998. At March 31, 1999, the
Company had $26.6 million in cash, cash equivalents, and marketable securities
($3.55/per share) and virtually no debt. For the three months ended March 31,
1999, the Company generated income from operations, excluding depreciation and
amortization (EBITDA) of $2.3 million, compared to $2.0 million for the same
period in 1998. International sales amounted to 26% of total sales for the first
quarter 1999, compared to 23% for all of 1998.
As the Company entered 1999, the development and delivery of new products was
focused on two distinct communications markets, Wide Area Networking
communications and Local Area Network Switching.
Wide Area Networking: The Company's overall Wide Area Networking strategy is to
provide customers with hardware and software product solutions which support a
variety of open system platforms and operating systems. The growth in the Wide
Area Networking (WAN) communications market is being driven by the expansion of
the Internet, cellular communications and the convergence occurring between data
communications and voice communications. At the same time, the technologies for
Wide Area Networking products are changing dramatically. Server, workstation,
and telecommunications providers are migrating their platforms and applications
to newer standard hardware bus architectures; PCIBus and CompactPCI. These
technology changes offer a significant opportunity for the Company. PTI began
shipping WAN communications products for the PCIBus market in 1996. In 1998,
PCIBus products represented 48% of the Company's WAN revenue. The next emerging
WAN market the Company is addressing is CompactPCI (cPCI). cPCI is a new
standard bus architecture that combines the attributes of the VMEbus and PCIBus
hardware into a ruggedized industrial hardware system for the embedded OEM
marketplace. The telecommunications and defense industries are expressing great
interest in the cPCI system architecture for meeting their application
requirements. Currently, the Company's cPCI WAN products are being evaluated for
more than thirty potential integration opportunities and the Company is
receiving orders for shipment during the second half of 1999.
To complement the Company's hardware development, communication software
protocols have been developed for the PCIBus and cPCI WAN product lines
including: Frame Relay, Signaling System #7 (SS7), X.25, High-Level Data Link
Control (HDLC) and a variety of specialized protocols to facilitate high and low
speed communications.
In March, two of the Company's PCIBus Wide Area Network communications products
were selected by Cisco Systems to be integrated into their new SC2200 Voice over
IP Gateway Controllers which are expected to be sold to the telecommunications
industry. Also in March, the Company became an active partner in Motorola
Computer Group's (MCG) Embedded Connections Partner Program, a development
effort designed to create industry leading telecom and datacom product solutions
through strategic partnering.
Local Area Network Switching: The Company has been developing its second
generation family of high performance 100Mbit/Gigabit Network Switches for Local
Area Networks. During 1998, the Company completed development of its new
Nebula(TM) 4000 workgroup switch and its new Nebula 6000 high density
departmental switch. The centerpiece of the Company's Local Area Network switch
strategy is the Nebula 8000 Fault Tolerant Switch. This 100/1000 Ethernet switch
is the first network switch to offer true fault tolerance at an affordable
price. The Nebula 8000's redundant switch fabric has been engineered for maximum
availability and minimal mean time to repair. Its innovative design ensures that
no single point of failure will shut down a network. The Company currently has
an outstanding patent application pending for a variety of aspects associated
with the fault tolerant design.
5
<PAGE>
The market demands for fault tolerant computing and networking are rising
rapidly. Manufacturers such as Compaq Computers and Sun Microsystems have
developed server clusters to meet their customers' high availability
requirements. Network software companies, including Novell, Vinca and Microsoft
are actively promoting and selling networking solutions for mission critical
applications. Management believes that deployment of its fault tolerant
technologies in the new Nebula 8000 Network Switch is a logical extension of the
market demand for high availability server clusters and ultra reliable network
infrastructure. The fault tolerant features of the Nebula 8000 differentiate PTI
from the other vendors in the network switching marketplace. This new product is
being positioned for Ethernet based business and mission critical applications
in enterprises where "round-the-clock" operations demand highly resilient
network infrastructures. Prospective customers in the banking, brokerage,
medical imaging and defense industries are expressing serious interest in this
product.
As of April 1999, the Nebula 8000 Ethernet Switch has entered the full beta
testing stage at multiple sites in Rochester, New York and Toronto, Canada.
Additional beta sites have been selected and units are expected to be installed
in these locations in May. A live demonstration of this unique fault tolerant
networking product will be presented at the Networld+Interop Networking
Conference in Las Vegas in May. Pending successful completion of the beta
program, deliveries to customers are expected to commence in the near term.
Quarter Ended March 31, 1999, compared with the Quarter Ended March 31, 1998
Sales. Sales for the quarter ended March 31, 1999 were $8,113,000, compared to
$7,411,000 for the first quarter 1998. The Company's sales are in one product
segment and beginning in 1999 are grouped into four categories: WAN
communications products, LAN interface products, Network Switching products, and
Other (combining Network System products, Mass Storage Interface products and
Inter-System Connectivity products).
WAN communications product revenue was $4.4 million, or 54% of sales in the
first quarter 1999, reflecting a moderate decline from the similar period a year
earlier. Shipments to a large OEM customer were negligible during the first
quarter of 1999 because the customer appears to be experiencing inventory
problems. Indications are that shipments to this customer will resume in the
second half of the year. PCIBus WAN revenue increased 108% in the first quarter
1999 to $2.1 million, compared to $1 million for the first quarter 1998. The
Company continues to expand its PCIBus and cPCI product lines and the breadth
and capability of communications software available on these WAN products. An
acceleration in design wins and orders is anticipated in the second half of the
year.
Shipments of LAN interface products amounted to $2.9 million, or 35% of sales in
the first quarter, compared to $740,000, or 10% of sales for the first quarter
1998. The largest component of the Company's LAN business is generated from
Commercial Off the Shelf (COTS) Defense applications. During 1998, a large
follow-on Department of Defense contract, which had been delayed for most of
1998, was awarded in September. Total LAN revenue in 1999 is expected to be
greater than in 1998 due to the impact (on 1998) of the delay in the award of
the follow-on contract and because the Company received a new $8.3 million order
for LAN products in April, 1999, of which $4.6 million is a firm order for
product to be delivered over the next twelve months. The remainder of this order
is contingent and needs to be confirmed by the customer by the end of June 1999.
During the second half of 1998, the Company completed development of a new
PCIBus LAN product and shipments began late in the third quarter. First quarter
shipments of this product were greater than during the fourth quarter 1998.
Other products represented 11% of total sales for the first quarter 1999,
compared to 27% of sales in the first quarter 1998. Other products include the
Company's older/legacy products previously grouped in Network System products,
Mass Storage Interface products and Inter-System Connectivity products. Many of
these products are project oriented and shipments can fluctuate on a quarterly
basis. First quarter 1999 revenue for this product group was at the low end of
management's quarterly revenue expectations.
Network Switching products: The centerpiece of the Company's network switching
product strategy is the Nebula 8000 Fault Tolerant Network Switch which was in
Beta Testing during the first quarter, 1999. Network switching revenue was
negligible during the first quarter 1999.
6
<PAGE>
Gross Profit. Gross profit for the first quarter of 1999 increased $430,000, to
$4,978,000 due to higher sales volumes. Gross margin was 61.4% of sales for the
first quarter 1999, compared to 54.4% in the fourth quarter 1998 and 61.4% in
the first quarter 1998. During 1999, gross margin for the Company's WAN, LAN
interface and Other Products is expected to range between 59% and 61% while the
gross margin on the new network switching products is forecasted to average
approximately 45% for the year. Gross margin for the first quarter 1999 was
slightly higher than expected primarily due to the product mix.
Total Operating Expenses. Total operating expenses increased to $2,842,000, or
35.0% of sales for the first quarter 1999, from $2,642,000, or 35.6% of sales
for the same period in 1998. The Company expects to increase investments in
sales, marketing, research and development during 1999 while maintaining tight
control over general and administrative expenses as a percentage of sales.
Selling and marketing expenses were $1,060,000, or 13.1% of sales for the first
quarter of 1999, compared to $893,000, or 12.0% of sales for the same quarter in
1998. Management intends to aggressively market its new products in 1999 and
expects sales and marketing expenses to increase as a percentage of sales. The
Company presented its products at various trade shows during the first quarter
including Comnet in Washington, D.C. and IT Wallstreet in New York City. In May,
the Company will be presenting a live demonstration of the Nebula 8000 Fault
Tolerant Network Switch at the Networld+Interop Networking Conference in Las
Vegas and in June the Company's WAN products will be presented at the SuperComm
trade show in Atlanta.
Research and development expenses were $1,225,000, or 15.1% of sales for the
first quarter of 1999, compared to $1,063,000, or 14.3% of sales for the
comparable 1998 quarter. Recruiting and hiring engineers continues to be one of
the Company's greatest challenges. While a number of engineers have been added
to staff during the past year, the Company is actively recruiting to fill
several open positions and has engaged outside engineering consultants to assist
in meeting certain project deadlines. This resulted in an increase in research
and development expenses for the first quarter 1999. During 1999, management
expects research and development expenses to increase as a percentage of sales
from the 1998 levels. New development efforts are primarily focused on expanding
the WAN product line and on the Nebula 8000 Fault Tolerant Switch.
General and administrative expenses were $557,000, or 6.9% of sales for the
first quarter of 1999, compared to $686,000, or 9.3% of sales for the first
quarter of 1998. The Company continues to maintain tight control over its
general and administrative expenses. Management believes general and
administrative expenses should decline as a percentage of sales in 1999.
Other income, net. Other income consists primarily of interest income from cash
equivalents and marketable securities. The funds are primarily invested in high
quality Municipal and U.S. Treasury securities with a maturity of less than one
year.
Income Taxes. The provision for income taxes for the first quarter 1999 is based
upon the combined federal and state effective tax rate of 35%, compared to 36%
for the first quarter 1998.
Liquidity and Capital Resources
At March 31, 1999, the Company's primary source of liquidity included cash and
cash equivalents of $11,617,000, marketable securities with a maturity of less
than one year of $15,008,000 and available borrowings of $5,000,000 under a
revolving credit facility with a bank. No amounts were outstanding under this
credit facility as of March 31, 1999. The Company had working capital of
$33,523,000 at March 31, 1999, compared to $31,790,000 at December 31, 1998 and
$27,926,000 at March 31, 1998.
Cash provided by operating activities was $1,046,000 for the quarter ended March
31, 1999, compared to $2,405,000 for the first quarter 1998. The decrease in
cash provided by operating activities for the three months ended March 31, 1999
is primarily attributable to increases in inventory and accounts receivable.
Capitalization of certain software development costs amounted to $49,000 for the
quarter ended March 31, 1999, compared to $172,000 for the same period in 1998.
7
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
Many companies are facing a potential issue regarding the ability of information
systems to accommodate the coming year 2000. The Year 2000 issue is the result
of computer programs using only the last two digits to indicate the year. If
uncorrected, such computer programs will be unable to interpret dates beyond the
year 1999, which could cause computer system failure or other computer errors
disrupting operations. The Company recognizes the importance of the Year 2000
issue and has been giving it high priority. The Company created a corporate-wide
Year 2000 project team and the team's objective is to ensure an uninterrupted
transition into the Year 2000. The scope of the Year 2000 readiness effort
includes (i) information technology ("IT") such as software and hardware; (ii)
non-IT systems or embedded technology; and (iii) readiness of key third parties,
including suppliers and customers, and the electronic data interchange (EDI)
with those key third parties. If needed modifications and conversions are not
made on a timely basis, the Year 2000 issue could have a material adverse effect
on Company operations.
The Company has completed Phase I of its readiness plan for its IT systems and
non-IT systems. This phase consisted of evaluating its systems and equipment
based on the current status and normal scheduled upgrade and replacement of such
system components. The Company is in the process of completing Phase II which
consists of testing IT system and non-IT system components whose Year 2000
status cannot be determined by research and has begun certain parts of Phase
III, upgrading its IT system. The remaining parts of Phase III are planned
during the third quarter 1999, and will consist of upgrading and/or replacement
of non-IT system components specifically required for Year 2000 readiness. Phase
IV, planned during the fourth quarter of 1999, will consist of finalizing
contingency plans for temporary operation should unexpected difficulties with IT
systems and non-IT systems occur. The development of these contingency plans
began in conjunction with upgrading its IT system.
In addition to internal Year 2000 IT and non-IT remediation activities, the
Company has contacted key suppliers to assure no interruption in the
relationship between the Company and these important third parties from the Year
2000 issue. The Company is waiting for responses from these suppliers to assess
if such third parties have any known Year 2000 issues. If third parties do not
convert their systems in a timely manner and in a way that is compatible with
the Company's systems, the Year 2000 issue could have a material adverse effect
on Company operations. The Company believes that its diligent actions with key
suppliers will minimize these risks.
The vast majority of the Company's products are not date-sensitive. The Company
is in the process of summarizing information on its products and this
information has been available to customers since November 1998.
While the Company expects its internal IT and non-IT systems to be Year 2000
compliant by the dates specified within its internal plan, the Company is
working on a contingency plan specifying what the Company will do if it or
important third parties are not Year 2000 compliant by the required dates. The
Company expects to have such a contingency plan finalized by the second half of
1999.
Through March 1999, the Company has not incurred significant incremental costs
related to the Year 2000 issue. The total projected incremental cost is
estimated to be $150,000. The Company is expensing as incurred all costs related
to the assessment and remediation of the Year 2000 issue unless the nature of
the item is an upgrade or replacement of a system with a useful life that meets
the capitalization policy of the Company. These costs are being funded through
operating cash flows. The Company's total cost for the Year 2000 issue includes
estimated costs and time associated with interfacing with third parties' Year
2000 issues. These estimates are based on currently available information.
The Company's current estimates of the amount of time and costs necessary to
remediate and test its computer systems are based on the facts and circumstances
existing at this time. The estimates were made using assumptions of future
events including the continued availability of certain resources, Year 2000
modification plans, implementation success by key third-parties, and other
factors. New developments may occur that could affect the Company's estimates of
the amount of time and costs necessary to modify and test its IT and non-IT
systems for Year 2000 compliance. These developments include, but are not
limited to: (i) the availability and cost of personnel trained in this area;
(ii) the ability to locate and correct all relevant computer codes and
equipment, and (iii) the planning and Year 2000 compliance success that key
customers and suppliers attain.
8
<PAGE>
Year 2000 compliance is an issue for virtually all businesses whose computer
systems and applications may require significant hardware and software upgrades
or modifications. Companies owning and operating such systems may plan to devote
a substantial portion of their information systems' spending to fund such
upgrades and modifications. It is the Company's intention to fulfill its plan
and become Year 2000 compliant; however, uncertainties exist about the
thoroughness of how other companies, vendors, customers and other service
providers that the Company does business with will be successful at also
becoming Year 2000 compliant. These other companies, regardless of the dollar
volume transacted with the Company, may significantly affect either directly or
indirectly the operations of the Company. Where practicable, the Company will
attempt to mitigate its risks with respect to the failure of suppliers to be
Year 2000 compliant. In the event that suppliers are not Year 2000 compliant,
the Company will seek alternative sources of supplies. However, such failures
remain a possibility and could have an adverse impact on the Company's results
of operations or financial condition.
FORWARD LOOKING STATEMENTS AND RISK FACTORS
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. This Quarterly Report on Form 10-Q
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, as amended, and Section 21E of the
Securities Act of 1934, as amended, and is subject to the safe harbor provisions
of those Sections.
These forward-looking statements are subject to certain risks and uncertainties,
including those identified below, which could cause actual results to differ
materially from historical results or those anticipated. The words "believes,"
"anticipates," "plans," "may," "intend," "estimate," "will," should," "could,"
and other expressions which indicate future events and trends also identify
forward-looking statements. However, the absence of such words does not mean
that a statement is not forward-looking.
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 include, among other factors, general
business and economic conditions, rapid or unexpected changes in technologies,
cancellation or delay of customer orders, changes in the product or customer mix
of sales, delays in new product development, customer acceptance of new products
and customer delays in qualification of products. This report on Form 10-Q
should be read in conjunction with the Consolidated Financial Statements, the
notes thereto, Management's Discussion and Analysis of Financial Condition and
Results of Operations as of December 31, 1998 and "Risk Factors" as reported in
the Company's Annual Report on Form 10-K as filed with the Securities and
Exchange Commission.
9
<PAGE>
Performance Technologies, Incorporated and Subsidiaries
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
None
B. Reports on Form 8-K
There were no reports filed on Form 8-K during the three month
period ended March 31, 1999.
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PERFORMANCE TECHNOLOGIES, INCORPORATED
May 10, 1999 By: s/ Donald L. Turrell
-----------------------------------
Donald L. Turrell
President and
Chief Executive Officer
May 10, 1999 By: s/ Dorrance W. Lamb
-----------------------------------
Dorrance W. Lamb
Chief Financial Officer and
Vice President, Finance
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1999 FINANCIAL STATEMENTS OF PERFORMANCE TECHNOLOGIES, INC. AND SUBSIDIARIES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001003950
<NAME> PERFORMANCE TECHNOLOGIES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 11,617
<SECURITIES> 15,008
<RECEIVABLES> 5,844
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0
0
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