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Performance Tech Posts Q3

ROCHESTER, N.Y. -- Performance Technologies, Inc. (NASDAQ: PTIX), a leading developer of communications platform products for the telecommunications, defense and homeland security, and commercial markets, today announced its financial results for the third quarter 2006.

Financial Information

Revenue in the third quarter 2006 amounted to $10.8 million, compared to $12.3 million in the third quarter 2005. Revenue for the nine months ended September 30, 2006 amounted to $36.0 million, compared to $36.3 million during the corresponding period in 2005.

Net loss for the third quarter 2006 amounted to $.4 million, or $.03 per basic share, including restructuring charges related to a facility closing and severance costs of $.8 million, or $.06 per basic share, stock compensation expense amounting to $.2 million, or $.02 per basic share, and discrete income tax benefits amounting to $.3 million, or $.03 per basic share, based on 13.3 million shares outstanding. Net income for the third quarter 2005 amounted to $.9 million, or $.07 per diluted share, including restructuring charges related to centralization efforts amounting to $.1 million, or $.00 per diluted share, based on 13.1 million shares outstanding.

Net income for the nine months ended September 30, 2006 amounted to $.2 million, or $.02 per diluted share, including restructuring charges related to facility closings and severance costs amounting to $1.8 million, or $.10 per diluted share, a charge for non-compliant "RoHS" inventory amounting to $.8 million, or $.05 per diluted share, stock compensation expense of $.5 million, or $.03 per diluted share, and discrete income tax benefits amounting to $.4 million, or $.03 per diluted share, based on 13.3 million shares outstanding. Net income for the nine months ended September 30, 2005 amounted to $2.2 million, or $.17 per diluted share, including restructuring charges related to centralization efforts amounting to $.2 million, or $.01 per diluted share, based on 13.1 million shares outstanding.

In September 2006, the Company completed the relocation of its engineering center in San Luis Obispo, California to a smaller, less expensive facility located in the same city and instituted a 3% company-wide reduction-in-force. In May 2006, the Company closed its engineering center in Norwood, Massachusetts and absorbed its voice technology operations into other Company locations. The Company recorded restructuring charges primarily related to these actions amounting to $.8 million, or $.06 per basic share, and $1.8 million, or $.10 per diluted share, in the third quarter and in the first nine months of 2006, respectively.

Effective January 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), "Share-Based Payment" to account for stock-based compensation. Under this accounting standard, the Company is required to recognize and record compensation expense related to the granting of stock options. The Company recorded stock compensation expense of $.2 million, or $.02 per basic share, and $.5 million, or $.03 per diluted share, in the third quarter and in the first nine months of 2006, respectively.

At September 30, 2006, cash and investments amounted to $35.2 million, or approximately $2.66 per share, and the Company had no long-term debt.

Performance Technologies Inc. (Nasdaq: PTIX)

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