Advanced Power Technology Reports First Quarter 2005 Results.BEND, Ore. -- Advanced Power Technology, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :APTI APTI Association for Preservation Technology International APTI Air Pollution Training Institute ): Conference Call at 2:00 p.m. PT, April 28, 2005 - Advanced Power Technology will conduct a conference call at 2:00 p.m. PT, Thursday Thursday: see week. , April 28, 2005, webcast simultaneously for interested investors via the Company's corporate web site at www.advancedpower.com. The call can be accessed live by dialing 800-967-7141. International callers please dial 719-457-2630. The content of the call will remain available for replay on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the for 30 days. In addition, a telephone replay of the conference call will be available for 30 days and can be accessed at 888-203-1112 and from international locations at 719-457-0820; pass code 2889204. Advanced Power Technology, Inc. (NASDAQ:APTI), a leading supplier of high performance power semiconductors used in the conditioning and control of electrical power for both switching and RF applications, today reported financial results for the first quarter ended March 31, 2005. For the first quarter of 2005, revenues were $14.1 million which was down 6.4 percent from $15.1 million for the first quarter of 2004, and down 11.8 percent from $16.0 million for the fourth quarter of 2004. The net loss for the first quarter of 2005 in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) was $6.3 million, or $(0.59) per share and included $4.9 million of in-process research and development charges related to the Company's acquisition of PowerSicel, Inc. on January January: see month. 7, 2005 and $363,000 in other charges primarily related to non-cash intangible asset Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. amortization charges due to acquisitions. This compares to a first quarter 2004 GAAP net income of $283,000 or $0.03 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share and to a fourth quarter 2004 GAAP net income of $676,000 or $0.06 per diluted share. On a GAAP basis, gross margin for the first quarter 2004 was 26.6 percent of revenue compared to 36.1 percent in the year-ago quarter and 36.1 percent in the prior quarter. Excluding non-cash purchase accounting charges related to acquisitions and certain previously announced restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. , the pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss for the first quarter ended March 31, 2005 was $1.1 million or $(0.10) per share, compared to a pro forma net income of $769,000 or $0.07 per diluted share in the year-ago quarter and a pro forma net income of $1.2 million or $0.11 per diluted share in the fourth quarter of 2004. Pro forma gross margin for the first quarter 2005 was 28.5 percent of revenue compared to 37.9 percent in the year-ago quarter and 37.8 percent in the prior quarter. Relative to prior expectation, the Company's first quarter 2005 gross profit was negatively impacted by lower than planned wafer fabrication Wafer Fabrication is a procedure composed of many repeated sequential processes to produce complete electrical or photonic circuits. Examples include production of radio frequency (RF) amplifiers, LEDs, optical computer components, and CPUs for computers. facility utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be and manufacturing yields as well as greater than anticipated product returns and reserve requirements Reserve Requirements Requirements regarding the amount of funds that banks must hold in reserve against deposits made by their customers. This money must be in the bank's vaults or at the closest Federal Reserve Bank. for excess inventory. Pro forma net income (loss) and pro forma gross margin, which differs from net income (loss) and gross margin in accordance with GAAP, excludes purchase accounting charges related to acquisitions and certain restructuring charges. A reconciliation of pro forma and GAAP net income (loss) is included with the attached financial statements. The financial results that exclude certain charges are not in accordance with GAAP. APT (Automatic Programmed Tools) A high-level programming language used to generate instructions for numerical control machines. 1. (language) APT - Automatically Programmed Tools. 2. (company) APT - Audio Processing Technology. management uses these non-GAAP measures internally to evaluate the company's performance and manage its operations, and believes that these measures provide useful information for understanding the operating results and comparing prior periods. Patrick Sireta, Chief Executive Officer commented, "We experienced a significant upturn in orders and a strong positive operational cash flow in the first quarter of 2005 but there is no question that our profit performance, which I believe resulted primarily from the convergence of singular SINGULAR, construction. In grammar the singular is used to express only one, not plural. Johnson. 2. In law, the singular frequently includes the plural. events, was a disappointment. It does not live up to the standard of operational performance which I believe we have demonstrated in prior up-market up-market adj → anspruchsvoll up-market adj [product] → che si rivolge ad una fascia di mercato superiore and down-market down-mar·ket also down·mar·ket adj. Appealing to or designed for low-income consumers; downscale. down-market Adjective cheap, popular, and of poor quality down-market circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . "Our switching power business is where the gross profit shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. occurred while our RF power business operated globally in line with expectation. Some of the issues we faced in our switching business, such as the greater than anticipated product returns, are not expected to re-occur. Most of the issues causing lower than planned manufacturing yields have already been addressed and resolved. Wafer fabrication facility utilization is improving after being impacted by the $1.3 million reduction in our switching power business inventory achieved in the first quarter of 2005. I am confident that the actions already taken as well as in progress are returning our switching power business to the level of operational consistency that it has historically achieved and that I expect. "On the positive side, during the first quarter of 2005 we received $17.8 million in customer orders compared to $11.2 million in the fourth quarter of 2004, a sequential One after the other in some consecutive order such as by name or number. increase of 59 percent. Our book to bill ratio in the first quarter was 1.26 compared to 0.70 in the prior quarter and our backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. expanded to $21.2 million compared to $17.2 million at the end of the prior quarter. The order momentum is continuing to-date and we have added $1.4 million to our backlog during the first three weeks of the second quarter of 2005. "We continue to maintain strong control over our balance sheet. Although the reduced production levels we operated at during the first quarter negatively impacted our profitability, they contributed towards achieving an overall $1.2 million dollar reduction in our inventories from the prior quarter even as our revenues declined sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen by $1.9 million. We generated a positive operational cash flow of $1.2 million and have $12.5 million dollars of cash and marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has and no debt. In addition, during the first quarter of 2005 we put in place a $10.0 million bank line of credit providing us with additional flexibility to pursue opportunities that may arise", concluded Mr. Sireta. Business Outlook The following statements are based on current expectations. These statements are forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. , subject to risks and uncertainties, and actual results may differ materially. These statements do not include the potential impact of any investments outside the ordinary course of business, or mergers or acquisitions that may be completed after April 28, 2005. Readers are cautioned not to place undue reliance on these forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which speak only as of the date of this press release. The inclusion of any statement in this release does not constitute a suggestion by the Company or any other person that the events or circumstances described in such statements are material. The Company does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied in this release will not be realized. Revenues for the second quarter ending June June: see month. 30, 2005 are expected to be in the range of $14.3 million to $14.7 million, a sequential increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 1 to 4 percent over the prior quarter. At the anticipated revenue levels indicated above, gross margin for the second quarter 2005, exclusive of non-cash purchase accounting charges associated with acquisitions, is expected to be in the 32 to 34 percent range. R&D expenses in the second quarter 2005 are expected to be approximately 8 to 9 percent of revenues and SG&A expenses are expected to be 25 to 26 percent of revenues. These R&D and SG&A expense estimates are exclusive of non-cash purchase accounting charges associated with acquisitions. Interest income in the second quarter 2005 is expected to be approximately $35,000. Overall, the pro forma net earnings per share for the second quarter of 2005 are expected to be to be in the range of a $(0.03) loss per share to break-even. The company expects to record approximately $30,000 tax expense in the second quarter of 2005 for certain state and local taxes. The Company's effective tax rate deviates from the expected statutory tax rate because it has fully reserved for its net deferred tax assets. However, if at such time the Company is able to determine it is more likely than not that it will be able to utilize its net operating losses Net operating losses Losses that a firm can take advantage of to reduce taxes. , the reserve against net deferred tax assets will be reversed. About Advanced Power Technology With Operations in Bend, Oregon Bend is a city in Deschutes County, Oregon, United States. The name Bend was derived from "Farewell Bend," the designation used by early pioneers to refer to the location along the Deschutes River where the town eventually was platted, one of the few fordable points along the , Santa Clara, California Santa Clara, California (IPA: /ˌsæntəˈklærə/) , founded in 1777 and incorporated in 1852, is a city in Santa Clara County, in the U.S. state of California. , Montgomeryville, Pennsylvania Montgomeryville is a census-designated place (CDP) in Montgomery County, Pennsylvania, United States. The population was 12,031 at the 2000 census. Geography Montgomeryville is located at (40.250388, -75. , Boulder, Colorado The City of Boulder (, Mountain Time Zone) is a home rule municipality located in Boulder County, Colorado, United States. Boulder is the 11th most populous city in the State of Colorado, as well as the most populous city and the county and Bordeaux Bordeaux (bôrdō`), city (1990 pop. 213,274), capital of Gironde dept., SW France, on the Garonne River. Bordeaux is a major economic and cultural center, and a busy port accessible to oceangoing ships from the Atlantic through the Gironde France, APT is a leading supplier of power semiconductors for RF, Microwave microwave, electromagnetic wave having a frequency range from 1,000 megahertz (MHz) to 300,000 MHz, corresponding to a wavelength range from 300 mm (about 12 in.) to 1 mm (about 0.04 in.). Like light waves, microwaves travel essentially in straight lines. , Linear, and Switchmode Applications. For additional information on Advanced Power Technology, visit its Web site at www.advancedpower.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Except for historical information contained herein, the matters discussed in this news release are forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. APT cautions that such statements, including the metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. discussed under "Business Outlook" above, are subject to a number of uncertainties and actual results may differ materially. Factors that could affect the Company's actual results include the ability of subcontractors to meet their delivery commitments; unfavorable changes in industry and competitive conditions; the Company's mix of product shipments; the accuracy of customers forecasts; the effectiveness of the Company's efforts to control and reduce costs; the ability of the Company to integrate newly-acquired operations efficiently and to commercialize newly-acquired technology; and other uncertainties disclosed in the Company's filings with the Securities and Exchange Commission including our Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed on March 8, 2005. The Company assumes no obligation to update the information in this release.
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
(unaudited)
Three Months Ended
------------------------------
March 31, December 31,
------------------------------
2005 2004 2004
-------- -------- ---------
Revenues, net $ 14,132 $ 15,093 $ 16,023
Cost of goods sold 10,110 9,367 9,965
Amortization of technology rights and
other charges 269 274 269
-------- -------- ---------
Total cost of goods sold 10,379 9,641 10,234
-------- -------- ---------
Gross profit 3,753 5,452 5,789
-------- -------- ---------
Operating expenses:
Research and development 1,167 887 1,231
Selling, general and administrative 3,959 4,110 3,758
Restructuring charges 45 206 199
In-process research and development
charges 4,896 - -
-------- -------- ---------
Total operating expenses 10,067 5,203 5,188
-------- -------- ---------
Income (loss) from operations (6,314) 249 601
Other income (expense), net:
Interest, net 55 40 62
Other, net (51) (6) 38
-------- -------- ---------
Income (loss) before income taxes (6,310) 283 701
Provision for income taxes 30 - 25
-------- -------- ---------
Net income (loss) $ (6,340)$ 283 $ 676
======== ======== =========
Net income (loss) per share:
Basic ($0.59)$ 0.03 $ 0.06
Diluted ($0.59)$ 0.03 $ 0.06
Weighted average number of shares used
in the computation of net income (loss)
per share:
Basic 10,695 10,516 10,687
Diluted 10,695 11,171 11,115
SUPPLEMENTAL PRO FORMA DISCLOSURES (1)
RECONCILIATION OF GAAP TO PRO FORMA NET INCOME (LOSS)
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
-----------------------------
March 31, December 31,
-----------------------------
2005 2004 2004
-------- ------- ---------
Reported GAAP net income (loss) $ (6,340) $ 283 $ 676
Purchase accounting adjustments related to
acquisitions:
Cost of sales:
Intangible asset amortization 269 269 269
Deferred compensation
amortization - 5 -
Selling, general and administrative:
Intangible asset amortization 46 - -
Deferred compensation
amortization 10 6 -
In-process research and development
charges 4,896
Restructuring charges 45 206 199
Expenses associated with the filing and
subsequent withdrawal of our
registration statement, included in
Other, net - - 44
Tax effect of pro forma adjustments (7) - (10)
--------- ------- ---------
Pro forma net income (loss) $ (1,081) $ 769 $ 1,178
======== ======= =========
Pro forma net income (loss) per share:
Basic ($0.10) $ 0.07 $ 0.11
Diluted ($0.10) $ 0.07 $ 0.11
Weighted average number of shares used
in the computation of pro forma net
income (loss) per share:
Basic 10,695 10,516 10,687
Diluted 10,695 11,171 11,115
(1) Supplemental pro forma disclosures are not based on generally
accepted accounting principles (GAAP), but are provided to explain the
impact of certain significant items. In accordance with SEC regulation
G, the Company believes that this disclosure is useful to investors
and creditors of the Company as it is a way to explain the impact of
certain accounting charges included in the Company's operating results
due to acquisitions, restructuring activities, valuation of deferred
taxes and other charges.
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Mar. 31, Dec. 31,
2005 2004
-------------------
Assets
Current assets:
Cash and cash equivalents $ 1,442 $ 4,149
Short term investments in available-for-sale
securities 10,099 11,675
Accounts receivable, net 8,633 10,044
Inventories, net 13,401 14,647
Prepaid and other current assets 2,211 2,196
-------- --------
Total current assets 35,786 42,711
Property and equipment, net 11,368 11,357
Long term investments in available-for-sale
securities 1,000 1,000
Other assets 55 110
Intangible assets, net 7,753 7,734
Goodwill 15,570 15,570
-------- --------
Total assets $ 71,532 $ 78,482
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,745 $ 4,143
Accrued expenses 2,517 2,193
-------- --------
Total current liabilities 5,262 6,336
Other long term liabilities 104 108
-------- --------
Total liabilities 5,366 6,444
Stockholders' equity:
Common stock 108 108
Additional paid in capital 89,739 89,138
Treasury stock (1,761) (1,761)
Deferred stock compensation (56) -
Accumulated other comprehensive income 468 545
Accumulated deficit (22,332) (15,992)
-------- --------
Total stockholders' equity 66,166 72,038
-------- --------
Total liabilities and stockholders' equity $ 71,532 $ 78,482
======== ========
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