Advanced Power Technology Reports Second 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, July July: see month. 21, 2005 -- Advanced Power Technology will conduct a conference call at 2:00 p.m. PT, Thursday Thursday: see week. , July 21, 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 800-930-1344. International callers please dial 312-461-0644. 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 1561042. 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 second quarter ended June June: see month. 30, 2005. For the second quarter of 2005, revenues were $15.2 million which was down 16.0 percent from $18.1 million for the second quarter of 2004, and up sequentially se·quen·tial adj. 1. Forming or characterized by a sequence, as of units or musical notes. 2. Sequent. se·quen 7.4 percent from $14.1 million for the first quarter of 2005. The net loss for the second 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 $237,000, or $(0.02) per share and included $422,000 of 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 and certain 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. . This compares to a second quarter of 2004 GAAP net income of $869,000 or $0.08 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 first quarter of 2005 GAAP net loss of $6.3 million or $(0.59) per share. The first quarter of 2005 result 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. On a GAAP basis, gross margin for the second quarter of 2005 was 31.1 percent of revenue compared to 38.0 percent in the year-ago quarter and 26.6 percent in the prior quarter. On a non-GAAP basis excluding non-cash purchase accounting charges related to acquisitions and certain restructuring charges, net income for the second quarter ended June 30, 2005 was $185,000 or $0.02 per diluted share, compared to net income of $1.3 million or $0.11 per diluted share in the year-ago quarter and net loss of $1.1 million or $(0.10) per share in the first quarter of 2005. Non-GAAP gross margin for the second quarter of 2005 was 32.9 percent of revenue compared to 39.6 percent in the year-ago quarter and 28.5 percent in the prior quarter. Non-GAAP net income (loss) and non-GAAP 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 non-GAAP and GAAP measures 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, "I am pleased with the improvement in our financial results over the prior quarter. We had another solid quarter of order activity with a book to bill ratio of 1.08. Our balance sheet remains strong with $12.5 million in 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. During the first six months of 2005 we have generated a positive operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of $1.5 million. Our strong balance sheet and positive operating cash flow have allowed us to continue making significant investments in research and development which totaled $1.2 million in the second quarter of 2005," 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 July 21, 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 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 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 third quarter ending September September: see month. 30, 2005 are expected to be in the range of $15.5 million to $16.5 million, a sequential One after the other in some consecutive order such as by name or number. increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 2 to 9 percent over the prior quarter. At the anticipated revenue levels indicated above, gross margin for the third quarter of 2005, exclusive of non-cash purchase accounting charges associated with acquisitions and certain restructuring charges, is expected to be in the 34 to 36 percent range. R&D expenses in the third quarter of 2005 are expected to be approximately 8 to 9 percent of revenues and SG&A expenses are expected to be 23 to 25 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 third quarter of 2005 is expected to be approximately $70,000. Overall, the non-GAAP net earnings per diluted share for the third quarter of 2005 are expected to be to be in the range of $0.03 to $0.05. The company expects to record approximately $30,000 of tax expense in the third 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. The Company also announced that it would continue consolidating manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. and moving certain production activities offshore and would disengage dis·en·gage v. dis·en·gaged, dis·en·gag·ing, dis·en·gag·es v.tr. 1. To release from something that holds fast, connects, or entangles. See Synonyms at extricate. 2. from a small, low growth product line currently with onshore on·shore adj. 1. Moving or directed toward the shore: an onshore wind. 2. Located on the shore: an onshore beacon; an onshore patrol. adv. production. The Company estimates that these restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions will lead to a reduction of approximately 9 percent of its total work force. These actions will be completed over the next 12 to18 months and will result in pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern restructuring charges of approximately $800,000 over this time frame. They will result in greater 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 of offshore subcontract sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts manufacturing and are expected to contribute to the Company's ability to achieve its financial model of a non-GAAP gross margin of approximately 43 percent at an annual sales level of $90 million, targeted at a 4 to 6 quarter horizon. 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 dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). 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 Six Months Ended
Ended June 30, June 30,
2005 2004 2005 2004
-------- -------- -------- --------
Revenues, net $15,176 $18,061 $29,308 $33,154
Cost of goods sold 10,182 10,915 20,292 20,282
Amortization of technology rights
and other charges 269 274 538 548
-------- -------- -------- --------
Total cost of goods sold 10,451 11,189 20,830 20,830
-------- -------- -------- --------
Gross profit 4,725 6,872 8,478 12,324
-------- -------- -------- --------
Operating expenses:
Research and development 1,205 783 2,372 1,670
Selling, general and
administrative 3,665 5,130 7,624 9,240
Restructuring charges 124 115 169 321
In-process research and
development charges (28) - 4,868 -
-------- -------- -------- --------
Total operating expenses 4,966 6,028 15,033 11,231
-------- -------- -------- --------
Income (loss) from operations (241) 844 (6,555) 1,093
Other income (expense), net:
Interest, net 73 41 128 81
Other, net (69) 12 (120) 6
-------- -------- -------- --------
Income (loss) before income taxes (237) 897 (6,547) 1,180
Provision for income taxes - 28 30 28
-------- -------- -------- --------
Net income (loss) $(237) $869 $(6,577) $1,152
======== ======== ======== ========
Net income (loss) per share:
Basic ($0.02) $0.08 ($0.61) $0.11
Diluted ($0.02) $0.08 ($0.61) $0.10
Weighted average number of shares
used in the computation of net
income (loss) per share:
Basic 10,716 10,605 10,706 10,556
Diluted 10,716 11,261 10,706 11,212
ADVANCED POWER TECHNOLOGY, INC
SUPPLEMENTAL NON-GAAP DISCLOSURES
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) AND NON-GAAP
EARNINGS PER SHARE(1)
(In thousands, except per share amounts)
(Unaudited)
($ per diluted
share)
Business
Outlook
Three Months Ended Six Months Ended Three Months
June 30, June 30, Ended
2005 2004 2005 2004 Sept 30, 2005
------- ------- ------- ------- --------------
Reported GAAP net
income (loss) $ (237) $ 869 $(6,577) $ 1,152 $0.00 - $0.02
Purchase accounting
adjustments related
to acquisitions:
Cost of sales:
Intangible asset
amortization 269 269 538 538 $ 0.024
Deferred
compensation
amortization - 5 - 10
Selling, general and
administrative:
Intangible asset
amortization 47 - 93 - $ 0.004
Deferred
compensation
amortization 10 6 20 12 $ 0.001
-
In-process research
and development
charges (28) - 4,868 -
-
Restructuring
charges 124 115 169 321
Tax effect of non-
GAAP adjustments - - (7) -
------- ------- -------- ------- --------------
Non-GAAP net income
(loss) $ 185 $ 1,264 $ (896) $ 2,033 $0.03 - $0.05
======= ======= ======= ======= =============
Non-GAAP net income
(loss) per share(1):
Basic $ 0.02 $ 0.12 ($0.08) $ 0.19
Diluted $ 0.02 $ 0.11 ($0.08) $ 0.18
Weighted average
number of shares
used in the
computation of
non-GAAP net
income (loss)
per share:
Basic 10,716 10,605 10,706 10,556
Diluted 11,198 11,261 10,706 11,212
RECONCILIATION OF GAAP TO NON-GAAP GROSS PROFIT(1)
(In thousands except per share amounts)
(unaudited)
(% of
revenue)
Business
Outlook
Three
Three Months Six Months Ended Months
Ended June 30, June 30, Ended
Sept 30,
2005 2004 2005 2004 2005
------ ------ ------ ------- ---------
Reported GAAP gross profit $4,725 $6,872 $8,478 $12,324 32% - 34%
Purchase accounting
adjustments related to
acquisitions:
Cost of sales:
Intangible asset
amortization 269 269 538 538 2%
Deferred compensation
amortization - 5 - 10
------- ------- ------- -------- ---------
Non-GAAP gross profit $4,994 $7,146 $9,016 $12,872 34% - 36%
====== ====== ====== ======= =========
Non-GAAP gross profit % of
revenue 32.9% 39.6% 30.8% 38.8%
(1) Supplemental non-GAAP financial measures are not based on
generally accepted accounting principles (GAAP), but are provided to
explain the impact of certain significant items. The Company believes
that the disclosure of non-GAAP gross margin, net income, and earnings
per share 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 in a way
that allows for comparison to prior periods and expectations about the
ongoing financial condition and results of operations exclusive of
historical or contemplated acquisitions or other transactions. In
addition, management uses each of these measures in evaluating the
ongoing operational performance of its business. Management bonus
calculations are based on each of these same measures, in order to
isolate the controllable performance of the operations from the impact
of negotiated acquisition costs, restructuring measures, or tax
consequences.
ADVANCED POWER TECHNOLOGY, INC
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
Jun. 30, 2005 Dec. 31, 2004
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 1,527 $ 4,149
Short term investments in available-
for-sale securities 9,949 11,675
Accounts receivable, net 9,824 10,044
Inventories, net 13,730 14,647
Prepaid and other current assets 1,954 2,196
------------ ------------
Total current assets 36,984 42,711
Property and equipment, net 10,946 11,357
Long term investments in available-
for-sale securities 1,000 1,000
Other assets 53 110
Intangible assets, net 7,437 7,734
Goodwill 15,570 15,570
------------ ------------
Total assets $ 71,990 $ 78,482
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 3,236 $ 4,143
Accrued expenses 2,772 2,193
------------ ------------
Total current liabilities 6,008 6,336
Other long term liabilities 99 108
------------ ------------
Total liabilities 6,107 6,444
Stockholders' equity:
Common stock 109 108
Additional paid in capital 89,839 89,138
Treasury stock (1,761) (1,761)
Deferred stock compensation (46) -
Accumulated other comprehensive income 311 545
Accumulated deficit (22,569) (15,992)
------------ ------------
Total stockholders' equity 65,883 72,038
------------ ------------
Total liabilities and
stockholders' equity $ 71,990 $ 78,482
============ ============
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