-- On May 14th, PDSi announced that it had been awarded SGI's (Silicon
Graphics International Corp.'s) legacy Rackable products' return
management program. The contractual agreement covers the receipt and
management of all components and systems from SGI's Rackable products.
Under this agreement, PDSi will transact receipts, process warranties,
and test and repair all systems, motherboards, hard drives, power
supplies, memory and peripherals. In addition, PDSi has started
shipments and/or ramped several additional significant service programs
for new enterprise customers, contributing to the 28% year-on-year
growth in Service revenue in the recent second quarter.
-- On July 7, PDSi announced it had successfully completed a full
recertification audit of its quality systems registrations, which
include its ISO 9001:2008 Quality Management Systems; ISO 14001:2004
Environmental Management Systems; ISO 13485:2003 Medical
Devices-Quality Management Systems; and TL9000-H,V R5.0/R4.0, a
telecommunications standard published by the Quality Excellence for
Suppliers of Telecommunications (QuEST) Forum. These certifications
reflect PDSi's ongoing commitment to quality, and place it among the
best-in-class companies that have achieved and sustained the high
quality systems standards required for these registrations.
-- Q2 2010 represented the second highest quarter for Service segment
revenue since 2005, and was the most profitable for the Service
segment since 2006.
Conference Call
PDSi will host a conference call on Thursday, July 29, 2010, at 11 a.m.
EDT. John D. Bair, President, Chief Executive Officer, and Chief
Technology and Innovation Officer; Timothy J. Harper, Chief Operating
Officer; and Nicholas J. Tomashot, Chief Financial Officer, will discuss
the Company's 2010 second quarter results. Results will be released after
market close on July 28th.
The telephone number to participate in the conference call is (877)
485-3107. A slide presentation will be referenced during the call, which
may be accessed at the PDSi website (www.pinnacle.com) by clicking on
"Investor Relations" and then "Conference Calls." An audio replay of the
call will be available through the Investor Relations section of the
Company's website approximately one hour following the conference call.
About PDSi
PDSi is a global provider of services and products for the telecom,
imaging, defense/aerospace, medical, semiconductor, industrial automation
and IT markets. PDSi provides a variety of engineering and manufacturing
services for global OEMs requiring custom product design, system
integration, repair programs, warranty management, and/or specialized
production capabilities. With service centers in the U.S., Europe and
Asia, we ensure seamless support for solutions all around the world.
In addition to our service offerings, our product capabilities range from
board-level designs to globally-certified, fully integrated systems. Our
specialties include long-life computer products and unique,
customer-centric solutions.
PDSi's turnkey technical programs help our customers bring their solutions
to market faster and provide comprehensive service for the lifecycle of
their products.
For more information, visit the PDSi website at www.pinnacle.com.
Safe Harbor Statement
Portions of this release include forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, including, but not limited to, statements
regarding the Company achieving its financial growth and profitability
goals, or its sales, earnings and profitability expectations for the fiscal
year ending December 31, 2010. The words "believe," "expect,"
"anticipate," "estimate," "intend," "seek," "may" and similar expressions
identify forward-looking statements that speak only as of the date of this
release. Investors are cautioned that such statements involve risks and
uncertainties that could cause actual results to differ materially from
historical or anticipated results due to many factors. These factors
include, but are not limited to, the following:
-- changes in general economic conditions, including prolonged or
substantial economic downturn, and any related financial difficulties
experienced by original equipment manufacturers, end users, customers,
suppliers or others with whom the Company does business;
-- changes in customer order patterns;
-- changes in our business or our relationship with major technology
partners or significant customers;
-- failure to maintain adequate levels of inventory;
-- production components and service parts cease to be readily available
in the marketplace;
-- lack of adequate financing to meet working capital needs or to take
advantage of business and future growth opportunities that may arise;
-- inability of cost reduction initiatives to lead to a realization of
savings in labor, facilities or other operational costs;
-- deviation of actual results from estimates and/or assumptions used by
the Company in the application of its significant accounting policies;
-- lack of success in technological advancements;
-- inability to retain certifications, authorizations or licenses to
provide certain products and/or services;
-- risks associated with our new business practices, processes and
information systems;
-- impact of judicial rulings or government regulations, including related
compliance costs;
-- disruption in the business of suppliers, customers or service providers
due to adverse weather, casualty events, technological difficulty, acts
of war or terror, or other causes;
-- risks associated with doing business internationally, including
economic, political and social instability and foreign currency
exposure; and
-- other factors from time to time described in the Company's filings with
the United States Securities and Exchange Commission ("SEC").
The Company undertakes no obligation to publicly update or revise any such
statements, except as required by applicable law. For more details, please
refer to the Company's SEC filings, including its most recent Annual Report
on Form 10-K and Quarterly Reports on Form 10-Q.
PINNACLE DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31,
2010 2009
----------- -----------
ASSETS (Unaudited)
CURRENT ASSETS
Cash $ 135 $ 323
Accounts receivable, net of allowance for
doubtful accounts of $129 and $232,
respectively 4,938 5,932
Inventory, net 3,042 3,754
Prepaid expenses and other current assets 300 525
----------- -----------
Total current assets 8,415 10,534
----------- -----------
PROPERTY AND EQUIPMENT
Property and equipment, cost 5,888 5,899
Less accumulated depreciation and amortization (5,196) (5,038)
----------- -----------
Total property and equipment, net 692 861
----------- -----------
OTHER ASSETS
Goodwill 700 821
Other assets 343 359
----------- -----------
Total other assets 1,043 1,180
----------- -----------
TOTAL ASSETS $ 10,150 $ 12,575
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Line of credit $ 229 $ 2,413
Accounts payable 2,029 2,694
Accrued wages, payroll taxes and employee
benefits 685 1,014
Unearned revenue 280 85
Other current liabilities 653 555
----------- -----------
Total current liabilities 3,876 6,761
LONG-TERM LIABILITIES
Accrued other 185 226
----------- -----------
TOTAL LIABILITIES 4,061 6,987
----------- -----------
STOCKHOLDERS' EQUITY
Common stock 5,777 5,769
Additional paid-in capital 1,936 1,912
Accumulated other comprehensive income (loss) (169) (29)
Retained earnings (deficit) (1,455) (2,064)
----------- -----------
Total stockholders' equity 6,089 5,588
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 10,150 $ 12,575
=========== ===========
PINNACLE DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2010 2009 2010 2009
--------- -------- --------- --------
Sales $ 7,968 $ 9,038 $ 16,780 $ 19,925
Cost of sales 5,733 7,054 12,396 15,907
--------- -------- --------- --------
Gross profit 2,235 1,984 4,384 4,018
Operating expenses 1,835 2,272 3,563 5,250
--------- -------- --------- --------
Income (loss) from operations 400 (288) 821 (1,232)
Other expense
Interest expense 18 49 41 102
--------- -------- --------- --------
Income (loss) before income
taxes 382 (337) 780 (1,334)
Income tax expense (benefit) 82 (67) 171 (363)
--------- -------- --------- --------
Net income (loss) $ 300 $ (270) $ 609 $ (971)
========= ======== ========= ========
Weighted average common shares
outstanding:
Basic 7,826 7,825 7,825 7,825
Diluted 7,966 7,825 7,891 7,825
Earnings (loss) per common share:
Basic $ 0.04 $ (0.03) $ 0.08 $ (0.12)
Diluted 0.04 (0.03) 0.08 (0.12)
PINNACLE DATA SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
For the Six Months Ended
June 30,
------------------------
2010 2009
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 609 $ (971)
----------- -----------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Bad debt expense (32) 109
Inventory reserves 135 404
Depreciation and amortization 201 291
Share-based payment expense 24 83
(Increase) decrease in assets:
Accounts receivable 953 3,918
Inventory 550 94
Prepaid expenses and other assets 202 31
Increase (decrease) in liabilities:
Accounts payable (907) (1,082)
Unearned revenue 195 496
Other current liabilities (197) (533)
----------- -----------
Total adjustments 1,124 3,811
----------- -----------
Net cash provided by operating
activities 1,733 2,840
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (62) (155)
----------- -----------
Net cash used in investing activities (62) (155)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in line of credit (2,184) (2,431)
Net change in outstanding checks 303 (264)
Other 40 (181)
----------- -----------
Net cash used in financing activities (1,841) (2,876)
----------- -----------
EFFECT OF EXCHANGE RATE ON CASH (18) 3
----------- -----------
INCREASE (DECREASE) IN CASH (188) (188)
Cash at beginning of period 323 282
----------- -----------
Cash at end of period $ 135 $ 94
=========== ===========
Contact Information: Contact: Nick Tomashot Chief Financial Officer (614) 748-1150