 To Our Stakeholders,
It is my pleasure to present the results for our 24th fiscal
year (covering the period from January 1, 2005 to
December 31, 2005). To begin, I would like to express
my sincere gratitude to all shareholders for the
continuing support they have shown PALTEK
CORPORATION.
Year 2005 was a challenging year for the PALTEK
Group as we made a major transition for our core
Programmable Logic Device (PLD) business. As
announced on November 16, 2005, PALTEK has agreed
to terminate its distribution agreement with Altera
Corporation, a PLD manufacturer for which we have
been a distributor for approximately 20 years, effective
March 31, 2006. The PLD business of the PALTEK
Group will make a fresh start with Xilinx, Inc., the
worldwide leader in PLD solutions, with which we signed
a distribution agreement on January 25, 2006. The
transition to the new PLD partner and our future
business operations will be explained in detail in this
business report.
Our results for fiscal 2005 did not match those
of the previous year, primarily because of customer inventory
adjustments in the first half and the adverse
repercussions of the termination of the distribution
agreement with Altera in the second half. For year 2006,
while we do anticipate a return to profitability in the
second half, this will not be sufficient to offset the loss
expected in the first half, as we close the business with
Altera and launch PLD operations with Xilinx.
Consequently, we regret to report that we anticipate an
operating loss for fiscal 2006. To reconstruct the PLD
business with Xilinx’s products as the core, the PALTEK
Group will quickly deploy sales and marketing
operations and continue to provide technical support
and systems-based solutions on the experience and
expertise in PLD sales that we have accumulated over
many years. With these measures, we are committed to
returning to profitability from the second half of fiscal
2006.
As we pursue these initiatives, we continue to
ask for the understanding and support of all of our
shareholders.
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