-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ShhPFp/LEjrx50Kn07YYpt5gWXQT7teoEgYip+lcguM1Rdy/l4EWJybQdCobi8Te HPslW1DAn9lwiCatuQ6Tsg== 0000708821-00-000015.txt : 20000510 0000708821-00-000015.hdr.sgml : 20000510 ACCESSION NUMBER: 0000708821-00-000015 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAR TECHNOLOGY CORP CENTRAL INDEX KEY: 0000708821 STANDARD INDUSTRIAL CLASSIFICATION: CALCULATING & ACCOUNTING MACHINES (NO ELECTRONIC COMPUTERS) [3578] IRS NUMBER: 161434688 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09720 FILM NUMBER: 622961 BUSINESS ADDRESS: STREET 1: PAR TECHNOLOGY PARK STREET 2: 8383 SENECA TURNPIKE CITY: NEW HARTFORD STATE: NY ZIP: 13413 BUSINESS PHONE: 3157380600 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 2000. Commission File Number 1-9720 OR [ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period From __________ to __________ Commission File Number __________ PAR TECHNOLOGY CORPORATION (Exact name of registrant as specified in its charter) Delaware 16-1434688 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) PAR Technology Park 8383 Seneca Turnpike New Hartford, NY 13413-4991 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (315) 738-0600 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pre-ceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] The number of shares outstanding of registrant's common stock, as of April 30, 2000 - 7,899,205 shares. PAR TECHNOLOGY CORPORATION TABLE OF CONTENTS FORM 10-Q PART 1 FINANCIAL INFORMATION Item Number ----------- Item 1. Financial Statements - Consolidated Statement of Income for the Three Months Ended March 31, 2000 and 1999 - Consolidated Statement of Comprehensive Income for the Three Months Ended March 31, 2000 and 1999 - Consolidated Balance Sheet at March 31, 2000 and December 31, 1999 - Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2000 and 1999 - Notes to Consolidated Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit Index Item 1. Financial Statements PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (In Thousands Except Per Share Amounts) (Unaudited)
For the Three Months Ended March 31, ------------------------------------ 2000 1999 -------- -------- Net revenues: Product ....................................... $ 6,511 $ 22,045 Service ....................................... 6,688 8,666 Contract ...................................... 6,052 5,035 -------- -------- 19,251 35,746 -------- -------- Costs of sales: Product ....................................... 5,308 13,678 Service ....................................... 6,681 8,066 Contract ...................................... 5,695 4,756 -------- -------- 17,684 26,500 -------- -------- Gross margin ............................ 1,567 9,246 -------- -------- Operating expenses: Selling, general and administrative ........... 6,469 5,739 Research and development ...................... 2,102 2,213 -------- -------- 8,571 7,952 -------- -------- Income (loss) from operations ...................... (7,004) 1,294 Other income (expense), net ........................ (11) 49 Interest expense ................................... (124) (117) -------- -------- Income (loss) before provision for income taxes .... (7,139) 1,226 Provision (benefit) for income taxes ............... (2,616) 460 -------- -------- Net income (loss) .................................. $ (4,523) $ 766 ======== ======== Basic and Diluted earnings (loss) per common share ................................... $ (.56) $ .09 ======== ======== Weighted average shares outstanding Diluted ....................................... 8,034 8,607 ======== ======== Basic ......................................... 8,034 8,482 ======== ======== PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (In Thousands) (Unaudited) For the Three Months Ended March 31, ------------------------------------ 2000 1999 -------- -------- Net income (loss) .................................... $(4,523) $ 766 Other comprehensive loss net of tax: Foreign currency translation adjustments ........ (35) (79) ------- ------- Comprehensive income (loss) .......................... $(4,558) $ 687 ======= =======
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In Thousands Except Share Amounts)
March 31, 2000 December 31, Assets (Unaudited) 1999 ----------- ---------- Current Assets: Cash .......................................... $ 1,325 $ 953 Accounts receivable-net ....................... 27,118 37,436 Inventories ................................... 32,160 28,164 Income tax refund claims ...................... 2,273 133 Deferred income taxes ......................... 3,605 3,442 Other current assets .......................... 2,563 2,042 -------- -------- Total current assets ...................... 69,044 72,170 Property, plant and equipment - net ................ 11,069 11,470 Other assets ....................................... 4,386 4,467 -------- -------- $ 84,499 $ 88,107 ======== ======== Liabilities and Shareholders' Equity Current Liabilities: Notes payable ................................. $ 11,176 $ 4,984 Accounts payable .............................. 2,866 7,800 Accrued salaries and benefits ................. 4,423 4,746 Accrued expenses .............................. 1,776 2,497 Deferred service revenue ...................... 6,804 5,478 -------- -------- Total current liabilities ................. 27,045 25,505 -------- -------- Deferred income taxes .............................. 430 459 -------- -------- Shareholders' Equity: Common stock, $.02 par value, 19,000,000 shares authorized; 9,516,711 shares issued 7,951,405 and 8,059,805 outstanding ......... 190 190 Preferred stock, $.02 par value, 1,000,000 shares authorized ................. -- -- Capital in excess of par value ................ 28,071 28,071 Retained earnings ............................. 37,668 42,191 Accumulated comprehensive loss ................ (799) (764) Treasury stock, at cost, 1,565,306 and 1,456,906 shares .............. (8,106) (7,545) -------- -------- Total shareholders' equity ................ 57,024 62,143 -------- -------- $ 84,499 $ 88,107 ======== ========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands) (Unaudited)
For the Three Months Ended March 31, ------------------------------------ 2000 1999 --------- --------- Cash flows from operating activities: Net income (loss) ................................... $ (4,523) $ 766 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................... 912 638 Provision for obsolete inventory .................. 1,135 1,115 Deferred income taxes ............................. (192) (233) Translation adjustments ........................... (35) (79) Increase (decrease) from changes in: Accounts receivable-net ......................... 10,318 2,482 Inventories ..................................... (5,131) (6,846) Income tax refund claims ........................ (2,140) -- Other current assets ............................ (521) (164) Other assets .................................... -- (39) Accounts payable ................................ (4,934) 112 Accrued salaries and benefits ................... (323) 400 Accrued expenses ................................ (721) (229) Deferred service revenue ........................ 1,326 926 Income taxes payable ............................ -- 993 -------- -------- Net cash used by operating activities .......... (4,829) (158) -------- -------- Cash flows from investing activities Capital expenditures .............................. (113) (305) Capitalization of software costs .................. (317) (84) -------- -------- Net cash used by investing activities .......... (430) (389) -------- -------- Cash flows from financing activities: Net borrowings under line-of-credit agreements .... 6,192 1,230 Acquisition of treasury stock ..................... (561) (818) -------- -------- Net cash provided by financing activities ..... 5,631 412 -------- -------- Net increase (decrease) in cash and cash equivalents 372 (135) Cash and cash equivalents at beginning of year ..... 953 1,298 -------- -------- Cash and cash equivalents at end of period ......... $ 1,325 $ 1,163 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest .......................................... $ 107 $ 117 Income taxes paid, net of refunds ................. (255) (349)
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. The statements for the three months ended March 31, 2000 and 1999 are unaudited; in the opinion of the Company such unaudited statements include all adjustments (which comprise only normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results of opera-tions to be expected for the year ending December 31, 2000. The consolidated financial statements and notes thereto should be read in conjunction with the financial statements and notes for the years ended in December 31, 1999 and 1998 included in the Company's December 31, 1999 Annual Report to the Securities and Exchange Commission on Form 10-K. 2. Inventories are used in the manufacture of Point-Of-Sale systems and other commercial products. The components of inventory, net of related reserves, consist of the following:
(In Thousands) ------------ March 31, December 31, 2000 1999 --------- ----------- Finished goods $ 9,348 $ 6,886 Work in process 3,122 2,763 Component parts 6,570 6,001 Service parts 13,120 12,514 --------- --------- $ 32,160 $ 28,164 ========= =========
At March 31, 2000 and December 31, 1999, the Company had recorded reserves for obsolete inventory of $3,094,000 and $2,208,000, respectively. PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 3. The Company's reportable segments are strategic business units that have separate management teams and infrastructures that offer different products and services. The Company has three reportable segments. The Transaction Processing segment offers integrated solutions to the restaurant and manufacturing/warehousing industries. These offerings include industry leading hardware and software applications utilized at the point-of-sale, back of store, corporate office and in the manufacturing/warehousing environment. This segment also offers customer support including field service, installation, twenty-four hour telephone support and depot repair. The Government segment designs and implements advanced technology computer software systems primarily for military and intelligence agency applications. It provides services for operating and maintaining certain U.S. Government-owned test sites, and for planning, executing and evaluating experiments involving new or advanced radar systems. The Vision segment designs, manufactures, sells, installs and services image processing systems for the food-processing industry. Inter-segment sales and transfers are not material. Information as to the Company's operations in these three segments is set forth below:
Quarter ended March 31, (In Thousands) ------------------------ 2000 1999 -------- -------- Revenues: Transaction Processing ...................... $ 12,945 $ 30,620 Government .................................. 6,052 5,035 Vision ................................... 254 91 -------- -------- Total ................................. $ 19,251 $ 35,746 ======== ======== Income (loss) from operations: Transaction Processing ...................... $ (6,858) $ 1,276 Government .................................. 79 234 Vision ...................................... (225) (216) -------- -------- (7,004) 1,294 Other income (expense), net ...................... (11) 49 Interest expense ................................. (124) (117) -------- -------- Income (loss) before provision for income taxes ............................ $ (7,139) $ 1,226 ======== ======== Depreciation and amortization: Transaction Processing ...................... $ 696 $ 513 Government .................................. 34 29 Vision ...................................... 8 12 Corporate ................................... 174 84 -------- -------- Total ................................. $ 912 $ 638 ======== ======== Capital expenditures: Transaction Processing ...................... $ -- $ 236 Government .................................. 61 -- Vision ...................................... 3 27 Corporate ................................... 49 42 -------- -------- Total ................................. $ 113 $ 305 ======== ======== March 31, December 31, 2000 1999 --------- ----------- Identifiable assets: Transaction Processing ...................... $ 71,694 $ 76,780 Government .................................. 6,381 6,036 Vision ...................................... 875 1,112 Corporate ................................... 5,549 4,179 -------- -------- Total ................................. $ 84,499 $ 88,107 ======== ========
The following table presents revenues by geographic area based on the location of the use of the product or services.
Quarter ended March 31, (In Thousands) -------------------- 2000 1999 ------- ------- United States ........... $16,483 $31,745 Other Countries ......... 2,768 4,001 ------- ------- Total ............. $19,251 $35,746 ======= =======
The following table presents property by geographic area based on the location of the asset.
March 31, December 31, 2000 1999 --------- ---------- United States ........... $76,361 $77,438 Other Countries ......... 8,138 10,669 ------- ------- Total ............. $84,499 $88,107 ======= =======
Customers comprising 10% or more of the Company's total revenues are summarized as follows:
Quarter ended March 31, ---------------------- 2000 1999 ------ ------ Transaction Processing segment: McDonald's Corporation ....................... 22% 47% Tricon Corporation ........................... 22% 20% Government segment: Department of Defense ........................ 31% 14% All Others ....................................... 25% 19% --- --- 100% 100% === ===
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 2000 COMPARED WITH QUARTER ENDED MARCH 31, 1999 The Company reported revenues of $19.3 million for the first quarter ended 2000, a decrease of 46% from the $35.7 million reported in 1999. The Company recorded a net loss of $4.5 million or diluted loss per share of $.56 for 2000. This compares to net income of $766,000 or diluted earnings per share of $.09 for 1999. Product revenues were $6.5 million in 2000, a decrease of 70% from the $22 million recorded in 1999. This decline is attributed to ongoing delays in the release of PAR's restaurant management software, as well as the release and market acceptance of third party software products. Also contributing to the lower revenues has been the delayed opportunities in PAR's restaurant business caused by the scheduling of certain national and regional customer conventions later in the calendar year. The first quarter of 1999 was a record first quarter for the Company with sales especially strong to McDonald's Corporation due to the requirements of their "Made for You" initiative. This program was completed in 1999. Customer service revenues were $6.7 million in 2000, a decrease of 23% from the $8.7 million in 1999. The primary reason was lower installation revenue which is directly related to the decreased product revenue discussed above. The Company's service offerings include installation, twenty-four hour help desk support and various field and on-site service options. Contract revenues were $6.1 million in 2000, an increase of 20% when compared to the $5 million recorded in the same period in 1999. This growth was primarily due to the startup of a recently awarded four-year, $24 million Navy contract to operate and maintain communications in support of the Pacific Fleet. Additionally, the Company was recently awarded a $4.5 million contract with US Navy to provide telecommunications support to the Naval Computer and Telecommunications Detachment located in Brunswick, Maine. These contracts will contribute to revenue growth throughout the remainder of 2000. Product margins were 18% for 2000 compared to 38% for the same period in 1999. This decrease resulted from absorption of fixed manufacturing costs on a very low product volume as discussed above. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 2000 COMPARED WITH QUARTER ENDED MARCH 31, 1999 Customer service margins were .1% in 2000 compared to 7% for the same period in 1999. The service margins were down primarily due to a loss in installation activities caused by lower than anticipated product sales. Additionally, the provision for excess and obsolete inventory was higher in 2000 when compared to 1999. The Company is continuing its investments in service personnel, training and service integration and help desk capabilities. Contract margins were 6% unchanged from the same period in 1999. Margins on the Company's government contract business typically run between 5% and 6%. Selling, general and administrative expenses were $6.5 million in 2000 versus $5.7 million for the same period in 1999, an increase of 13%. The increase is the result of a one-time early retirement program offered to eligible employees in the first quarter of 2000. Additionally, administrative expenses related to the recently installed service management system increased. Research and development expenses were $2.1 million in 2000, a decrease of 5% from the $2.2 million recorded for the same period in 1999. The decline is due to an increase in 2000 in the amount of software development costs capitalized in accordance with Statement of Financial Accounting Standards No. 86, Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise Marketed. Absent this requirement, expenses increased 5% as the Company is continuing to invest in enterprise solutions for its manufacturing/warehouse customers. The Company is also preparing for release of its new iN.fusion software suite for its restaurant customers. Research and development costs attributable to government contracts are included in cost of contract revenues. Interest expense represents interest charged on the Company's short-term borrowing requirements from banks. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 2000 COMPARED WITH QUARTER ENDED MARCH 31, 1999 Liquidity and Capital Resources The Company's primary source of liquidity has been from operations. Cash used by operating activities was $4.8 in the first quarter of 2000, compared to $158,000 in 1999. During the first quarter of 2000, cash flow was adversely affected by the operating loss, a build up in inventory in anticipation of future demands and the timing of vendor payments. This was partially offset by the $10.3 million reduction in accounts receivable. During the first quarter of 1999, the Company increased its inventory levels in anticipation of future demand and to meet the growing service parts requirements as its customer base increased. This was partially offset by accounts receivable collections, net income for the period and a federal income tax refund. Cash used in investing activities was $430,000 for the first quarter of 2000 compared to $389,000 in 1999. In the first quarter of 2000, the most significant investing activity was the $317,000 capitalization of software costs. In 1999, capital expenditures were for the continued upgrade to the Company's customer service center and for PC equipment. Cash provided by financing activities was $5.6 million for the first quarter of 2000 compared to $412,000 in 1999. In 2000, the Company increased its line-of-credit borrowings by $6.2 million. This was partially offset by the repurchase of 108,400 shares of its stock for $561,000. In 1999, the Company received advances on its lines of credit totaling $1.2 million. The Company also repurchased 128,200 shares of its stock for $818,000. The Company has line-of-credit agreements, which aggregate $25 million with certain banks, of which $13.8 million were unused at March 31, 2000. The Company believes that it has adequate financial resources to meet its future liquidity and capital requirements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 2000 COMPARED WITH QUARTER ENDED MARCH 31, 1999 Other Matters Inflation had little effect on revenues and related costs during the first quarter of 2000. Manage- ment anticipates that margins will be maintained at acceptable levels to minimize the effects of inflation, if any. The Company has total interest bearing short-term debt of approximately $11.2 million at March 31, 2000. Management believes that increases in short-term rates could have an adverse effect on the Company's 2000 results. Management believes that foreign currency fluctuations should not have a significant impact on gross margins due to the low volume of business affected by foreign currencies. Important Factors Regarding Future Results Information provided by the Company, including information contained in this report, or by its spokespersons from time to time may contain forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including without limitation, further delays in new product introduction, risks in technology development and commercialization, risks in product development and market acceptance of and demand for the Company's products, risks of downturns in economic conditions generally, and in the quick service sector of the restaurant market specifically, risks of intellectual property rights associated with competition and competitive pricing pressures, risks associated with foreign sales and high customer concentration, Year 2000 compliance risks and other risks detailed in the Company's filings with the Securities and Exchange Commission. Item 6. Exhibits and Reports on Form 8-K List of Exhibits Exhibit No. Description of Instrument ----------- ------------------------- 11 Statement re computation of per-share earnings Reports on Form 8-K None during the first quarter of 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PAR TECHNOLOGY CORPORATION -------------------------- (Registrant) Date: May 9, 2000 RONALD J. CASCIANO ------------------ Ronald J. Casciano Vice President, Chief Financial Officer and Treasurer EX-11 2 Exhibit Index Exhibit ------- 11 - Statement re computation of per-share earnings
Exhibit 11 COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK (In Thousands) For the Three Months Ended March 31, ----------------------- 2000 1999 -------- -------- Diluted Earnings Per Share: Weighted average shares of Common Stock outstanding: Balance outstanding - beginning of period 8,060 8,549 Weighted average shares of treasury stock acquired .................. (26) (67) Incremental shares of common stock outstanding giving effect to stock options -- 125 ------ ------ Weighted balance - end of period ......... 8,034 8,607 ====== ======
Exhibit 11 COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK (In Thousands) For the Three Months Ended March 31, ----------------------- 2000 1999 -------- -------- Basic Earnings Per Share: Weighted average shares of Common Stock outstanding: Balance outstanding - beginning of period 8,060 8,549 Weighted average shares of treasury stock acquired ................. (26) (67) ------ ------ Weighted balance - end of period ........ 8,034 8,482 ====== ======
EX-27 3
5 1,000 3-MOS DEC-31-2000 MAR-31-2000 1,325 0 27,118 0 32,160 69,044 11,069 0 84,499 27,045 0 0 0 190 56,834 84,499 6,511 19,251 5,308 17,684 2,102 0 0 (7,139) (2,616) (4,523) 0 0 0 (4,523) (.56) (.56)
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