-----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, UB665OBrkLHKoJihRzlYxbyeBAtPiuAQCMPkY1RyiaKmJ8A5k3MIE3hLhJ1YiBwb aSPMk9R2+hjZcKHXapZUew== 0000708821-04-000018.txt : 20041217 0000708821-04-000018.hdr.sgml : 20041217 20041217145029 ACCESSION NUMBER: 0000708821-04-000018 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20041001 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041217 DATE AS OF CHANGE: 20041217 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09720 FILM NUMBER: 041211090 BUSINESS ADDRESS: STREET 1: PAR TECHNOLOGY PARK STREET 2: 8383 SENECA TURNPIKE CITY: NEW HARTFORD STATE: NY ZIP: 13413 BUSINESS PHONE: 3157380600 8-K/A 1 form8ka.txt FORM 8KA DATED DATED DECEMBER 17, 2004 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K/A Amendment No. 1 to Form 8-K as filed on December 17, 2004 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 October 7, 2004 Date of Report (Date of earliest event reported) PAR TECHNOLOGY CORPORATION - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 1-09720 16-1434688 - ----------------- --------------------- ------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 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 -------------- Not applicable - ------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c) Item 2.01. Acquisition or Disposition of Assets. PAR Technology Corporation hereby amends its Current Report on Form 8-K originally filed with the United States Securities and Exchange Commission on October 7, 2004 relating to the acquisition of PAR Springer-Miller Systems, Inc. to include the financial statements of the business acquired, the pro forma financial information and related exhibits as set forth below. Item 9.01. Financial Statements and Exhibits. (a) Financial Statements of Business Acquired. 1. The audited consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of and for the years ended December 31, 2003 and 2002 are filed with this report as Exhibit 99.1. 2. The unaudited interim consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003 are filed with this report as Exhibit 99.2 (b) Pro forma Financial Information. 1. The unaudited pro forma Consolidated Statement of Income for the year ended December 31, 2003 and for the nine months ended September 30, 2004 and the unaudited pro forma Consolidated Balance Sheet as of September 30, 2004. (c) Exhibits. Exhibit Number Description - ------ ----------- 99.1 The audited consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of and for the years ended December 31, 2003 and 2002 99.2 The unaudited interim consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003 99.3 The unaudited pro forma Consolidated Statement of Income for the year ended December 31, 2003 and for the nine months ended September 30, 2004 and the unaudited pro forma Consolidated Balance Sheet as of September 30, 2004. 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 hereunto duly authorized. PAR TECHNOLOGY CORPORATION Date: December 17, 2004 By: /s/ Ronald J. Casciano ------------------------------- Ronald J. Casciano Vice President, Chief Financial Officer and Treasurer EXHIBIT INDEX Exhibit Number Description - ------ ----------- 99.1 The audited consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of and for the years ended December 31, 2003 and 2002 99.2 The unaudited interim consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003 99.3 The unaudited pro forma Consolidated Statement of Income for the year ended December 31, 2003 and for the nine months ended September 30, 2004 and the unaudited pro forma Consolidated Balance Sheet as of September 30, 2004. EX-99.1 The audited consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of and for the years ended December 31, 2003 and 2002 CONSOLIDATED FINANCIAL STATEMENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS SPRINGER-MILLER SYSTEMS, INC., AND SUBSIDIARIES DECEMBER 31, 2003 AND 2002 SPRINGER-MILLER SYSTEMS, INC., AND SUBSIDIARIES DECEMBER 31, 2003 AND 2002 CONTENTS REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS CONSOLIDATED FINANCIAL STATEMENTS BALANCE SHEETS STATEMENTS OF OPERATIONS STATEMENTS OF STOCKHOLDER'S DEFICIT STATEMENTS OF CASH FLOWS NOTES TO FINANCIAL STATEMENTS [GRAPHIC OMITTED] Report of Independent Certified Public Accountants To the Stockholder of Springer-Miller Systems Inc., and Subsidiaries We have audited the accompanying consolidated balance sheets of Springer-Miller Systems, Inc., and Subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholder's deficit and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Springer-Miller Systems, Inc., and Subsidiaries as of December 31, 2003 and 2002, and the consolidated results of their operations and their consolidated cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. /s/Gallagher, Flynn & Company LLP March 4, 2004
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31 2003 2002 ----------- ------------ Current Assets Cash and cash equivalents ......................... $ 2,000,968 $ 924,495 Accounts receivable, less allowance for doubtful Accounts of $291,069 in 2003 and $353,402 in 2002 2,774,194 2,954,882 Inventories ........................................ 28,844 31,742 Current portion of notes receivable ................ 113,556 107,313 Costs on uncompleted contracts ..................... 62,360 55,628 Other current assets ............................... 327,832 240,200 ----------- ----------- Total current assets ........................... 5,307,754 4,314,260 ----------- ----------- Property and equipment, net of accumulated Depreciation and amortization ......................... 1,078,340 1,212,956 ----------- ----------- Other Assets Software held for resale, net of accumulated amortization of $688,567 in 2003 and $232,550 in 2002 .............. 1,651,656 1,926,179 Marketable securities and other investments ............. -- 112,731 Notes receivable, less current portion .................. 708,837 822,393 Other ................................................... 8,500 8,500 ----------- ----------- 2,368,993 2,869,803 ----------- ----------- $ 8,755,087 $ 8,397,019 =========== =========== Current Liabilities Notes payable - bank ............................... $ 75,000 $ 300,000 Accounts payable ................................... 615,346 919,617 Accrued liabilities ................................ 632,475 308,362 Billings on uncompleted contracts .................. 3,693,576 2,637,127 Deferred revenue ................................... 3,725,204 3,639,319 Current portion of acquisition liability ........... 327,454 560,000 Income tax payable ................................. 2,848 2,205 ----------- ----------- Total current liabilities ...................... 9,071,903 8,366,630 ----------- ----------- Acquisition liability, less current portion ............. 1,082,925 1,082,925 ----------- ----------- Accounts payable, less current portion .................. 126,000 -- ----------- ----------- Stockholder's deficit: Common stock, no par value, 100 shares authorized; issued and outstanding .... -- -- Additional paid-in capital ......................... 462,401 462,401 Accumulated deficit ................................ (2,103,908) (1,525,559) Accumulated other comprehensive income ............. 115,766 10,622 ----------- ----------- (1,525,741) (1,052,536) ----------- ----------- $ 8,755,087 $ 8,397,019 =========== ===========
The accompany notes are an integral part of these statements
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF OPERATIONS Years ended December 31, 2003 2002 ------------ ------------ Revenue .............................................. $ 13,962,500 $ 11,685,771 ------------ ------------ Operating expenses: Direct project and support service costs ........ 5,684,764 4,067,900 Research and development ........................ 2,326,865 2,250,594 Selling, general and administrative ............. 6,499,495 5,927,900 ------------ ------------ 14,511,124 12,246,394 ------------ ------------ Loss from operations ................................. (548,624) (560,623) ------------ ------------ Other income (Expense) Amortization of deferred credit and other acquisition related income .......... -- 203,597 Interest income ................................. 91,788 78,531 Interest expense ................................ (12,135) (12,233) Other income .................................... 120,453 75,593 Unrealized and realized gain (loss) on marketable securities ......................... 405 (75,730) Gain (loss) on disposal of property and equipment (1,258) 131 Other ........................................... (4,724) (8,816) ------------ ------------ 194,529 261,073 ------------ ------------ Loss before income taxes ............................. (354,095) (299,550) Provision for income taxes ........................... 2,134 1,561 ------------ ------------ Loss before extraordinary item ....................... (356,229) (301,111) Extraordinary gain - negative goodwill recognition (net of income taxes of $0) ............ -- 1,842,261 ------------ ------------ Net earnings (loss) .................................. $ (356,229) $ 1,541,150 ============ ============
The accompany notes are an integral part of these statements
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT YEARS ENDED DECEMBER 31, 2003 AND 2002 Accumulated Additional Other Common Paid-in Accumulated Comprehensive Comprehensive Stock Capital Deficit Income (loss) Income Total ---------------------------------------------------------------------------------------- Balance, January 1, 2002 ............. $ -- $ 462,401 $(2,809,849) $ 1,315 $(2,346,133) Net earnings for the year .. -- -- 1,541,150 $ 1,541,150 -- 1,541,150 Translation adjustments .... -- -- -- 9,307 9,307 9,307 ----------- Comprehensive income ....... -- -- -- $ 1,550,457 -- -- =========== Distributions to stockholder -- -- (256,860) -- (256,860) ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2002 ........... -- 462,401 (1,525,559) 10,622 $(1,052,536) Net loss for the year ...... -- -- (356,229) $ (356,229) -- (356,229) Translation adjustments .... -- -- -- 105,144 105,144 105,144 ----------- Comprehensive loss ......... -- -- -- $ (251,085) -- -- =========== Distributions to stockholder -- -- (222,120) -- (222,120) ----------- ----------- ----------- ----------- ----------- Balance, December 31, 2003 ........... $ -- $ 462,401 $(2,103,908) $ 115,766 $(1,525,741) =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these statements
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31 2003 2002 ------------ ----------- Decrease In Cash and Cash Equivalents Cash flows from operating activities: Net earnings (loss) .................................. $ (356,229) $ 1,541,150 ----------- ----------- Noncash items included in net earnings (loss): Provision for doubtful accounts .................. 75,926 497,457 Depreciation and amortization .................... 814,196 407,309 Revenues from reduction of acquisition liability . (59,960) -- Change in accounting principle - negative goodwill -- (1,842,261) Unrealized loss on marketable securities ......... -- 84,510 (Gain) loss on disposal of property and equipment 1,258 (131) Changes in assets and liabilities: Accounts receivable .............................. (22,244) (922,465) Inventory ........................................ 2,898 12,367 Costs on uncompleted contracts ................... (6,732) 11,106 Marketable securities ............................ 112,731 (15,215) Other current assets ............................. (87,632) (19,479) Accounts payable and accrued liabilities ......... (25,257) 79,222 Deferred revenue and billings on uncompleted contracts .......................... 1,142,334 1,107,302 ----------- ----------- 1,947,518 (600,278) ----------- ----------- Net cash provided by operating activities . 1,591,289 940,872 ----------- ----------- Cash flows from investing activities: Purchase of property and equipment ............... (224,821) (196,243) Proceeds from disposal of property and equipment . -- 4,835 Costs of software held for resale ................ (55,332) -- Business acquisition ............................. -- (640,847) Loan to stockholder .............................. -- (250,000) Payments received on notes receivable from stockholder ............................... 107,313 135,784 ----------- ----------- Net cash used in investing activities ..... (172,840) (946,471) ----------- ----------- Subtotal (forward) ........................ $ 1,418,449 $ (5,599) ----------- -----------
(CONTINUED) SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31 2003 2002 ------------- ------------ Subtotal (forwarded) ............... $ 1,418,449 $ (5,599) ------------- ------------ Cash flows from financing activities: Distributions to stockholder .................. (222,120) (256,860) Net payments on note payable - bank ........... (225,000) -- Principal payments on capital lease obligations -- (8,999) ----------- ----------- Net cash used in financing activities ..... (447,120) (265,859) ----------- ----------- Foreign currency translation adjustment ... 105,144 9,307 ----------- ----------- Net increase (decrease) in cash and cash equivalents ........................ 1,076,473 (262,151) Cash and cash equivalents, beginning of year ..... 924,495 1,186,646 ----------- ----------- Cash and cash equivalents, end of period ......... $ 2,000,968 $ 924,495 =========== =========== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest ...................................... $ 12,135 $ 12,233 =========== =========== Income taxes .................................. $ 1,491 $ 2,089 =========== =========== Noncash investing and financing activities: During 2003, the Company capitalized $168,000 of software costs and recorded long-term accounts payable for this amount. Also in 2003, the Company reduced the acquisition liability by $172,586 through adjustments to accounts receivable, software held for resale and accounts payable. During 2002, the Company paid cash $640,847 and incurred acquisition liabilities of $1,642,925 to acquire assets totaling $2,517,674 and assume liabilities totaling $233,902 from clubessential, Inc., (see Note B). The accompanying notes are an integral part of these statements. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES Operations: Springer-Miller Systems, Inc., (the Company) was founded in 1983 in Stowe, Vermont and develops comprehensive property management computer systems for hotels, resorts and time-share properties. The geographic market for the Company is primarily the United States and international locations in Canada, the Caribbean, Southeast Asia and Europe. Springer-Miller International, LLC, (SMI) a wholly owned subsidiary of the Company, provides services to the customers in Southeast Asia and Europe. This subsidiary opened branch offices in Malaysia in December 1998, Hong Kong in 2002 and acquired an office in Great Britain in 2001. Springer-Miller Canada, ULC, (SMC) a wholly owned subsidiary of SMI, provides services to the customers in Canada. SMC began operations in 2002. Accounting policies: A summary of the Company's significant accounting policies applied in the preparation of the accompanying financial statements follows: 1. Basis of presentation The accompanying consolidated financial statements of the Company have been prepared in conformity with generally accepted accounting principles. The consolidated financial statements include the accounts of Springer-Miller Systems, Inc., and its wholly owned subsidiaries, Springer-Miller International, LLC and Springer-Miller Canada, ULC. All significant intercompany transactions have been eliminated in consolidation. 2. Foreign currency transactions All balance sheet accounts of the Company's foreign subsidiary are translated into U.S. dollars at the year-end rate of exchange and statement of earnings items are translated at the weighted average exchange rates for the year. The resulting translation adjustments are made directly to a separate component of stockholder's equity. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued) 3. Cash and cash equivalents For purposes of the statements of cash flows, the Company considers all highly liquid instruments purchased with maturities of three months or less to be cash equivalents. 4. Accounts receivable Current earnings are charged with an allowance for doubtful accounts receivable based on collection experience and a review of the collectibility of specific accounts. Accounts deemed uncollectible are charged against this allowance. 5. Inventories Inventories are stated at the lower cost or market. Cost is determined principally by the first-in, first-out method. 6. Property and equipment Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. Leasehold improvements are amortized over the lives of the respective leases or the service lives of the improvements, whichever is shorter. Leased property under capital leases is amortized over the lives of the respective leases or over the service lives of the assets for those leases that substantially transfer ownership. The straight-line method of depreciation is followed for substantially all assets for financial reporting purposes, but accelerated methods are used for tax purposes. 7. Software held for resale Software held for resale represents costs related to the development and acquisition of software product masters. These costs are capitalized as incurred and are amortized on a straight-line basis over three to five years, the estimated economic lives of the software products, which exceeds revenue-based amortization. Amortization expense charged to operations for these costs was $490,261 in 2003 and $66,566 in 2002. The estimated minimum amortization expense for each of the ensuing years through December 31, 2008 is $541,881, $506,985, $392,995, $203,081 and $6,714, respectively. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued) 8. Marketable securities and other investments Investments in marketable securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities. Trading securities are recorded at fair value on the balance sheet, with the change in fair value during the period included in earnings. The Company liquidated its marketable securities during 2003. The net realized gains, which were included in earnings during 2003, were $405. Net unrealized losses on such securities, which were included in earnings during 2002, were $84,510. Marketable securities also included cash equivalents of $3,156 at December 31, 2002. 9. Income taxes Springer-Miller Systems, Inc., has elected to be taxed under provisions of Subchapter S of the Internal Revenue code. Income taxes on net earnings are payable personally by the stockholder pursuant to this election. Accordingly, no provision has been made for income taxes other than certain minimum state taxes and the subsidiary's foreign income taxes. 10. Revenue recognition Installations - revenue is recognized upon delivery and completed installation of the system, fulfillment of all significant contract obligations and determination that collectibility of any remaining receivable is probable. Master license agreements - revenue from license fees is recognized upon the latter of shipment of product or completion of significant obligations to customers. Support services - software support is billed and collected prior to the coverage period and revenue is recognized on a straight-line basis over the coverage period. Software development - through 2002, revenue from a long-term software development contract was recognized as work on the contract progressed, using the percentage of completion method. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued) 11. Billings and costs of uncompleted contracts The Company generally requires that customers place a deposit of 65% of the contract value upon the signing of an installment contract or master license agreement. These deposits are recorded as a liability until the project is completed and are presented as billings on uncompleted contracts. Direct project costs on work in progress are presented as costs on uncompleted contracts. Management periodically reviews the profitability of uncompleted contracts based on their estimate of costs to complete the project. Losses on contracts are recorded in the period in which such losses are determined. There are no estimated losses recorded at December 31, 2003 and 2002. 12. Excess of fair value of net assets of company acquired over cost Prior to 2002, negative goodwill (excess of fair value of net assets acquired over cost) was recorded as a deferred credit and was being amortized on a straight-line basis over the remaining benefit period of the credit. As of January 1, 2002, the Company adopted FASB Statement No. 141, Business Combinations, issued July 20, 2001. Upon initial application of Statement No. 141, the negative goodwill remaining from a business combination prior to applying the Statement was recognized as extraordinary income. 13. Advertising Advertising costs are charged to operations as incurred. Advertising expense was $26,383 in 2003 and $42,450 in 2002. 14. Research and development Research and development costs are expensed as incurred. 15. Comprehensive income Comprehensive income is the total of (1) net earnings plus (2) all other changes in net assets arising from nonowner sources, which are referred to as other comprehensive income. The Company has presented a statement of stockholder's deficit that includes other comprehensive income and an analysis of changes in components of accumulated other comprehensive income. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued) 16. Product warranties The Company's software contracts include a warranty period of ninety days during which the customer is entitled to receive support at no charge. The Company estimates the costs that may be incurred during this period, and if necessary, records a liability in the amount of such costs at the time the product revenue is recognized. Factors that affect the Company's anticipated warranty costs include the number of new installations, and historical and anticipated costs per claim. No warranty liability was required at December 31, 2003 and 2002. 17. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. B) BUSINESS ACQUISITION On November 28, 2002, the Company acquired certain assets of clubessential, Inc., in a business combination accounted for as a purchase. clubessential, Inc., was primarily engaged in the business of developing spa management software for hotels, resorts and time-share properties. The total cost of the acquisition was $2,283,772 and was allocated as follows: Current assets ............ $ 368,754 Property and equipment .... 185,191 Software held for resale .. 1,963,729 ----------- 2,517,674 Current liabilities assumed (233,902) ----------- Net assets acquired ....... $ 2,283,772 =========== The consideration paid for the acquisition was allocated as follows: Cash ................................ $ 640,847 Acquisition liabilities due to seller 1,642,925 ---------- $2,283,772 ========== SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 B) BUSINESS ACQUISITION (continued) The software held for resale is being amortized over the weighted average estimated useful life of 4.6 years. It is not anticipated that such assets will have significant residual values. The acquisition liabilities due to the seller include cash and credits against future sales of products and services, and the Company is contingently liable for additional consideration of up to $1,500,000 based on 25% of certain revenues generated by the acquired products. In conjunction with the acquisition referred to in Note A.12, the Company was entitled to earn fees from the collection of certain accounts receivable balances. This income had no effect on negative goodwill and was included in other income in 2002, totalling $203,597. The Company also entered into a $2,500,000 long-term software development contract with the seller and an agreement to settle certain commitments to customers through 2002, for which the Company was compensated $2,400,000. C) CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS In 2002, a substantial portion of the Company's revenues were from one customer. Revenues from this customer approximated $1,700,000 (15% of total revenues) for the year ended December 31, 2002. The amount due from this customer, included in trade accounts receivable, was approximately $157,000 at December 31, 2002. The Company maintains domestic bank account balances, which, at times, may exceed federally insured limits. The Company has not experienced any losses with these accounts. Management believes the Company is not exposed to any significant credit risk on domestic cash balances. The Company also maintains certain foreign bank balances that are not covered by deposit insurance totalling approximately $88,000 at December 31, 2003. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 D) PROPERTY AND EQUIPMENT Property and equipment consist of the following at December 31: 2003 2002 ---------- ---------- Furniture and fixtures .......................... $ 766,629 $ 742,675 Leasehold improvements .......................... 749,762 390,668 Computer hardware and software .................. 1,167,499 1,012,643 Vehicles ........................................ -- 5,598 Construction in progress - leasehold improvements -- 339,621 ---------- ---------- 2,683,890 2,491,205 Less accumulated depreciation and amortization .. 1,605,550 1,278,249 ---------- ---------- $1,078,340 $1,212,956 ========== ========== E) NOTES RECEIVABLE Notes receivable consist of the following at December 31: 2003 2002 -------- -------- Stockholder - Due in equal monthly installments of $10,436, including interest at 6%, due July 2009 ........ $592,895 $679,706 Due in equal monthly installments of $2,561, including interest at 4.25%, due December 1, 2013 229,498 250,000 -------- -------- 822,393 929,706 Less current portion ............................... 113,556 107,313 -------- -------- $708,837 $822,393 ======== ======== F) NOTE PAYABLE - BANK Note payable - bank represents the amount due under a $300,000 line of credit from a bank due December 2004. Interest is payable monthly at The Wall Street Journal prime rate (4% at December 31, 2004), adjusted monthly. The note is secured by substantially all business assets and is personally guaranteed by the stockholder of the Company. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 G) OPERATING LEASES The Company leases office space and office equipment under various operating lease agreements. The Company also rents a building on a month-to-month basis from its sole stockholder (see Note I). Future minimum payments for all noncancellable operating leases having a term in excess of one year at December 31, 2003, are as follows: Years ending December 31, Amount ------------ ------ 2004 $ 291,857 2005 225,139 2006 200,676 2007 39,763 2008 39,071 Thereafter 18,508 ----------- $ 815,014 =========== Total rent expense charged to operations was $1,002,468 for 2003 and $765,801 for 2002. H) PROFIT SHARING PLAN The Company has a 401(k) profit sharing plan (the Plan) that covers substantially all employees. All employees over the age of 20 1/2 years who have completed three months of service are eligible to participate in the Plan. Contributions to the Plan are at the discretion of the board of directors. Contributions to the Plan were $200,000 in 2003 and $0 in 2002. SPRINGER-MILLER SYSTEMS INC., AND SUBSIDIARIES NOTES TO CONSOLIDATED STATEMENTS DECEMBER 31, 2003 AND 2002 I) RELATED PARTY TRANSACTIONS AND GUARANTEES The Company has a loan agreement with its sole stockholder (see Note E). Interest income related to this note included in operations was $48,650 in 2003 and $43,464 in 2002. The Company rents a building on a month-to-month basis from its stockholder. Rent expense under these agreements was approximately $360,000 in 2003 and $230,000 in 2002. The Company's sole stockholder obtained unsecured bank financing totalling $1,388,308 at December 31, 2003, which is due in full at its maturity in January 2021. For no consideration, the Company agreed to guarantee the bank debt on behalf of the stockholder because the purpose of the loan was to finance the expansion of office facilities. The Company can be required to perform on the guarantee only in the event of nonpayment of the debt by the stockholder. Management evaluates the Company's exposure to loss at each balance sheet date and provides accruals for such as deemed necessary. No accruals were deemed necessary at December 31, 2003 and 2002. The Company has recourse only to the general credit of the stockholder should the Company be required to perform under the guarantee. [GRAPHIC OMITTED] To the Board of Directors of Springer-Miller Systems, Inc., and Subsidiaries We consent to the use of our report dated March 4, 2004, included herein with respect to the consolidated balance sheets of Springer-Miller Systems, Inc., and Subsidiaries as of December 31, 2003 and 2002, and the related consolidated statements of operations, stockholder's deficit, and cash flows for each of the years in the two-year period ended December 31, 2003. [GRAPHIC OMITTED] /s/Gallagher, Flynn & Company LLP Burlington, Vermont 05401 December 15, 2004 EX-99.2 The unaudited interim consolidated financial statements of Springer-Miller Systems, Inc. and Subsidiaries as of September 30, 2004 and for the three and nine months ended September 30, 2004 and 2003. SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands except share amounts) (unaudited) September 30, December 31, 2004 2003 -------- -------- Assets Current assets: Cash and cash equivalents .................... $ 2,574 $ 2,001 Accounts receivable-net ....................... 1,761 2,774 Inventories-net ............................... 19 29 Current portion of notes receivable ........... 29 114 Costs on uncompleted contracts ................ 187 62 Other current assets .......................... 322 328 ------- ------- Total current assets ...................... 4,892 5,308 Property and equipment - net ....................... 1,330 1,078 Notes receivable, less current portion ............. 709 709 Other assets ....................................... 1,025 1,660 ------- ------- $ 7,956 $ 8,755 ======= ======= Liabilities and Stockholder's Deficit Current liabilities: Notes payable - bank .......................... $ -- $ 75 Accounts payable .............................. 618 615 Accrued liabilities ........................... 461 633 Billings on uncompleted contracts ............. 4,993 3,694 Deferred revenue .............................. 3,094 3,725 Current portion of acquisition liability ...... 212 327 Income tax payable ............................ 52 3 ------- ------- Total current liabilities ................. 9,430 9,072 ------- ------- Acquisition liability .............................. 1,000 1,083 ------- ------- Accounts payable - less current portion ............ 126 126 ------- ------- Stockholder's deficit: Common stock, no par value, 100 shares authorized; issued and outstanding -- -- Additional paid-in capital .................... 462 462 Accumulated deficit ........................... (3,205) (2,104) Accumulated other comprehensive income ........ 143 116 ------- ------- Total stockholder's deficit ............... (2,600) (1,526) ------- ------- $ 7,956 $ 8,755 ======= ======= Continued
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands) (unaudited) For the three months For the nine months ended September 30, ended September 30, -------------------------------------------- 2004 2003 2004 2003 -------- -------- -------- -------- Net revenues: Product ........................... $ 1,186 $ 974 $ 4,256 $ 3,352 Service ........................... 2,660 2,070 7,946 6,328 -------- -------- -------- -------- 3,846 3,044 12,202 9,680 -------- -------- -------- -------- Costs of sales: Product ........................... 148 207 693 573 Service ........................... 1,346 1,122 3,798 3,357 -------- -------- -------- -------- 1,494 1,329 4,491 3,930 -------- -------- -------- -------- Gross margin ................ 2,352 1,715 7,711 5,750 -------- -------- -------- -------- Operating expenses: Selling, general and administrative 1,876 1,694 5,182 5,148 Research and development .......... 674 513 1,843 1,548 -------- -------- -------- -------- 2,550 2,207 7,025 6,696 -------- -------- -------- -------- Operating income (loss) ................ (198) (492) 686 (946) Other income (expense), net ............ (113) 8 232 120 Interest expense ....................... (1) (8) (2) (10) -------- -------- -------- -------- Income (loss) before provision for income taxes ..................... (312) (492) 916 (836) Provision for income taxes ............. -- -- -- -- -------- -------- -------- -------- Net income (loss) ...................... $ (312) $ (492) $ 916 $ (836) -------- -------- -------- --------
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited) For the three For the nine months ended months ended September 30, September 30, -------------------------------- 2004 2003 2004 2003 ------- ------- ------- ------ Net income (loss) ............................ $(312) $(492) $ 916 $(836) Other comprehensive income (loss): Foreign currency translation adjustments 45 (6) 27 53 ----- ----- ----- ----- Comprehensive income (loss) .................. $(267) $(498) $ 943 $(783) ===== ===== ===== ===== SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) For the nine months ended September 30, ------------------- 2004 2003 -------- --------- Cash flows from operating activities: Net income (loss) .................................... $ 916 $ (836) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ..................... 599 605 Provision for bad debts ........................... 30 6 Increase (decrease) from changes in: Accounts receivable ............................. 983 1,580 Inventories ..................................... 10 4 Costs on uncompleted contracts .................. (125) 8 Other current assets ............................ 6 25 Other assets .................................... (47) (17) Accounts payable and accrued expenses ........... (120) (358) Deferred revenue and billings on uncompleted contracts ......................... 668 658 ------- ------- Net cash provided by operating activities ...... 2,920 1,675 ------- ------- Cash flows from investing activities: Marketable securities ................................ -- 113 Capital expenditures ................................. (169) (186) Payments received on notes receivable from stockholder 85 80 ------- ------- Net cash provided (used) in investing activities (84) 7 ------- ------- Cash flows from financing activities: Net payments on note payable - bank .................. (75) (85) Acquisition liability ................................ (198) (233) Distributions to stockholder ......................... (2,017) (133) ------- ------- Net cash used in financing activities .......................... (2,290) (451) ------- ------- Effect of exchange rate changes on cash and cash equivalents ...................................... 27 53 ------- ------- Net increase in cash and cash equivalents ............... 573 1,284 Cash and cash equivalents at beginning of year ..................................... 2,001 924 ------- ------- Cash and cash equivalents at end of period ......................................... $ 2,574 $ 2,208 ======= ======= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 2 $ 10 SPRINGER-MILLER SYTEMS, INC. AND SUBSIDIARIES NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying unaudited interim consolidated financial statements have been prepared by Springer-Miller Systems, Inc. and Subsidiaries (the "Company") in accordance with accounting principles generally accepted in the United States of America for interim financial statements. Accordingly, these interim financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. 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 and nine months ended September 30, 2004 are not necessarily indicative of the results of operations to be expected for any future period. The unaudited interim consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes (included in this SEC Form 8-K/A in Exhibit 99.1) as of and for the years ended December 31, 2003 and 2002. 2. On October 1, 2004, PAR Technology Corporation ("PAR") and its wholly-owned subsidiary, PAR Springer-Miller Systems, Inc. (f/k/a PSMS Acquisition Inc.) (the "Subsidiary"), completed its previously-announced transaction with Springer-Miller Systems, Inc. ("Springer-Miller") and John Springer-Miller pursuant to which the Subsidiary acquired substantially all of the assets (including the equity interests in each of Springer-Miller International, LLC and Springer-Miller Canada, ULC), and assumed certain liabilities, of Springer-Miller. The purchase price of the net assets acquired was $16.1 million adjusted, in accordance with the purchase agreement, to $15.0 million based on changes in the balance sheet of Springer-Miller through September 30, 2004 plus approximately $3.2 million (an amount equal to the cash and cash equivalents held by Springer-Miller and its subsidiaries at the closing date of the acquisition, October 1, 2004). The purchase price consisted of $1.9 million worth of PAR common stock (208,653 shares of PAR Technology Corporation common stock) and the remainder in cash. EX-99.3 The unaudited pro forma Consolidated Statements of Income for the year ended December 31, 2003 and for the nine months ended September 30, 2004 and the unaudited pro forma Consolidated Balance Sheet as of September 30, 2004. On October 1, 2004, PAR Technology Corporation (the "Company") and its wholly-owned subsidiary, PAR Springer-Miller Systems, Inc. (f/k/a PSMS Acquisition Inc.) (the "Subsidiary"), completed its previously-announced transaction with Springer-Miller Systems, Inc. ("Springer-Miller") and John Springer-Miller pursuant to which the Subsidiary acquired substantially all of the assets (including the equity interests in each of Springer-Miller International, LLC and Springer-Miller Canada, ULC), and assumed certain liabilities, of Springer-Miller. The purchase price of the net assets acquired was $16.1 million adjusted, in accordance with the purchase agreement, to $15.0 million based on changes in the consolidated balance sheet of Springer-Miller through September 30, 2004 plus approximately $3.2 million (an amount equal to the cash and cash equivalents held by Springer-Miller and its subsidiaries at the closing date of the acquisition, October 1, 2004). The purchase price consisted of $1.9 million worth of Company common stock (208,653 shares of PAR Technology Corp. common stock) and the remainder in cash. Springer-Miller, based in Stowe, Vermont, is a developer of software for hotel and restaurant management.
PAR TECHNOLOGY CORPORATION UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the year ended December 31, 2003 (in thousands except per share amounts) Acquisition Pro forma PAR Technology Springer-Miller Pro forma PAR Technology Corporation Systems, Inc. Adjustments Corporation ------------------------------------------------------------------------ Net revenues: Product $ 60,223 $ 5,156 $ $ 65,379 Service 37,865 8,807 46,672 Contract 41,682 -- 41,682 ----------- ------------- ----------- ------------- 139,770 13,963 153,733 ----------- ------------- ----------- ------------- Costs of sales: Product 39,024 594 39,618 Service 32,140 5,091 37,231 Contract 39,613 -- 39,613 ----------- ------------- ----------- ------------- 110,777 5,685 116,462 ----------- ------------- ----------- ------------- Gross margin 28,993 8,278 37,271 ----------- ------------- ----------- ------------- Operating expenses: Selling, general and administrative 19,340 6,499 25,839 Research and development 5,310 2,328 7,638 Amortization of identifiable intangible assets -- -- 1,343 (i) 1,343 ----------- ------------- ----------- ------------- 24,650 8,827 1,343 34,820 ----------- ------------- ----------- ------------- Operating income (loss) 4,343 (549) (1,343) 2,451 Other income, net 582 207 -- 789 Interest expense (540) (12) (537) (j) (1,089) ----------- ------------- ----------- ------------- Income (loss) from continuing operations before provision for income taxes 4,385 (354) (1,880) 2,151 (Provision) benefit for income taxes (1,593) (2) 754 (k) (841) ----------- ------------- ----------- ------------- Income (loss) from continuing operations 2,792 (356) (1,126) 1,310 ----------- ------------- ----------- ------------- Discontinued operations: Loss from operations of discontinued component (570) -- (570) Income tax benefit 207 -- -- 207 ----------- ------------- ----------- ------------- Loss from discontinued operations (363) -- -- (363) ----------- ------------- ----------- ------------- Net income (loss) $ 2,429 $ (356) $ (1,126) $ 947 =========== ============= =========== =============
Continued
PAR Technology Corporation UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Continued) For the year ended December 31, 2003 (in thousands except per share amounts) Acquisition Pro forma PAR Technology Springer-Miller Pro forma PAR Technology Corporation Systems, Inc. Adjustments Corporation ------------------------------------------------------------------------ Earnings per share: Basic: Income from continuing operations $ .33 $ -- $ -- $ .15 Loss from discontinued operations $ (.04) $ -- $ -- $ (.04) Net income $ .29 $ -- $ -- $ .11 Diluted: Income from continuing operations $ .32 $ -- $ -- $ .14 Loss from discontinued operations $ (.04) $ -- $ -- $ (.04) Net income $ .27 $ -- $ -- $ .10 Weighted average shares outstanding Basic 8,438 209 (f) 8,647 ========= ========= ========= ========= Diluted 8,861 209 (f) 9,070 ========= ========= ========= =========
See notes to unaudited pro forma Consolidated Financial Statements.
PAR Technology Corporation UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET September 30, 2004 (in thousands except share amounts) Acquisition Pro forma PAR Technology Springer-Miller Pro forma PAR Technology Corporation Systems, Inc. Adjustments Corporation ------------------------------------------------------------------------ Assets Current assets: Cash and cash equivalents $ 5,505 $ 2,574 $ (2,547) (a) $ 5,532 Accounts receivable-net 28,052 1,761 29,813 Inventories-net 31,086 19 31,105 Current portion of notes receivable -- 29 (29) (b) -- Deferred income taxes 6,102 -- -- 6,102 Costs on uncompleted contracts -- 187 187 Other current assets 2,658 322 2,980 ------------- ------------- ------------- ------------- Total current assets 73,403 4,892 (2,576) 75,719 Property and equipment - net 7,307 1,330 (469) (c) 8,168 Notes receivable -- 709 (709) (b) -- Deferred income taxes 1,467 -- 1,467 Other assets 3,397 1,025 21,354 (d) 25,776 ------------- ------------- ------------- ------------- $ 85,574 $ 7,956 $ 17,600 $ 111,130 ============= ============= ============= =============
PAR Technology Corporation UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (Continued) September 30, 2004 (in thousands except share amounts) Acquisition Pro forma PAR Technology Springer-Miller Pro forma PAR Technology Corporation Systems, Inc. Adjustments Corporation ------------------------------------------------------------------------ Liabilities and Stockholders' Equity Current liabilities: Current portion of long-term debt $ 87 $ -- $ -- $ 87 Notes payable - bank -- -- 13,100 (e) 13,100 Accounts payable 10,081 618 10,699 Accrued salaries and benefits 6,029 -- -- 6,029 Accrued expenses 2,074 513 2,587 Billings on uncompleted contracts -- 4,993 4,993 Deferred revenue 5,506 3,094 8,600 Current portion of acquisition liability -- 212 212 Total liabilities of discontinued operations 390 -- -- 390 ------------- ------------- ------------- ------------- Total current liabilities 24,167 9,430 13,100 46,697 ------------- ------------- ------------- ------------- Acquisition liability -- 1,000 1,000 ------------- ------------- ------------- ------------- Accounts payable - less current portion -- 126 126 ------------- ------------- ------------- ------------- Long-term debt 2,027 -- 2,027 ------------- ------------- ------------- ------------- Stockholders' equity (deficit): Preferred stock, $.02 par value, 1,000,000 shares authorized Common stock, $.02 par value, 19,000,000 shares authorized; 10,080,182 shares issued; 8,669,495 outstanding (Pro forma PAR; 10,288,835 issued; 8,878,148 outstanding 202 -- 4 (f) 206 Additional paid-in capital 30,309 462 1,434 (f)(g) 32,205 Retained earnings (Accumulated deficit) 36,157 (3,205) 3,205 (g) 36,157 Accumulated other comprehensive income (loss) (235) 143 (143) (h) (235) Treasury stock, at cost, 1,410,687 shares (7,053) -- -- (7,053) ------------- ------------- ------------- ------------- Total stockholders' equity (deficit) 59,380 (2,600) 4,500 61,280 ------------- ------------- ------------- ------------- $ 85,574 $ 7,956 $ 17,600 $ 111,130 ============= ============= ============= =============
See notes to unaudited pro forma Consolidated Financial Statements.
PAR Technology Corporation UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the nine months ended September 30, 2004 (in thousands except per share amounts) Acquisition Pro forma PAR Technology Springer-Miller Pro forma PAR Technology Corporation Systems, Inc. Adjustments Corporation ------------------------------------------------------------------------ Net revenues: Product $ 54,212 $ 4,256 $ $ 58,468 Service 32,490 7,946 40,436 Contract 36,756 0 36,756 ----------- ----------- ----------- ------------- 123,458 12,202 135,660 ----------- ----------- ----------- ------------- Costs of sales: Product 36,413 693 37,106 Service 28,079 3,798 31,877 Contract 34,245 0 34,245 ----------- ----------- ----------- ------------- 98,737 4,491 103,228 ----------- ----------- ----------- ------------- Gross margin 24,721 7,711 32,432 ----------- ----------- ----------- ------------- Operating expenses: Selling, general and administrative 15,143 5,182 20,325 Research and development 3,914 1,843 5,757 Amortization of identifiable intangible assets -- -- 1,007 (l) 1,007 ----------- ----------- ---------- ------------- 19,057 7,025 1,007 27,089 ----------- ----------- ---------- ------------- Operating income 5,664 686 (1,007) 5,343 Other income, net 588 232 -- 820 Interest expense (146) (2) (378) (m) (526) ----------- ----------- ---------- ------------- Income (loss) from continuing operations before provision for income taxes 6,106 916 (1,385) 5,637 (Provision) benefit for income taxes (2,324) -- 227 (n) (2,097) ----------- ----------- ----------- ------------- Net income (loss) $ 3,782 $ 916 $ (1,158) $ 3,540 =========== =========== =========== =============
PAR Technology Corporation UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME For the nine months ended September 30, 2004 (in thousands except per share amounts) Acquisition Pro forma PAR Technology Springer-Miller Pro forma PAR Technology Corporation Systems, Inc. Adjustments Corporation ----------------------------------------------------------------------- Earnings per share: Basic: $ 0.44 $ -- $ -- $ .40 ======== ======== Diluted: $ 0.41 $ -- $ -- $ .38 ======== ======== Weighted average shares outstanding Basic 8,625 209 (f) 8,834 ========= ========= ========= ========= Diluted 9,159 209 (f) 9,368 ========= ========= ========= =========
See notes to unaudited pro forma Consolidated Financial Statements Notes to unaudited pro forma Consolidated Financial Statements 1. Purchse Price Allocation The total purchase price discussed above is allocated to the tangible and identifiable intangible assets acquired and liabilities assumed by the Company based on their estimated fair values as of the closing date of the acquisition. The following table presents the preliminary estimated fair value of the assets acquired and liabilities assumed: (in thousands) Cash and cash equivalents .................... $ 3,227 Accounts receivable, net ..................... 1,761 Prepaid and other current assets ............. 528 Property and equipment, net .................. 861 Accounts payable ............................. (618) Accrued expenses and other current liabilities (725) Deferred revenues ............................ (8,087) Long-term liabilities ........................ (1,126) -------- Net liabilities assumed ...................... (4,179) Identifiable intangible assets acquired Software .............................. 3,500 Customer relationships ................ 2,800 Trademark and trade names ............. 2,100 Others ................................ 300 Goodwill ..................................... 13,679 -------- Total estimated purchase price ............... $ 18,200 ======== The identifiable intangible assets acquired and their estimated useful lives (based on preliminary third party valuation) are as follows: Estimated (in thousands) Fair Value Useful Life -------------- ---------- ----------- Software $ 3,500 5 Years Customer relationships 2,800 5 Years Trademarks and trade names 2,100 Indefinite Others 300 3 - 4 Years ------------- $ 8,700 ============= 2. Pro forma assumptions The accompanying unaudited pro forma consolidated balance sheet at September 30, 2004 and the unaudited pro forma consolidated statements of income for the nine months ended September 30, 2004 and the year ended December 31, 2003 give effect to the acquisition referred to above. The pro forma consolidated statements of income assume the acquisition took place on January 1, 2003. The pro forma consolidated balance sheet at September 30, 2004 assumes the acquisition took place on September 30, 2004. The pro forma consolidated balance sheet and statements of income are presented for illustrative purposes only and do not necessarily reflect the results of operations that would have occurred had the acquisition actually occurred during the periods presented. The accompanying unaudited pro forma consolidated balance sheet and statements of income are subject to a number of estimates, assumptions and uncertainties, and do not purport to be indicative of actual results had the acquisition taken place on the date indicated, nor do these statements of income purport to be indicative of the results of operations that may be achieved in the future. The unaudited pro forma consolidated balance sheet at September 30, 2004 and the unaudited pro forma consolidated statements of income for the nine months ended September 30, 2004 and the year ended December 31, 2003 have been adjusted as discussed in the notes below: a) Reflects the cash portion of the purchase price held by Springer-Miller and its subsidiaries at the closing. b) To eliminate the note receivable which is not included in the purchase agreement. c) To eliminate certain specifically identified property and equipment which are not included in the purchase agreement. d) To record the identifiable intangibles and goodwill resulting from the acquisition as detailed in note 1. e) To record the debt incurred in connection with the acquisition. f) To record the 208,653 shares of PAR Technology Corp. common stock issued in connection with the acquisition. The number of shares issued was determined based on a formula in the purchase agreement. For purposes of recording the acquisition, these shares were valued based upon the average value of the Company's common stock based on the average closing share price for the period of 2 days preceding through the 2 days following the announcement of the acquisition. g) To eliminate historical Springer-Miller additional paid in capital and accumulated deficit. h) To eliminate historical Springer-Miller accumulated other comprehensive income. i) To record pro forma amortization of the identifiable intangible assets with finite lives acquired based on periods indicated in note 1 for the year ended December 31, 2003. j) To record pro forma interest expense on debt incurred for the year ended December 31, 2003. Interest expense assumes the entire amount of debt incurred of $13.1 million was outstanding for all of 2003 at an average annual borrowing rate of 4.1%. k) To record pro forma tax benefit using statutory tax rates assuming results of Springer Miller (formerly an S-Corp) combined with PAR Technology Corp. and after giving effect to the pro forma adjustments. l) To record pro forma amortization for identifiable intangible assets with finite lives acquired based on periods indicated in note 1 for the nine months ended September 30, 2004. m) To record pro forma interest expense on debt incurred for the nine months ended September 30, 2004. Interest expense assumes the entire amount of debt incurred of $13.1 million was outstanding for the first 6 months of 2004 at an average borrowing rate for that period of 3.9%, reduced to $11.6 million (from available cash flow for 2004) for the three months ended September 30, 2004 at an average borrowing rate for that period of 4.3%. n) To record pro forma tax provision using statutory tax rates assuming results of Springer Miller (formerly an S-Corp) combined with PAR Technology Corp. and after giving effect to the pro forma adjustments. -----END PRIVACY-ENHANCED MESSAGE-----