-----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, SYFz7Cqa0yblDKftwX0wL26dKpZbQyw/imMXUO3dK0VlYETdNbv8sLzZvUkZNSDc CN0hMJE5ZCknIOJNanWa7w== 0000708821-98-000010.txt : 19980507 0000708821-98-000010.hdr.sgml : 19980507 ACCESSION NUMBER: 0000708821-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980506 SROS: NYSE 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: 98611811 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, 1998. 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 preceding 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, 1998 - 8,897,165 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, 1998 and 1997 - Consolidated Balance Sheet at March 31, 1998 and December 31, 1997 - Consolidated Statement of Cash Flows for the Three Months Ended March 31, 1998 and 1997 - 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, ------------------------------------ 1998 1997 ---- ---- Net revenues: Product ..................................... $ 7,961 $ 6,566 Service ..................................... 6,955 6,381 Contract .................................... 6,265 5,116 -------- -------- 21,181 18,063 -------- -------- Costs of sales: Product ..................................... 5,649 5,514 Service ..................................... 6,392 5,609 Contract .................................... 5,982 4,887 -------- -------- 18,023 16,010 -------- -------- Gross margin .......................... 3,158 2,053 -------- -------- Operating expenses: Selling, general and administrative ......... 4,569 4,871 Research and development .................... 1,338 1,092 Non-recurring charges (benefit) ............. (100) -- -------- -------- 5,807 5,963 -------- -------- Loss from operations ............................. (2,649) (3,910) Other income, net ................................ 145 141 -------- -------- Loss before provision for income taxes ........... (2,504) (3,769) Benefit for income taxes ......................... (877) (1,376) -------- -------- Net loss ......................................... $ (1,627) $ (2,393) ======== ======== Loss per common share ............................ $ (.18) $ (.27) ======== ======== Weighted average number of common shares outstanding ............................... 8,895 8,840 ======== ========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (In Thousands) (Unaudited)
For the Three Months Ended March 31, ------------------------------------ 1998 1997 ------- ------- Cash flows from operating activities: Net loss ............................................. $(1,627) $(2,393) Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ........ 206 (277) ------- ------- Comprehensive loss ................................... $(1,421) $(2,670) ======= ======= PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In Thousands Except Share Amounts) March 31, 1998 December 31, Assets Unaudited) 1997 Current Assets: Cash .......................................... $ 1,070 $ 3,977 Accounts receivable-net ....................... 26,617 29,938 Inventories ................................... 30,812 31,168 Income tax refund claims ...................... 867 214 Deferred income taxes ......................... 5,719 5,876 Other current assets .......................... 1,032 1,340 -------- -------- Total current assets ...................... 66,117 72,513 Property, plant and equipment - net ................ 7,051 7,013 Other assets ....................................... 4,382 3,678 -------- -------- $ 77,550 $ 83,204 ======== ======== Liabilities and Shareholders' Equity Current Liabilities: Notes payable ................................. $ -- $ 195 Accounts payable .............................. 4,027 8,664 Accrued salaries and benefits ................. 4,034 3,804 Accrued expenses .............................. 3,836 3,444 Deferred service revenue ...................... 2,885 3,024 -------- -------- Total current liabilities ................. 14,782 19,131 -------- -------- Deferred income taxes .............................. 672 656 -------- -------- Shareholders' Equity: Common stock, $.02 par value, 12,000,000 shares authorized; 9,499,671 and 9,466,771 shares issued 8,897,165 and 8,864,265 outstanding ......... 190 189 Preferred stock, $.02 par value, 250,000 shares authorized ................... -- -- Capital in excess of par value ................ 27,974 27,875 Retained earnings ............................. 37,333 38,960 Cumulative translation adjustment ............. (476) (682) Treasury stock, at cost, 602,506 ............ (2,925) (2,925) -------- -------- Total shareholders' equity ................ 62,096 63,417 -------- -------- Contingent liabilities $ 77,550 $ 83,204 ======== ========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands) (Unaudited)
For the three months ended March 31, ----------------------------------- 1998 1997 ---- ---- Cash flows from operating activities: Net loss .................................................. $ (1,627) $ (2,393) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ........................... 542 546 Provision for obsolete inventory ........................ 655 740 Translation adjustments ................................. 206 (277) Increase (decrease) from changes in: Accounts receivable-net ............................... 3,321 10,752 Inventories ........................................... (299) (3,669) Income tax refund claims .............................. (653) (1,060) Other current assets .................................. 308 (342) Other assets .......................................... (596) (359) Accounts payable ...................................... (4,637) (1,268) Accrued salaries and benefits ......................... 230 283 Accrued expenses ...................................... 392 (671) Deferred service revenue .............................. (139) 454 Deferred income taxes ................................. 173 (106) -------- -------- Net cash provided (used) by operating activities ..... (2,124) 2,630 -------- -------- Cash flows from investing activities: Capital expenditures .................................... (427) (333) Capitalization of software costs ........................ (261) (344) -------- -------- Net cash used by investing activities ................ (688) (677) -------- -------- Cash flows from financing activities: Net borrowings (payments) under line-of-credit agreements (195) 10 Proceeds from the exercise of stock options ............. 100 82 Acquisition of treasury stock ........................... -- (163) -------- -------- Net cash used by financing activities ............... (95) (71) -------- -------- Net increase (decrease) in cash and cash equivalents ..... (2,907) 1,882 Cash and cash equivalents at beginning of year ........... 3,977 8,391 -------- -------- Cash and cash equivalents at end of period ............... $ 1,070 $ 10,273 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest ................................................ $ 2 $ -- Income taxes paid, net of refunds ....................... (393) (202)
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. The statements for the three months ended March 31, 1998 and 1997 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 consoli-dated financial statements for the year ending December 31, 1998 are subject to adjustment at the end of the year when they will be audited by independent accountants. The results of operations for the three months ended March 31, 1998 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 1998. 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, 1997 and 1996 included in the Company's December 31, 1997 Annual Report to the Securities and Exchange Commission on Form 10-K. Earnings per share are based on the weighted average number of shares outstanding plus common stock equivalents under the Company's stock option plans. 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, 1998 1997 ----------- ------------ Finished goods $ 7,238 $ 8,635 Work in process 4,136 4,184 Component parts 10,389 9,883 Service parts 9,049 8,466 ---------- ---------- $ 30,812 $ 31,168 ========== ==========
At March 31, 1998 and December 31, 1997, the Company had recorded reserves for obsolete inventory of $3,300,000 and $3,800,000, respectively. Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 1998 COMPARED WITH QUARTER ENDED MARCH 31, 1997 The Company reported a net loss of $1.6 million or a loss per share of $.18 for the first quarter of 1998. Revenues for the quarter were $21.2 million. These results compare to a net loss of $2.4 million or a loss per share of $.27 and revenues of $18.1 million for the first quarter of 1997. Product revenues were $8.0 million in the first quarter of 1998 an increase of 21% from the $6.6 million recorded in the first quarter of 1997. The increase was primarily due to higher sales to McDonald's as the Company's new POS 4 hardware products were recently approved by this major customer. Higher sales to Taco Bell also contributed to this increase. Customer service revenues were $7.0 million in the first quarter of 1998, an increase of 9% from the $6.4 million in the first quarter of 1997. In 1998, the Company increased its number of worldwide field service and telephone help desk contracts as its customer base expands. The Company also increased its integration work requested by customers. Contract revenues were $6.3 million in 1998, an increase of 22% when compared to the $5.1 million recorded in the same period in 1997. The Company increased the level of integration and software development activity across several contracts. Additionally, the Company expanded its engineering service efforts in airfield management. Product margins were 29% for the first quarter of 1998 compared to 16% for the same quarter of 1997. The product margins in 1997 were depressed due to lower than normal sales volume. Additionally, the Company experienced improved margins on its international business as its customers are transitioning to the Company's new products. Customer service margins were 8% in 1998 compared to 12% in 1997. The decline in margin is primarily due to an increase in personnel as the Company is upgrading its integration and service capabilities. This investment will continue throughout the remainder of the year. Contract margins were 4.5% in 1998 virtually unchanged from a year ago. Margins on the Company's government contract business typically run between 5% and 6%. A slightly higher mix of low margin material and subcontract components was the main reason for the lower than normal margins. Selling, general and administrative expenses were $4.6 million in 1998 versus $4.9 million in 1997, a decrease of 6%. The decline is primarily due to the Company's decision in 1997 to reduce its investment in its Corneal Topography (CTS) business. Research and development expenses were $1.3 million in 1998, an increase of 23% from the $1.1 million in 1997. The Company is actively increasing its investment in its POS business in 1998. Partially offsetting the increase was the reduction in the CTS business discussed above. Research and development costs attributable to government contracts are included in cost of contract revenues. In the first quarter of 1998, the Company recorded a non-recurring benefit of $100,000 due to payments received from Phoenix Systems and Technologies pertaining to amounts owed the Company which were previously reserved. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED MARCH 31, 1998 COMPARED WITH QUARTER ENDED MARCH 31, 1997 Liquidity and Capital Resources The Company's primary source of liquidity has been from operations. Cash used by operating activities was $2.1 million in the first quarter of 1998, compared to cash provided of $2.6 million in 1997. The Company historically has experienced significant collections of accounts receivable in its first quarter due to the volume of sales generated in the preceding quarter. This is primarily due to the seasonal demands of the Company's restaurant customers. However, sales in the fourth quarter of 1997 were lower than the fourth quarter of 1996. As a result, accounts receivable collections were not as great in the first quarter of 1998 when compared to the first quarter of 1997. Additionally, in the first quarter of 1998, the Company's accounts payable disbursements were greater than a year ago primarily as a result of inventory growth in 1997. Cash used in investing activities was $688,000 for the first quarter of 1998 compared to $677,000 in 1997. In 1998, capital expenditures were primarily for upgrades to the Company's customer service center and for manufacturing equipment. In 1997, capital expenditures were primarily for upgrades to the manufacturing facility. Cash used by financing activities was $95,000 for the first quarter of 1998 compared to cash used of $71,000 in 1997. In 1998, the Company repaid its line-of-credit indebtedness of $195,000 and received $100,000 from the exercise of employee stock options. In 1997, the Company paid $163,000 to repurchase some of its stock and received $82,000 from the exercise of employee stock options. The Company has line-of-credit agreements, which aggregate $34.4 million with certain banks, of which were unused at March 31, 1998. The Company believes that it has adequate financial resources to meet its future liquidity and capital requirements. 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 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 1998. 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 6, 1998 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, -------------------- 1998 1997 ---- ---- Primary and Fully Diluted Earnings Per Share: Weighted average shares of common stock outstanding: Balance - beginning of period ...................... 8,864 8,826 Weighted average shares issued ..................... 31 14 ----- ----- Weighted shares - end of period .................... 8,895 8,840 ===== =====
EX-27 3
5 1,000 3-MOS DEC-31-1998 MAR-31-1998 1,070 0 26,617 0 30,812 66,117 7,051 0 77,550 14,782 0 0 0 190 61,906 77,550 7,961 21,181 5,649 18,023 1,238 0 0 (2,504) (877) (1,627) 0 0 0 (1,627) (.18) (.18)
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