0000914317-95-000065.txt : 19950818 0000914317-95-000065.hdr.sgml : 19950818 ACCESSION NUMBER: 0000914317-95-000065 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950801 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: PAR TECHNOLOGY CORP CENTRAL INDEX KEY: 0000708821 STANDARD INDUSTRIAL CLASSIFICATION: 3578 IRS NUMBER: 161434688 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09720 FILM NUMBER: 95558026 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 June 30, 1995. 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 July 21, 1995 - 7,686,700 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 and Six Months Ended June 30, 1995 and 1994 - Consolidated Balance Sheet at June 30, 1995 and December 31, 1994 - Consolidated Statement of Cash Flows for the Six Months Ended June 30, 1995 and 1994 - 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 For the six months ended June 30, ended June 30, ---------------------- ----------------------- 1995 1994 1995 1994 ---------------------- ----------------------- Revenues: Net product sales ................... $ 11,884 $ 12,959 $ 24,226 $ 23,681 Service revenues .................... 5,889 5,205 11,496 10,012 Contract revenues ................... 6,593 4,959 12,678 10,200 -------- -------- -------- -------- Total revenues ................... 24,366 23,123 48,400 43,893 -------- -------- -------- -------- Costs and expenses: Costs of products sold .............. 6,782 8,485 14,445 15,175 Costs of service .................... 4,856 4,241 9,306 8,387 Costs of contracts .................. 6,234 4,730 12,004 9,662 Selling, general and administrative . 4,263 3,651 8,309 7,130 Research and development ............ 1,302 1,227 2,635 2,348 -------- -------- -------- -------- Total costs and expenses ......... 23,437 22,334 46,699 42,702 -------- -------- -------- -------- Income from operations ................. 929 789 1,701 1,191 Other income, net ...................... 119 21 (14) 11 Interest expense ....................... -- (5) -- (25) -------- -------- -------- -------- Income before provision for income taxes 1,048 805 1,687 1,177 Provision for income taxes ............. 412 337 661 482 -------- -------- -------- -------- Net income ............................. $ 636 $ 468 $ 1,026 $ 695 ======== ======== ======== ======== Earnings per common share .............. $ .08 $ .06 $ .13 $ .09 ======== ======== ======== ======== Weighted average number of common shares outstanding .................. 8,110 7,994 8,108 8,009 ======== ======== ======== ========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In Thousands Except Share Amounts)
June 30, 1995 December 31, (Unaudited) 1994 ----------- ----------- Assets Current Assets: Cash ............................................ $ 3,664 $ 2,912 Accounts receivable-net ......................... 27,797 28,103 Inventories ..................................... 17,987 16,467 Deferred income taxes ........................... 1,147 1,034 Other current assets ............................ 1,282 1,460 --------- --------- Total current assets ........................ 51,877 49,976 Property, plant and equipment - net ................ 7,774 7,716 Other assets ....................................... 2,485 2,950 --------- --------- $ 62,136 $ 60,642 ========= ========= Liabilities and Shareholders' Equity Current Liabilities: Accounts payable ................................ $ 3,228 $ 3,632 Accrued salaries and benefits ................... 3,813 3,874 Accrued expenses ................................ 1,414 1,237 Deferred maintenance revenue .................... 2,652 2,010 Income taxes payable ............................ 699 308 --------- --------- Total current liabilities ................... 11,806 11,061 --------- --------- Deferred income taxes .............................. 874 936 --------- --------- Shareholders' equity: Common stock, $.02 par value, 12,000,000 shares authorized, 9,084,484 and 9,030,787 shares issued and outstanding ................. 182 181 Preferred stock, $.02 par value, 250,000 shares authorized ...................................... -- -- Capital in excess of par value ..................... 13,387 13,268 Retained earnings ............................... 38,100 37,074 Cumulative translation adjustment ............... (117) (181) Treasury stock, at cost, 1,412,416 and 1,374,467 shares .............................. (2,096) (1,697) --------- --------- Total shareholders' equity .................... 49,456 48,645 --------- --------- $ 62,136 $ 60,642 ========= =========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (In Thousands) (UNAUDITED)
For the six months ended June 30, ----------------------- 1995 1994 ------- ------- Cash flows from operating activities: Net income ......................................... $ 1,026 $ 695 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................... 1,221 1,421 Translation adjustments .......................... 64 253 Increase (decrease) from changes in: Accounts receivable-net ........................ 306 4,482 Inventories .................................... (1,520) (1,441) Other current assets ........................... 178 (225) Other assets ................................... 264 30 Accounts payable ............................... (404) (594) Accrued salaries and benefits .................. (61) 19 Accrued expenses ............................... 177 326 Deferred maintenance revenue ................... 642 405 Income taxes payable ........................... 391 497 Deferred income taxes .......................... (175) (356) ------- ------- Net cash provided by operating activities ..... 2,109 5,512 ------- ------- Cash flows from investing activities: Capital expenditures ............................. (798) (623) Capitalization of software costs ................. (280) (281) ------- ------- Net cash used by investing activities ......... (1,078) (904) ------- ------- Cash flows from financing activities: Net payments under line-of-credit agreements ..... -- (4,087) Proceeds from the exercise of stock options ...... 120 128 Acquisition of treasury stock .................... (399) (22) ------- ------- Net cash used by financing activities ........ (279) (3,981) ------- ------- Net increase in cash and cash equivalents ......... 752 627 ------- ------- Cash and cash equivalents at beginning of year .... 2,912 907 ------- ------- Cash and cash equivalents at end of period ........ $ 3,664 $ 1,534 ======= ======= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest ......................................... $ 11 $ 27 Income taxes paid, net of refunds ................ 437 177
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. The statements for the three and six months ended June 30, 1995 and 1994 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 consolidated financial statements for the year ending December 31, 1995 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 and six months ended June 30, 1995 are not necessarily indicative of the results of operations to be expected for the year ending December 31, 1995. 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, 1994 and 1993 included in the Company's December 31, 1994 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, maintenance, and service of commercial systems. The components of inventory consist of the following:
(In Thousands) ------------ June 30, December 31, 1995 1994 ------- ------------ Finished Goods ......................... $ 5,626 $ 3,891 Work in process ........................ 1,670 1,697 Component parts ........................ 5,164 5,411 Service parts .......................... 5,527 5,468 ------- ------- $17,987 $16,467 ======= =======
At June 30, 1995 and December 31, 1994, the Company had recorded reserves for obsolete inventory of $2,812,000 and $2,860,000, respectively. 3. Beginning in the first quarter of 1995, certain revenues and related costs relating to Systems Integration activity which previously were reflected as service revenues and costs have been reclassified to product sales and costs. Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS QUARTER ENDED JUNE 30, 1995 COMPARED WITH QUARTER ENDED JUNE 30, 1994 Results of Operations PAR Technology Corporation reported net income of $636,000, and earnings per share of $.08, on revenues of $24.4 million for the quarter ended June 30, 1995. This compares to net income of $468,000, and earnings per share of $.06 on revenues of $23.1 million for the same quarter of 1994. Net product sales of the Commercial segment decreased 8.3% to $11.9 million in 1995 versus $13.0 million in 1994. This decrease was primarily due to lower sales to Kentucky Fried Chicken International, because of a greater number of new store openings and replacement orders in the second quarter of 1994. The Company continues to fulfill the requirements under its sales contract with Taco Bell. However, these requirements were slightly less in the second quarter of 1995 when compared to 1994. Partially offsetting this decrease was increased sales to McDonald's, especially in international markets where this customer continues to expand. The Company was also successful in selling to other international restaurant chains in the second quarter of 1995. Finally, due to a new $1.3 million contract with Chic-Fil-A restaurants in March 1995, the Company increased its sales to this chain in the second quarter of 1995. This contract will continue through the remainder of 1995. Customer service revenues of the Commercial segment increased 13.1% to $5.9 million in the second quarter of 1995 compared to $5.2 million for the second quarter of 1994. This increase was due to growth in service contract revenue as the Company's site base expands in both domestic and international markets. Contract revenues of the Government segment were $6.6 million in 1995, an increase of 33% from $5 million reported in 1994. The Company's site maintenance and testing activities and its software development business both contributed to this increase due to growth in direct labor charged to contracts and, in particular, to the timing of certain non-recurring material buys required under existing contracts. Costs of products sold for the Commercial segment were 57.1% of net product sales in the second quarter of 1995, compared to 65.5% for the second quarter of 1994. This improved cost ratio was due to product mix during the quarter and certain customer discounts that were earned in 1994 that did not recur in the second quarter of 1995. Costs of service of the Commercial segment were 82.5% of service revenues for the three months ended June 1995 versus 81.5% for the same three months of 1994. The minor decrease in margin in 1995 was due to slightly higher material usage compared to 1994. Costs of contracts of the Government segment were 94.6% in 1995 versus 95.4% a year ago. This decreased cost ratio is due to improved margins on certain contracts and the Company's ability to control overhead spending. Selling, general and administrative expenses were $4.3 million in 1995, an increase of 16.8% from the $3.7 million reported in 1994. This is primarily due to an increased sales force as the Company is expanding its major account and dealer efforts. Research and development expenses of the Commercial segment were $1.3 million in 1995 compared to $1.2 million in the same quarter of 1994, an increase of 6.1%. The Company has maintained a constant level of investment in its POS, Data Collection and Vision products. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1995 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1994 PAR Technology Corporation reported a net income of $1.0 million, or earnings per share of $.13, on revenues of $48.4 million for the six months ended June 30, 1995. This compares to net income of $695,000, or earnings per share of $.09 on revenues of $43.9 million for the same six-month period of 1994. Net product sales of the Commercial segment increased 2.3% to $24.2 million in 1995 versus $23.7 million in 1994. This increase was the result of POS sales to Taco Bell under its existing contract. This increase was partially offset by a decline in POS sales to Kentucky Fried Chicken International and Systems Integration sales relating to the Company's Industrial Transaction Processing business (ITPS). During the second quarter of 1995, the Company's ITPS business won several new contracts and revenue from this business is expected to increase in the second half of the year. Customer service revenues of the Commercial segment increased 14.8 % to $11.5 million the first six months of 1995 compared to $10 million for the same period of 1994. This increase was due to new service contracts as the Company's customer base continues to expand. Certain product enhancement programs with a major customer in 1995 also contributed to this increase. Contract revenues of the Government segment were $12.7 million in 1995, an increase of 24.3% from $10.2 million reported in 1994. Both the Company's site maintenance and software development businesses contributed to this increase. This was due, in part, to certain non-recurring material purchases on existing contracts. Costs of products sold for the Commercial segment were 59.6 % of net product sales in 1995 versus 64.1% in 1994. This improvement was the result of favorable product mix and certain discounts earned in 1994 that did not recur in 1995. Costs of service of the Commercial segment were 80.9 % for the six months ended June 1995 versus 83.8% for the same six months of 1994. This improvement is due to the product enhancement program described above and the improved absorption as revenue increases. Costs of contracts of the Government segment were 94.7% in 1995 and 1994. The Company continues to control costs, absorb overhead and maintain consistent margins from its government business. Selling, general and administrative expenses were $8.3 million in 1995, a 16.5% increase from the $7.1 million reported in 1994. The Company is expanding its POS, ITPS and Vision sales forces. The main thrust of the expansion in POS is in major accounts and dealer distribution channels. Research and development expenses of the Commercial segment were $2.6 million in 1995 compared to $2.3 million in 1994, an increase of 12.2%. The Company is continuing to invest in its POS products primarily in software development. Liquidity and Capital Resources Cash flows to meet the Company's requirements for operating, investing and financing activities for the six months ended June 30, 1995 and 1994 are reported in the Consolidated Statement of Cash Flows. Cash provided by operating activities was $2.1 million in the first half of 1995 compared to $5.5 million in 1994. This reduced cash flow is primarily due to the higher collection of accounts receivable in 1994 compared to the current period. This was the result of unusually high sales in the fourth quarter of 1993. Collections in 1995 were also impacted by the timing of payments on certain government contracts that will be delayed until the third quarter of 1995. Cash used in investing activities was $1.1 million in 1995 versus $900,000 in 1994. In 1995 capital improvements were primarily for upgrades to internal use software. In 1994 capital expenditures were primarily for improvements to the Company's headquarters facility. Cash used in financing activities was $279,000 in 1995 compared to $4 million in 1994. In 1995, the Company repurchased stock owned by an executive officer of the Corporation. In 1994, the Company was able to pay down its line-of-credit borrowings with the cash provided from operations. The Company has line-of-credit agreements with certain banks, which aggregate $17.2 million, all of which were unused at June 30, 1995. The Company believes that it has adequate financial resources to meet its future liquidity and capital requirements. 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 second quarter of 1995. 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: July 31, 1995 RONALD J. CASICANO --------------------------------------- Ronald J. Casciano Vice President, Chief Financial Officer and Treasurer EX-11 2 Exhibit Index Exhibit ------- 11 - Statements 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 June 30, ----------------------------------- 1995 1994 ----------------------------------- Primary and Fully Diluted Earnings Per Share: Weighted average shares of common stock outstanding: Balance - beginning of period 7,686 7,634 Weighted average shares issued 5 5 Acquisition of treasury stock (2) -- Assumed exercise of certain stock options 421 355 ----- ----- Weighted shares - end of period 8,110 7,994 ===== =====
Exhibit 11 COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK (In Thousands)
For the six months ended June 30, --------------------------------- 1995 1994 --------------------------------- Primary and Fully Diluted Earnings Per Share: Weighted average shares of common stock outstanding: Balance - beginning of period 7,656 7,605 Weighted average shares issued 25 28 Acquisition of treasury stock (1) (2) Assumed exercise of certain stock options 428 378 ----- ----- Weighted shares - end of period 8,108 8,009 ===== =====
EX-27 3
5 1,000 3-MOS DEC-31-1995 JUN-30-1995 3,664 0 27,797 0 17,987 51,877 7,774 0 62,136 11,806 0 182 0 0 49,274 62,136 11,884 24,366 6,782 17,872 1,302 0 0 1,048 412 636 0 0 0 636 .08 .08