EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1
 
FOR RELEASE:
 
CONTACT:
New Hartford, NY, March 13, 2017
Christopher R. Byrnes (315) 738-0600 ext. 6226
cbyrnes@partech.com,  www.partech.com
 
PAR TECHNOLOGY CORPORATION ANNOUNCES

2016 FOURTH QUARTER & FULL YEAR 2016 RESULTS

New Hartford, NY- March 13, 2017 -- PAR Technology Corporation (NYSE: PAR) today announced its results of continuing operations for its fourth quarter and full year ended December 31, 2016.
 
Summary of Fiscal 2016 Fourth Quarter and Year End Financial Results
 
Fourth Quarter 2016
 
·
Revenues were reported at $60.2 million in the fourth quarter of fiscal 2016, compared to $56.8 million in the same period in 2015, a 6.0% increase.
·
GAAP net income in the fourth quarter of fiscal 2016 was $1.9 million, or $0.12 per diluted share, an increase from the GAAP net income of $1.3 million, or $0.08 earnings per diluted share reported in the same period in 2015.
·
Non-GAAP net income in the fourth quarter of fiscal 2016 was $2.1 million, or $0.13 per diluted share, compared to non-GAAP net income of $2.0 million, or $0.13 earnings per diluted share, in the same period in 2015.
 
Full Year 2016

·
Revenues were reported at $229.7 million in fiscal 2016, a slight increase from the $229.0 million in revenues reported for fiscal year 2015.
·
GAAP net income for fiscal 2016 was $2.5 million or $0.16 earnings per diluted share, compared to GAAP net income of $4.0 million, or $0.26 earnings per diluted share, in the same period in 2015.
·
Non-GAAP net income in fiscal 2016 was $5.3 million, or $0.33 per diluted share, compared to non-GAAP net income of $6.1 million or $0.39 earnings per diluted share, in the same period in 2015.

A reconciliation and description of non-GAAP financial measures to their comparable GAAP financial measures are included in the tables at the end of this press release.
 
“The fourth quarter was a strong close for 2016, with top line growth of 6.0% year-over-year.  Although offset by reduced Government contract revenues, our fourth quarter performance was driven by higher demand for PAR hardware solutions from Tier 1 customers in our Restaurant and Retail segment and expanded deployments of our Brink cloud software solution.  I am pleased to report we ended 2016 by achieving our target of deployed Brink sites,” commented Karen E. Sammon, PAR Technology Corporation President and Chief Executive Officer.  “Our financial results reflect the progress we have made executing to our strategy and focusing on operational efficiency within our businesses.  Our ability to grow revenues highlights the strength of our brand and the capabilities of our product and service offerings.”
 
Sammon continued, “With our focus on delivering innovation and customer success, and with operational adjustments, we continue to make necessary changes and drive execution that will position us to capitalize on the long-term growth opportunities for our Company.”

Internal Investigation; Update.

As previously disclosed, the Company is conducting an internal investigation into import/export and sales documentation activities at our China and Singapore offices discovered by management during the third quarter of 2016. The investigation, which is not complete, is being conducted under the oversight of our Audit Committee, with the assistance of outside counsel, and is focused on compliance with certain of our policies, including our Code of Business Conduct and Ethics, and the U.S. Foreign Corrupt Practices Act, or FCPA, and other applicable laws.  The Company has voluntarily notified the U.S. Securities and Exchange Commission (“SEC”) and the U.S. Department of Justice (“DOJ”) of these matters, and intends to fully cooperate with both agencies. During the three months ended December 31, 2016, the Company recorded $1,323,000 of expenses relating to the investigation, including expenses of outside legal counsel and forensic accountants. While the investigation is substantially complete, the Company expects to incur additional expenses relating to its completion, as well as in connection with remedial measures being taken and to be taken by the Company to correct the material weaknesses identified in the Company’s internal control over financial reporting. We are presently unable to predict what, if any, actions the SEC, the DOJ, or other governmental agencies (including foreign governmental agencies) will take. The SEC, DOJ, and other governmental authorities have a broad range of civil and criminal sanctions including, injunctive relief, disgorgement, fines, penalties, modifications to our business practices, including the termination or modification of existing business relationships, the imposition of compliance programs and the retention of a monitor to oversee our future compliance. We cannot reasonably estimate the potential liability, if any, to the Company arising out of the China and Singapore matters.  However, the imposition of sanctions, fines or remedial measures could have a material adverse effect on the Company’s business, prospects, reputation, financial condition, liquidity, results of operations or cash flows

Conference Call.

There will be a conference call at 10:00 a.m. (Eastern) on March 13, 2017, during which the Company’s management will discuss the financial results for the fourth quarter of 2016.  To participate in the call, please call 866-868-9502, approximately 10 minutes in advance.  No passcode is required to participate in the live call or to listen to the replay version.  Individual & Institutional Investors will have the opportunity to listen to the conference call/event over the internet by visiting PAR’s website at www.partech.com.  Alternatively, listeners may access an archived version of the presentation call after 1:00 p.m. on March 13, 2017 through March 20, 2017 by dialing 855-859-2056 and using conference ID 82600661.

About PAR Technology Corporation.
 
PAR Technology Corporation's stock is traded on the New York Stock Exchange under the symbol “PAR”. PAR’s Restaurant and Retail segment has been a leading provider of restaurant and retail technology for more than 35 years. PAR offers technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. Products from PAR also can be found in retailers, cinemas, cruise lines, stadiums, and food service companies. PAR’s Government Business is a leader in providing computer-based system design, engineering and technical services to the Department of Defense and various federal agencies. For more information visit http://www.partech.com or connect with us on Facebook and Twitter.

Forward-Looking Statements.

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements appear throughout this press release, including express or implied forward-looking statements relating to our expectations regarding anticipated financial performance, customer and product opportunities, and assumptions as to future events. Forward-looking statements are subject to a variety of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those contemplated in these statements. Factors that could cause actual results to differ materially, include delays in new product development and/or product introduction, changes in customer product and service demands, concentration of revenues from a small group of customers, product and service competition, and the other factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required under applicable securities law.

###
 
PAR TECHNOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
 
   
(Unaudited)
  
 
Assets
  
December 31,
2016
    
December 31,
2015
  
Current assets:
            
Cash and cash equivalents
  
$
9,055
    
$
8,024
  
Accounts receivable-net
    
30,705
      
29,530
  
Inventories-net
    
26,237
      
21,499
  
Note receivable
    
4,447
      
-
  
Income taxes receivable
    
261
      
-
  
Deferred income taxes
    
7,421
      
6,741
  
Other current assets
    
4,027
      
3,808
  
Assets of Discontinued operations
    
462
      
-
  
Total current assets
    
82,615
      
69,602
  
Property, plant and equipment - net
    
7,035
      
5,716
  
Note receivable
    
-
      
4,259
  
Deferred income taxes
    
9,650
      
11,038
  
Goodwill
    
11,051
      
11,051
  
Intangible assets - net
    
10,966
      
10,898
  
Other assets
    
3,785
      
3,687
  
Total Assets
  
$
125,102
    
$
116,251
  
Liabilities and Shareholders’ Equity
                
Current liabilities:
                
Current portion of long-term debt
  
$
187
    
$
2,103
  
Accounts payable
    
16,687
      
11,729
  
Accrued salaries and benefits
    
5,470
      
5,727
  
Accrued expenses
    
4,682
      
7,644
  
Customer deposits and deferred service revenue
    
19,814
      
10,819
  
Income taxes payable
    
-
      
279
  
Liabilities of discontinued operations
    
-
      
441
  
Total current liabilities
    
46,840
      
38,742
  
Long-term debt
    
379
      
566
  
Other long-term liabilities
    
7,712
      
8,883
  
Total liabilities
    
54,931
      
48,191
  
Commitments and contingencies
                
Shareholders’ Equity:
                
Preferred stock, $.02 par value, 1,000,000 shares authorized
    
-
      
-
  
Common stock, $.02 par value, 29,000,000 shares authorized; 17,479,454 and 17,352,838 shares issued; 15,771,345 and 15,644,729 outstanding at December 31, 2016 and December 31, 2015, respectively
    
350
      
347
  
Capital in excess of par value
    
46,203
      
45,753
  
Retained earnings
    
32,948
      
30,574
  
Accumulated other comprehensive loss
    
(3,494
)
    
(2,778
)
Treasury stock, at cost, 1,708,109 shares
    
(5,836
)
    
(5,836
)
Total shareholders’ equity
    
70,171
      
68,060
  
Total Liabilities and Shareholders’ Equity
  
$
125,102
    
$
116,251
  
 
PAR TECHNOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
   
For the three months ended December 31,
    
For the year ended December 31,
  
   
2016
    
2015
    
2016
    
2015
  
Net revenues:
                        
Product
  
$
30,986
    
$
24,316
    
$
100,271
    
$
94,397
  
Service
    
12,942
      
12,067
      
49,070
      
46,754
  
Contract
    
16,270
      
20,414
      
80,312
      
87,852
  
     
60,198
      
56,797
      
229,653
      
229,003
  
Costs of sales:
                                
Product
    
23,108
      
18,053
      
73,975
      
68,223
  
Service
    
9,528
      
8,210
      
35,647
      
33,875
  
Contract
    
14,828
      
18,790
      
73,830
      
81,848
  
     
47,464
      
45,053
      
183,453
      
183,946
  
Gross margin
    
12,734
      
11,744
      
46,200
      
45,057
  
Operating expenses:
                                
Selling, general and administrative
    
8,168
      
7,061
      
31,440
      
27,374
  
Research and development
    
3,347
      
2,325
      
11,581
      
10,067
  
Acquisition amortization
    
242
      
241
      
966
      
987
  
     
11,757
      
9,627
      
43,987
      
38,428
  
Operating income from continuing operations
    
977
      
2,117
      
2,213
      
6,629
  
Other income (expense), net
    
1,634
      
(742
)
    
1,316
      
(800
)
Interest Income (expense)
    
101
      
(56
)
    
121
      
(308
)
Income from continuing operations before provision for income taxes
    
2,712
      
1,319
      
3,650
      
5,521
  
Provision for income taxes
    
(841
)
    
(30
)
    
(1,147
)
    
(1,500
)
Income from continuing operations
    
1,871
      
1,289
      
2,503
      
4,021
  
Discontinued operations
                                
Loss on discontinued operations (net of tax)
    
(103
)
    
(407
)
    
(129
)
    
(4,912
)
Net Income (Loss)
  
$
1,768
    
$
882
    
$
2,374
    
$
(891
)
Basic Earnings per Share:
                                
Income from continuing operations
    
0.12
      
0.08
      
0.16
      
0.26
  
Loss from discontinued operations
    
(0.01
)
    
(0.03
)
    
(0.01
)
    
(0.32
)
Net Income (Loss)
  
$
0.11
    
$
0.06
    
$
0.15
    
$
(0.06
)
Diluted Earnings per Share:
                                
Income from continuing operations
    
0.12
      
0.08
      
0.16
      
0.26
  
Loss from discontinued operations
    
(0.01
)
    
(0.03
)
    
(0.01
)
    
(0.31
)
Net Income (Loss)
  
$
0.11
    
$
0.06
    
$
0.15
    
$
(0.06
)
Weighted average shares outstanding
                                
Basic
    
15,777
      
15,616
      
15,675
      
15,562
  
Diluted
    
15,818
      
15,732
      
15,738
      
15,666
  
 
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
(Unaudited)
 
   
For the three months ended December 31, 2016
    
For the three months ended December 31, 2015
  
   
Reported basis (GAAP)
    
Adjustments
    
Comparable basis (Non-GAAP)
    
Reported basis (GAAP)
    
Adjustments
    
Comparable basis (Non-GAAP)
  
                                     
Net revenues
  
$
60,198
      
-
      
60,198
    
$
56,797
      
-
      
56,797
  
Costs of sales
    
47,464
      
517
      
46,947
      
45,053
      
-
      
45,053
  
Gross Margin
    
12,734
      
517
      
13,251
      
11,744
      
-
      
11,744
  
                                                 
Operating Expenses
                                                
Selling, general and administrative
    
8,168
      
1,508
      
6,660
      
7,061
      
-
      
7,061
  
Research and development
    
3,347
       -      
3,347
      
2,325
       -      
2,325
  
Acquisition amortization
    
242
      
242
      
-
      
241
      
241
      
-
  
Total operating expenses
    
11,757
      
1,750
      
10,007
      
9,627
      
241
      
9,386
  
Operating income from continuing operations
    
977
      
2,267
      
3,244
      
2,117
      
241
      
2,358
  
Other income (expense), net
    
1,634
      
(1,871
)
    
(237
)
    
(742
)
    
776
      
34
  
Interest Income (expense), net
    
101
      
-
      
101
      
(56
)
    
26
      
(30
)
Income from continuing operations before provision for income taxes
    
2,712
      
396
      
3,108
      
1,319
      
1,043
      
2,362
  
Provision for income taxes
    
(841
)
    
(147
)
    
(988
)
    
(30
)
    
(291
)
    
(321
)
Income from continuing operations
  
$
1,871
    
$
249
    
$
2,120
    
$
1,289
    
$
752
    
$
2,041
  
Loss from discontinued operations, (net of tax)
  
$
(103
)
          
$
(103
)
  
$
(407
)
          
$
(407
)
Net income
  
$
1,768
            
$
2,017
    
$
882
            
$
1,634
  
Income per diluted share from continuing operations
  
$
0.12
            
$
0.13
    
$
0.08
            
$
0.13
  
Loss per diluted share from discontinuing operations
  
$
(0.01
)
          
$
(0.01
)
  
$
(0.03
)
          
$
(0.03
)
Income per diluted share
  
$
0.11
            
$
0.13
    
$
0.06
            
$
0.10
  
 
The Company reports its financial results in accordance with GAAP.  However, non-GAAP adjusted financial measures, as defined in the reconciliation table above, are provided because management uses these non-GAAP measures in evaluating the results of the continuing operations of the Company and believes this information provides investors supplemental insight into underlying business trends and operating results. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP. In addition, these non-GAAP measures should be read in conjunction with the Company’s financial statements prepared in accordance with GAAP.

The Company's results of operations are impacted by certain non-recurring charges, including severance charges from restructuring business operations, equity based compensation, acquisition related expenditures, and other non-recurring charges that may not be indicative of the Company’s financial performance. Management believes that adjusting its operating expenses, operating income, net earnings and diluted earnings per share to remove non-recurring charges provides a useful perspective with respect to our operating results and provides supplemental information to both management and investors by removing items that are difficult to predict and are often unanticipated.  PAR believes the adjustments provide a useful comparison on a year-over-year basis.
 
Included within selling, general and administrative expenses, as referenced above under “Internal Investigation; Update”, during the fourth quarter of 2016, the Company recorded $1,323,000 of expenses related to the Company’s internal investigation. In addition, $123,000 expenses related to the implementation of the new ERP system, and $72,000 of equity based compensation charges were recorded during the fourth quarter of 2016.  Included within costs of sales was $517,000 of accelerated amortization related to the Company’s discontinued development of a software module.  Lastly, the Company recognized amortization of acquired intangible assets of $242,000 related to the Company’s acquisition of Brink.  Offsetting these charges, the Company recorded an insurance recovery of $771,000, relating to the Company’s former chief financial officer’s unauthorized transfers of Company funds, and a $1,100,000 decrease to a contingent consideration liability related to the Brink acquisition.

During the fourth quarter of 2015, the Company recognized amortization of acquired intangible assets of $241,000 and accreted interest of $26,000 related to the acquisition of Brink.  Additionally, the Company recorded a $776,000 write-off related to the unauthorized transfer of Company funds. The unauthorized transfers occurred during the period between September 25, 2015 and November 6, 2015.   As of December 31, 2015, the Company was uncertain of the collectability relating to these funds and as a result, reduced its fair value to zero.
 
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
(Unaudited)
 
   
For the year ended December 31, 2016
    
For the year ended December 31, 2015
  
   
Reported basis (GAAP)
    
Adjustments
    
Comparable basis (Non-GAAP)
    
Reported basis (GAAP)
    
Adjustments
    
Comparable basis (Non-GAAP)
  
                                     
Net revenues
  
$
229,653
      
-
    
$
229,653
    
$
229,003
      
-
    
$
229,003
  
Costs of sales
    
183,452
      
517
      
182,935
      
182,864
      
151
      
182,713
  
Gross Margin
    
46,201
      
517
      
46,718
      
46,139
      
151
      
46,290
  
                                                 
Operating Expenses
                                                
Selling, general and administrative
    
31,440
      
4,678
      
26,762
      
28,276
      
1,120
      
27,156
  
Research and development
    
11,581
      
-
      
11,581
      
10,247
      
13
      
10,234
  
Acquisition amortization
    
966
      
966
      
-
      
987
      
987
      
-
  
Total operating expenses
    
43,987
      
5,644
      
38,343
      
39,510
      
2,120
      
37,390
  
Operating income from continuing operations
    
2,214
      
6,161
      
8,375
      
6,629
      
2,271
      
8,900
  
Other income (expense), net
    
1,316
      
(1,871
)
    
(555
)
    
(800
)
    
776
      
(24
)
Interest Income (expense), net
    
121
      
78
      
199
      
(308
)
    
103
      
(205
)
Income from continuing operations before provision for income taxes
    
3,651
      
4,368
      
8,019
      
5,521
      
3,150
      
8,671
  
Provision for income taxes
    
(1,147
)
    
(1,616
)
    
(2,763
)
    
(1,500
)
    
(1,071
)
    
(2,571
)
Income from continuing operations
  
$
2,504
    
$
2,752
    
$
5,256
    
$
4,021
    
$
2,079
    
$
6,100
  
Loss from discontinued operations, (net of tax)
  
$
(129
)
          
$
(129
)
  
$
(4,912
)
          
$
(4,912
)
Net income (Loss)
  
$
2,375
            
$
5,127
    
$
(891
)
          
$
1,188
  
Income per diluted share from continuing operations
  
$
0.16
            
$
0.33
    
$
0.26
            
$
0.39
  
Loss per diluted share from discontinuing operations
  
$
(0.01
)
          
$
(0.01
)
  
$
(0.32
)
          
$
(0.32
)
Income (loss) per diluted share
  
$
0.15
            
$
0.33
    
$
(0.06
)
          
$
0.08
  
 
During the year ended December 31, 2016, the Company recorded professional services charges of $2,789,000, of which $1,466,000 were for investigation costs related to the Company’s former chief financial officer’s unauthorized transfers of Company funds, and $1,323,000 were related to the Company’s internal investigation of conduct at its China and Singapore offices.  Additionally, the Company recorded charges of $789,000, as a write-off, related to the Company’s previous human capital management system, $631,000 related to the implementation of the new ERP system and $469,000 related to equity based compensation charges, included in selling, general and administrative.  Additionally, during fiscal 2016, the Company recorded $517,000 of accelerated amortization into to cost of service, which is related to the Company’s discontinued development of a software module. Lastly, the Company recognized amortization of acquired intangible assets of $966,000 related to the acquisition of Brink, and accreted interest of $78,000.  Offsetting these charges, the Company recorded an insurance recovery of $771,000 relating to the unauthorized transfers of Company funds by its former chief financial officer, and a $1,100,000 decrease to a contingent consideration liability related to the 2014 acquisition of Brink.
 
During the year ended December 31, 2015, the Company recorded severance and other related charges of $797,000, of which $151,000 is included in cost of sales, $13,000 is included in research and development, and $633,000 is included in selling, general and administrative.  Also included within selling, general and administrative, is equity based compensation charges of $487,000.  Lastly, the Company recognized amortization of acquired intangible assets of $987,000 related to the acquisition of Brink, and accreted interest of $103,000.  Additionally, the Company recorded a $776,000 write-off related to its former chief financial officer’s unauthorized transfer of Company funds. The unauthorized transfers occurred during the period between September 25, 2015 and November 6, 2015.   As of December 31, 2015, the Company was uncertain of the collectability relating to these funds and as a result, reduced its fair value to zero.