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.
<PAGE>
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
<PAGE>
Item 1.
Financial Statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In Thousands Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months For the six months
ended June 30, ended June 30,
---------------------- -----------------------
1995 1994 1995 1994
---------------------- -----------------------
<S> <C> <C> <C> <C>
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
======== ======== ======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
June 30,
1995 December 31,
(Unaudited) 1994
----------- -----------
<S> <C> <C>
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
========= =========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
For the six months
ended June 30,
-----------------------
1995 1994
------- -------
<S> <C> <C>
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
</TABLE>
<PAGE>
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:
<TABLE>
<CAPTION>
(In Thousands)
------------
June 30, December 31,
1995 1994
------- ------------
<S> <C> <C>
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
======= =======
</TABLE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
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
Exhibit Index
Exhibit
-------
11 - Statements re computation
of per share earnings
<PAGE>
Exhibit 11
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
(In Thousands)
<TABLE>
<CAPTION>
For the three months ended June 30,
-----------------------------------
1995 1994
-----------------------------------
<S> <C> <C>
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
===== =====
</TABLE>
<PAGE>
Exhibit 11
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
(In Thousands)
<TABLE>
<CAPTION>
For the six months ended June 30,
---------------------------------
1995 1994
---------------------------------
<S> <C> <C>
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
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,664
<SECURITIES> 0
<RECEIVABLES> 27,797
<ALLOWANCES> 0
<INVENTORY> 17,987
<CURRENT-ASSETS> 51,877
<PP&E> 7,774
<DEPRECIATION> 0
<TOTAL-ASSETS> 62,136
<CURRENT-LIABILITIES> 11,806
<BONDS> 0
<COMMON> 182
0
0
<OTHER-SE> 49,274
<TOTAL-LIABILITY-AND-EQUITY> 62,136
<SALES> 11,884
<TOTAL-REVENUES> 24,366
<CGS> 6,782
<TOTAL-COSTS> 17,872
<OTHER-EXPENSES> 1,302
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,048
<INCOME-TAX> 412
<INCOME-CONTINUING> 636
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 636
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
