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, 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 pre-ceding 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
March 31, 1995 - 7,685,912 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 Months Ended March 31,
1995 and 1994
- Consolidated Balance Sheet at March 31, 1995 and December 31, 1994
- Consolidated Statement of Cash Flows for the Three Months Ended March
31, 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
ended March 31,
-----------------------
1995 1994
-------- --------
<S> <C> <C>
Revenues:
Net product sales ........................... $ 12,342 $ 10,722
Service revenues ............................ 5,607 4,807
Contract revenues ........................... 6,085 5,241
-------- --------
Total revenues .......................... 24,034 20,770
-------- --------
Costs and expenses:
Costs of products sold ...................... 7,663 6,690
Costs of service ............................ 4,450 4,146
Costs of contracts .......................... 5,770 4,932
Selling, general and administrative ......... 4,046 3,479
Research and development .................... 1,333 1,121
-------- --------
Total costs and expenses ................ 23,262 20,368
-------- --------
Income from operations ......................... 772 402
Other income, net .............................. (133) (10)
Interest expense ............................... -- (20)
-------- --------
Income before provision
for income taxes ............................. 639 372
Provision for income taxes ..................... 249 145
-------- --------
Net income ..................................... $ 390 $ 227
======== ========
Earnings per common share ...................... $ .05 $ .03
======== ========
Weighted average number of common
shares outstanding .......................... 8,073 8,022
======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(Unaudited) 1994
----------- ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ........................... $ 4,927 $ 2,912
Accounts receivable-net ............................. 25,091 28,103
Inventories ......................................... 17,617 16,467
Deferred income taxes ............................... 1,094 1,034
Other current assets ................................ 1,622 1,460
-------- --------
Total current assets ............................ 50,351 49,976
Property, plant and equipment - net .................... 7,695 7,716
Other assets ........................................... 2,519 2,950
-------- --------
$ 60,565 $ 60,642
======== ========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable .................................... $ 2,883 $ 3,632
Accrued salaries and benefits ....................... 3,471 3,874
Accrued expenses .................................... 1,258 1,237
Deferred maintenance revenue ........................ 2,269 2,010
Income taxes payable ................................ 834 308
-------- --------
Total current liabilities ....................... 10,715 11,061
-------- --------
Deferred income taxes .................................. 548 936
-------- --------
Shareholders' equity:
Common stock, $.02 par value, 12,000,000
shares authorized, 9,060,379 and 9,030,787 shares
issued and outstanding ............................ 181 181
Preferred stock, $.02 par value, 250,000 shares
authorized ........................................ -- --
Capital in excess of par value ...................... 13,335 13,268
Retained earnings ................................... 37,464 37,074
Cumulative translation adjustment ................... 19 (181)
Less 1,374,467 shares in treasury, at cost .......... (1,697) (1,697)
-------- --------
Total shareholders' equity ...................... 49,302 48,645
-------- --------
$ 60,565 $ 60,642
======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
For the
three months
ended March 31,
------------------
1995 1994
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income ............................................ $ 390 $ 227
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization ....................... 610 727
Translation adjustments ............................. 200 47
Increase (decrease) from changes in:
Accounts receivable-net ........................... 3,012 4,739
Inventories ....................................... (1,150) (1,481)
Other current assets .............................. (162) (133)
Other assets ...................................... 328 --
Accounts payable .................................. (749) 272
Accrued salaries and benefits ..................... (403) (418)
Accrued expenses .................................. 21 298
Deferred maintenance revenue ...................... 259 504
Income taxes payable .............................. 526 (34)
Deferred income taxes ............................. (448) --
------- -------
Net cash provided by operating activities ........ 2,434 4,748
------- -------
Cash flows from investing activities:
Capital expenditures ................................ (346) (443)
Capitalization of software costs .................... (140) (164)
------- -------
Net cash used by investing activities ............ (486) (607)
------- -------
Cash flows from financing activities:
Net payments under line-of-credit agreements ........ -- (4,087)
Proceeds from the exercise of stock options ......... 67 98
Acquisition of treasury stock ....................... -- (22)
------- -------
Net cash provided (used) by
financing activities .......................... 67 (4,011)
------- -------
Net increase in cash and cash equivalents ............ 2,015 130
------- -------
Cash and cash equivalents at beginning of year ....... 2,912 907
------- -------
Cash and cash equivalents at end of period ........... $ 4,927 $ 1,037
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ............................................ $ 9 $ 22
Income taxes paid, net of refunds ................... 131 125
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The statements for the three months ended March 31, 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 months ended March 31,
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 of Point-Of-Sale systems and other
commercial products. The components of inventory, net of related reserves,
consist of the following:
<TABLE>
<CAPTION>
(In Thousands)
March 31, December 31,
1995 1994
---------- ------------
<S> <C> <C>
Finished goods ......................... $ 5,660 $ 3,891
Work in process ........................ 1,468 1,697
Component parts ........................ 4,849 5,411
Service parts .......................... 5,640 5,468
------- -------
$17,617 $16,467
======= =======
</TABLE>
At March 31, 1995 and December 31, 1994, the Company had recorded reserves
for obsolete inventory of $2,624,000 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 MARCH 31, 1995
COMPARED WITH
QUARTER ENDED MARCH 31, 1994
PAR Technology Corporation reported a net income of $390,000, or
earnings per share of $.05, on revenues of $24 million for the quarter ended
March 31, 1995. This compares to a net income of $227,000, or earnings per share
of $.03 on revenues of $20.8 million for the same quarter of 1994.
Net product sales of the Commercial segment increased 15.1% to $12.3
million in 1995 versus $10.7 million in 1994. This increase was the result of
POS sales to Taco Bell as the Company continues to fulfill the requirements
under its sales contract with this customer. Sales to Taco Bell under this
contract will continue through September, 1995. Additionally, international
product sales increased nearly 14% as the Company's major customers continue to
expand abroad. The Company's international sales include customers in Europe,
South Africa, Australia and Asia.
Customer service revenues of the Commercial segment increased 16.6% to
$5.6 million in the first quarter of 1995 compared to $4.8 million for the first
quarter of 1994. This increase was due to product enhancement programs in 1995
and an overall increase in various service programs as the Company's customer
base expands.
Contract revenues of the Government segment were $6.1 million in 1995,
an increase of 16.1% from $5.2 million reported in 1994. The Company's site
mainte-nance and testing activities for the Department of Defense (DoD)
increased as it continues to expand its contract base. The Company's software
development business also increased in 1995 due to the award in late 1994 of a
$2.5 million contract with the National Institute for Environmental Renewal
(NIER). Under this contract, the Company is developing a prototype Environmental
Monitoring and Management System. This is the Company's first major award in an
application that is not directly related to the defense industry. The Company
anticipates future growth in this area.
Costs of products sold for the Commercial segment were 62.1% of net
product sales in the first quarter of 1995, virtually unchanged from the 62.4%
for the first quarter of 1994. The Company's manufacturing costs have remained
constant in 1995 versus 1994.
Costs of service of the Commercial segment were 79.4% for the three
months ended March 1995 versus 86.2% for the same three months of 1994. This
improvement is due to the higher POS service revenue earned during the quarter
and improved margins on various service offerings during the period.
Costs of contracts of the Government segment were 94.8% in 1995 versus
94.1% a year ago. The Company continues to control costs, absorb overhead and
generate consistent margins from the government business.
Selling, general and administrative expenses of the Commercial segment
were $4 million in 1995, a 16.3% increase from the $3.5 million reported in
1994. This increase is primarily due to the expansion of the Company's major
accounts marketing organization and its dealer distribution channel.
Research and development expenses of the Commercial segment increased
18.9% to $1.3 million in 1995 compared to $1.1 million in 1994. The Company has
increased its level of investment in its transaction processing products.
Liquidity and Capital Resources
Cash flows to meet the Company's requirements for operating, investing
and financing activities for the quarters ended March 31, 1995 and 1994 are
reported in the Consolidated Statement of Cash Flows.
Cash provided by operating activities was $2.4 million in the first
quarter of 1995 compared to $4.7 million in 1994. 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 POS customers. The decrease is also
attributed to the reduction in accounts payable due to timing of payments to
vendors.
Cash used in investing activities was $486,000 in 1995 compared to
$607,000 in 1994. In 1995, capital expenditures were primarily for upgrades to
internal use soft-ware. The Company's capital expenditures in 1994 were
primarily for improvements to the Company's headquarters facility.
Cash provided from financing activities was $67,000 in 1995 compared
to cash used of $4 million in 1994. The cash provided in 1995 was from the
exercise of stock options. In 1994, the Company used cash to pay down its
line-of-credit borrowings.
The Company has line-of-credit agreements with certain banks, which
aggregate $17.2 million, all of which were unused at March 31, 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 first 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: April 25, 1995
/s/ RONALD J. CASCIANO
-----------------------------
Ronald J. Casciano
Vice President, Treasurer and
Chief Accounting Officer
Exhibit Index
Exhibit
-------
11 - Statement 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 March 31,
----------------
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 ...................... 16 19
Acquisition of treasury stock ....................... -- (2)
Assumed exercise of certain stock options ........... 401 400
----- -----
Weighted shares - end of period ..................... 8,073 8,022
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 4,927
<SECURITIES> 0
<RECEIVABLES> 25,091
<ALLOWANCES> 0
<INVENTORY> 17,617
<CURRENT-ASSETS> 50,351
<PP&E> 7,695
<DEPRECIATION> 0
<TOTAL-ASSETS> 60,565
<CURRENT-LIABILITIES> 10,715
<BONDS> 0
<COMMON> 181
0
0
<OTHER-SE> 49,121
<TOTAL-LIABILITY-AND-EQUITY> 60,565
<SALES> 12,342
<TOTAL-REVENUES> 24,034
<CGS> 7,663
<TOTAL-COSTS> 17,883
<OTHER-EXPENSES> 1,333
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 639
<INCOME-TAX> 249
<INCOME-CONTINUING> 390
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 390
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
