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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________ to __________
Commission File Number 1-9720
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PAR TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 16-1434688
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
PAR Technology Park
8383 Seneca Turnpike
New Hartford, New York 13413-4991
(Address of principal executive offices) (Zip Code)
(315) 738-0600
(Registrant's Telephone number, including area code)
<PAGE>
Securities registered pursuant to Section 12(g) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
- ---------------------------- ------------------------
Common Stock, $.02 par value New York Stock Exchange
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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 aggregate market value of the voting stock held by non-affiliates of
the registrant based on the average price as of March 15, 1996 - $33.6 million.
The number of shares outstanding of registrant's common stock, as of March
15, 1996 - 7,737,128 shares.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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<PAGE>
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PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
FORM 10-K
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Item Number
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PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
PART III
Item 10. Directors, Executive Officers and Other
Significant Employees of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners
and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
Signatures
<PAGE>
PAR TECHNOLOGY CORPORATION
PART I
Item 1: Business
PAR Technology Corporation ("PAR" or the "Company"), incorporated in
1968, designs, develops, manufactures, markets, installs, and services
microprocessor-based transaction processing systems for the restaurant and
industrial market-places, Corneal Topography systems for measuring the true
topography of the eye and vision inspection systems for the food-processing
industry (Commercial Segment). The Company is also engaged in the design and
implementation of advanced-technology computer software systems, for the
Department of Defense and other Government agencies (Government Segment). In
addition, the Government Segment provides specialized services to the
Government, including the operation and maintenance of Government-owned test
sites and the planning, execution, and evaluation of experiments involving new
or advanced radar systems, electronic countermeasures systems, and
communications systems.
Information concerning the Company's industry segments for the three
years ended December 31, 1995 is set forth in Note 11 to the Consolidated
Financial Statements included elsewhere herein.
The Company's principal executive offices are located at PAR Technology
Park, 8383 Seneca Turnpike, New Hartford, New York 13413-4991, telephone number
(315) 738-0600. Unless the context otherwise requires, the term "PAR" or
"Company" as used herein means PAR Technology Corporation and its wholly-owned
subsidiaries.
Commercial Segment
PAR, through its wholly-owned subsidiary PAR Microsystems Corporation
(PMC), designs, develops, manufactures, markets, installs, and provides systems
integration services for microprocessor-based transaction processing systems.
The Company's current products include Point-of-Sale (POS) hardware and
state-of-the-art software tailored for individual restaurant chains, and
Industrial Transaction Processing Systems (ITPS) for the Computer Integrated
Manufacturing (CIM) market-place. The Company's wholly-owned subsidiary, PAR
Vision Systems Corporation has developed a Corneal Topography System (CTS) which
maps the surface of the cornea of the human eye. Additionally, the Company has
developed and is marketing an automatic vision inspection system called Qscan(R)
for the food-processing industry. This system utilizes a specialized image
processing technique to detect contaminants in filled containers.
Products
PAR has evolved from a company that designs individual POS hardware
components and POS software applications to solve specific customer requirements
to one that designs broad-based, flexible POS system architectures that can be
rapidly adapted to satisfy a customer's ever-changing needs. This philosophy
results from the recognition that the management information requirements of the
restaurant industry are complex and rarely identical from one chain to the next.
<PAGE>
The POS systems that PAR provides consist of individual modules
designed as "stand-alone" members of a distributed processing network. These
modules are intended to provide various and specific functions and yet, because
they were designed as components of a standardized system architecture, work
together to gather, process, communicate, and share the tremendous volume of
data generated and needed by today's restaurant businesses. For example, POS
terminals are used by restaurant personnel for order-entry purposes. The
terminal computes the order total based on the items ordered by the customer,
processes any applicable coupons or discounts, calculates the tax, and displays
the amount of change due the customer. In the kitchen, the terminal displays the
menu items for use by restaurant personnel in the preparation and assembly of
the order. This information appears on the built-in display or, because the unit
is a member of a distributed processing network, appears on remote displays for
simultaneous use by multiple persons. Additionally, each operator key-stroke
occurring throughout the transaction is recorded and is available to other
processors in the system for cash, marketing, or inventory analyses. All three
uses occur automatically and simultaneously without operator intervention.
The POS components are located in the customer's store and may be
interconnected to remote sites such as regional or central offices. These
components include POS terminals, printers, video displays, employee
time/attendance recorders, personal computers and associated software.
Remote-site components consist of personal and midrange computers, modems,
printers, and associated business processing and network communications
software. The Company sells, rather than leases, virtually all components of its
systems.
Systems Integration is becoming more important to the Restaurant POS
business. Customers require expertise in systems architecture and systems
engineering to utilize the technology and PAR provides this capability in the
restaurant business.
PAR's ITPS business unit provides hardware, enabling and applications
software, and system integration services to the industrial marketplace. Systems
integration software and services, as well as application software, are provided
to end-users directly by PAR and through qualified distributors. Systems
integration products include installation and training services, as well as
custom modifications for specific customers and customer groups. In an on-going
program to provide multi-vendor system integration solutions to its customers,
PAR has entered several strategic alliances. PAR provides hardware and software
products to IBM for marketing to the industrial Computer Integrated
Manufacturing market, where they are used for data collection on the factory
floor. PAR also has on-going strategic partnership with Telxon through which
both Companies distribute a co-logoed PAR/Telxon hardware/software solution to
retail, wholesale distribution, transportation, and health-care markets. PAR
also has strategic alliances with Intermec Corp., a leading data collection
equipment supplier and Ernst & Young LLP, a leading international services firm.
<PAGE>
The Company's ITPS products include Transaction Processing System/2
(TPS/2) software enabler which provides generic client/server data collection.
With TPS/2's distributed processing environment, users can control all aspects
of data collection from a central location, including large, multi-site systems.
TPS/2 provides central and remote control of numerous types of devices across
many communication protocols. Data Collection devices include PAR manufactured
IBM fixed base terminals, Telxon and Intermec portable terminals and PC's.
TPS/2's open-system architecture also makes possible concurrent connectivity
with multiple host computers, including IBM, Hewlett-Packard, and DEC. While
TPS/2 can be used to create or integrate complex transaction-processing
environments, it offers simplified system use and operation. TPS/2 also offers
greater system speed than previous data collection systems.
TPS/2 provides a flexible and highly functional platform for on-line
transaction processing applications such as time and attendance, inventory
control, warehousing, job status, scheduling and quality control. Data can be
directly read from and written to host databases, as well as forwarded to
managers, who can respond quickly to production deviations based on real-time
information.
Another PAR data collection product is CIMport, a series of application
software products used with Telxon portable hand-held terminals to collect data
without fixed-wire attachment. With CIMport, radio-frequency (RF) and store and
forward portable terminals can be used in data collection environments that
previously did not support this capability. PAR also provides factory-floor
application software. CIMprint is a bar code document printing software package
that is ideal for demanding client/server environments. The product is used for
printing tags, labels, employee badges and other documents with any combination
of text, bar code, graphic images, and optical character reading (OCR) fonts.
Moreover, CIMprint is fully integrated into the TPS/2 platform.
With high technology applications continually being developed through
its Government contract business, PAR works toward developing new commercial
applications. For example, using computerized digital image processing
techniques originally developed for the defense industry, PAR developed two
innovative products for commercial industry--a Corneal Topography System
(CTS(TM)) and an automatic vision inspection system, Qscan(R).
PAR's CTS provides the ophthalmic surgeon and optometrist with the
ability to measure the true topography of the cornea in terms of elevation.
PAR's technology, unlike its competitors, can be used both in an office,
clinical setting as well as in an operating room, surgical environment. PAR's
CTS is fully compatible with the excimer laser and can be used for therapeutic
and refractive procedures.
Qscan(R) is the first system fully designed for use on a food
processor's production line. The system detects and rejects small contaminants
such as pits, shards of glass, or slivers of metal in opaque, filled and capped
food containers. Certain containers can be examined on-line at high speeds--up
to 1,100 per minute. This allows 100% inspection of all containers during the
flow of production.
<PAGE>
Installation and Training
In the U.S., Canada, Europe, South Africa, Australia and Asia, PAR POS
personnel provide installation and training services, on a fixed-fee basis, as a
normal part of the equipment purchase agreement. In certain areas of North
America, Europe and Asia, the Company provides these services through third
parties.
Maintenance and Service
PAR services its POS equipment through a combination of telephone
diagnostic support, factory maintenance, on-site, depot, and spare unit rental
service. Equipment requiring factory maintenance service is shipped in the
Company's specially designed containers from the customer's store to the service
center at the Company's headquarters in New Hartford, NY, or to service centers
in Canada, Europe, South Africa, Australia and Asia. The Company repairs and
tests the equipment, generally charging a predetermined, fixed fee to repair
each module regardless of the nature of the malfunction. The Company offers
optional on-site maintenance services through its own field service organization
or through third parties for PAR's restaurant and convenience store equipment in
certain areas of the United States and Europe.
The Company maintains a central customer support and diagnostic service
that permits customers to discuss problems on the telephone with a Company
representative. Test polling of customer-owned data communications equipment is
also provided by the central support service. Approximately four out of every
five customer-perceived problems are solved over the telephone, thereby
eliminating unnecessary module returns and field-service visits and providing
the most cost-effective maintenance offering possible.
During 1995, PAR was awarded a service integration contract with Taco
Bell. Under this contract the Company services all POS systems, back office
systems and provides Help Desk and On-Site support activities.
Marketing
POS
---
The Company's POS marketing efforts highlight its total solution
offering including hardware, software, systems integration and service from a
customer initial installation to replacement systems. The Company directs its
marketing efforts to customers in the top one hundred fast-food restaurant as
described in Nations Restaurant News. The account management marketing strategy
is to establish joint development programs with the leading chains, thereby
gaining expertise in the appropriate hardware and application software needs of
a particular chain's operation. The Company has found that various segments of
the food service industry have several common elements and goals; however, they
may differ as to software application needs. The open architecture of the
Company's systems, as dictated by such a marketing strategy, enables PAR to
perform customization in a cost-effective and timely manner.
During 1994, PAR began the organization of a world-wide dealer channel.
This capability will allow POS access to concepts outside the top 100 restaurant
chains. Small operators will have access to more sophisticated technology that
has been available to the major chains for over 15 years.
<PAGE>
ITPS
- ----
PAR's marketing approach for its ITPS products is to provide a total
solution to customers' data collection and transaction processing needs. PAR
closely tailors its comprehensive range of factory-floor data collection
enablers and applications to the requirements of the industrial sector.
For CTS, the Company has its own direct sales channels, a
distribution network of independent ophthalmic sales representatives and an
international dealer network. For its Qscan(R) product, the Company has
established worldwide distribution through an industrial representative network
in addition to its own direct sales channels. Both domestic and international
customer prospects in the baby food market are being pursued, as well as other
food-processing market segment customers.
Competition
The Company faces competition with respect to its POS products. Some of
the Company's competitors are, or are controlled by, companies that are larger
and have substantially greater resources. Principal competitors include
Panasonic, IBM, NCR and Olivetti. Most major restaurant chains maintain an
"approved vendor" list for POS equipment, designating those companies that have
been approved to sell their equipment to both corporate and franchised stores of
that chain. These chains tend to limit approved vendors to a small number,
usually one or two sources, due to the time and expense of qualifying approved
vendors. Corporate-owned stores will normally buy only approved POS equipment.
PAR is an approved vendor for McDonald's, Taco Bell, Kentucky Fried Chicken
International, Chick-fil-A and sells to many other major chains. The Company
believes its success in obtaining "approved vendor status" is due to the
establishment of a solid foundation of expertise in the industry and its
willingness to tailor systems to meet the specific needs of each of its
customers.
Backlog
At December 31, 1995, the Company's backlog of unfilled orders for the
Commercial segment was approximately $20,600,000 compared to $17,200,000 a year
ago. Most of the present orders will be delivered in 1996. Commercial segment
orders are generally of a short term nature and are usually booked and shipped
in the same fiscal year.
Research and Development
The highly technical nature of the Company's restaurant POS, Industrial
Transaction Processing, and Vision products requires a significant and
continuous research and development effort. Research and development expenses
for new and existing products were approximately $5,331,000 in 1995, $5,009,000
in 1994 and $4,239,000 in 1993. See Note 1 to the Consolidated Financial
Statements included elsewhere herein for discussion on Statement of Financial
Accounting Standards No. 86, Accounting for the Costs of Computer Software to be
Sold, Leased or Otherwise Marketed.
<PAGE>
Manufacturing and Suppliers
The Company assembles its products from standard components, such as
integrated circuits, and fabricated parts such as printed circuit boards, metal
parts and castings, most of which are manufactured by others to the Company's
specifications. The Company depends on outside suppliers for the continued
availability of its components and parts. Although most items are generally
available from a number of different suppliers, the Company purchases certain
components from only one supplier. Items purchased from only one supplier
include certain printers, base castings and electronic components. If such a
supplier should cease to supply an item, the Company believes that new sources
could be found to provide the components. However, added cost and manufacturing
delays could result and adversely affect the business of the Company. The
Company has not experienced significant delays of this nature in the past, but
there can be no assurance that delays in delivery due to supply shortages will
not occur in the future.
Government Segment
PAR has two wholly-owned subsidiaries in the government business
segment, PAR Government Systems Corporation (PGSC) and Rome Research Corporation
(RRC). These companies provide federal and state government organizations,
including the DoD, with a wide range of technical products and services. PGSC is
involved with the design, development and implementation of state-of-the-art
data processing systems, and with advanced research and development for
high-technology projects. RRC provides engineering services, software
development/testing, and operation & maintenance for government facilities. The
Company's products cover the entire development cycle for Government systems:
requirements analysis, design specification, development, implementation,
installation, test and evaluation. The Company also develops and markets
off-the-shelf software products for both DoD and commercial use.
PAR Government Systems Corporation
PGSC is organized into three business sectors: Image & Signal
Processing, Telecommunications, and Special Programs. Its headquarters and data
processing technology center is in New Hartford, NY and its Center for advanced
sensor processing is located in La Jolla, CA, the San Diego Technology Center.
PGSC has a Joint Surveillance Target Attack System (J-STARS) project office
located in Melbourne, FL to support the Northrop Grumman Corporation. PGSC
currently conducts about 80% of its business with the DoD and with major prime
contractors.
PGSC has designed and implemented advanced software systems that have
often become key components for the later development of large DoD systems.
PGSC's strategy has been to identify the Government's data processing needs and
to provide special--sometimes unique--solutions for either the Government or
prime contractors. PGSC is currently involved in radar, infrared and
electro-optical sensor data handling, design of algorithms for highly accurate
real-time tracking, sensor systems design and evaluation, massively parallel
processing, geographic information systems, image processing, environmental data
monitoring, command and control, mission planning, and asset tracking & data
management. Additionally, new environmental monitoring business is being
conducted for state agencies in New York and Pennsylvania.
<PAGE>
Image & Signal Processing
This business sector deals with the collection and analysis of complex
and massive sensor data. PGSC is a leader in developing and implementing target
detection and tracking algorithms for both radar and infrared sensor systems.
Since 1986, PGSC has been a key contributor to the full-scale engineering
development for J-STARS, providing algorithm development and data handling for
both moving target indicator (MTI) and synthetic aperture radar (SAR)
technologies that detect, track and target moving enemy vehicles.
PGSC scientists have also developed sensor concepts and algorithms to
address the difficult problem of detecting low-contrast targets against
cluttered background (e.g., finding a cruise missile or fighter aircraft against
a terrain background). Technical approaches developed for radar and infrared
sensors have been applied to other research and operational sensor systems.
Telecommunications
The Telecommunications business sector addresses the movement of
massive data sets, and the adaptation of data to meet user needs for system
control, mission planning, and decision support. U.S. Government agencies use
PGSC's software to rapidly convert images to digital maps; to store, edit, and
retrieve such maps; and to extract features from digital data bases.
Applications of these geographical information systems (GIS) are also addressing
the needs of state and local government groups.
An environmental measurement and data management system has been
implemented for the National Institute for Environmental Renewal (NIER) which
integrates field sensors, GIS systems, image processing, contaminant monitoring,
risk assessment, and site modeling. This environmental data system will address
a wide spectrum of applications, including: air and water quality monitoring,
detection and monitoring of soil and underground contaminants, waste disposal
facility siting, and emergency response.
PGSC's asset management line of business provides command and control
for a user's assets, utilizing small electronic tags on assets and cargoes to
communicate information on an asset's location and state. Under a contract with
the U.S. Department of Transportation and the NIER, PGSC is providing a system
that will monitor and track hazardous material (HAZMAT) cargoes in Northeastern
Pennsylvania. Data are collected and analyzed at a command center and reports on
cargo status are sent electronically to all parties involved, including
responders to emergencies in the case of HAZMAT accidents or mishaps.
Special Programs
PGSC provides special data handling and system interoperability for key
Government customers. PAR's operation of the Image Exploitation 2000 facility
for the Air Force's Rome Laboratory has assisted with the introduction of many
new data handling concepts, including imagery dissemination using compact disc
technology. Image processing and mission planning are conducted to support many
DoD military exercises and training programs.
<PAGE>
Rome Research Corporation
RRC primarily provides professional and engineering services to operate
and maintain DoD laboratories, ranges, and related facilities owned by the
Government. At these sites, Company personnel plan, execute, and evaluate
experiments involving new or advanced radar systems, electronic counter-measures
systems and communications systems, and operate training and operational
communications equipment. RRC also provides software engineers that specialize
in software testing and validation. It has developed a relationship with
Northrop Grumman Corporation to support the testing of operational software for
the J-STARS project.
Test Laboratory and Range Operations
RRC provides management, engineering, and technical services under
several contracts with the U.S. Air Force and the U.S. Navy. These services are
used to plan and execute tests and to evaluate results at several government
test ranges and laboratories that the Company operates and maintains. Test
activities encompass components, specific equipment, and systems related to
radar, communications, electronic countermeasures, and integrated weapon
systems.
The Company also develops complex measurement systems in several
defense-related areas of technology. These systems are computer-based and have
led to the development by RRC of a significant software capability, which
provides the basis for competing in new markets.
Software Test and Validation
RRC continues to support to the Northrop Grumman J-STARS program. This
effort has provided RRC with a vehicle to expand its business base into a
different segment of the defense industry. The J-STARS effort is RRC's first
venture into the software verification and validation arena, with RRC engineers
embedded in the Northrop Grumman test organization for formal qualification of
the entire J-STARS software suite. RRC participates in all phases of the test
process, from initial analysis to formal government acceptance. The ability to
provide a wide range of software technology is particularly important during a
period when almost all engineering efforts require the application of software
and hardware in support of the task.
Operations and Maintenance
RRC provides operations and maintenance services in support of two
other business areas. The first involves support to the U.S. Navy-Marine and Air
Force training system known as the Tactical Aircrew Combat Training Systems
(TACTS) by the Sea Service and the Air Combat Maneuvering Instrumentation (ACMI)
systems by the Air Force. There are RRC personnel operating these activities in
Taiwan and Egypt. The second new area consists of support to several U.S. Navy
communications and space surveillance sites. The five space surveillance sites
are located across the southern United States and the communication station in
California.
<PAGE>
Mentor-Protege Program
During 1992, the Company began participation in the Mentor-Protege
Program sponsored by the Department of Defense. The purpose of the program is to
have an established company, such as PAR, assist a Small Disadvantaged Business
to become a successful enterprise. Phoenix Systems and Technology, Inc.
(Phoenix), is a build-to-print manufacturer of various military sub-systems. In
1992, it had revenues of $2.5 million. Under the Mentor-Protege Program, PAR has
assisted Phoenix to broaden its manufacturing business and expand into
engineering services which has contributed to Phoenix's growth in revenues to
$5.3 million in 1995. In 1995, with RRC's assistance, Phoenix bid and won the
program to support a Minimum Essential Airfield at the former Griffiss Air Force
Base. This contract with the New York Air National Guard spans up to five years
and is valued at $19.3 million. In 1992, PAR acquired a 10% equity interest in
Phoenix which was increased to 44% in January, 1993.
Government Contracts
PGSC and RRC perform work for U.S. Government agencies under
fixed-price, cost-plus fixed fee, time-and-material, and incentive-type prime
contracts and subcontracts. Most of its contracts are for one-year to three-year
terms. The Company also has been awarded Task Order/Support contracts.
There are several risks associated with Government contracts. For
example, contracts may be terminated for the convenience of the Government any
time the Government believes that such termination would be in its best
interests. Under contracts terminated for the convenience of the Government, the
Company is entitled to receive payments for its allowable costs and, in general,
a proportionate share of its fee or profit for the work actually performed.
The Company's business with the U.S. Government is also subject to
other risks unique to the defense industry, such as reduction, modification, or
delays of contracts or subcontracts if the Government's requirements, budgets,
or policies or regulations change. The Company may also perform work prior to
formal authorization or to adjustment of the contract price for increased work
scope, change orders, and other funding adjustments.
Additionally, the books and records of the Company are audited by the
Defense Contract Audit Agency on a regular basis. Such audits can result in
adjustments to contract costs and fees. Audits have been completed through the
Company's fiscal year 1992 and have not resulted in any material adjustments.
<PAGE>
Marketing and Competition
The Company's marketing activities in the Government sector are
conducted primarily by senior- and middle-management and technical staff
members. Marketing begins with collecting information from a variety of sources
concerning the present and future requirements of the Government and other
potential customers for the types of technical expertise provided by the
Company. A proven approach is for the Company to enter into teaming arrangements
with other contractors. Teaming arrangements allow the contractors to complement
the unique capabilities of each other and to offer the Government the best
combination of capabilities to achieve the performance, cost, and delivery
schedule desired for the system being procured. Structuring the right teaming
arrangement can significantly enhance a contractor's competitive position. Some
of the contractors that the Company has previously, or is presently, teamed with
are Hughes Aircraft, Harris, Lockheed-Martin, Northrop Grumman Corporation, GTE,
and TASC.
Although the Company believes it is positioned well in its chosen areas
of image and signal processing, telecommunications and engineering services,
competition for Government contracts is intense. Many of the Company's
competitors are, or are controlled by, companies such as Lockheed-Martin, SAIC,
TRW and Bendix that are larger and have substantially greater financial
resources. The Company also competes with many smaller companies that target
particular segments of the Government market. Typically, seven or more companies
will compete for each contract and, as previously discussed, PAR sometimes bids
as part of a team with other companies. Contracts are obtained principally
through competitive proposals in response to requests for bids from Government
agencies and prime contractors. The principal competitive factors are prior
experience, the ability to perform, price, technological capabilities, and
service. In addition, the Company sometimes obtains contracts by submitting
unsolicited proposals.
Backlog
The dollar value of existing Government contracts at December 31, 1995,
net of amounts relating to work performed to that date, was approximately
$32,088,000, of which $7,568,000 was funded. At December 31, 1994, the
comparable amount was approximately $22,774,000, of which $9,673,000 was funded.
Funded represents amounts committed under contract by Government agencies and
prime contractors. The December 31, 1995 Government contract backlog of
$32,088,000 represents firm, existing contracts. Approximately $15,430,000 of
this amount will be completed in calendar year 1996 as funding is committed.
Employees
As of December 31, 1995, the Company had 822 employees, approximately
65% of whom are engaged in the Company's Commercial segment, 28% are in the
Government segment, and the remainder are corporate employees.
Due to the highly technical nature of the Company's business, the
Company's future can be significantly influenced by its ability to attract and
retain its technical staff. The Company believes that it will be able to fulfill
its near-term needs for technical staff.
None of the Company's employees are covered by collective bargaining
agreements. The Company considers its employee relations to be good.
<PAGE>
Item 2: Properties
The following are the principal facilities (by square footage) of the
Company:
<TABLE>
<CAPTION>
Industry Floor Area Number of
Location Segment Principal Operations Sq. Ft.
-------- ------- -------------------- -----------
<S> <C> <C> <C>
New Hartford, NY Commercial Principal executive offices 148,000
Government manufacturing, research and
development laboratories,
computing facilities
Boulder, CO Commercial Service 17,500
Rome, NY Government Research and Development 15,000
Norcross, GA Commercial Research and Development 9,200
Sydney, Australia Commercial Sales and Service 8,800
La Jolla, CA Government Research and Development 8,400
Arlington, TX Commercial Sales, Research and Development 6,100
Irvine, CA Commercial Sales and Service 4,500
San Antonio, TX Commercial Sales 4,700
</TABLE>
The Company's headquarters and principal business facility is located
in New Hartford, New York, which is near Utica, located in Central New York
State.
The Company owns its principal facility and adjacent space in New
Hartford, N.Y. All of the other facilities are leased for varying terms.
Substantially all of the Company's facilities are fully utilized, well
maintained, and suitable for use. The Company believes its present and planned
facilities and equipment are adequate to service its current and immediately
foreseeable business needs.
Item 3: Legal Proceedings
The Company is subject to legal proceedings which arise in ordinary
course of business. In the opinion of Management, the ultimate liability, if
any, with respect to these actions will not materially affect the financial
position of the Company.
Item 4: Submission of Matters to a Vote of Security Holders
None
<PAGE>
PART II
Item 5: Market for the Registrant's Common Stock and Related Stockholder Matters
The Company's Common Stock, par value $.02 per share, trades on the New
York Stock Exchange (NYSE symbol - PTC). At December 31, 1995, there were
approximately 811 owners of record of the Company's Common Stock, plus those
owners whose stock certificates are held by brokers.
The following table shows the high and low stock prices for the two
years ended December 31, 1995 as reported by New York Stock Exchange:
<TABLE>
<CAPTION>
1995 1994
----------------------------- -----------------------------
Period Low High Low High
- -------------- ----------------------------- -----------------------------
<S> <C> <C> <C> <C>
First Quarter 5 7/8 9 3/4 7 9 1/4
Second Quarter 8 10 3/4 6 5/8 7 7/8
Third Quarter 8 1/4 10 3/4 6 1/4 7 1/4
Fourth Quarter 8 5/8 10 1/4 6 1/8 8 1/4
</TABLE>
The Company has not paid cash dividends on its common stock, and its
Board of Directors presently intends to continue to retain earnings for
reinvestment in growth opportunities for the Company. Accordingly, it is
anticipated that no cash dividends will be paid in the foreseeable future.
<PAGE>
Item 6: Selected Financial Data
SELECTED CONSOLIDATED STATEMENT OF INCOME DATA
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Year ended December 31,
-----------------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues ......... $ 107,394 $ 94,530 $ 81,247 $ 73,271 $78,897
========== ======== ======== ======== =======
Net income ............. $ 4,658 $ 3,661 $ 2,529 $ 2,333 $ 1,461
========== ======== ======== ======== =======
Earnings per share ..... $ .58 $ .46 $ .32 $ .30 $ .20
========== ======== ======== ======== =======
</TABLE>
SELECTED CONSOLIDATED BALANCE SHEET DATA
(In thousands)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------
1995 1994 1993 1992 1991
-----------------------------------------------
<S> <C> <C> <C> <C> <C>
Working capital .............. $42,976 $38,915 $34,489 $31,373 $28,609
Total assets ................. 68,073 60,642 60,449 53,433 49,019
Long-term debt ............... -- -- -- -- --
Shareholders' equity ......... 53,132 48,645 44,530 41,858 39,094
</TABLE>
<PAGE>
Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis highlights items having a
significant effect on operations during the three-year period ended December 31,
1995. It may not be indicative of future operations or earnings. It should be
read in conjunction with the Consolidated Financial Statements and Notes thereto
and other financial and statistical information appearing elsewhere in this
report.
Results of Operations -- 1995 Compared to 1994
PAR Technology Corporation reported earnings per share of $.58 for the
year ended December 31, 1995, an increase of 26.1% from the $.46 per share
recorded for the year ended December 31, 1994. Net income increased 27.2% to
$4.7 million in 1995 compared to $3.7 million for 1994. Revenues for 1995 were
$107.4 million versus $94.5 million for 1994, an increase of 13.6%.
Net product sales of the Commercial segment were $58.3 million for 1995,
a 10.1% increase from the $53 million recorded in 1994. Most of this increase
occurred in the fourth quarter of 1995. This was primarily due to the Company's
continued successful partnership with Taco Bell. In the fourth quarter of 1995,
the Company received a $23 million order from Taco Bell for POS products. The
Company began delivery of this order in 1995, with the majority to be shipped in
1996. The increase is also due to new contract awards from the Chick-fil-A
restaurant chain. Product sales also increased in 1995 due to the growth in the
Company's Industrial Transaction Processing (ITPS) business. This business won
several new contracts in 1995 and grew 34% over 1994. Partially offsetting these
increases was a decline in sales to Kentucky Fried Chicken International due to
a greater number of new store openings and replacement orders in 1994 than in
1995.
Customer service revenues of the Commercial segment increased 20.3% to
$25.1 million in 1995 compared to $20.8 million for 1994. The growth in service
revenue was primarily related to higher installation revenue as a result of the
increase in product sales discussed above. Additionally, in the third quarter of
1995 the Company was awarded a service integration contract with Taco Bell.
Under this agreement, the Company is responsible for servicing of all POS
systems, back office systems and Help Desk and On-Site Support activities. This
contract is expected to generate revenues in the aggregate of more than $24
million over three years. Certain product enhancement programs for various
customers also contributed to this increase in 1995.
Contract revenues of the Government segment were $24 million for 1995, an
increase of 15.8% from the $20.7 million reported in 1994. The Company's site
maintenance and testing activities and its software development business both
contributed to this increase. The Company was awarded new site contracts and
expanded the scope of other existing contracts during 1995. Additionally, the
Company's software development business continues to expand its work in
environmental systems.
As previously announced, the Company's Rome Research Corporation (RRC)
was awarded a $10 million, five-year contract as the prime subcontractor for the
Griffiss Minimum Essential Airfield Contract awarded to Phoenix Systems and
Technologies, Inc. (Phoenix). Under this contract, Phoenix and RRC will provide
engineering services to Griffiss Air Force Base. The Company owns a 44% interest
in Phoenix. See Note 9 to the Consolidated Financial Statements for further
discussion.
<PAGE>
Gross margin on net product sales of the Commercial segment was 41.6%
compared to 38.6% in 1994. POS margins improved primarily due to certain
customer discounts earned in 1994 that did not recur in 1995. Additionally, the
Company was able to achieve certain product cost reductions in 1995.
Gross margin on service revenues of the Commercial segment were 17% in
1995 versus 16.9% in 1994. Margins benefited from increased revenues including
revenue from certain product enhancement programs. However, this was offset by
start-up costs related to the service integration contract with Taco Bell
discussed above.
Gross margin on contract revenues of the Government segment was 6.4% in
1995 compared to 4.8% in 1994. This margin improvement was the result of higher
award fees earned on certain contracts due to high performance ratings and to a
favorable contract mix.
Selling, general and administrative expenses of the Commercial segment
were $17.7 million in 1995, an increase of 24.7% from the $14.2 million recorded
in 1994. This increase is primarily due to the expansion of the Company's
worldwide POS sales force, growth in the ITPS sales force and increased sales
and promotional activities related to the Company's Vision businesses. Also,
1995 expenses included $1.1 million for allowances related to the Company's
investment in and receivable from Phoenix. See Note 9 to the Consolidated
Financial Statements for further discussion.
Research and development expenses of the Commercial segment were $5.3
million in 1995, an increase of 6.4% from the $5 million reported a year ago.
The Company is continuing its investment in POS hardware and software products.
Additionally, the Company continues to improve the technological performance of
its Vision products in order to achieve increased sales and improved margins.
The Company's effective tax rate was 33.6% in 1995 compared to 36.3% in
1994. The lower rate is primarily due to the utilization of Foreign Tax credits
in 1995.
Results of Operations -- 1994 Compared to 1993
PAR Technology Corporation reported earnings per share of $.46 for the
year ended December 31, 1994, an increase of 43.7% from the $.32 per share
recorded for the year ended December 31, 1993. Net income increased 44.8% to
$3.7 million in 1994 compared to $2.5 million for 1993. Revenues for 1994 were
$94.5 million versus $81.2 million for 1993, an increase of 16.3%.
Net product sales of the Commercial segment were $53 million for 1994, a
20.8% increase from the $43.8 million recorded in 1993. This increase was due to
the ongoing success with sales to Taco Bell of the Company's third generation
Point-of-Sale system (POS III). Another major factor was sales of the Company's
POS II products to McDonald's, Kentucky Fried Chicken and other fast food chains
in both domestic and international markets. During 1994, the Company received
follow on purchase orders from Taco Bell totalling $20 million. The Company's
system integration work related to its ITPS business also contributed to the
increase.
Customer service revenues of the Commercial segment increased 8.4% to
$20.8 million in 1994 compared to $19.2 million for 1993. The growth in service
revenue was primarily related to higher installation revenue as a result of the
increase in product sales discussed above.
<PAGE>
Contract revenues of the Government segment were $20.7 million for 1994,
an increase of 14% from the $18.2 million reported in 1993. This growth was due
to the success of the Company's site maintenance and testing business. The
Company currently has several contracts at different government-owned sites
across the country. The Company's software development business also contributed
to the increase. In 1994, the Company announced its software development
business was successful in winning a $2.5 million, multi-year contract from the
National Institute for Environmental Renewal. This will result in the
development and application of an Environmental Monitoring and Management System
for the detection of ground and water contamination.
Gross margin on net product sales of the Commercial segment was 38.6% in
1994, compared to 42% in 1993. This decrease in margin was a result of volume
discounts earned in 1994 by a major customer in accordance with the terms of its
sales agreement with the Company. Partially offsetting this was improved
absorption of certain fixed manufacturing costs as a result of increased
production in 1994.
Gross margin on service revenues of the Commercial segment was 16.9% in
1994 versus 11.3% in 1993. This increase was the result of increased
installation and service contract revenue directly related to the increased POS
product revenue discussed above.
Gross margin on contract revenues of the Government segment was 4.8% in
1994 compared to 3.7% in 1993. During 1994, the Company controlled its overhead
costs which resulted in improved margins on certain contracts.
Selling, general and administrative expenses of the Commercial segment
were $14.2 million in 1994, an increase of 9.2% from the $13 million recorded in
1993. This increase was primarily due to the Company's expanded POS sales
efforts and to sales and marketing activities associated with the Company's
Vision products.
Research and development expenses of the Commercial segment were $5
million in 1994, an increase of 18.2% from the $4.2 million reported a year ago.
The Company's net investment in POS and Vision products increased in 1994
compared to last year.
Liquidity and Capital Resources
Cash flows to meet the Company's requirements of operating, investing and
financing activities during the past three years are reported in the
Consolidated Statement of Cash Flows.
Cash flow used by operating activities was $767,000 in 1995 compared to
cash provided by operations of $8.1 million in 1994. The Company's accounts
receivable balance grew substantially in 1995 as a result of record fourth
quarter revenues which increased $8.3 million over the fourth quarter of 1994.
During 1994, the Company's net profits and a reduction in accounts receivable
were the primary reasons for the positive cash flow.
<PAGE>
Cash used in investing activities was $1.8 million in 1995 compared to
$2.2 million in 1994. The Company incurred $1.3 million for capital expenditures
in 1995 versus $1.7 million in 1994. In 1995, the Company purchased additional
internal use computer hardware and software and upgraded certain communications
equipment. Capital expenditures in 1994 were primarily for continued
improvements to the Company's headquarters' facility and computer equipment
upgrades.
Cash flow provided by financing activities was $101,000 in 1995 versus
cash used of $3.9 million in 1994. In 1995, cash flow benefited by the proceeds
from the exercise of employee stock options and short-term bank borrowings for
working capital requirements. This was partially offset by the acquisition of
treasury stock during the year. In 1994, the Company used its cash provided by
operations to pay off all of its short term borrowings with banks.
The Company has line-of-credit agreements with certain banks which
aggregate $27.2 million, virtually all of which was unused at December 31, 1995.
The Company believes that it has adequate financial resources to meet its future
liquidity and capital requirements.
The Company owns a 44% interest in Phoenix and is involved in the
DoD's Mentor Protege Program with Phoenix. At December 31, 1995, Phoenix owes
the Company $957,000 related to contracted manufacturing and services.
Additionally, the Company has guaranteed a $1,000,000 line-of-credit borrowing
of Phoenix. See Note 9 to the Consolidated Financial Statements for further
discussion.
Item 8: Financial Statements and Supplementary Data
The Company's 1995 Financial Statements, together with the report
thereon of Price Waterhouse LLP dated February 13, 1996, are included elsewhere
herein. See Item 14 for a list of Financial Statements and Financial Statement
Schedules.
Item 9: Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
<PAGE>
================================================================================
PART III
================================================================================
Item 10: Directors, Executive Officers and Other Significant Employees
of the Registrant
The directors and executive officers of the Company and their respective ages
and positions are:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------ --- -----------------------------------------
<S> <C> <C>
Dr. John W. Sammon, Jr. 56 Chairman of the Board, President and
Director
Charles A. Constantino 56 Executive Vice President and Director
J. Whitney Haney 61 President, PAR Microsystems and Director
Sangwoo Ahn 57 Director
Dr. James C. Castle 59 Director
Albert Lane, Jr. 54 President, Rome Research
Dr. John P. Retelle, Jr. 50 President, PAR Government Systems
Ronald J. Casciano 42 Vice President, C.F.O. and Treasurer
<CAPTION>
Other senior officers and significant employees of the Company and their
respective ages and positions are:
Name Age Position
- ------------------------ --- -----------------------------------------
<S> <C> <C>
James E. Cashman III 42 Vice President, International Sales and Service,
PAR Microsystems
William L. Collier 52 Vice President, Sales and Marketing
Industrial Transaction Processing Systems,
PAR Microsystems
Gregory T. Cortese 46 Vice President, Law & Business Affairs,
General Counsel and Secretary
Donald A. England 44 Vice President, National Accounts
PAR Microsystems
<PAGE>
<CAPTION>
Name Age Position
- ------------------------ --- -----------------------------------------
<S> <C> <C>
William J. Francis 44 Vice President Finance and Operations
PAR Microsystems
Donald D. Hall 60 Vice President Operations, Rome Research
F. Tibertus Lenz 45 Vice President and General Manager
Industrial Transaction Processing Systems,
PAR Microsystems
Fred A. Matrulli 50 Vice President Operations
PAR Vision Systems
E. John Mohler 52 Vice President Telecommunications
Programs, PAR Government Systems
David W. Robbins 41 Vice President, San Diego Technical Center
PAR Government Systems
Robert G. Saenz 57 Vice President Engineering
PAR Microsystems
Richard P. Sargent 64 Vice President Worldwide Sales
PAR Microsystems
Warren M. Thomas 57 Vice President Advanced Technology
Development, PAR Government Systems
Ben F. Williams 54 Vice President Business Development
Alexander J. Zanon 57 Senior Vice President Operations
PAR Government Systems
</TABLE>
<PAGE>
The Company's Directors are elected in classes with staggered three
year terms with one class being elected at each annual meeting of shareholders.
The Directors serve until the next election of their class and until their
successors are duly elected and qualified. The Company's officers are appointed
by the Board of Directors and hold office at the will of the Board of
Directors.
The principal occupations for the last five years of the directors,
executive officers, and other significant employees of the Company are as
follows:
Dr. John W. Sammon, Jr. is the founder of the Company and has been the
President and a Director since its incorporation in 1968. He has authored
several papers in the field of Artificial Intelligence and Pattern Recognition
and is a Fellow of the Institute of Electronic Engineers.
Mr. Charles A. Constantino has been a Director of the Company since
1971 and Executive Vice President since 1974.
Mr. J. Whitney Haney has been a Director of the Company and President
of PAR Microsystems since April, 1988.
Mr. Sangwoo Ahn was appointed a Director of the Company in March, 1986.
He has been a partner of Morgan, Lewis, Githens & Ahn (investment banking) since
1982.
Dr. James C. Castle was appointed a Director of the Company in
December, 1989. Dr. Castle has been the Chairman and CEO of U.S. Computer
Services Corporation since August, 1992. Prior to assuming that position, he was
the President of Teradata Corp. since 1991. He also held the position of
Chairman of the Board of Infotron Systems Corporation since 1989.
Mr. Albert Lane, Jr. was appointed to President, Rome Research
Corporation in 1988.
Dr. John P. Retelle, Jr. was appointed President, PAR Government
Systems Corporation in November 1993. He was Vice President, Business
Development and joined the Company in July, 1993. Previously, he held a number
of executive positions with Lockheed Corp.
Mr. Ronald J. Casciano, CPA, was promoted to Vice President, C.F.O. and
Treasurer in June, 1995. Mr. Casciano had been Vice President and Treasurer
since 1994. He joined the Company in 1983 as Corporate Controller.
Mr. James E. Cashman III joined PAR Microsystems as Vice President,
International Sales and Service in June of 1995. Prior to joining PAR, Mr.
Cashman was Vice President, Development and Marketing with Metaphase Technology,
Inc.
Mr. William L. Collier joined the Company as Vice President, Sales and
Marketing, Industrial Transaction Processing Systems in May, 1994. Prior to
joining the Company, Mr. Collier was a Sales Manager with Tyler
Computer/Controls.
Mr. Gregory T. Cortese was appointed Secretary of the Company in 1987.
He was promoted to Vice President, General Counsel in 1985. Mr. Cortese is also
responsible for the Company's Ophthalmic business.
<PAGE>
Mr. Donald A. England was promoted to Vice President, National Accounts
of PAR Microsystems in 1994. Previously, he was the Director of Product
Marketing.
Mr. William J. Francis was promoted to Vice President, Finance and
Operations of PAR Microsystems in March, 1993. He joined PAR in July, 1988 as
Controller.
Mr. Donald D. Hall joined Rome Research in November, 1990. He was
promoted to Vice President, Operations in May, 1993. Previously, he served as a
Colonel in the U.S. Marine Corp.
Mr. F. Tibertus Lenz was promoted to Vice President and General
Manager, Industrial Transaction Processing Systems in 1989.
Mr. Fred A. Matrulli was promoted to Vice President, Operations of PAR
Vision Systems Corporation in January, 1993. He held the positions of Vice
President Production and Manager of Hardware Development for PAR Microsystems
since 1987.
Mr. E. John Mohler joined the Company in 1994 as Vice President,
Telecommunications Programs for PAR Government Systems. Prior to this, he was a
self-employed consultant.
Mr. David W. Robbins was promoted to Vice President, PAR Government
Systems Corporation, San Diego Technical Center in January, 1992. Mr. Robbins
had been the Director of the Center since June, 1987.
Mr. Robert G. Saenz joined the Company in 1989 as Vice President,
Engineering of PAR Microsystems.
Mr. Richard P. Sargent was promoted to Vice President, Worldwide Sales
of PAR Microsystems in 1994. Previously, he was Vice President, International
Sales.
Mr. Warren M. Thomas joined the Company in 1994 as Vice President,
Advanced Technology Development of PAR Government Systems. Prior to PAR, he was
Manager of Advanced Program Development for Northrop Grumman Corporation.
Mr. Ben F. Williams was appointed Vice President, Business Development
in 1986.
Mr. Alexander J. Zanon was promoted to Senior Vice President,
Operations of PAR Government Systems Corporation in 1986.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and Directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities Exchange Commission, the
New York Stock Exchange and the Company. To the Company's knowledge, based
solely on its review of the copies of such reports received by the Company and
written representations from certain reporting persons that they were not
required to file Form 5's, the Company believes that during 1995 all filing
requirements were met except for the following: due to an error by
administrative personnel, there was a failure to file on a timely basis a Form
4, Statement of Changes in Beneficial Ownership, on behalf of Mr. Constantino,
relative to the sale of stock by his wife on March 16, 1995. Upon discovery of
the omis sion, the Form 4 was immediately filed.
<PAGE>
Item 11: Executive Compensation
The following table sets forth information concerning compensation for
each of 1995, 1994 and 1993 awarded to, earned by, or paid to the Chief
Executive Officer and the four most highly compensated Executive Officers of the
Company other than the Chief Executive Officer.
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term Compensation
----------------------------------------------------------------------------------------
Annual Compensation Awards Payouts
----------------------------------------------------------------------------------------
Other Securities
Annual Restricted Underlying All Other
Compen- Stock Options/ LTIP Compen-
Name and Bonus sation Award(s) SAR's (#) Payouts sation
Principal Position Year Salary (1) ($) ($) (2) ($) ($) (3)
- ------------------ ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Dr. John W. Sammon, Jr. 1995 $ 200,904 $ 76,206 0 0 0 0 $ 7,130
Chairman of the Board, 1994 $ 192,856 $ 110,030 0 0 0 0 $ 7,172
President and Director 1993 $ 185,302 $ 57,309 0 0 0 0 $ 8,969
Charles A. Constantino 1995 $ 173,772 $ 56,498 0 0 0 0 $ 7,130
Executive Vice President 1994 $ 166,815 $ 81,803 0 0 0 0 $ 7,172
and Director 1993 $ 152,968 $ 39,978 0 0 0 0 $ 8,033
J. Whitney Haney 1995 $ 175,956 $ 56,396 $9,026 0 0 0 $ 7,130
President, PAR Microsystems 1994 $ 169,189 $ 89,583 0 0 0 0 $ 7,172
Corporation 1993 $ 162,103 $ 35,235 0 0 0 0 $ 8,768
Albert Lane, Jr. 1995 $ 140,270 $ 71,317 0 0 0 0 $ 7,130
President, Rome Research 1994 $ 132,600 $ 81,102 0 0 0 0 $ 7,172
Corporation 1993 $ 118,000 $ 53,597 0 0 21,300 0 $ 7,206
Dr. John P. Retelle, Jr. 1995 $ 124,668 $ 39,105 0 0 5,000 0 $ 7,130
President, PAR Government 1994 $ 115,000 $ 34,898 0 0 5,000 0 $ 856
Systems Corporation 1993 $ 53,865 $ 18,495 0 0 25,000 0 0
</TABLE>
- ----------------------------------------
(1) Cash bonus awards earned in the respective fiscal year.
(2) Represents stock options granted under the Company's 1984 Stock option
Plan.
(3) All Other Compensation column consists only of Company contributions to the
employees Profit Sharing component of the Company's Retirement Plan.
<PAGE>
Options/SAR's Granted in Last Fiscal Year
There were no stock options or stock appreciation rights ("SAR's")
granted to the Executive Officers named in Summary Compensation Table in 1995.
Aggregated Option Exercises in 1995 and Year-End Option Values
The table which follows sets forth information concerning exercises of
stock options during 1995 by each of the Executive Officers named in the Summary
Compensation Table and the value of his unexercised Options as of December 31,
1995 based on a fair market value of $9.06 per share of the Company's common
stock on such date:
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised in-the-Money
Options at 12/31/95 Options at 12/31/95 (2)
--------------------- -----------------------
Acquired Value (1)
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Dr. John W. Sammon, Jr. ----- ----- ----- ----- ----- -----
Charles A. Constantino ----- ----- ----- ----- ----- -----
J. Whitney Haney 10,000 (3) $ 53,750 267,900 70,600 $ 1,624,144 $ 428,012
Dr. John P. Retelle 2,500 (3) $ 15,345 12,050 13,850 $ 39,735 $ 48,394
Albert Lane, Jr. 12,700 (3) $ 82,690 19,780 8,520 $ 89,856 $ 43,133
</TABLE>
- ------------------
(1) The value realized equals the aggregate amount of the excess of the fair
market value on the date of exercise (the average of the high and low
prices of the Company's common stock as reported in the Wall Street
Journal for the exercise date) over the relevant exercise price(s).
(2) The value is calculated based on the aggregate amount of the excess of
$9.06 (the fair market value of the Company's common stock on 12/31/95)
over the relevant exercise price(s).
(3) Shares were acquired and sold the same day.
Compensation Committee Report
Pursuant to its responsibilities, the Compensation Committee of the
Board of Directors (the "Committee") performs annual reviews of the performance
and contribution of the Company's executive officers against annual and long
term commitments and objectives to determine the nature and extent of executive
compensation actions. Decisions of the Committee relative to the compensation of
employee committee members (Dr. Sammon and Mr. Constantino) are subject to
review and approval by a majority of the disinterested members of the Board.
<PAGE>
General Compensation Policy
PAR's executive compensation program is designed to attract, motivate,
reward and retain the management talent essential to achieving PAR's business
objectives and maintaining its position of leadership in the industry.
Compensation for PAR's executive officers in 1995 is consistent with the three
fundamental principles of the executive compensation program:
o Executive compensation must be tied to the Company's general
performance and achievement of financial and strategic goals;
o Executive compensation opportunities should be competitive with those
provided by other leading high technology companies of comparable size;
and
o Provide incentives that align the long-term financial interests of the
Company's executives with those of its Shareholders.
Elements of Executive Compensation
To meet its policy objectives for executive compensation, the Company's
executive compensation program consists of Base Salary, Incentive Compensation
and Stock Options.
Base Salary. The Committee reviewed and set the annual base salary of
the executive officers for fiscal 1995. In setting annual base salaries, the
Committee considered the salaries of relative executives in similar positions in
the industry from its most recent contracted survey, the level and scope of
responsibility, experience and performance of the executive, financial
performance of the Company and overall general economic factors. The Committee
believes that the companies with whom the Company competes for compensation
purposes are not necessarily the same companies with which shareholder
cumulative returns are compared. The peer groups used in the Performance Graph
below include the Standard & Poor's 500 Stock Index and those computer hardware
companies deemed most comparable to the Company's businesses for measuring stock
performance. An objective of the Committee is to administer the salary for each
executive management position within a range with a midpoint near the average
midpoint for comparable positions at companies of similar size, line of business
and geographic area. In implementing its compensation policies, the Committee
also considers the individual experience and performance of the executive, the
performance of the organization over which the executive has responsibility, the
performance of the Company and general economic conditions. The Committee gives
such weight to each factor as it deems appropriate.
Incentive Compensation. PAR's executive officers participate with other
key employees in the Key Employee Incentive Compensation Program. Adopted in
1985, this program provides compensation calculated on annual business unit
performance and overall corporate performance compared to predetermined
financial goals. Under this program, key employees are eligible to receive an
annual incentive cash bonus based on the performance of the Company and the
appropriate business unit as measured against pre-established financial
objectives which include measurements of profit before tax, revenue, accounts
receivable collection cycle and inventory turns. Performance attainment of no
less than 75% and up to 200% of the targeted objective will entitle the
participant to receive a proportionally calculated incentive bonus. For 1995,
the maximum possible incentive bonuses for achievement of 100% performance was
dependent upon the participant's organizational level and ranged from 25% to 35%
of the participant's base salary.
<PAGE>
Stock Options. In furtherance of the objective of providing long-term
financial incentives that relate to improvement in long-term Shareholder value,
the Company awards stock options to its key employees (including executive
officers) under its 1995 Stock Option Plan ("Option Plan"). Stock options
("Options") granted under the Option Plan may be either Incentive Stock Options
as defined by the Internal Revenue Code ("Incentive Stock Options") or Options
which are not Incentive Stock Options ("Nonqualified Stock Options"). The Option
Plan is administered by the Stock Option Committee of the Board of Directors.
Upon review of recommendations from the Compensation Committee, the Stock Option
Committee from time to time determines the key employees of the Company and its
subsidiaries who shall be granted Options, the type of Options to be granted,
the terms of the grant and the number of shares to be subject thereto. Option
grants become exercisable no less than six months after the grant and typically
expire ten years after the date of the grant. Option grants are discretionary
and are reflective of the value of the recipients' position as well as the
current performance and continuing contribution of that individual to the
Company.
CEO Compensation for Fiscal 1995
The Committee based the 1995 compensation of the Chief Executive
Officer on the policies and practices described above. In 1995, Dr. Sammon
received salary compensation of $200,904, an increase of 4% over his 1994 salary
and earned an Incentive Compensation bonus payment of $76,206. The Incentive
Compensation award was based on the Company's performance to pre-established
objectives for profit before tax, revenue, inventory turns and accounts
receivable collection cycle with each objective carrying a pre-established
weight. Dr. Sammon, the Company's founder, became a shareholder before the
Company became publicly-owned and has not, to date, been granted options under
the Company's Stock Option Plan in view of his already existing substantial
interest in maximizing the value of the Company's common stock.
Compensation Committee
Sangwoo Ahn, Chairman
Dr. John W. Sammon, Jr.
Charles A. Constantino
<PAGE>
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate by reference this Form 10-K, in
whole or in part, the above Compensation Committee Report and the Performance
Graph set forth below shall not be deemed to be incorporated by reference into
any filing under the Securities Act of 1933 (the "1933 Act") or the Securities
Exchange Act of 1934 (the "1934 Act"), except to the extent the Company
specifically incorporates them by reference into a filing under the 1933 Act or
the 1934 Act nor shall such Compensation Committee Report or Performance Graph
be deemed to be "soliciting material" or to be "filed" with the Securities and
Exchange Commission or subject to Regulation 14A or 14C under the 1934 Act or to
the liabilities of Section 18 of the 1934 Act, except to the extent that the
Company specifically incorporates them by reference into a filing under the 1933
Act or the 1934 Act. As of the date of this Form 10-K, the Company has made no
such incorporation by reference or request.
Compensation Committee Interlocks and Insider Participation
Dr. John W. Sammon, Jr., Chairman of the Board and President of the
Company and Mr. Charles A. Constantino, Executive Vice President of the Company
serve as members of the Compensation Com-mittee and the Stock Option Committee.
Directors who are employees of the Company are not separately
compensated for serving on the Board. All other directors receive annual
retainers of $10,000 for membership on the Board and an attendance fee of $1,000
per day for attendance at Board meetings and any Committee meetings held on the
same day and $500 per day, prorated accordingly, for Committee meetings held on
days other than Board meeting days. All directors are also reimbursed for all
reasonable expenses incurred in attending meetings. In addition, for serving on
the Board, each non-employee Director receives an initial Non-qualified Stock
Options to purchase 5,000 shares of the company's common stock at an exercise
price equal to 80% of the fair market value of the stock on the date of grant
vesting 20% per year over five years. Upon expiration of such 5 year period,
such non-employee Directors may be granted additional Nonqualified Stock Options
under the then existing stock option plan.
Performance Graph
The following Performance Graph shows the changes over the past five
year period (1991 through 1995) in the value of $100 invested in: (1) the
Company's common stock, (2) the Standard & Poor's 500 Index, and (3) the common
stock of the Computer Hardware Listed Industry Group (companies with SIC codes
of 3571 and 3575) whose returns are weighted according to their respective
market capitalizations. The closing price of the Company's stock on December 31,
1990 was $2.63 and an investment of $100 would have acquired 38 shares of the
Company. On December 31, 1995 the Company's stock price closed at $9.00 making
the value of the originally acquired 38 shares $343.
The following companies are included in Computer Hardware Listed
Industry Group: Amdahl Corporation, Atari Corporation, Ceridian Corporation,
Compaq Computer Corporation, Cray Research Inc., Datapoint Corporation,
Intelligent Systems Corporation, PAR Technology Corporation, Silicon Graphics
Inc., Stratus Computer Inc., Sulcus Computer Corporation, Tandem Computers
Incorporated, and Tandy Corporation. Commodore International Limited, Convex
Computer Corporation and NBI Corporation, were formerly included in the Computer
Hardware Listed Industry Group. PAR has been advised that stock for these
companies is no longer publicly traded and therefore they are excluded from
PAR's peer group.
<PAGE>
The year-end values of each investment are based on share price
appreciation and the reinvestment of dividends.
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PTC 100 100 233 286 252 343
PEER GROUP 100 88 97 132 177 184
S&P 500 100 130 140 155 157 215
</TABLE>
Item 12: Security Ownership Of Management And Certain Beneficial Owners
The following table sets forth certain information regarding the
ownership of the Company's common stock as of December 31, 1995, by each
Director, by each of the Executive Officers named in the Summary Compensation
Table below, by all Directors and Executive Officers as a group, and by Other
Beneficial Owners.
<TABLE>
<CAPTION>
Amount and Nature of
Name of Beneficial Owner or Group Beneficial Ownership (1) Percent of Class
- --------------------------------- ------------------------ ----------------
<S> <C> <C>
Dr. John W. Sammon, Jr. ............................. 4,100,200 (2) (3) 53.37%
Charles A. Constantino .............................. 537,961 (4) 7.00%
J. Whitney Haney .................................... 270,400 (5) 3.40%
Sangwoo Ahn ......................................... 53,500 (6) *
Albert Lane, Jr. .................................... 19,780 (7) *
Dr. John R. Retelle, Jr. ............................ 12,050 (8) *
Dr. James C. Castle ................................. 12,500 (9) *
All Directors and Executive Officers
as a Group (8 persons) .............................. 5,029,541 62.52%
Other Principal Beneficial Owners
Deanna D. Sammon ................................. 935,685 (10) (11) 12.18%
</TABLE>
- ------------------------
*Represents less than 1%
(1) Except as otherwise noted, each individual has sole voting and investment
power with respect to all shares.
(2) Does not include 777,510 shares beneficially owned, or the 158,175 shares
held as custodian by Dr. Sammon's wife, Deanna D. Sammon. Dr. Sammon
disclaims beneficial ownership of such shares.
(3) Includes 77,700 held by Dr. Sammon as trustee for the benefit of his
daughter under a trust agreement dated July 5, 1983.
(4) Does not include 8,800 shares owned by Mr. Constantino's wife, Elaine
Constantino. Mr. Constantino disclaims beneficial ownership of such
shares.
(5) Includes 267,900 shares which Mr. Haney has or will have the right to
acquire pursuant to the Company's stock option plans as of February 29,
1996.
<PAGE>
(6) Includes 32,500 shares which Mr. Ahn has the right to acquire pursuant to
the Company's stock option plans as of February 29, 1996.
(7) Represents shares Mr. Lane has or will have the right to acquire pursuant
to the Company's stock option plans as of February 29, 1996.
(8) Represents shares Dr. Retelle has or will have the right to acquire
pursuant to the Company's stock option plans as of February 29, 1996.
(9) Includes 7,500 shares which Dr. Castle has or will have the right to
acquire pursuant to the Company's stock option plans as of February 29,
1996.
(10) Includes 158,175 shares held by Mrs. Sammon as custodian for her
children.
(11) Does not include 4,100,200 shares beneficially owned by Mrs. Sammon's
husband, Dr. John Sammon, Jr. Mrs. Sammon disclaims beneficial ownership
of such shares.
The address for Dr. John W. Sammon, Jr., Deanna D. Sammon and Charles A.
Constantino is c/o PAR Technology Corporation, PAR Technology Park, 8383 Seneca
Turnpike, New Hartford, NY 13413-4991.
Item 13: Certain Relationships and Related Transactions
In December 1991, PAR Microsystems Corporation granted Mr. Haney a loan
for $60,000 with interest at the prime rate, adjusted monthly, which is due on
January 2, 1997. In January 1992, PAR Microsystems Corporation granted Mr. Haney
an additional loan which totaled $540,000 with interest at the prime rate,
adjusted monthly, is also due on January 2, 1997. The principal amount of such
notes, $600,000, is secured by a Deed to Secure Debt on real estate owned by Mr.
Haney and his wife. As of December 31, 1995 the total principal and interest
outstanding on such loans was $792,000.
In 1994, Rome Research Corporation granted Mr. Constantino loans
aggregating $350,000 with interest at the prime rate. In 1994, $50,000 was
repaid to Rome Research Corporation on these loans. In 1995, Rome Research
Corporation granted Mr. Constantino additional loans totaling $50,000 with
interest at the prime rate. These loans ($350,000) together with interest were
repaid in 1995.
<PAGE>
PART IV
Item 14: Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as a part of the Form 10-K
(1) Financial Statements:
Report of Independent Accountants
Consolidated Balance Sheet at December 31, 1995 and 1994
Consolidated Statement of Income for the three
years ended December 31, 1995
Consolidated Statement of Changes in Shareholders' Equity for
the three years ended December 31, 1995
Consolidated Statement of Cash Flows for the three years
ended December 31, 1995
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
Valuation and Qualifying Accounts and Reserves (Schedule II)
(b) Reports on Form 8-K
None
(c) Exhibits
See list of exhibits
(d) Financial statement schedules
See (a)(2) above.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of PAR Technology Corporation
In our opinion, the consolidated financial statements listed in the
index appearing under Item 14(a) (1) and (2) the Annual Report on Form 10-K
present fairly, in all material respects, the financial position of PAR
Technology Corporation and its subsidiaries at December 31, 1995 and 1994, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Syracuse, New York
February 13, 1996
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share Amounts) December 31,
-------------------------
1995 1994
-------- --------
<S> <C> <C>
Assets
Current Assets:
Cash .............................................. $ 458 $ 2,912
Accounts receivable-net (Note 2) .................. 36,474 28,103
Inventories (Note 3) .............................. 17,801 16,467
Deferred income taxes (Note 7) .................... 1,303 1,034
Other current assets .............................. 1,090 1,460
-------- --------
Total current assets .......................... 57,126 49,976
Property, plant and equipment - net (Note 4) ........... 7,580 7,716
Other assets ........................................... 3,367 2,950
-------- --------
$ 68,073 $ 60,642
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable (Note 5) ............................ $ 286 $ --
Accounts payable .................................. 4,925 3,632
Accrued salaries and benefits ..................... 4,186 3,874
Accrued expenses .................................. 1,534 1,237
Deferred service revenue .......................... 2,214 2,010
Income taxes payable (Note 7) ..................... 1,005 308
-------- --------
Total current liabilities ..................... 14,150 11,061
-------- --------
Deferred income taxes (Note 7) ......................... 791 936
-------- --------
Shareholders' Equity (Note 6):
Common stock, $.02 par value, 12,000,000
shares authorized; 9,113,031 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 .................... 13,664 13,268
Retained earnings ................................. 41,732 37,074
Cumulative translation adjustment ................. (167) (181)
Treasury stock, at cost, 1,430,606 and
1,374,467 shares ................................ (2,279) (1,697)
-------- --------
Total shareholders' equity .................... 53,132 48,645
-------- --------
Contingent liabilities (Note 10)
-------- --------
$ 68,073 $ 60,642
======== ========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF INCOME
(In Thousands Except Per Share Amounts) Year ended December 31,
----------------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net revenues:
Product ........................... $ 58,306 $ 52,965 $ 43,835
Service ........................... 25,059 20,823 19,213
Contract .......................... 24,029 20,742 18,199
-------- -------- --------
107,394 94,530 81,247
-------- -------- --------
Costs of sales:
Product ........................... 34,028 32,527 25,433
Service ........................... 20,807 17,296 17,041
Contract .......................... 22,492 19,740 17,534
-------- -------- --------
77,327 69,563 60,008
-------- -------- --------
Gross margin ................ 30,067 24,967 21,239
Operating expenses:
Selling, general and administrative 17,721 14,211 13,009
Research and development .......... 5,331 5,009 4,239
-------- -------- --------
23,052 19,220 17,248
-------- -------- --------
Income before provision for
income taxes ......................... 7,015 5,747 3,991
Provision for income taxes
(Note 7) ............................. 2,357 2,086 1,462
-------- -------- --------
Net income ............................. $ 4,658 $ 3,661 $ 2,529
======== ======== ========
Earnings per common share .............. $ .58 $ .46 $ .32
======== ======== ========
Weighted average number of common
shares outstanding ................ 8,068 7,992 7,968
======== ======== ========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock Capital in Cumulative Treasury Stock
------------------ excess of Retained Translation ------------------
(In Thousands) Shares Amount Par Value Earnings Adjustment Shares Amount
------ ------- ------- ------- ------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 ...................... 8,907 $ 178 $12,727 $30,884 $ (256) (1,371) $ (1,675)
Net income ........................................ -- -- -- 2,529 -- -- --
Issuance of common stock upon the
exercise of stock options (Note 6) ............. 69 2 296 -- -- -- --
Translation adjustments ........................... -- -- -- -- (155)
----- ------- ------- ------- ------- ------ --------
Balance at December 31, 1993 ...................... 8,976 180 13,023 33,413 (411) (1,371) (1,675)
Net income ........................................ -- -- -- 3,661 -- -- --
Issuance of common stock upon the
exercise of stock options (Note 6) ............. 55 1 245 -- -- -- --
Translation adjustments ........................... -- -- -- -- 230 -- --
Acquisition of treasury stock ..................... -- -- -- -- -- (3) (22)
----- ------- ------- ------- ------- ------ --------
Balance at December 31, 1994 ...................... 9,031 181 13,268 37,074 (181) (1,374) (1,697)
Net income ........................................ -- -- -- 4,658 -- -- --
Issuance of common stock upon the
exercise of stock options (Note 6) ............. 82 1 396 -- -- -- --
Translation adjustments ........................... -- -- -- -- 14 -- --
Acquisition of treasury stock ..................... -- -- -- -- -- (57) (582)
----- ------- ------- ------- ------- ------ --------
Balance at December 31, 1995 ...................... 9,113 $ 182 $13,664 $41,732 $ (167) (1,431) $ (2,279)
===== ======= ======= ======= ======= ====== ========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands) Year ended December 31,
------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ................................... $ 4,658 $ 3,661 $ 2,529
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ....... 2,414 2,683 3,027
Provision for obsolete inventory .... 2,072 1,834 1,227
Translation adjustments ............. 14 230 (155)
Increase (decrease) from changes in:
Accounts receivable-net ............. (8,371) 1,337 (5,595)
Inventories ......................... (3,406) (1,994) (3,680)
Other current assets ................ 370 (189) (103)
Other assets ........................ (907) (57) (193)
Accounts payable .................... 1,293 267 496
Accrued salaries and benefits ....... 312 560 703
Accrued expenses .................... 297 (874) 601
Deferred service revenue ............ 204 325 20
Income taxes payable ................ 697 28 (459)
Deferred income taxes ............... (414) 231 48
------- ------- -------
Net cash provided (used) by operating activities .. (767) 8,042 (1,534)
------- ------- -------
Cash flows from investing activities:
Capital expenditures ......................... (1,288) (1,726) (1,220)
Capitalization of software costs ............. (500) (448) (1,047)
------- ------- -------
Net cash used in investing activities ............. (1,788) (2,174) (2,267)
------- ------- -------
Cash flows from financing activities:
Net borrowings (payments) under
line-of-credit agreements .................. 286 (4,087) 3,106
Proceeds from the exercise of stock options .. 397 246 298
Acquisition of treasury stock ................ (582) (22) --
------- ------- -------
Net cash provided (used) by financing activities .. 101 (3,863) 3,404
------- ------- -------
Net increase (decrease) in cash
and cash equivalents ............................ (2,454) 2,005 (397)
Cash and cash equivalents at
beginning of year ............................... 2,912 907 1,304
------- ------- -------
Cash and cash equivalents at
end of year ..................................... $ 458 $ 2,912 $ 907
======= ======= =======
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ................................. $ 20 $ 69 $ 588
Income taxes, net of refunds ............. 1,940 1,759 1,418
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 -- Summary of Significant Accounting Policies
Basis of consolidation
The consolidated financial statements include the accounts of PAR
Technology Corporation and its wholly owned subsidiaries (PAR Microsystems
Corporation, PAR Government Systems Corporation, Rome Research Corporation and
PAR Vision Systems Corporation), collectively referred to as the "Company." All
significant intercompany transactions have been eliminated in consolidation.
Revenue recognition
Revenues from sales of commercial products are generally recorded as the
products are shipped, provided that no significant vendor and post-contract
support obligations remain and the collection of the related receivable is
probable. Costs relating to any remaining insignificant vendor and post-contract
obligations are accrued. The Company's service revenues are recognized ratably
over the related contract period or as the services are performed. Billings in
advance of the Company's performance of such work are reflected as deferred
service revenue in the accompanying consolidated balance sheet.
The Company's contract revenues result primarily from contract services
performed for the United States Government under a variety of
cost-reimbursement, time-and-material and fixed-price contracts. Contract
revenues, including fees and profits, are recorded as services are performed
using the percentage-of-completion method of accounting, primarily based on
contract costs incurred to date compared with estimated costs at completion.
Anticipated losses on all contracts and programs in process are recorded in full
when identified. Unbilled accounts receivable are stated at estimated realizable
value. Contract costs, including indirect expenses, are subject to audit and
adjustment through negotiations between the Company and government
representatives. Contract revenues have been recorded in amounts that are
expected to be realized on final settlement. The Company follows accepted
industry practice and records amounts retained by the government on contracts as
a current asset.
Statement of cash flows
For purposes of reporting cash flows, the Company considers all highly
liquid investments, purchased with a remaining maturity of three months or less,
to be cash equivalents. The effect of changes in foreign-exchange rates on cash
balances is not material.
Inventories
Inventories are valued at the lower of cost or market, cost being
determined on the basis of the first-in, first-out (FIFO) method.
Property, plant and equipment
Property, plant and equipment are recorded at cost and depreciated using
the straight-line or an accelerated method over the estimated useful lives of
the assets, which range from three to twenty years. Expenditures for maintenance
and repairs are expensed as incurred.
<PAGE>
Warranties
A majority of the Company's products are under warranty for defects in
material and workmanship for various periods of time. The Company establishes an
accrual for estimated warranty costs at the time of sale.
Income taxes
The provision for income taxes is based upon pretax earnings with
deferred income taxes provided for the temporary differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities.
Foreign currency
The assets and liabilities for the Company's international operations are
translated into U.S. dollars using year-end exchange rates. Income statement
items are translated at average exchange rates prevailing during the year. The
resulting translation adjustments are recorded as a separate component of
share-holders' equity. Exchange gains and losses on intercompany balances of a
long-term investment nature are also recorded as a translation adjustment.
Foreign currency transaction gains and losses, which historically have been
immaterial, are included in net income.
Research and development costs
The Company capitalizes certain costs related to the development of
computer software under the requirements of Statement of Financial Accounting
Standards No. 86, Accounting for the Costs of Computer Software to be Sold,
Leased, or Otherwise Marketed. Software development costs incurred prior to
establishing technological feasibility are charged to operations and included in
research and development costs. Software development costs incurred after
establishing feasibility, are capitalized and amortized on a product-by-product
basis when the product is available for general release to customers. The
unamortized computer software costs included in other assets amounted to
$1,311,000 and $1,801,000 at December 31, 1995 and 1994, respectively. Annual
amortization, charged to cost of sales, is the greater of the amount computed
using the ratio that current gross revenues for a product bear to the total of
current and anticipated future gross revenues for that product, or the
straight-line method over the remaining estimated economic life of the product.
Amortization of capitalized software costs amounted to $990,000, $1,076,000 and
$1,231,000 in 1995, 1994, and 1993, respectively.
Earnings per share
Earnings per share are based upon the weighted average number of shares
outstanding plus common stock equivalents under the Company's stock option
plans.
Reclassifications
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>
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates, judgments
and assumptions that affect the reported amounts of assets, liabilities and
revenues and expenses (as well as disclosures of contingent liabilities) during
the reporting period. Actual results could differ from those estimates.
Note 2 -- Accounts Receivable
The Company's accounts receivable consist of:
<TABLE>
<CAPTION>
December 31,
(In Thousands)
-----------------------
1995 1994
------- -------
<S> <C> <C>
Government segment:
United States Government
Billed .................................... $ 2,522 $ 2,673
Unbilled .................................. 1,474 2,009
------- -------
3,996 4,682
------- -------
Other --
Billed .................................... 2,947 2,898
Unbilled .................................. 681 1,148
------- -------
3,628 4,046
------- -------
Commercial segment:
Trade accounts receivable-net ................. 28,850 19,375
------- -------
$36,474 $28,103
======= =======
</TABLE>
Included in billed amounts at December 31, 1995 are retentions totalling
$95,000. Of these retentions, $39,000 is expected to be collected in 1996.
Retained amounts are collectible upon contract completion and the acceptance of
costs incurred. At December 31, 1995 and 1994, the Company had recorded a
reserve for doubtful accounts of $768,000 and $818,000, respectively, against
trade accounts receivable. Trade accounts receivable are primarily with major
fast-food corporations or their franchisees.
<PAGE>
Note 3 -- Inventories
Inventories are used primarily in the manufacture, maintenance, and service of
commercial systems. Inventories are net of related reserves. The components of
inventory are:
<TABLE>
<CAPTION>
December 31,
(In Thousands)
---------------------------
1995 1994
------- -------
<S> <C> <C>
Finished goods ......................... $ 4,427 $ 3,891
Work in process ........................ 3,337 1,697
Component parts ........................ 3,979 5,411
Service parts .......................... 6,058 5,468
------- -------
$17,801 $16,467
======= =======
</TABLE>
Note 4 -- Property, Plant and Equipment
The components of property, plant and equipment are:
<TABLE>
<CAPTION>
December 31,
(In Thousands)
-----------------------
1995 1994
------- -------
<S> <C> <C>
Land ........................................... $ 253 $ 253
Building and improvements ...................... 8,371 8,356
Furniture and equipment ........................ 21,952 21,515
------- -------
30,576 30,124
Less accumulated depreciation
and amortization ............................... 22,996 22,408
------- -------
$ 7,580 $ 7,716
======= =======
</TABLE>
The Company has constructed certain facilities at a cost of approximately
$216,000 on land it leases from an officer. The terms of the related lease
provide that title to the facility will pass to the officer at the end of the
lease in 1996.
The Company leases office space under various operating leases. Rental
expense on these operating leases was approximately $879,000, $817,000 and
$845,000 for the years ended December 31, 1995, 1994, and 1993, respectively.
<PAGE>
Future minimum lease payments under all noncancelable operating leases
are (in thousands):
1996 716
1997 287
1998 252
1999 248
2000 180
Thereafter 308
------
$1,991
======
Note 5 -- Notes Payable
The Company has an aggregate of $27,200,000 in bank lines of credit.
Certain lines totalling $23,000,000 allow the Company to choose among unsecured
borrowings which bear interest at the prime rate (8.5% at December 31, 1995),
banker's acceptance borrowings which bear interest at a rate below the prime
rate or other bank negotiated rates below prime. These lines are negotiated
annually. The remaining line of $4,200,000 is unsecured, bears interest at the
prime rate, requires a compensating balance and expires on June 30, 1996. At
December 31, 1995, $286,000 was outstanding under these lines at an interest
rate of 6.6%.
<PAGE>
Note 6 -- Common Stock
The Company had reserved 2,052,500 shares of common stock for issuance
under its Stock Option Plans. By November 30, 1994, these Plans had expired. In
1995, the Company reserved 500,000 shares under the 1995 Stock Option Plan.
Options under this Plan may be incentive stock options or nonqualified options.
Stock options are nontransferable other than upon death and are not exercisable
prior to six months from date of grant. A summary of the stock options follows:
<TABLE>
<CAPTION>
No. of Shares Option Price Total
(In Thousands) Per Share (In Thousands)
------------- ------------ --------------
<S> <C> <C> <C>
Outstanding at December 31, 1992 911 $2.00 - $15.00 $2,987
Granted 76 4.00 - 6.06 372
Exercised (69) 3.00 - 5.00 (228)
Forfeited (55) 3.00 - 11.00 (249)
------ ------
Outstanding at December 31, 1993 863 2.00 - 15.00 2,882
Granted 72 6.50 - 7.25 476
Exercised (55) 3.00 - 5.00 (169)
Forfeited (21) 3.00 - 15.00 (110)
------ ------
Outstanding at December 31, 1994 859 2.00 - 13.00 3,079
Granted 38 9.31 - 10.19 372
Exercised (82) 3.00 - 5.81 (269)
Forfeited (5) 5.25 - 13.00 (56)
------ -------
Outstanding at December 31, 1995 810 $2.00 - $11.25 $3,126
====== =======
Shares remaining
available for grant 462
======
Total shares vested and exercisable
as of December 31, 1995 602
======
</TABLE>
<PAGE>
Note 7-- Income Taxes
The provision for income taxes consists of:
<TABLE>
<CAPTION>
Year ended December 31,
(In Thousands)
----------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Current tax expense:
Federal ........................... $ 2,248 $ 1,219 $ 826
State ............................. 542 457 250
Foreign ........................... (11) 150 161
------- ------- -------
2,779 1,826 1,237
------- ------- -------
Deferred income tax:
Federal ........................... (422) 260 225
------- ------- -------
Provision for income taxes ............. $ 2,357 $ 2,086 $ 1,462
======= ======= =======
</TABLE>
Deferred tax liabilities (assets) are comprised of the following at:
<TABLE>
<CAPTION>
December 31,
(In Thousands)
------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Depreciation ......................... $ 744 $ 730 $ 712
Software development expense ......... 446 612 826
Other ................................ -- 136 79
------- ------- -------
Gross deferred liabilities ........... 1,190 1,478 1,617
------- ------- -------
Reserves ............................. (1,250) (1,132) (1,444)
Capitalized inventory costs .......... (84) (90) (98)
Wage and salary accruals ............. (342) (314) (311)
Other ................................ (26) (40) (93)
------- ------- -------
Gross deferred tax assets ............ (1,702) (1,576) (1,946)
------- ------- -------
$ (512) $ (98) $ (329)
======= ======= =======
</TABLE>
<PAGE>
Total income tax provision differed from total tax expense as computed by
applying the statutory U.S. federal income tax rate to income before taxes. The
reasons were:
<TABLE>
<CAPTION>
Year ended December 31,
----------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Statutory U.S. federal tax rate ............ 34.0% 34.0% 34.0%
State taxes net of federal benefit ......... 5.1 5.2 2.5
Foreign income taxes ....................... .8 2.6 4.0
FSC benefit ................................ (2.6) (1.4) (1.6)
Adjustment to prior years' accrual ......... 1.8 2.5 --
Foreign tax credits ........................ (7.7) (6.5) (2.1)
Other ...................................... 2.2 (0.1) (.2)
---- ---- ----
33.6% 36.3% 36.6%
==== ==== ====
</TABLE>
The provision for income taxes is based on income before income taxes as
follows:
<TABLE>
<CAPTION>
Year ended December 31,
(In Thousands)
--------------------------------------
1995 1994 1993
------- ------- -------
<S> <C> <C> <C>
Domestic operations .............. $ 7,697 $ 5,519 $ 3,953
Foreign operations ............... (682) 228 38
------- ------- -------
Total ....................... $ 7,015 $ 5,747 $ 3,991
======= ======= =======
</TABLE>
Note 8 -- Employee Benefit Plans
The Company has a deferred profit-sharing retirement plan that covers
substantially all employees. The Company's annual contribution to the plan is
discretionary. The contributions to the plan in 1995, 1994 and 1993 were
approximately $824,000, $749,000 and $626,000, respectively. The plan also
contains a 401(K) provision that allows employees to contribute a percentage of
their salary.
The Company also maintains an incentive-compensation plan. Participants
in the plan are key employees as determined by executive management.
Compensation under the plan is based on the achievement of predetermined
financial performance goals of the Company and its subsidiaries. Awards under
the plan are payable in cash. For the years ended December 31, 1995, 1994 and
1993, the Company expensed approximately $628,000, $764,000 and $506,000,
respectively, in cash awards under the plan.
<PAGE>
Note 9 -- Investment in Affiliate
In June 1992, the Company was approved under the Department of Defense
Mentor-Protege Program as a mentor for a minority-owned government contractor,
Phoenix Systems and Technology, Inc. (Phoenix). Concurrent with this approval,
the Company acquired a 44% interest in Phoenix which is accounted for under the
equity method.
The Company is a subcontractor to Phoenix on certain engineering service
contracts with the United States Government. Additionally, Phoenix rents its
office space from the Company. Phoenix is also a vendor to PAR providing
manufacturing and some contract services. As a result of this business
relationship, PAR had a net receivable from Phoenix of $1,000,000 at December
31, 1994. During 1995 $450,000 of this amount was paid and the Company recorded
an allowance for the remainder. During 1995, PAR billed Phoenix approximately
$1.6 million and Phoenix billed PAR $1.1 million in connection with the above
activities. At December 31, 1995, the Company had recorded $957,000 of
receivables relating to 1995 activities. This amount is net of a $282,000
allowance and is included in other assets in the consolidated balance sheet. The
Company determined that allowances were necessary as a result of delays in new
contract starts, Phoenix exiting certain unprofitable manufacturing activities
and the settlement of a contracting claim with the federal government. Also
during 1995, as a result of the Company's equity in Phoenix's losses, the
Company's remaining investment of $264,000 was written off.
In connection with the Mentor-Protege program discussed above, Company
management assisted Phoenix in the development of their business plan for 1996
and beyond. This plan, which Phoenix believes to be achievable, anticipates the
development of a profitable manufacturing business and continued profitable
services business. The plan provides for payment of the amount due the Company
over the next three years. The Company has also guaranteed a $1,000,000
line-of-credit borrowing of Phoenix. If Phoenix is unable to successfully
execute its business plan, the Company could incur additional losses.
Note 10 -- Contingencies
The Company is subject to legal proceedings which arise in the ordinary
course of business. Additionally, Government contract costs are subject to
periodic audit and adjustment. In the opinion of Management, the ultimate
liability, if any, with respect to these actions will not materially affect the
financial position of the Company.
Note 11 -- Industry Segments
The Company, through its separate operating subsidiaries, operates in two
principal segments: a Commercial segment and a Government segment. The
Commercial segment designs, develops, manu-factures, sells, installs and
services point-of-sale terminal systems for the restaurant industry, industrial
data collection systems for manufacturing industries, and image processing
systems for the ophthalmic and food-processing industries. The Government
segment designs and implements advanced technology computer software systems
primarily for military and intelligence agency applications, and provides
services for operating and maintaining certain U.S. Government-owned test sites,
and for planning, executing and evaluating experiments involving new or advanced
radar systems. Inter-segment sales and transfers are not material.
<PAGE>
Information as to the Company's operations in these two segments is set
forth below:
<TABLE>
<CAPTION>
Year ended December 31,
(In Thousands)
-----------------------------------
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Revenues:
Commercial segment
United States .................. $ 76,984 $ 67,079 $ 57,636
Europe ......................... 6,335 5,579 4,352
Australia ...................... 2,654 4,299 3,372
Other Non U.S. ................. 3,432 3,190 1,869
Eliminations ................... (6,040) (6,359) (4,181)
Government segment ................. 24,029 20,742 18,199
--------- --------- ---------
Total ............................ $ 107,394 $ 94,530 $ 81,247
========= ========= =========
Income before provision for income taxes:
Commercial segment
United States .................. $ 4,880 $ 2,930 $ 2,104
Europe ......................... 1,047 783 395
Australia ...................... 260 840 549
Other Non U.S. ................. 164 215 331
Government segment ................. 1,389 1,020 645
Corporate .......................... (725) (41) (33)
--------- --------- ---------
Total ............................ $ 7,015 $ 5,747 $ 3,991
========= ========= =========
Identifiable assets:
Commercial segment
United States .................. $ 50,186 $ 39,574 $ 43,826
Europe ......................... 3,263 3,227 2,335
Australia ...................... 1,195 1,341 1,341
Other Non U.S. ................. 2,511 2,920 1,339
Government segment ................. 10,730 9,834 9,935
Corporate .......................... 188 3,746 1,673
--------- --------- ---------
Total .......................... $ 68,073 $ 60,642 $ 60,449
========= ========= =========
Depreciation and amortization:
Commercial segment ................. $ 1,959 $ 2,304 $ 2,609
Government segment ................. 210 182 232
Corporate .......................... 245 197 186
--------- --------- ---------
Total .......................... $ 2,414 $ 2,683 $ 3,027
========= ========= =========
Capital expenditures:
Commercial segment ................. $ 1,063 $ 1,051 $ 895
Government segment ................. 137 295 119
Corporate .......................... 88 380 206
--------- --------- ---------
Total .......................... $ 1,288 $ 1,726 $ 1,220
========= ========= =========
</TABLE>
<PAGE>
Customers comprising 10% or more of the Company's Commercial segment
sales are summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Taco Bell Corporation ................... 42% 34% 34%
McDonald's Corporation .................. 27% 31% 31%
Kentucky Fried Chicken .................. 6% 10% 9%
All Others .............................. 25% 25% 26%
--- --- ---
100% 100% 100%
=== === ===
</TABLE>
Substantially all revenues derived by the Government segment arise from
Federal government contracts, or subcontracts related thereto, virtually all of
which are with the Department of Defense.
Note 12 -- Fair Value of Financial Instruments
Financial instruments consist of the following:
<TABLE>
<CAPTION>
December 31, 1995
(In Thousands)
-------- ------
Carrying Fair
Value Value
-------- -----
<S> <C> <C>
Cash and cash equivalents ........................ $458 $458
Long-term receivables and ........................ 957 957
other investments
Notes Payable .................................... 286 286
</TABLE>
Fair value of financial instruments classified as current assets or
liabilities approximate carrying value due to the short-term maturity of the
instruments. Fair value of long-term receivables and other investments was based
on discounted cash flows.
<PAGE>
Note 13 -- Selected Quarterly Financial Data (Unaudited)
<TABLE>
<CAPTION>
Quarter ended
(In Thousands Except Per Share Amounts)
-------------------------------------------------------
1995 March 31 June 30 September 30 December 31
---- --------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Total revenues .... $24,034 $24,366 $23,980 $35,014
Gross margin ...... 6,151 6,494 7,032 10,390
Net income ........ 390 636 1,533 2,099
Earnings per
common share .... $ .05 $ .08 $ .19 $ .26
======= ======= ======= =======
<CAPTION>
Quarter ended
(In Thousands Except Per Share Amounts)
-------------------------------------------------------
1994 March 31 June 30 September 30 December 31
---- --------- ------- ------------ -----------
<S> <C> <C> <C> <C>
Total revenues .... $20,770 $23,123 $23,903 $26,734
Gross margin ...... 5,002 5,667 6,617 7,681
Net income ........ 227 468 1,444 1,522
Earnings per
common share .... $ .03 $ .06 $ .18 $ .19
======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING
ACCOUNTS AND RESERVES
(In Thousands)
- ------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ------------------------------------------------------------------------------------------------------------------------
Additions
Balance at --------------------------------
beginning of Charged to Costs Charged to Balance at end
Description period and Expenses Other Accounts Deductions of period
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Allowance for Doubtful
Accounts - deducted from
Accounts Receivable in
the Balance Sheet
1995 $ 818 137 (187) (a) $ 768
1994 $ 771 321 (274) (b) $ 818
1993 $ 691 206 (126) (c) $ 771
(a) Uncollectible accounts written off during 1995.
(b) Uncollectible accounts written off during 1994.
(c) Uncollectible accounts written off during 1993.
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
- ------------------------------------------------------------------------------------------------------------------------
Additions
Balance at --------------------------------
beginning of Charged to Costs Charged to Balance at end
Description period and Expenses Other Accounts Deductions of period
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Inventory Reserves
- - deducted from Inventory
in the Balance Sheet
1995 $ 2,860 2,072 (3,010) $ 1,922
1994 $ 4,136 1,834 (3,110) $ 2,860
1993 $ 7,154 1,277 (4,295) $ 4,136
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 of 15(d) 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
March 22, 1996 /s/John W. Sammon, Jr.
----------------------
John W. Sammon, Jr.
Chairman of Board and President
-------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Signatures Title Date
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
/s/John W. Sammon, Jr.
- ----------------------------
John W. Sammon, Jr. Chairman of Board and March 22, 1996
President (Principal
Executive Officer)
and Director
/s/Charles A. Constantino
- ----------------------------
Charles A. Constantino Executive Vice President March 22, 1996
and Director
/s/Sangwoo Ahn
- ----------------------------
Sangwoo Ahn Director March 22, 1996
/s/Ronald J. Casciano
- ----------------------------
Ronald J. Casciano Vice President, Chief Financial March 22, 1996
Officer and Treasurer
</TABLE>
<PAGE>
List of Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description of Instrument
- --------------------------------------------------------------------------------------
<S> <C> <C>
3(a) Copy of registrant's Amended Filed as Exhibit 3(a)
and Restated Certificate of to Registration Statement
Incorporation on Form S-1 (File No. 2-80077)
of PAR Technology Corporation
incorporated herein by reference.
3(b) Copy of registrant's by-laws Filed as Exhibit 3(b)
as amended to Registration Statement
on Form S-1 (File No. 2-80077)
of PAR Technology Corporation
incorporated herein by reference.
11 Statement re computation of
per-share earnings
22 Subsidiaries of the registrant
24 Consent of independent accountants
</TABLE>
<TABLE>
<CAPTION>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER-SHARE EARNINGS
(In Thousands)
1995 1994 1993
------ ------ ------
<S> <C> <C> <C>
Weighted average shares of
common stock outstanding:
Balance outstanding - beginning of year ..... 7,656 7,605 7,536
Weighted average shares
issued during the year ...................... 51 39 28
Weighted average shares of
treasury stock acquired ..................... (23) (3) --
Incremental shares of common stock
outstanding giving effect to stock
options ..................................... 384 351 404
------ ------ ------
Weighted balance - end of year .............. 8,068 7,992 7,968
====== ====== ======
</TABLE>
EXHIBIT 22
Subsidiaries of PAR Technology Corporation
================================================================================
Name State of Incorporation
================================================================================
PAR Microsystems Corporation New York
PAR Government Systems Corporation New York
Rome Research Corporation New York
PAR Vision Systems Corporation New York
Transaction Control Industries, Inc. Texas
PAR U.K. Corp. New York
EXHIBIT 24
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 2-82392, 33-04968, 33-39784, 33-58110 and 33-63095)
of PAR Technology Corporation of our report dated February 13, 1996 appearing at
Item 14 of this Form 10-K.
PRICE WATERHOUSE LLP
Syracuse, New York
March 22, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 458
<SECURITIES> 0
<RECEIVABLES> 36,474
<ALLOWANCES> 0
<INVENTORY> 17,801
<CURRENT-ASSETS> 57,126
<PP&E> 7,580
<DEPRECIATION> 0
<TOTAL-ASSETS> 68,073
<CURRENT-LIABILITIES> 14,150
<BONDS> 0
0
0
<COMMON> 182
<OTHER-SE> 52,950
<TOTAL-LIABILITY-AND-EQUITY> 68,073
<SALES> 58,306
<TOTAL-REVENUES> 107,394
<CGS> 34,028
<TOTAL-COSTS> 77,327
<OTHER-EXPENSES> 5,331
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 7,015
<INCOME-TAX> 2,357
<INCOME-CONTINUING> 4,658
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,658
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
</TABLE>
