SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1996. Commission File Number 1-9720
OR
[ ] TRANSITION REPORT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From __________ to __________
Commission File Number __________
PAR TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 16-1434688
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
PAR Technology Park
8383 Seneca Turnpike
New Hartford, NY 13413-4991
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (315) 738-0600
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the pre-ceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of registrant's common stock, as of April
30, 1996 - 7,752,178 shares.
<PAGE>
PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
FORM 10-Q
PART 1
FINANCIAL INFORMATION
Item Number
-----------
Item 1. Financial Statements
- Consolidated Statement of Income for
the Three Months Ended March 31, 1996
and 1995
- Consolidated Balance Sheet at March 31, 1996
and December 31, 1995
- Consolidated Statement of Cash Flows
for the Three Months Ended March 31, 1996 and 1995
- Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
Item 1.
Financial Statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In Thousands Except Per Share Amounts)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three months
ended March 31,
--------------------
1996 1995
-------- --------
<S> <C> <C>
Net revenues:
Product .......................................... $ 10,880 $ 12,342
Service .......................................... 7,677 5,607
Contract ......................................... 6,937 6,085
-------- --------
25,494 24,034
-------- --------
Costs of sales:
Product .......................................... 6,778 7,663
Service .......................................... 6,261 4,450
Contract ......................................... 6,513 5,770
-------- --------
19,552 17,883
-------- --------
Gross margin ..................................... 5,942 6,151
Operating expenses:
Selling, general and administrative .............. 3,744 4,179
Research and development ......................... 1,351 1,333
-------- --------
5,095 5,512
-------- --------
Income before provision
for income taxes ................................. 847 639
Provision for income taxes ....................... 296 249
-------- --------
Net income ....................................... $ 551 $ 390
======== ========
Earnings per common share ........................ $ .07 $ .05
======== ========
Weighted average number of common
shares outstanding ............................... 8,157 8,073
======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
March 31,
1996 December 31,
(Unaudited) 1995
--------- ------------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents .......................... $ 2,448 $ 458
Accounts receivable-net ............................ 29,151 36,474
Inventories ........................................ 20,921 17,801
Deferred income taxes .............................. 1,129 1,303
Other current assets ............................... 2,470 1,090
-------- --------
Total current assets ............................... 56,119 57,126
Property, plant and equipment - net ................ 7,281 7,580
Other assets ....................................... 2,964 3,367
-------- --------
$ 66,364 $ 68,073
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable ...................................... $ 383 $ 286
Accounts payable ................................... 4,051 4,925
Accrued salaries and benefits ...................... 3,475 4,186
Accrued expenses ................................... 766 1,534
Deferred service revenue ........................... 2,606 2,214
Income taxes payable ............................... 340 1,005
-------- --------
Total current liabilities .......................... 11,621 14,150
-------- --------
Deferred income taxes .............................. 787 791
-------- --------
Shareholders' Equity:
Common stock, $.02 par value, 12,000,000
shares authorized; 9,177,884 and 9,113,031 shares
issued and outstanding ............................. 184 182
Preferred stock, $.02 par value, 250,000 shares
authorized ......................................... -- --
Capital in excess of par value ..................... 13,901 13,664
Retained earnings .................................. 42,283 41,732
Cumulative translation adjustment .................. (133) (167)
Less 1,430,606 shares in treasury, at cost ......... (2,279) (2,279)
-------- --------
Total shareholders' equity ......................... 53,956 53,132
-------- --------
$ 66,364 $ 68,073
======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three
months ended
March 31,
----------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities: ..................
Net income ............................................. $ 551 $ 390
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .......................... 655 610
Provision for obsolete inventory ....................... 62 341
Translation adjustments ................................ 34 200
Increase (decrease) from changes in:
Accounts receivable-net ................................ 7,323 3,012
Inventories ............................................ (3,182) (1,491)
Other current assets ................................... (1,380) (162)
Other assets ........................................... 245 328
Accounts payable ....................................... (874) (749)
Accrued salaries and benefits .......................... (711) (403)
Accrued expenses ....................................... (768) 21
Deferred service revenue ............................... 392 259
Income taxes payable ................................... (665) 526
Deferred income taxes .................................. 170 (448)
-------- --------
Net cash provided by operating activities .............. 1,852 2,434
-------- --------
Cash flows from investing activities:
Capital expenditures ................................... (102) (346)
Capitalization of software costs ....................... (96) (140)
-------- --------
Net cash used by investing activities .................. (198) (486)
-------- --------
Cash flows from financing activities:
Net borrowings under line-of-credit agreements ......... 97 --
Proceeds from the exercise of stock options ............ 239 67
Acquisition of treasury stock .......................... -- --
-------- --------
Net cash provided by
financing activities ................................... 336 67
-------- --------
Net increase in cash and cash equivalents .............. 1,990 2,015
Cash and cash equivalents at beginning of year ......... 458 2,912
-------- --------
Cash and cash equivalents at end of period ............. $ 2,448 $ 4,927
======== ========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ............................................... $ 20 $ 9
Income taxes paid, net of refunds ...................... 764 131
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The statements for the three months ended March 31, 1996 and 1995 are
unaudited; in the opinion of the Company such unaudited statements include
all adjustments (which comprise only normal recurring accruals) necessary
for a fair presentation of the results for such periods. The consolidated
financial statements for the year ending December 31, 1996 are subject to
adjustment at the end of the year when they will be audited by independent
accountants. The results of operations for the three months ended March 31,
1996 are not necessarily indicative of the results of operations to be
expected for the year ending December 31, 1996. The consolidated financial
statements and notes thereto should be read in conjunction with the
financial statements and notes for the years ended in December 31, 1995 and
1994 included in the Company's December 31, 1995 Annual Report to the
Securities and Exchange Commission on Form 10-K. Earnings per share are
based on the weighted average number of shares outstanding plus common
stock equivalents under the Company's stock option plans.
2. Inventories are used in the manufacture of Point-Of-Sale systems and other
commercial products. The components of inventory, net of related reserves,
consist of the following:
<TABLE>
<CAPTION>
(In Thousands)
March 31, December 31,
1996 1995
------- -------
<S> <C> <C>
Finished goods ......... $ 5,904 $ 4,427
Work in process ........ 2,575 3,337
Component parts ........ 5,459 3,979
Service parts .......... 6,983 6,058
------- -------
$20,921 $17,801
======= =======
</TABLE>
At March 31, 1996 and December 31, 1995, the Company had recorded
reserves for obsolete inventory of $1,494,000 and $1,922,000,
respectively.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996
COMPARED WITH
QUARTER ENDED MARCH 31, 1995
The Company reported an increase in net income of 41.3% for the quarter
ended March 31, 1996 compared to the same quarter of 1995. Net income was
$551,000, or earnings per share of $0.07, on net revenues of $25.5 million for
the quarter ended March 31, 1996, compared to net income of $390,000, or
earnings per share of $0.05 on net revenues of $24.0 million for the same
quarter of 1995.
Product revenues decreased 11.8% to $10.9 million in 1996 versus $12.3
million in 1995. This decrease was the result of the timing of Taco Bell's
requirements under its sales contract with the Company. In the first quarter of
1995, Taco Bell's demand for systems was high due to the size of the replacement
program during that period. The Company will continue providing systems to Taco
Bell under its current contract which runs through March, 1997; however, because
the timing of replacement programs and new store openings is determined by Taco
Bell based on its requirements, the volume of system sales to Taco Bell in any
quarter may vary from the prior comparable quarter. Partially offsetting this
decrease was an increase in sales to KFC in several international markets.
During the current period, the Company sold 15 systems for use in China and 23
systems for use in Thailand to KFC.
Service revenues increased 36.9% to $7.7 million in the first quarter of
1996 compared to $5.6 million for the first quarter of 1995. This increase was
due to a greater volume of special integration projects requested by customers
in 1996 compared to 1995 and the ongoing activities with Taco Bell under the
exclusive service integration contract awarded in 1995. Under this agreement,
the Company is responsible for servicing of all POS systems, back office systems
and Help Desk and On-Site Support activities.
Contract revenues were $6.9 million in 1996, an increase of 14.0% from $6.1
million reported in 1995. The Government segment's software development and
systems integration business increased due to its ongoing work in environmental
monitoring systems and hazardous material tracking. Additionally, the Company
continues to perform as a subcontractor to Northrop Grumman on the Joint
Surveillance Target Attack System (Joint STARS) Program. The Company's
engineering services business increased primarily due to the Griffiss Minimum
Essential Airfield Contract awarded to Phoenix in 1995. The Company is a
subcontractor to Phoenix to operate and maintain Griffiss Air Force Base.
Gross margin on product revenues was 37.7% in the first quarter of 1996,
virtually unchanged from the 37.9% for the first quarter of 1995. Although the
Company has experienced reductions in average selling price to certain customers
during this period as compared to the first quarter of 1995, the impact has been
mitigated by favorable product mix and cost reduction programs implemented by
the Company.
Gross margin on service revenues was 18.4% for the three months ended March
1996 versus 20.6% for the same three months of 1995. This decline was primarily
the result of lower margins attributable to the special integration projects
discussed above.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED MARCH 31, 1996
COMPARED WITH
QUARTER ENDED MARCH 31, 1995
Gross margin on contract revenues was 6.1% in 1996 versus 5.2% in 1995. The
improved margins were due to favorable contract mix in 1996 versus 1995.
Selling, general and administrative expenses were $3.7 million in 1996, a
decline of 10.4% from the $4.2 million reported in 1995. This decrease was
mainly the result of nonrecurring charges in 1995 relating to the Company's
accounts receivable from and equity interest in Phoenix. This was partially
offset by an increase in the restaurant sales force costs in 1996 over 1995.
Research and development expenses increased 1.4% to $1.4 million in 1996
compared to $1.3 million in 1995. Research and development costs attributable to
government contracts are included in costs of contract revenues.
The Company's effective tax rate was 34.9% in 1996 compared to 39.0% in
1995. This decrease was due to adjustments to prior years' accruals in 1995.
Liquidity and Capital Resources
The Company's primary source of liquidity has been from operations. Cash
provided by operating activities was $1.9 million in the first quarter of 1996,
compared to $2.4 million in 1995. The Company historically has experienced
significant collections of accounts receivable in its first quarter due to the
volume of sales generated in the preceding quarter. This is primarily due to the
seasonal demands of the Company's restaurant customers. However, this factor was
offset by the build up of product and service inventory in anticipation of
future sales orders and service requirements and the timing of estimated income
tax payments in 1996 versus 1995.
Cash used in investing activities was $198,000 for the first quarter of
1996 compared to $486,000 in 1995. In 1996, capital expenditures were for
internal use computers and other miscellaneous items. In 1995, capital
expenditures were primarily for upgrades to internal use software.
Cash provided from financing activities was $336,000 for the first quarter
of 1996 compared to $67,000 in 1995. This increase was due primarily to the
proceeds from the exercise of stock options.
The Company has line-of-credit agreements, which aggregate $27.2 million
with certain banks, of which $383,000 was in use at March 31, 1996. The Company
believes that it has adequate financial resources to meet its future liquidity
and capital requirements.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
List of Exhibits
Exhibit No. Description of Instrument
----------- -------------------------
11 Statement re computation of per-share earnings
Reports on Form 8-K
None during the first quarter of 1996.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAR TECHNOLOGY CORPORATION
--------------------------
(Registrant)
Date: May 14, 1996
RONALD J. CASCIANO
------------------
Ronald J. Casciano
Vice President, Chief Financial Officer
and Treasurer
Exhibit Index
Exhibit
-------
11 - Statement re computation
of per-share earnings
<PAGE>
Exhibit 11
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
(In Thousands)
<TABLE>
<CAPTION>
For the three months
ended March 31,
-------------------
1996 1995
-------------------
<S> <C> <C>
Primary and Fully Diluted Earnings Per Share:
Weighted average shares of common stock outstanding:
Balance - beginning of period .............................. 7,682 7,656
Weighted average shares issued ............................. 18 16
Assumed exercise of certain stock options .................. 457 401
----- -----
Weighted shares - end of period ............................ 8,157 8,073
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,448
<SECURITIES> 0
<RECEIVABLES> 29,151
<ALLOWANCES> 0
<INVENTORY> 20,921
<CURRENT-ASSETS> 56,119
<PP&E> 7,281
<DEPRECIATION> 0
<TOTAL-ASSETS> 66,364
<CURRENT-LIABILITIES> 11,621
<BONDS> 0
0
0
<COMMON> 184
<OTHER-SE> 53,772
<TOTAL-LIABILITY-AND-EQUITY> 66,364
<SALES> 10,880
<TOTAL-REVENUES> 25,494
<CGS> 6,778
<TOTAL-COSTS> 19,552
<OTHER-EXPENSES> 1,351
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 847
<INCOME-TAX> 296
<INCOME-CONTINUING> 551
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 551
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
