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 September 30, 1998. 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
October 30, 1998 - 8,742,865 shares.
<PAGE>
PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
FORM 10-Q
PART 1
FINANCIAL INFORMATION
Item Number
-----------
Item 1. Financial Statements
- Consolidated Statement of Income for
the Three and Nine Months Ended
September 30, 1998 and 1997
- Consolidated Balance Sheet at
September 30, 1998 and December 31, 1997
- Consolidated Statement of Cash Flows
for the Nine Months Ended
September 30, 1998 and 1997
- Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
<PAGE>
Item 1.
Financial Statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
---------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues:
Product ........................... $ 19,683 $ 16,993 $ 39,599 $ 32,790
Service ........................... 7,703 7,105 21,908 20,280
Contract .......................... 6,077 7,435 19,114 18,203
-------- -------- -------- --------
33,463 31,533 80,621 71,273
-------- -------- -------- --------
Costs of sales:
Product ........................... 13,779 10,969 28,453 23,541
Service ........................... 6,845 5,891 19,696 17,344
Contract .......................... 5,171 7,025 17,145 17,300
-------- -------- -------- --------
25,795 23,885 65,294 58,185
-------- -------- -------- --------
Gross margin ................ 7,668 7,648 15,327 13,088
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 4,722 4,510 13,669 14,953
Research and development .......... 1,399 1,021 4,275 3,524
Non-recurring charges ............. (157) -- (807) 4,919
-------- -------- -------- --------
5,964 5,531 17,137 23,396
-------- -------- -------- --------
Income (loss) from operations .......... 1,704 2,117 (1,810) (10,308)
Other income, net ...................... 94 132 405 385
-------- -------- -------- --------
Income (loss) before provision for
income taxes ......................... 1,798 2,249 (1,405) (9,923)
Provision (benefit) for income taxes ... 632 818 (499) (3,617)
-------- -------- -------- --------
Net income (loss) ...................... $ 1,166 $ 1,431 $ (906) $ (6,306)
======== ======== ======== ========
Basic and Diluted earnings (loss)
per common share ..................... $ .13 $ .16 $ (.10) $ (.71)
======== ======== ======== ========
Weighted average shares outstanding
Diluted ........................... 8,959 9,060 8,878 8,844
======== ======== ======== ========
Basic ............................. 8,841 8,849 8,878 8,844
======== ======== ======== ========
</TABLE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
---------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) ....................... $ 1,166 $ 1,431 $ (906) $(6,306)
Other comprehensive income (loss), net of tax:
Foreign currency translation
adjustments ........................ (22) (147) (13) (478)
------- ------- ------- -------
Comprehensive income (loss) ............. $ 1,144 $ 1,284 $ (919) $(6,784)
======= ======= ======= =======
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands Except Share Amounts)
<TABLE>
<CAPTION>
September 30,
1998 December 31,
Assets (Unaudited) 1997
- ------ ------------ -----------
<S> <C> <C>
Current Assets:
Cash .............................................. $ 1,596 $ 3,977
Accounts receivable-net ........................... 36,971 29,938
Inventories ....................................... 29,869 31,168
Income tax refund claims .......................... 625 214
Deferred income taxes ............................. 3,093 5,876
Other current assets .............................. 1,132 1,340
-------- --------
Total current assets .......................... 73,286 72,513
Property, plant and equipment - net .................... 8,371 7,013
Other assets ........................................... 4,544 3,678
-------- --------
$ 86,201 $ 83,204
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable ..................................... $ 3,678 $ 195
Accounts payable .................................. 8,959 8,664
Accrued salaries and benefits ..................... 4,288 3,804
Accrued expenses .................................. 3,388 3,444
Deferred service revenue .......................... 3,719 3,024
-------- --------
Total current liabilities ..................... 24,032 19,131
-------- --------
Deferred income taxes .................................. 729 656
-------- --------
Shareholders' Equity:
Common stock, $.02 par value,
12,000,000 shares authorized;
9,513,571 and 9,466,771 shares issued
8,697,465 and 8,864,265 outstanding ............. 190 189
Preferred stock, $.02 par value,
250,000 shares authorized ....................... -- --
Capital in excess of par value .................... 28,051 27,875
Retained earnings ................................. 38,054 38,960
Cumulative translation adjustment ................. (695) (682)
Treasury stock, at cost, 816,106 and 602,506 shares (4,160) (2,925)
-------- --------
Total shareholders' equity .................... 61,440 63,417
-------- --------
Contingent liabilities
-------- --------
$ 86,201 $ 83,204
======== ========
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
--------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss ............................................. $ (906) $(6,306)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization ...................... 1,731 1,704
Provision for obsolete inventory ................... 2,067 2,619
Translation adjustments ............................ (13) (478)
Increase (decrease) from changes in:
Accounts receivable-net .......................... (7,033) 8,764
Inventories ...................................... (768) (6,083)
Income tax refund claims ......................... (411) (1,916)
Other current assets ............................. 208 (409)
Other assets ..................................... (582) 1,720
Accounts payable ................................. 295 (41)
Accrued salaries and benefits .................... 484 690
Accrued expenses ................................. (56) (5)
Deferred service revenue ......................... 695 304
Deferred income taxes ............................ 2,856 (1,663)
------- -------
Net cash used in operating activities ........... (1,433) (1,100)
------- -------
Cash flows from investing activities:
Capital expenditures ............................... (2,607) (1,197)
Capitalization of software costs ................... (766) (1,106)
------ -------
Net cash used in investing activities ........... (3,373) (2,303)
------ -------
Cash flows from financing activities:
Net borrowings under line-of-credit agreements ..... 3,483 10
Proceeds from the exercise of stock options ........ 177 131
Acquisition of treasury stock ...................... (1,235) (163)
------- -------
Net cash provided (used) in financing activities 2,425 (22)
------- -------
Net decrease in cash and cash equivalents ........... (2,381) (3,425)
Cash and cash equivalents at beginning of year ...... 3,977 8,391
------- -------
Cash and cash equivalents at end of period .......... $ 1,596 $ 4,966
======= =======
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest ........................................... $ 12 $ 13
Income taxes, net of refunds ....................... (2,891) (101)
</TABLE>
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The statements for the three and nine months ended September 30, 1998 and
1997 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, 1998 are
subject to adjustment at the end of the year when they will be audited by
independent accountants. The results of operations for the three and nine
months ended September 30, 1998 are not necessarily indicative of the
results of operations to be expected for the year ending December 31, 1998.
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, 1997 and 1996 included in the Company's December 31, 1997
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:
(In Thousands)
--------------
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ -----------
<S> <C> <C>
Finished goods $ 8,766 $ 8,635
Work in process 3,304 4,184
Component parts 8,002 9,883
Service parts 9,797 8,466
------- -------
$29,869 $31,168
======= =======
</TABLE>
At September 30, 1998 and December 31, 1997, the Company had recorded
reserves for obsolete inventory of $3,323,000 and $3,800,000, respectively.
3. In 1997, the Company adopted Statement of Financial Accounting Standards
No. 128 Earnings per Share (SFAS 128), which specifies the computation,
presentation, and disclosure requirements for earnings per share (EPS). It
replaces the presentation of primary and fully diluted EPS with basic and
diluted EPS. Basic EPS excludes all dilution. It is based upon the weighted
average number of common shares outstanding during the period. Diluted EPS
reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common
stock. Previously presented EPS amounts have been restated to reflect the
method of computation required by SFAS 128.
<PAGE>
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The following is a reconciliation of the weighted average shares
outstanding for the basic and diluted EPS computations (In Thousands except
per share data):
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1998
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Basic EPS .................... $ 1,166 8,841 $ .13
Effect of Stock Options ...... 118
------- -----
Diluted EPS$ ................. 1,166 8,959 $ .13
======= ===== =======
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1997
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Basic EPS .................... $ 1,431 8,849 $ .16
Effect of Stock Options ...... 211
------- ------
Diluted EPS$ ................. 1,431 9,060 $ .16
======= ====== =======
</TABLE>
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1997
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Basic and Diluted EPS ........ $ (906) 8,878 $ (.10)
====== ===== =======
</TABLE>
<TABLE>
<CAPTION>
For the Nine Monthes Ended September 30, 1997
---------------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
<S> <C> <C> <C>
Basic and Diluted EPS ........ $ (6,306) 8,844 $ (.71)
======== ===== =======
</TABLE>
The diluted EPS calculations for the nine months ended September 30, 1998
and 1997 exclude the effect of stock options, as they would have been
antidilutive.
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1998
COMPARED WITH
QUARTER ENDED SEPTEMBER 30, 1997
The Company reported net income of $1.2 million or earnings per share of
$.13 for the third quarter of 1998. Revenues for the quarter were $33.5 million.
These results compare to net income of $1.4 million or earnings per share of
$.16 and revenues of $31.5 million for the third quarter of 1997.
Product revenues were $19.7 million in the third quarter of 1998, an
increase of 16% from the $17 million recorded in the third quarter of 1997. This
growth was lead by increased domestic sales to McDonald's Corporation. The
Company's POS 4 hardware products have been generally accepted by this major
customer and meet the POS requirements of their "made for you" initiative.
Higher sales to Chick-fil-A also contributed to this increase. The Company also
recorded a 16% increase in international product revenue with growth recorded in
the Middle East, South America, Europe and Africa. The Company's major customers
abroad include McDonald's, Burger King, Tricon and Wendy's. The increase was
partially offset by lower domestic sales to Burger King as the Company completed
delivery of POS systems in 1997 under its corporate contract with this customer.
Customer service revenues were $7.7 million in the third quarter of 1998,
an increase of 8% from the $7.1 million in the second quarter of 1997. In 1998,
the Company increased its installation revenue, which is directly related to the
higher product revenue discussed above. The Company also recorded increases in
its supply revenues as its customer base expands.
Contract revenues were $6.1 million in the third quarter of 1998, a
decrease of 18% when compared to the $7.4 million recorded in the same period in
1997. This decrease was due to certain contract delays relating to software
development and integration. In addition, the Company completed a major airfield
management contract in the third quarter of 1998. However, the government
division of our Professional Services business has recently received a $9
million multi-year contract for our Cargo*Mate identification and monitoring
system from the Department of Transportation. The Company believes that this and
other opportunities will enable the government business to return to growth in
1999.
Product margins were 30% for the third quarter of 1998 compared to 35% for
the same period in 1997. Product margins were lower than expected due to delays
in the release and sale of our new software products as well as delays in
certain third party software. The Company anticipates margins to improve in the
fourth quarter of 1998 as software sales increase.
Customer service margins were 11% in the third quarter of 1998 compared to
17% for the same period in 1997. The decline in margin is primarily due to an
increase in personnel as the Company is upgrading its integration and service
capabilities. The Company is completing several new service initiatives
including expansion of its full service and help desk capabilities. This coupled
with the installation of a new service management system, will result in lower
costs and improved customer satisfaction in the future. This investment will
continue throughout the remainder of the year.
Contract margins were 15% in the third quarter of 1998 compared to 6% for
the same period in 1997. This increase is primarily due to additional profit
recognized in connection with the completion of certain contracts in 1998 and
will not be a continuing trend. Margins on the Company's government contract
business typically run between 5% and 6%.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1998
COMPARED WITH
QUARTER ENDED SEPTEMBER 30, 1997
Selling, general and administrative expenses were $4.7 million in the third
quarter of 1998 versus $4.5 million for the same period in 1997, an increase of
5%. This increase is primarily due to an increase in the Company's POS sales
expense directly related to the product revenue growth discussed previously.
This increase was partially offset by a reduction in the Company's investment in
its Corneal Topography (CTS) business.
Research and development expenses were $1.4 million in third quarter of
1998, an increase of 37% from the $1 million recorded for the same period in
1997. The Company is actively increasing its investment in POS software
development, SAP expertise and the expansion of the Company's professional
service organization. Partially offsetting the increase was the reduction in the
CTS business discussed above. Research and development costs attributable to
government contracts are included in cost of contract revenues.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
COMPARED WITH
NINE MONTHS ENDED SEPTEMBER 30, 1997
The Company reported a net loss of $906,000 or a loss per share of $.10 for
the first nine months of 1998. Revenues for the nine months were $80.6 million.
These results compare to a net loss of $6.3 million or a loss per share of $.71
and revenues of $71.3 million for the first nine months of 1997.
The results for the nine months ended September 30, 1998 include a benefit
of $807,000 ($520,000 after tax or $.06 per share) relating to a partial
recovery of accounts receivable from Phoenix Systems and Technologies, Inc.
(Phoenix), which were previously reserved. The results for same nine month
period in 1997 include a charge of $4 million ($2.6 million after tax or $.29
per share) relating to a receivable from and loan guarantee for Phoenix. The
1997 results also include a charge of $900,000 ($580,000 after tax or $0.07 per
share) pertaining to the CTS business.
Product revenues were $39.6 million in the first nine months of 1998, an
increase of 21% from the $32.8 million recorded in the first nine months of
1997. The increase was primarily due to higher sales to McDonald's, Chick-fil-A
and several other POS customers. The Company's international product revenues
grew 7% in 1998 when compared to 1997. Increased sales to Europe, South America
and the Middle East have more than offset declines in certain Asian markets due
to the continuing economic crisis. The increase was partially offset by lower
domestic sales to Burger King as the Company completed delivery of POS systems
in 1997 under its corporate contract with this customer.
Customer service revenues were $21.9 million in the first nine months of
1998, an increase of 8% from the $20.3 million in the first nine months of 1997.
This increase was due to growth in installation revenue, which is directly
related to the increase in product revenue discussed above. The Company also
increased its number of field service contracts as its customer base expands.
Contract revenues were $19.1 million in the first nine months of 1998, an
increase of 5% when compared to the $18.2 million recorded for the same period
in 1997. The Company increased its level of integration and software development
activity across several contracts. Additionally, the Company's engineering
service efforts in airfield management contributed to this growth.
Product margins were 28% for the first nine months of 1998 virtually
unchanged from the same period in 1997. The Company's product mix and
manufacturing cost were comparable to the prior period. Margins were less than
anticipated due to the low software content in product revenues. The Company
anticipates an increase in margins in the future as software sales increase.
Customer service margins were 10% in the first nine months of 1998 compared
to 14% for the same period in 1997. This decline in margin is primarily due to
an increase in personnel as the Company is upgrading its integration and service
capabilities.
Contract margins were 10% in the first nine months of 1998 compared to 5%
for the same period in 1997. This increase is primarily due to additional profit
recognized in connection with the completion of certain contracts discussed
above and a retroactive fee adjustment on another contract.
Selling, general and administrative expenses were $13.7 million in the
first nine months of 1998 versus $15 million for the same period in 1997, a
decrease of 9%. This decline is primarily due to certain reserves for bad debts
recorded in 1997 relating to the Company's government business. The Company's
decision in 1997 to reduce its investment in its CTS business also contributed
to the decline. This decline is partially offset by an increase in POS sales and
marketing expenses.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH
NINE MONTHS ENDED SEPTEMBER 30, 1997
Research and development expenses were $4.3 million in the first nine
months of 1998, an increase of 21% from the $3.5 million recorded for the same
period in 1997. The Company is actively increasing its investment in its POS
business in 1998. Partially offsetting the increase was the reduction in the CTS
business discussed above.
Liquidity and Capital Resources
The Company's primary source of liquidity has been from operations. Cash
used in operating activities was $1.4 million in the first nine months of 1998,
compared to $1.1 million in 1997. In the third quarter of 1998, the Company
experienced an increase in accounts receivable due to the growth in product
revenues. This was partially offset by the receipt of a $2.5 million federal tax
refund pertaining to utilization of 1997's net operating loss. In 1997, the
Company experienced significant collections of accounts receivable due to the
volume of sales generated in the fourth quarter of 1996. This was partially
offset by the build up of restaurant and service inventory in anticipation of
future sales orders and service requirements.
Cash used in investing activities was $3.4 million for 1998 compared to
$2.3 million in 1997. In 1998, capital expenditures were primarily for upgrades
to the Company's customer service center and for manufacturing equipment. In
1997, capital expenditures were primarily for upgrades to the manufacturing
facility.
Cash provided from financing activities was $2.4 million for 1998 compared
to cash used of $22,000 in 1997. In 1998, the Company's net borrowings under its
line-of-credit agreements were $3.5 million. Additionally the Company received
$177,000 from the exercise of an employee stock option. These activities were
partially offset by the acquisition of 213,600 shares of treasury stock at a
cost of $1.2 million. In 1997, the Company paid $163,000 to repurchase some of
its stock and received $131,000 from the exercise of employee stock options.
The Company has line-of-credit agreements, which aggregate $30 million with
certain banks, of which $3.7 million was outstanding at September 30, 1998. The
Company believes that it has adequate financial resources to meet its future
liquidity and capital requirements.
Year 2000 Disclosure-- The "Year 2000 problem" exists because many computer
programs use only the last two digits to refer to a year. Therefore these
computer programs do not properly recognize a year beginning with "20", instead
of the familiar "19". The Year 2000 problem affects virtually all computer
systems, processes, and products in all segments of society.
The Company has identified the following areas which could be impacted by
the Year 2000 issue. They are: Company products, internally used systems and
software, and products or services provided by key third parties or business
partners. If the Company experiences Year 2000 issues resulting from failures in
any of these areas, the results could conceivably have a material adverse effect
on the Company.
In 1997, the Company established a corporate-wide program to address the
Year 2000 issue. The objective of this program is to identify, assess, and
address any issues associated with its infrastructure, operations, and products
in transitioning to Year 2000. The Company's cross-functional Year 2000 Task
Force includes senior management personnel who have responsibility for ensuring
Year 2000 program tasks are completed in support of all PAR business functions
and locations. Year 2000 progress reports are also presented regularly to
executive management and the Company's Board of Directors.
<PAGE>
MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1998
COMPARED WITH
NINE MONTHS ENDED SEPTEMBER 30, 1997
The multi-phase Year 2000 program includes: (1) education of Company
personnel on the Year 2000 and its effects, (2) identification of systems,
suppliers of goods and services, and business partners with potential Year 2000
issues relating to the Company's internal operations as well as the creation and
support of its products, (3) assessment of internal systems and products, as
well as inquiries to outside parties to ascertain Year 2000 readiness, (4)
resolution and contingency planning for any items identified as having Year 2000
issues, and (5) post implementation follow-up.
The Company is currently in Phase 3 of its program and anticipates
completion of this phase by January 1999. Phase 4 is in progress for issues
identified to date. The Company has established a site on its web page dedicated
to Year 2000 Readiness Disclosure. This site is a culmination of Company product
analysis and testing results, and can be found at http://www.partech.com/.
The Company has undergone a review of its internal systems including those
which support manu-facturing, financial, and general business operations. As a
result, the Company has identified some systems which require upgrades to be
Year 2000 ready, including certain business software applications. The business
application upgrades are in progress, and are accommodated by existing software
maintenance contracts with outside providers. The Company anticipates that it
will complete its review of its internal systems and expects that all necessary
upgrades to ensure Year 2000 compliance will be completed by the second quarter
of 1999.
The Company's analysis to date of key third parties has not revealed any
issues which would prevent them from continuing to provide products and services
through the Year 2000 transition. Such analysis has included telephone and
written inquiries to third parties. As the assessment continues, the Company
will determine its vulnerability and establish contingency plans where required
and possible. The Company expects any such contingency plans to be developed by
the second quarter of 1999.
The Company at present does not believe the cost of resolving Year 2000
issues will have a material effect on the Company's results of operations or
financial condition. The costs to date associated with the Year 2000 effort
represent a reallocation of existing Company resources. However failure, delays
or increased costs experienced by the Company could have a material adverse
effect on the Company's results of operations or financial condition.
Additionally the Company cannot guarantee that third parties, upon which the
Company relies, will be able to adequately assess and address their Year 2000
compliance issues in a timely manner, the effects of which may also have an
adverse impact on the Company's results of operations. As a consequence, the
Company can give no assurances that issues related to Year 2000 will not have a
material adverse effect on future results of operations or financial condition.
Important Factors Regarding Future Results
Information provided by the Company, including information contained in
this Report, or by its spokespersons from time to time may contain
forward-looking statements. Forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties, including without limitation, further delays in new product
introduction, risks in technology development and commercialization, risks in
product development and market acceptance of and demand for the Company's
products, risks of downturns in economic conditions generally, and in the quick
service sector of the restaurant market specifically, risks of intellectual
property rights associated with competition and competitive pricing pressures,
risks associated with foreign sales and high customer concentration, Year 2000
compliance and other risks detailed in the Company's filings with the Securities
and Exchange Commission.
<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 third quarter of 1998.
<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: November 4, 1998
/s/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 September 30,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Diluted Earnings Per Share:
Weighted average shares of common stock outstanding:
Balance - beginning of period ...................... 8,897 8,849
Weighted average shares issued ..................... 11 --
Acquisition of treasury stock ...................... (67) --
Assumed exercise of certain stock options .......... 118 211
------ ------
Weighted shares - end of period .................... 8,959 9,060
====== ======
</TABLE>
<TABLE>
<CAPTION>
For the three months
ended September 30,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Basic Earnings Per Share:
Weighted average shares of common stock outstanding:
Balance - beginning of period ...................... 8,897 8,849
Weighted average shares issued ..................... 11 --
Acquisition of treasury stock ...................... (67) --
------ ------
Weighted shares - end of period .................... 8,841 8,849
====== ======
</TABLE>
<PAGE>
Exhibit 11
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
(In Thousands)
<TABLE>
<CAPTION>
For the nine months
ended September 30,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Basic and Diluted Earnings Per Share:
Weighted average shares of common stock outstanding:
Balance - beginning of period ...................... 8,864 8,826
Weighted average shares issued ..................... 36 26
Acquisition of treasury stock ...................... (22) (8)
------ ------
Weighted shares - end of period .................... 8,878 8,844
====== ======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,596
<SECURITIES> 0
<RECEIVABLES> 36,971
<ALLOWANCES> 0
<INVENTORY> 29,869
<CURRENT-ASSETS> 73,286
<PP&E> 8,371
<DEPRECIATION> 0
<TOTAL-ASSETS> 86,201
<CURRENT-LIABILITIES> 24,032
<BONDS> 0
0
0
<COMMON> 190
<OTHER-SE> 61,250
<TOTAL-LIABILITY-AND-EQUITY> 86,201
<SALES> 39,599
<TOTAL-REVENUES> 80,621
<CGS> 28,453
<TOTAL-COSTS> 65,294
<OTHER-EXPENSES> 3,468
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,405)
<INCOME-TAX> (499)
<INCOME-CONTINUING> (906)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (906)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
