SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 27, 2005
PAR TECHNOLOGY CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-09720 16-1434688
-------- ------- ----------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) incorporation or
organization) Identification Number)
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
Not Applicable
--------------
(Former Name or Former Address, if changed since Last Report)
Item 2.02 Results of Operations and Financial Condition.
(a) The information, including Exhibits attached hereto, in this Current Report
is being furnished and shall not be deemed "filed" for the purposes of
Section 18 of the Securities and Exchange Act of 1934, or otherwise subject
to the liabilities of that Section. The information in this Current Report
shall not be incorporated by reference into any registration statement or
other document pursuant to the Securities Act of 1933, as amended, except
as otherwise expressly stated in such filing.
(b) On July 27, 2005, PAR Technology Corporation issued a press release
announcing its results of operation for the quarterly period ending June
30, 2005. A copy of the press release is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
(c) On July 27, 2005, PAR Technology Management held an Investor's Conference
Call. Management Remarks are attached hereto as Exhibit 99.2 and is
incorporated herein by reference.
99.1 Press Release dated July 27, 2005.
99.2 Management Remarks dated July 27, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PAR TECHNOLOGY CORPORATION
--------------------------
(Registrant)
Date: July 27, 2005
/s/RONALD J. CASCIANO
---------------------------------------
Ronald J. Casciano
Vice President, Chief Financial Officer
and Treasurer
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99.1 Press Release dated July 27, 2005.
99.2 Management Remarks dated July 27, 2005.
Exhibit 99.1 Press Release dated July 27, 2005.
CONTACT: Christopher R. Byrnes (315) 738-0600 ext. 226
cbyrnes@partech.com, www.partech.com
PAR TECHNOLOGY CORPORATION
-REPORTS RECORD SECOND QUARTER RESULTS-
o Revenues Rise 19%, Highest Second Quarter Revenue in Company's History
o Net Income Grows more than 79%
o EPS Rises 71% to $0.24 versus $0.14 a year ago
----------------------------------------------------------------
NEW HARTFORD, NY, PAR TECHNOLOGY CORPORATION (NYSE:PTC)
New Hartford, NY--July 27, 2005--PAR Technology Corporation (NYSE:PTC - News)
today announced record results for the second quarter ended June 30, 2005.
PAR reported second quarter revenues of $51.2 million, a 19% increase from the
$42.9 million reported in the same period a year ago. Net income of $2.4 million
was reported for the second quarter, compared with net income of $1.3 million in
the second quarter of 2004, a 79% increase. Diluted earnings per share rose 71%
to $0.24 for the second quarter of 2005, when compared to diluted earnings per
share of $0.14 for the second quarter of last year.
For the six months ended June 30, 2005, PAR Technology Corporation reported
revenues of $100 million, a 24% increase from the $80.8 million reported one
year ago. The Company also reported $3.7 million in net income for the first six
months of 2005 versus $2 million reported for the first six months of 2004, a
79% rise. Diluted earnings per share rose 73% to $0.38 for the first six months
of 2005 compared to $0.22 reported for the first six months of 2004.
"Our strong results reflect continued robust demand for our hospitality
technology solutions as well as continuing growth in our Government business.
PAR remains particularly well positioned to benefit from the growing demand for
innovative technology solutions for the hospitality marketplace. With this
momentum in place, PAR is well positioned to continue execution of our plan to
achieve profitable growth," said John W. Sammon, PAR Chairman and CEO. "We are
pleased to see our focus on client success and our investments in integrated
solutions paying off. Our commitment makes a real difference to our existing
clients, who continue to roll out our technology solutions across several
business segments, and to our new customers, who see clear benefits in PAR's
hardware and software.
" Sammon concluded, "It was a solid quarter in all respects. I am proud of our
organization as we continue to execute well. We have a strong position in
excellent and diversified markets and continue to increase our presence with the
major companies in these markets."
Certain Company information in this release or by its spokespersons from time to
time may contain forward-looking statements. Any statements in this document
that do not describe historical facts are 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, 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, and other risks detailed in the Company's
filings with the Securities and Exchange Commission.
ABOUT PAR TECHNOLOGY
PAR Technology Corporation develops, markets and supports hardware and software
products that improve the ability of hospitality business professionals to make
timely, fact-based business decisions. The Company is the world's largest
supplier of Point-of-Sale systems to the quick service restaurant market with
over 40,000 systems installed in more than 100 countries. In addition PAR is a
leader in providing computer based system design and engineering services to the
Department of Defense and other federal government agencies. PAR Technology
Corporation's stock is traded on the New York Stock Exchange under the symbol
PTC. For additional information visit PAR's website at www.partech.com.
================================================================================
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
June 30, December 31,
2005 2004
Assets ---------- ----------
Current assets:
Cash and cash equivalents ............... $ 3,045 $ 8,696
Accounts receivable-net .................. 36,759 32,702
Inventories - net ........................ 28,263 27,047
Deferred income taxes .................... 8,740 6,634
Other current assets ..................... 2,726 2,617
--------- ---------
Total current assets ................. 79,533 77,696
Property, plant and equipment - net ........... 8,051 8,123
Goodwill ...................................... 15,379 15,379
Intangible assets-net ......................... 8,752 9,235
Other assets .................................. 1,797 1,319
--------- ---------
$ 113,512 $ 111,752
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt ........ $ 58 $ 90
Borrowings under lines of credit ......... 1,900 10,246
Accounts payable ......................... 11,315 9,486
Accrued salaries and benefits ............ 7,982 8,072
Accrued expenses ......................... 3,535 2,998
Customer deposits ........................ 3,846 4,861
Deferred service revenue ................. 10,109 9,083
Net liabilities of discontinued operation 219 323
--------- ---------
Total current liabilities ............ 38,964 45,159
--------- ---------
Long-term debt ................................ 2,003 2,005
--------- ---------
Deferred income taxes ......................... 450 194
--------- ---------
Other long-term liabilities ................... 1,350 820
--------- ---------
Shareholders' Equity:
Preferred stock, $.02 par value,
1,000,000 shares authorized ............ -- --
Common stock, $.02 par value,
19,000,000 shares authorized;
10,490,147 and 10,139,132 shares issued;
9,286,471 and 8,935,456 outstanding .... 209 203
Capital in excess of par value ........... 35,433 31,560
Retained earnings ........................ 41,667 38,010
Accumulated other comprehensive loss ..... (546) (181)
Treasury stock, at cost, 1,203,676 shares (6,018) (6,018)
--------- ---------
Total shareholders' equity ........... 70,745 63,574
--------- ---------
$ 113,512 $ 111,752
========= =========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share amounts)
(unaudited)
For the three months For the six months
ended June 30, ended June 30,
--------------------- ----------------------
2005 2004 2005 2004
--------- ---------- --------- ----------
Net revenues:
Product ........................... $ 22,930 $ 19,466 $ 43,931 $ 35,705
Service ........................... 14,416 10,570 27,818 20,877
Contract .......................... 13,874 12,889 28,228 24,241
-------- -------- -------- --------
51,220 42,925 99,977 80,823
-------- -------- -------- --------
Costs of sales:
Product ........................... 13,893 13,231 26,769 24,268
Service ........................... 10,923 9,084 21,370 18,029
Contract .......................... 12,944 12,082 26,509 22,612
-------- -------- -------- --------
37,760 34,397 74,648 64,909
-------- -------- -------- --------
Gross margin ................ 13,460 8,528 25,329 15,914
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 7,323 5,245 14,716 10,261
Research and development .......... 2,107 1,302 4,385 2,645
Amortization of identifiable
intangible assets ............... 244 -- 490 --
-------- -------- -------- --------
9,674 6,547 19,591 12,906
-------- -------- -------- --------
Operating income ....................... 3,786 1,981 5,738 3,008
Other income, net ...................... 71 187 304 398
Interest expense ....................... (65) (46) (143) (119)
-------- -------- -------- --------
Income before provision for income taxes 3,792 2,122 5,899 3,287
Provision for income taxes ............. (1,441) (810) (2,242) (1,239)
-------- -------- -------- --------
Net income ............................. $ 2,351 $ 1,312 $ 3,657 $ 2,048
======== ======== ======== ========
Earnings per share:
Basic ............................. $ .26 $ .15 $ .40 $ .24
Diluted ........................... $ .24 $ .14 $ .38 $ .22
Exhibit 99.2 Management Remarks dated July 27, 2005.
Investor's Telcom
Good morning. Today I will be presenting the results for our second quarter
ending June 30, 2005.
Second quarter, revenues were $51.2 million, a 19% increase from the $ 42.9
million reported for the same period a year ago. This represents the highest
second quarter revenue in our history.
Net Income for the quarter was $2.4 million, an increase of 79% over the $1.3
million reported last year. Earnings per share for the period were 24 cents per
diluted share compared to 14 cents per diluted share reported last year.
For the six months ended June 30, 2005, revenues were $100 million, a 24%
increase from the $80.8 million reported one year ago establishing a new first
half record.
Net income for the first six months of 2005 was $3.7 million an increase of 79%
over the $2 million reported for the first six months of 2004. Earnings per
share for the period were 38 cents per diluted share compared to 22 cents per
diluted share reported last year.
REVENUE
Looking at the Quarterly revenue breakdown:
PRODUCT REVENUE
Product Revenue for the quarter was $22.9 M up 17.8% compared to the second
quarter of 2004. This increase resulted from the strong demand for our
hospitality products in the restaurant, hotel, resort and spa markets.
SERVICE REVENUE
Service revenue for the quarter was $14.4 M, up 36.4% compared to Q2 of last
year. This increase resulted from a growing installed base in the restaurant
sector in addition to the hotel and spa service revenues.
CONTRACT REVENUE
Contract revenue was up 7.6% to $13.9 M for the quarter. This growth was
consistent with our internal plan yet lower than more traditional quarters due
to the timing of revenue recognition on certain contracts. Our first quarter
revenue was exceptionally high resulting in a below average second quarter
growth.
MARGINS
Now moving to margins.
PRODUCT MARGINS
Product margins for the quarter were 39.4% vs 32% last year. This increase
resulted from higher software content in our product mix.
We are particularly pleased with this margin increase since it demonstrates the
success of our strategic plan to improve margins through software sales.
SERVICE MARGINS
Service margins were 24.2% vs 14.1% a year ago. This significant increase also
reflects the growth of the software content in our hospitality business.
CONTRACT MARGINS
Contract margins, or in our case, pre-tax profits, were 6.7 % compared to 6.3%
last year. This is somewhat higher than our traditional 5 to 6% pre-tax profit
range and resulted from favorable contract modifications.
EXPENSES
Now turning to expenses.
SG&A expenses for the quarter were $7.3 M vs $5.2 M last year. This increase
primarily reflects the acquisition of Springer-Miller.
R&D expenses were $2.1 M vs. $1.3 M last year reflecting the acquisition of
Springer-Miller as well as increased investment in new product development.
Breaking out year to date performance:
o Total revenue was $100 M up 23.7% o Product Revenue was $43.9 M up 23%
o Service revenue was $27.8 M up 33.2% and
o Contract Revenue was $28.2 M up 16.4%
o Product margins were 39.1% and increase of 7.1 percentage points
o Service margins were 23.2% and increase of 9.6 percentage points and o
Contract margins were 6.1%, a slight decrease of six-tenths of a
percentage point.
o Overall margins improved a full 5.6 percentage points
o Operating expenses were $19.6 M and increase of 48%
o Net income was $3.7M and increase of 79% o diluted earnings per share
was 38 cents an increase of 73%
Turning to some balance sheet highlights: Our financial condition remains
strong:
o Our receivables collection cycle remains very good. Our days
outstanding for our Hospitality business are 64.5 days and our Govt.
business is 54 days.
o Inventory turns continue to improve to 4.72 turns compared to 4.3
turns at the end of the year.
o We have reduced our short term debt to $1.9 M at 6/30/05 compared to
10.2 M at 12/31/04.
o Cashflow from operations was $3.2 M for the first half of 2005.
SUMMARY
In summary we are very pleased with our record second quarter performance. Both
our government and our hospitality businesses exceeded our internal plans and
made this achievement possible.
We are especially delighted with margin improvements in both products and
services reflecting a substantial increase of software content in our
hospitality business. While much of this derives from the Springer-Miller
acquisition; we are also experiencing an increase in our restaurant software
sales.
With a 19% revenue growth and substantial gross margin improvements, we were
able to grow earning per share by 71% to 24 cents per share, slightly higher
than street forecasts of 21 cents.
The results for this quarter are a reflection of the following facts:
1. The Hospitality market is very healthy with both restaurants and
resorts investing in expansion and up grades
2. We have created and sustained long term relations with our Hospitality
customers which has allowed us to gain market share, not as the result
of lower pricing but rather, delivering value which has resulted in
excellent customer relations. This I consider to be a strategically
important accomplishment as we serve some of the largest, most
demanding companies in the Hospitality sector. Through these long term
relationships, our customers have benefited from the value we have
provided; however, we have also benefited from these relationships by
building a valuable infrastructure which credibly creates, delivers
and supports complex IT solutions for large global accounts. It is
this asset which we are now leveraging to expand our hospitality
business.
3. We are pleased with the accretive results from our acquisition of
Springer-Miller. This is the first example of our intended strategy of
leveraging our considerable infrastructure to extend our Hospitality
business through strategic partnering with exemplarily software
companies.
4. Our investments to increase software content is beginning to pay off.
This can be seen in this quarter's improvement in both margins and
profits.
5. We are pleased to report a 62% increase in international hospitality
product revenue this quarter as we have been striving to increase our
international sales. Particularly gratifying is the fact that this
growth resulted from several new customers such as Loterria a large
Korean corporate owner of many restaurant & cafeteria outlets, Herfy's
a burger chain in Saudi Arabia, Subway in Latin America and Gloria
Jeans an international coffee chain with operations widely distributed
around the world.
6. Our government business continues to perform quite well with a 7.6%
revenue growth this quarter. This marks the 146th consecutive
profitable quarter for our government business and with a backlog of
$110 M, we are assured of continuing a strong government business.
7. In addition to the government revenue growth in the both IT
Outsourcing and applied technology, we also benefited this quarter by
the restoral of DOT funding to our Logistics Management program. While
we expect continuation of government funding, we are also beginning to
develop an embryonic commercial business. To date we have installed
over 1200 hundred CargoMate systems on chassis and Mobile Generator
Sets. While we are a long way from establishing a successful
commercial business, we are never-the-less gratified by this small
first step. Our strategy for this area is to continue to pursue
government sponsored container security programs as a means to our end
goal of establishing an information based commercial business.
On another note, it was gratifying to have been listed in two national business
magazine's noting our most recent financial performance. We were listed # 34 on
the Fortune Small Business Fastest Growing Companies and # 15 on Business 2.0
magazine's list of the fastest growing public technology companies.
We are off to a strong start to 2005 as represented by our YTD performance. For
the year we had forecasted revenue growth in the range of 15 to 20% with
accelerated earnings. Based on results to date, we feel that revenue will grow
at the upper end of the range with corresponding acceleration in earnings.
I would now like to open the session to take your questions.