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): May 1, 2003
PAR TECHNOLOGY CORPORATION
--------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-9720 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 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Form of Press Release dated May 1, 2003
Item 9. Regulation FD Disclosure.
(a) The information contained in this Item 9 of the Current Report is intended
to be furnished pursuant to "Item 12. Results of Operations and Financial
Condition" of Form 8-K, but is instead furnished under "Item 9. Regulation
FD Disclosure" of Form 8-K, in accordance with SEC Release Nos. 33-8216 and
34-47583.
(b) 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.
(c) On May 1, 2003, PAR Technology Corporation issued a press release
announcing its results of operation for the quarterly period ending March
31, 2003. A copy of the press release is attached hereto as Exhibit 99.1
and is incorporated herein by reference.
(d) On May 1, 2003, PAR Technology Corporation held a conference call with
research analysts. During that conference call, PAR Technology
Corporation's executive officers made the following material statements:
Investor's Telcom April 29, 2003
For the first quarter, revenues from continuing operations were $30.5 million, a
9.4% decrease from the $33.7 million reported for the same period in 2002.
Income from continuing operations for the period was $256,000 or 3 cents per
diluted share in 2003 compared to the $832 million or 10 cents per diluted share
reported last year.
When discontinued operations are included, EPS for the period was 3 cents per
diluted share compared to 6 cents per diluted share reported last year.
The reason for the revenue and earnings decline relate primarily to a slow down
in sales to our traditional restaurant accounts, McDonald's and YUM Brands.
REVENUE
PRODUCT REVENUE
Product Revenue for the quarter was $12.4M down 19.9% compared to the first
quarter of in 2002. Contributing to this decline were reduced sales to
McDonald's and YUM Brands.
The decrease did not come as a surprise, since last month we announced that we
anticipated this slow down particularly as it relates to McDonald's.
The McDonald's slow down was attributed to delayed buying decisions by
franchisees while the new McD management team studied various strategic options
including the reversal of an earlier announcement to subsidize the cost of
upgrading franchisee stores. Earlier this month, McDonald's announced its
strategy which among other things focuses on improvement of store operations but
severely limits the upgrade program to only 1000 stores this year. The impact of
this strategy on POS sales is not yet totally clear. We do expect clarification
soon and - on a positive note, we have seen sales improve dramatically over the
past few weeks but still running somewhat below plan. As a consequence of this
confused situation, we have decided to reduce our McDonald's sales plan for the
year.
In the case of the YUM Brands decline; last year we benefited from a very large
sale to Harmans Corporation, KFC's largest franchisee. This year in Q1 our YUM
business was ahead of plan! We fully expect this trend to continue and thus
anticipate beating our internal YUM plan for the year.
SERVICE REVENUE
Service revenue for the quarter was $8.5M, down 3.8% compared to Q1 of last
year. This decline was caused primarily by lower installation revenue associated
with fewer installs this year vs last.
CONTRACT REVENUE
Contract revenue was up 2.3% to $9.7M for the quarter. This increase was
slightly below plan due to 2 factors:
o First we experienced slower than anticipated build up under some new IT
telecommunications outsourcing contracts and
o Second, a slow down in government funding for our Logistic Management
business unit.
MARGINS
PRODUCT MARGINS
Product margins for the quarter were 34.7%, up significantly from 30.6% a year
ago. This improvement was primarily the result of greater software content in
our product mix.
SERVICE MARGINS
Service margins were down to 15.4% vs 18.1% a year ago. This decline is
attributed substantially to installation inefficiencies caused by lower than
anticipated installation requirements.
CONTRACT MARGINS
Contract margins were lower than average at 4.6 % compared to 5.3% last year.
Margins were impacted by start up costs on new contracts and are expected to
average out for the year in the 5 to 6% range.
EXPENSES
Selling, general and administrative (S,G&A) expenses for the quarter were $4.4M
up 5.3% compared to Q1 of 2002. Research and Development (R&D) expense was $1.2M
down 18.9% for a year ago. Neither of these changes are considered significant
as they were the result of expense timing. We expect both S,G&A and R&D expenses
to be essentially unchanged in 2003 as compared to 2002.
99.1 Press Release dated May 1, 2003.
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 6, 2003
/s/RONALD J. CASCIANO
---------------------------------------
Ronald J. Casciano
Vice President, Chief Financial Officer
and Treasurer
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99.1 Press Release dated May 1, 2003.
Exhibit 99.1
PAR TECHNOLOGY CORPORATION
--------------------------
-REPORTS FIRST QUARTER RESULTS-
NEW HARTFORD, NY, PAR TECHNOLOGY CORPORATION (NYSE:PTC)
New Hartford, NY--May 1, 2003-PAR Technology Corporation (NYSE:PTC) today
announced results from continuing operations for the first quarter ended March
31, 2003.
PAR reported first quarter revenues of $30.5 million, a 9% decrease over the
$33.7 million reported in the same period a year ago. Income from continuing
operations for the first quarter was $256,000 compared with $832,000 reported in
the first quarter of 2002. The Company reported diluted earnings per share from
continuing operations of $0.03 for the first quarter of 2003, compared to
diluted earnings per share of $0.10 for the first quarter of last year. Net
income for the first quarter 2003 was $229,000 or $0.03 diluted earnings per
share. This compares to $511,000 net income and $0.06 diluted earnings per share
in the first quarter 2002.
As discussed in the Company's Annual Report on Form 10-K for the year ended
December 31, 2002, the results for the first quarter of 2002 have been restated
to reflect the change in the Company's revenue recognition policy.
"We are encouraged by our results in the first quarter. Despite an unprecedented
combination of challenging factors, including seasonal weakness, geopolitical
issues and a struggling economy, we maintained our focus on continuing our
excellence in systems quality, functionality, and customer service," stated John
W. Sammon, PAR Chairman and CEO. "We continued our strategy of growing our
business outside of our traditional foodservice market with contract wins with
Loews Cineplex and Steiner Leisure this past quarter."
"As expected, product sales were lower in the first quarter this year due to the
reduced capital expenditures of our customers compared with last year. Given the
current market conditions, we are taking measures that will streamline our costs
in the coming quarters to more closely match sales volume. In addition, our
financial position remains strong with positive cash flows and solid liquidity
providing us with the resources to support our business and build operations as
the economy improves."
Commenting on the outlook for 2003, Sammon went on to say, "We will continue to
concentrate on being a leader in the market segments in which the Company
operates. Our core government business will show strong growth in both our
applied technology sector as well as in the outsourcing of military
telecommunication facility operation segment. We expect the hospitality segment
will likely be challenged by the U.S. economy for another quarter due to current
economic situations with significant improvement in the second half. PAR's
Logistics Management business will experience a hiatus of funding the second
half of this year, and we will make business decisions accordingly during this
brief lapse of funding. Our conservative outlook for the year continues to be
moderate revenue and earnings growth."
This release contains forward-looking statements concerning the Company's
strategic plans, market opportunities, cash flows, liquidity, and future growth.
These forward looking statements are neither promises nor guarantees but are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in the forward looking statements, including
without limitation, 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 and litigation, risks associated with foreign sales and high
customer concentration and other risks detailed in the Company's filings with
the Securities and Exchange Commission. The Company cautions investors not to
place undue reliance on these statements, which are currently only as of the
date of this release. The Company disclaims any obligation to update or
supplement these statements as a result of changing circumstances or otherwise.
ABOUT PAR TECHNOLOGY PAR Technology Corporation develops, markets and supports
hardware and software products that improve the ability of 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 30,000 systems installed in over 95 countries. In
addition PAR is a leader in providing computer based system design and
engineering services to the Department of Defense and 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 SHEET
(In Thousands Except Share Amounts)
(Unaudited)
March 31, December 31,
2003 2002
Assets --------- -----------
Current Assets:
Cash ............................................ $ 1,578 $ 490
Accounts receivable-net ......................... 24,242 25,843
Inventories ..................................... 33,641 34,274
Deferred income taxes ........................... 5,883 5,766
Other current assets ............................ 2,506 2,638
Total assets of discontinued operation .......... 26 59
-------- --------
Total current assets ........................ 67,876 69,070
Property, plant and equipment - net .................. 8,089 8,455
Deferred income taxes ................................ 4,272 4,386
Other assets ......................................... 3,150 3,211
-------- --------
$ 83,387 $ 85,122
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Notes payable ................................... $ 10,145 $ 9,634
Accounts payable ................................ 5,853 8,371
Accrued salaries and benefits ................... 4,054 4,615
Accrued expenses ................................ 2,163 2,077
Deferred service revenue ........................ 7,122 6,704
Total liabilities of discontinued operation ..... 290 342
-------- --------
Total current liabilities ................... 29,627 31,743
-------- --------
Long term debt ....................................... 2,159 2,181
-------- --------
Shareholder' Equity:
Preferred stock, $.02 par value,
1,000,000 shares authorized; .................. - -
Common stock, $.02 par value,
19,000,000 shares authorized;
9,791,187 and 9,770,262 shares issued
8,380,500 and 8,359,575 outstanding ........... 196 195
Capital in excess of par value .................. 28,993 28,926
Retained earnings ............................... 30,175 29,946
Accumulative comprehensive income ............... (710) (816)
Treasury stock, at cost, 1,410,687 .............. (7,053) (7,053)
-------- --------
Total shareholders' equity .................. 51,601 51,198
-------- --------
$ 83,387 $ 85,122
======== ========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
For the three months
ended March 31,
----------------------
Restated
2003 2002
------- -------
Net revenues:
Product ....................................... $ 12,353 $ 15,416
Service ....................................... 8,469 8,800
Contract ...................................... 9,720 9,499
-------- --------
30,542 33,715
-------- --------
Costs of sales:
Product ....................................... 8,062 10,699
Service ....................................... 7,167 7,207
Contract ...................................... 9,272 8,991
-------- --------
24,501 26,897
-------- --------
Gross margin ............................ 6,041 6,818
-------- --------
Operating expenses:
Selling, general and administrative ........... 4,411 4,188
Research and development ...................... 1,159 1,429
-------- --------
5,570 5,617
-------- --------
Operating income from continuing operations ........ 471 1,201
Other income, net .................................. 76 129
Interest expense ................................... (143) (217)
-------- --------
Income from continuing operations
before provision for income taxes ................ 404 1,113
Provision for income taxes ......................... (148) (281)
-------- --------
Income from continuing operations .................. 256 832
-------- --------
Discontinued operations:
Loss from operations of
discontinued component ..................... (42) (430)
Income tax benefit ............................ 15 109
-------- --------
Loss on discontinued operations ............... (27) (321)
-------- --------
Net income ......................................... $ 229 $ 511
======== ========
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Continued)
(In Thousands Except Per Share Amounts)
(Unaudited)
For the three months
ended March 31,
-----------------------
Restated
2003 2002
---- ----
Basic:
Income from continuing operations .......... $ .03 $ .11
Loss from discontinued operations .......... $ -- $ (.04)
Net income .............................. $ .03 $ .06
Diluted:
Income from continuing operations .......... $ .03 $ .10
Loss from discontinued operations .......... $ -- $ (.04)
Net income .............................. $ .03 $ .06
Weighted average shares outstanding
Basic ...................................... 8,373 7,881
======== =========
Diluted .................................... 8,767 7,998
======== =========