UNITED STATES
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, 2008. 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 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 [ ]
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of "large accelerated filer" and "accelerated filer" and
"smaller reporting company" in Rule 12b-2 of the Exchange Act.
(Check one): Large Accelerated Filer [ ] Accelerated Filer [X] Non-Accelerated
Filer [ ] Smaller Reporting Company [ ] (Do not check if a smaller reporting
company)
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The number of shares outstanding of registrant's common stock, as of April
30, 2008 - 14,406,063 shares.
PAR TECHNOLOGY CORPORATION
TABLE OF CONTENTS
FORM 10-Q
PART I
FINANCIAL INFORMATION
Item Number
-----------
Item 1. Financial Statements (unaudited)
- Consolidated Statements of Operations for
the three months ended March 31, 2008 and 2007
- Consolidated Statements of Comprehensive Loss
for the three months ended March 31, 2008 and 2007
- Consolidated Balance Sheets at
March 31, 2008 and December 31, 2007
- Consolidated Statements of Cash Flows
for the three months ended March 31, 2008 and 2007
- Notes to Unaudited Interim Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II
OTHER INFORMATION
Item 1A. Risk Factors
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
Signatures
Exhibit Index
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
For the three months
ended March 31,
---------------------
2008 2007
--------- ---------
Net revenues:
Product ........................................... $ 16,897 $ 16,706
Service ........................................... 16,415 15,529
Contract .......................................... 18,795 15,601
-------- --------
52,107 47,836
-------- --------
Costs of sales:
Product ........................................... 9,425 10,308
Service ........................................... 12,483 12,166
Contract .......................................... 17,840 14,554
-------- --------
39,748 37,028
-------- --------
Gross margin ...................................... 12,359 10,808
-------- --------
Operating expenses:
Selling, general and administrative ............... 9,061 8,709
Research and development .......................... 4,121 3,814
Amortization of identifiable intangible assets .... 390 390
-------- --------
13,572 12,913
-------- --------
Operating loss ......................................... (1,213) (2,105)
Other income, net ...................................... 314 240
Interest expense ....................................... (348) (222)
-------- --------
Loss before income taxes ............................... (1,247) (2,087)
Benefit for income taxes ............................... 503 779
-------- --------
Net loss ............................................... $ (744) $ (1,308)
======== ========
Loss per share
Basic ............................................. $ (.05) $ (.09)
Diluted ........................................... $ (.05) $ (.09)
Weighted average shares outstanding
Basic ............................................. 14,379 14,320
======== ========
Diluted ........................................... 14,379 14,320
======== ========
See notes to unaudited interim consolidated financial statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
For the three months
ended March 31,
---------------------
2008 2007
--------- ---------
Net loss ............................................. $ (744) $(1,308)
Other comprehensive loss, net of tax:
Foreign currency translation adjustments ........ (104) (84)
------- -------
Comprehensive loss ................................... $ (848) $(1,392)
======= =======
See notes to unaudited interim consolidated financial statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
March 31, December 31,
2008 2007
--------- ------------
Assets
Current assets:
Cash and cash equivalents ........................ $ 3,493 $ 4,431
Accounts receivable-net .......................... 39,283 43,608
Inventories-net .................................. 41,720 40,319
Income tax refunds ............................... 1,302 521
Deferred income taxes ............................ 5,314 5,630
Other current assets ............................. 3,835 3,370
--------- ---------
Total current assets ......................... 94,947 97,879
Property, plant and equipment - net ................... 7,350 7,669
Deferred income taxes ................................. 759 503
Goodwill .............................................. 26,718 26,998
Intangible assets - net ............................... 9,561 9,899
Other assets .......................................... 2,237 3,570
--------- ---------
Total Assets ............................ $ 141,572 $ 146,518
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt ................ $ 849 $ 772
Borrowings under lines of credit ................. 4,604 2,500
Accounts payable ................................. 12,708 16,978
Accrued salaries and benefits .................... 8,302 9,919
Accrued expenses ................................. 3,162 3,860
Customer deposits ................................ 4,202 3,898
Deferred service revenue ......................... 14,241 14,357
--------- ---------
Total current liabilities .................... 48,068 52,284
--------- ---------
Long-term debt ........................................ 6,681 6,932
--------- ---------
Other long-term liabilities ........................... 2,560 2,315
--------- ---------
Shareholders' Equity:
Preferred stock, $.02 par value,
1,000,000 shares authorized .................... -- --
Common stock, $.02 par value,
29,000,000 shares authorized;
16,058,818 and 16,047,818 shares issued;
14,406,063 and 14,395,063 outstanding .......... 321 321
Capital in excess of par value ................... 39,376 39,252
Retained earnings ................................ 49,707 50,451
Accumulated other comprehensive income (loss) .... 368 472
Treasury stock, at cost, 1,652,755 shares ........ (5,509) (5,509)
--------- ---------
Total shareholders' equity ................... 84,263 84,987
--------- ---------
Total Liabilities and Shareholders' Equity $ 141,572 $ 146,518
========= =========
See notes to unaudited interim consolidated financial statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the three months
ended March 31,
---------------
2008 2007
-------- --------
Cash flows from operating activities:
Net loss ......................................................... $ (744) $(1,308)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization ............................... 1,029 965
Provision for bad debts ..................................... 460 422
Provision for obsolete inventory ............................ 407 248
Equity based compensation ................................... 104 138
Deferred income tax ......................................... 120 (781)
Changes in operating assets and liabilities:
Accounts receivable ..................................... 3,865 3,431
Inventories ............................................. (1,808) (3,141)
Income tax refunds ...................................... (781) 309
Other current assets .................................... (465) (310)
Other assets ............................................ (238) (347)
Accounts payable ........................................ (4,270) (735)
Accrued salaries and benefits ........................... (1,617) (1,555)
Accrued expenses ........................................ (597) 354
Customer deposits ....................................... 304 62
Deferred service revenue ................................ (116) 679
Other long-term liabilities ............................. 245 419
------- -------
Net cash used in operating activities ................ (4,102) (1,150)
------- -------
Cash flows from investing activities:
Capital expenditures ............................................. (178) (332)
Capitalization of software costs ................................. (250) (401)
Contingent purchase price paid on prior year acquisitions ........ (101) (60)
Cash received from voluntary conversion of long-lived other assets 1,571 --
------- -------
Net cash provided by (used in) investing activities ... 1,042 (793)
------- -------
Cash flows from financing activities:
Net borrowings under line-of-credit agreements ................... 2,104 157
Payments of long-term debt ....................................... (174) (26)
Proceeds from the exercise of stock options ...................... 20 90
Excess tax benefit of stock option exercises ..................... -- 76
------- -------
Net cash provided by financing activities ............. 1,950 297
------- -------
Effect of exchange rate changes on cash and cash equivalents ......... 172 (143)
------- -------
Net decrease in cash and cash equivalents ............................ (938) (1,789)
Cash and cash equivalents at beginning of period ..................... 4,431 4,273
------- -------
Cash and cash equivalents at end of period ........................... $ 3,493 $ 2,484
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ......................................................... $ 185 $ 224
Income taxes, net of refunds ..................................... 79 (403)
See notes to unaudited interim consolidated financial statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited interim consolidated financial statements have
been prepared by PAR Technology Corporation (the "Company" or "PAR") in
accordance with U.S. generally accepted accounting principles for interim
financial statements and with the instructions to Form 10-Q and Regulation
S-X pertaining to interim financial statements. Accordingly, these interim
financial statements do not include all information and footnotes required
by U.S. generally accepted accounting principles for complete financial
statements. 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
results of operations for the three months ended March 31, 2008 are not
necessarily indicative of the results of operations to be expected for any
future period. The consolidated financial statements and notes thereto
should be read in conjunction with the audited consolidated financial
statements and notes for the year ended December 31, 2007 included in the
Company's December 31, 2007 Annual Report to the Securities and Exchange
Commission on Form 10-K.
The preparation of consolidated financial statements requires management of
the Company to make a number of estimates and assumptions relating to the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the period.
Significant items subject to such estimates and assumptions include: the
carrying amount of property, plant and equipment, identifiable intangible
assets and goodwill, equity based compensation, and valuation allowances
for receivables, inventories and deferred income taxes. Actual results
could differ from those estimates.
2. Inventories are primarily used in the manufacture and service of
Hospitality products. The components of inventory, net of related reserves,
consist of the following:
(in thousands)
--------------
March 31, December 31,
2008 2007
--------- ---------
Finished goods ............. $10,992 $ 9,965
Work in process ............ 1,675 1,722
Component parts ............ 10,178 10,408
Service parts .............. 18,875 18,224
------- -------
$41,720 $40,319
======= =======
At March 31, 2008 and December 31, 2007, the Company had recorded reserves
for shrinkage, excess and obsolete inventory of $3,756,000 and $3,951,000,
respectively.
3. Effective January 1, 2006, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standards (SFAS) No. 123R
Share-Based Payment (SFAS 123R) on a modified prospective basis. This
standard requires the Company to measure the cost of employee services
received in exchange for equity awards based on the grant date fair value
of the awards. The cost is recognized as compensation expense over the
vesting period of the awards. Total compensation expense included in
operating expenses for the three months ended March 31, 2008 and 2007 was
$104,000 and $137,000, respectively. At March 31, 2008, the unrecognized
compensation expense related to non-vested option awards was $564,000 (net
of estimated forfeitures) which is expected to be recognized as
compensation expense in fiscal years 2008 through 2012.
4. Earnings per share are calculated in accordance with Statement of Financial
Accounting Standards No. 128, Earnings per Share, which specifies the
computation, presentation and disclosure requirements for earnings per
share (EPS). It requires the presentation of basic and diluted EPS. Basic
EPS excludes all dilution and 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.
The following is a reconciliation of the weighted average shares
outstanding for the basic and diluted EPS computations (in thousands,
except per share data):
For the three months
ended March 31,
--------------------
2008 2007
-------- --------
Net loss ............................................ $ (744) $ (1,308)
======== ========
Basic:
Shares outstanding at beginning of period ...... 14,372 14,310
Weighted average shares issued during the period 7 10
-------- --------
Weighted average common shares, basic .......... 14,379 14,320
======== ========
Loss per common share, basic ................... $ (.05) $ (.09)
======== ========
Diluted:
Weighted average common shares, basic .......... 14,379 14,320
Dilutive impact of stock options ............... -- --
Weighted average common shares, diluted ........ 14,379 14,320
======== ========
Loss per common share, diluted ................. $ (.05) $ (.09)
======== ========
For the three months ended March 31, 2008, 401,960 incremental shares from
the assumed exercise of stock options and 24,458 restricted stock awards
are not included in the computation of diluted earnings per share because
of the anti-dilutive effect on earnings per share.
5. In September 2006, the Financial Accounting Standards Board (FASB) issued
SFAS No. 157, "Fair Value Measurements," (SFAS 157), which is effective for
fiscal years beginning after November 15, 2007 and for interim periods
within those years. This statement defines fair value, establishes a
framework for measuring fair value and expands the related disclosure
requirements. This statement applies under other accounting pronouncements
that require or permit fair value measurements. The statement indicates,
among other things, that a fair value measurement assumes that the
transaction to sell an asset or transfer a liability occurs in the
principal market for the asset or liability or, in the absence of a
principal market, the most advantageous market for the asset or liability.
Relative to SFAS 157, the FASB issued FASB Staff Positions (FSP) 157-1 and
157-2. FSP 157-1 amends SFAS 157 to exclude SFAS No. 13, "Accounting for
Leases," (SFAS 13) and its related interpretive accounting pronouncements
that address leasing transactions, while FSP 157-2 delays the effective
date of the application of SFAS 157 to fiscal years beginning after
November 15, 2008 for all nonfinancial assets and nonfinancial liabilities
that are recognized or disclosed at fair value in the financial statements
on a nonrecurring basis.
The Company adopted SFAS 157 as of January 1, 2008, with the exception of
the application of the statement to non-recurring nonfinancial assets and
nonfinancial liabilities. Non-recurring nonfinancial assets and
nonfinancial liabilities for which we have not applied the provisions of
SFAS 157 include those measured at fair value in goodwill impairment
testing, indefinite lived intangible assets measured at fair value for
impairment testing, asset retirement obligations initially measured at fair
value, and those initially measured at fair value in a business
combination.
SFAS 157 establishes a valuation hierarchy for disclosure of the inputs to
valuation used to measure fair value. This hierarchy prioritizes the inputs
into three broad levels as follows. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or liabilities. Level 2
inputs are quoted prices for similar assets and liabilities in active
markets or inputs that are observable for the asset or liability, either
directly or indirectly through market corroboration, for substantially the
full term of the financial instrument. Level 3 inputs are unobservable
inputs based on our own assumptions used to measure assets and liabilities
at fair value. A financial asset or liability's classification within the
hierarchy is determined based on the lowest level input that is significant
to the fair value measurement.
The Company's interest rate swap agreement is valued at the amount the
Company would have expected to pay to terminate the agreement. The fair
value determination was based upon the present value of expected future
cash flows using the LIBOR rate, plus an applicable interest rate spread, a
technique classified within Level 2 of the valuation hierarchy described
above. The fair value at March 31, 2008 was $318,000, and is included as a
component of accrued expenses within the consolidated balance sheet.
6. The Company has an aggregate availability of $20,000,000 in unsecured bank
lines of credit. One line totaling $12,500,000 bears interest at the bank
borrowing rate (5.1% at March 31, 2008). The second line of $7,500,000
allows the Company, at its option, to borrow funds at the LIBOR rate plus
the applicable interest rate spread or at the bank's prime lending rate
(4.5% at March 31, 2008). These lines expire in April 2009. At March 31,
2008, there was $4,604,000 outstanding under these lines. The weighted
average interest rate paid by the Company was 5.6% during 2008 and 6.3%
during 2007. These facilities contain certain loan covenants including
leverage and fixed charge coverage ratios. In the first quarter of 2008,
the Company did not attain the required ratios but received waivers from
its banks from these requirements. Additionally, the waivers require the
Company to refinance its existing credit agreements by June 16, 2008. On
May 7, 2008, the Company executed a commitment letter with one of the
lenders above to enter into a new credit facility. The commitment
initially provides the Company $7,500,000 in a working capital line of
credit along with a term loan of $5,550,000, and allows the lender to
arrange for participation by another lender in up to an additional
$12,500,000 in availability under the working capital line of credit. The
terms and conditions of the commitment letter will provide the Company with
availability under the line of credit up to 36 months from the date of
closing and escalating principal payments on the term loan through 2012.
The waivers require a change in the applicable interest rate spread
effective May 7, 2008 based on the Company's actual leverage ratio for the
quarter. The committed credit facility will be secured by certain assets
of the Company. The commitment letter expires on June 16, 2008.
In 2006, the Company borrowed $6,000,000 under an unsecured term loan
agreement, executed as an amendment to one of its bank line of credit
agreements, in connection with the asset acquisition from SIVA
Corporation. The loan provides for interest only payments in the first
year and escalating principal payments through 2012. The loan bears
interest at the LIBOR rate plus the applicable interest rate spread (5.1%
at March 31, 2008). The terms and conditions of the line of credit
agreement described above apply to the term loan. This loan continues to
be classified as long term as the Company has both the ability (through the
commitment letter discussed above) and intent to continue to finance this
obligation over a long term period.
7. The Company's reportable segments are strategic business units that have
separate management teams and infrastructures that offer different products
and services.
The Company has two reportable segments, Hospitality and Government. The
Hospitality segment offers integrated solutions to the hospitality
industry. These offerings include industry leading hardware and software
applications utilized in point-of-sale, back of store and corporate office
applications as well as in the hotel/resort/spa marketplace. This segment
also offers customer support including field service, installation,
twenty-four hour telephone support and depot repair. The Government segment
provides technical expertise in the development of advanced technology
prototype systems primarily for the Department of Defense and other
Governmental agencies. It provides services for operating and maintaining
certain U.S. Government-owned communication and test sites, and for
planning, executing and evaluating experiments involving new or advanced
radar systems. It is also involved in developing technology to track mobile
chassis. Intersegment sales and transfers are not significant.
Information as to the Company's segments is set forth below:
(in thousands)
--------------
For the three months
ended March 31,
---------------------
2008 2007
--------- --------
Net revenues:
Hospitality ............. $ 33,312 $ 32,235
Government .............. 18,795 15,601
-------- --------
Total ............. $ 52,107 $ 47,836
======== ========
Operating income (loss):
Hospitality ............. $ (2,039) $ (2,968)
Government .............. 930 1,000
Other ................... (104) (137)
-------- --------
(1,213) (2,105)
Other income, net ............ 314 240
Interest expense ............. (348) (222)
-------- --------
Loss before provision
for income taxes ........... $ (1,247) $ (2,087)
======== ========
Depreciation and amortization:
Hospitality ............. $ 907 $ 861
Government .............. 27 9
Other ................... 95 95
-------- --------
Total ............ $ 1,029 $ 965
======== ========
Capital expenditures:
Hospitality ............. $ 102 $ 291
Government .............. 35 32
Other ................... 41 9
-------- --------
Total ............. $ 178 $ 332
======== ========
Revenues by geographic area:
United States ........... $ 45,948 $ 41,687
Other Countries ......... 6,159 6,149
-------- --------
Total ............. $ 52,107 $ 47,836
======== ========
The following table represents identifiable assets by business segment:
(in thousands)
March 31, December 31,
----------------------
2008 2007
--------- ---------
Identifiable assets:
Hospitality ............. $117,544 $122,442
Government .............. 13,211 14,429
Other .......... 10,817 9,647
-------- --------
Total .............. $141,572 $146,518
======== ========
The following table presents identifiable assets by geographic area based
on the location of the asset:
(in thousands)
March 31, December 31,
----------------------
2008 2007
-------- -----------
United States ........... $129,836 $134,766
Other Countries ......... 11,736 11,752
-------- --------
Total .............. $141,572 $146,518
======== ========
The following table represents Goodwill by business segment:
(in thousands)
March 31, December 31,
------------------------
2008 2007
--------- -----------
Hospitality ............. $26,069 $26,349
Government .............. 649 649
------- -------
Total $26,718 $26,998
======= =======
Customers comprising 10% or more of the Company's total revenues are
summarized as follows:
For the three months
ended March 31,
------------------------
2008 2007
--------- ---------
Hospitality Segment:
McDonald's Corporation ... 19% 24%
YUM! Brands, Inc. ........ 13% 13%
Government Segment:
Department of Defense 36% 33%
All Others ............... 32% 30%
--- ---
100% 100%
=== ===
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-Looking Statement
This document contains "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934. Any statements in this document that do not
describe historical facts are forward-looking statements. Forward-looking
statements in this document (including forward-looking statements regarding the
continued health of the Hospitality industry, future information technology
outsourcing opportunities, an expected increase in contract funding by the U.S.
Government, the impact of current world events on our results of operations, the
effects of inflation on our margins, and the effects of interest rate and
foreign currency fluctuations on our results of operations) are made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. When we use words such as "intend," "anticipate," "believe," "estimate,"
"plan," "will," or "expect", we are making forward-looking statements. We
believe that the assumptions and expectations reflected in such forward-looking
statements are reasonable, based on information available to us on the date
hereof, but we cannot assure you that these assumptions and expectations will
prove to have been correct or that we will take any action that we presently may
be planning. We have disclosed certain important factors that could cause our
actual future results to differ materially from our current expectations,
including a decline in the volume of purchases made by one or a group of our
major customers; risks in technology development and commercialization; risks of
downturns in economic conditions generally, and in the quick-service sector of
the hospitality market specifically; risks associated with government contracts;
risks associated with competition and competitive pricing pressures; and risks
related to foreign operations. Forward-looking statements made in connection
with this report are necessarily qualified by these factors. We are not
undertaking to update or revise publicly any forward-looking statements if we
obtain new information or upon the occurrence of future events or otherwise.
Overview
PAR continues to be a leading provider of hospitality systems that include
software, hardware and professional and lifecycle support services to several
industries including: restaurants, hotels/resorts/spas, cruise lines and
specialty retailers. The Company also provides the Federal Government, and its
agencies, applied technology and technical services primarily contracting with
the Department of Defense.
The Company's hospitality technology products are used in a variety of
applications by thousands of customers. The Company faces competition in all of
its markets (restaurants, hotels, etc.) and competes primarily on the basis of
product design/features, product quality/reliability, price, customer service,
and delivery capability. Of late the trend in the hospitality industry has been
for users to consolidate their lists of approved vendors to companies that have
global capabilities, can achieve quality and delivery standards, have multiple
product offerings, R&D capability, and can be competitive with their pricing.
PAR believes that its global reach as a technology provider is an important
competitive advantage as it allows the Company to provide innovative products,
with significant delivery capability, globally, to its multinational customers
like McDonald's, Yum! Brands and the Mandarin Oriental Hotel Group.
PAR's strategy is to provide completely integrated technology systems and
services with a high level of customer service in the markets in which it
competes. The Company conducts its research and development efforts to create
cutting-edge technology that meet and exceed our customers' requirements and
also have high probability for broader market appeal and success. PAR also
focuses upon operating efficiencies and controlling costs. This is achieved
through investment in modern production technologies, and by managing purchasing
processes and functions.
In 2007, the Company undertook an internal investment strategy in three
distinct areas of its hospitality segment. First, the Company made significant
investments in developing its next generation software. Additionally, the
Company invested in building a more robust, further reaching distribution
channel. Lastly, as the Company's customers expand in international markets, PAR
has invested in creating an international infrastructure, initially
concentrating on the Asia/Pacific rim due to the new restaurant growth and
concentration of PAR customers in that region.
Approximately 36% of the Company's revenues are generated in our Government
Business segment. This segment is comprised of two subsidiaries: PAR Government
Systems Corporation and Rome Research Corporation. Through these two government
contractors, the Company provides IT and communications support services to the
U.S. Navy, Air Force and Army. PAR also offers its services to several
non-military U.S. federal, state and local agencies. The Company provides
applied technology services including radar, image and signal processing,
logistics management systems, and geospatial services and products. The
Company's record setting Government performance rating allows the Company to
consistently win repeat business and establish long-term client-vendor
relationships with their contract customers. PAR provides its clients the
technical expertise necessary to facilitate and operate complex systems utilized
by government agencies.
The Company will continue to leverage its core technical capabilities and
performance into related technical areas and an expanding customer base. The
Company will seek to accelerate this growth through strategic acquisitions of
businesses that broaden the Company's technology and/or business base.
Summary
The Company believes it can be successful in its two core business segments
- - Hospitality and Government - due to its focus and industry expertise. PAR
remains committed to streamlining operations and improving return on invested
capital through a variety of initiatives.
Results of Operations -- Three Months Ended March 31, 2008 Compared to Three
Months Ended March 31, 2007
The Company reported revenues of $52.1 million for the quarter ended March
31, 2008, an increase of 9% from the $47.8 million reported for the quarter
ended March 31, 2007. The Company's net loss for the quarter ended March 31,
2008 was $744,000, or $.05 diluted loss per share, compared to a net loss of
$1.3 million and a $.09 diluted net loss per share for the same period in 2007.
Product revenues from the Company's Hospitality segment were $16.9 million
for the quarter ended March 31, 2008, an increase of 1% from the $16.7 million
recorded in 2007. This increase was due to a 2% improvement in domestic product
sales primarily due to solution sales to new restaurant customers. This was
partially offset by a decline in hardware orders from a major customer pending
the release of that customer's new third party software. This third party
software was released in April and sales to this major customer are expected to
increase over the balance of the year. This increase in domestic revenue was
partially offset by a 2% decline in international product sales. This decrease
was due to the timing of restaurant customer orders in Asia.
Customer service revenues are also generated by the Company's Hospitality
segment. The Company's service offerings include installation, software
maintenance, training, twenty-four hour help desk support and various depot and
on-site service options. Customer service revenues were $16.4 million for the
quarter ended March 31, 2008, a 6% increase from $15.5 million reported for the
same period in 2007. The growth is primarily related to increases in several
service areas including onsite contracts and professional service activities.
Contract revenues from the Company's Government segment were $18.8 million
for the quarter ended March 31, 2008, an increase of 20% when compared to the
$15.6 million recorded in the same period in 2007. This increase was primarily
due to the start of new contracts in both the information technology outsourcing
and imaging information areas, including the timing of subcontract work and
material buys on these new contracts. These outsourcing operations provided by
the Company directly support U.S. Navy, Air Force and Army operations as they
seek to convert their military information technology communications facilities
into contractor-run operations and to meet new requirements with contractor
support. The imaging information work of the Company includes high technology
research involving information archive and retrieval as well as sensors.
Product margins for the quarter ended March 31, 2008 were 44.2%, an
increase of 590 basis points from the 38.3% for the quarter ended March 31,
2007. This increase in margins was primarily attributable to an increase in
software revenue from restaurant customers.
Customer service margins were 24% for the quarter ended March 31, 2008, an
increase of 230 basis points compared to 21.7% for the same period in 2007.
Service margins increased primarily due to improved margins in field service and
installation as revenue increased in both of these areas.
Contract margins were 5.1% for the quarter ended March 31, 2008, a decrease
of 160 basis points compared to 6.7% for the same period in 2007. This decline
was due to new contract starts and to lower margins on the subcontract work and
material buys described above. The most significant components of contract costs
in 2008 and 2007 were labor and fringe benefits. For 2008, labor and fringe
benefits were $13.6 million or 76% of contract costs compared to $12.6 million
or 86% of contract costs for the same period in 2007.
Selling, general and administrative expenses are virtually all related to
the Company's Hospitality segment. Selling, general and administrative expenses
for the quarter ended March 31, 2008 were $9.1 million, an increase of 4% from
the $8.7 million for the same period in 2007. This increase was primarily due to
a rise in sales and marketing expenses associated with restaurant products as
the Company is investing in its international infrastructure and in the
expansion of its dealer channel.
Research and development expenses relate primarily to the Company's
Hospitality segment. Research and development expenses were $4.1 million for the
quarter ended March 31, 2008, an increase of 8% from the $3.8 million recorded
in 2007. The increase was primarily attributable to the Company's continued
research and development in its next generation software and hardware products
for its restaurant customers.
Amortization of identifiable intangible assets was $390,000 for the quarter
ended March 31, 2008, unchanged from 2007. Amortization is on the identifiable
assets acquired in the Company's acquisitions over the last several years.
Other income, net, was $314,000 for the quarter ended March 31, 2008
compared to $240,000 for the same period in 2007. Other income primarily
includes rental income and foreign currency gains and losses. This increase is
primarily due to an increase in foreign currency gains in 2008 versus 2007.
Interest expense represents interest charged on the Company's short-term
borrowing requirements from banks and from long-term debt. Interest expense was
$348,000 for the quarter ended March 31, 2008 as compared to $222,000 in 2007.
The increase is primarily due to interest expense recognized on the Company's
interest rate swap agreement that was entered into in September 2007. In
addition, the Company's average borrowings increased in 2008 compared to 2007.
These increases were partially offset by a decrease in the Company's borrowing
rate in 2008 when compared to 2007.
For the quarters ended March 31, 2008 and 2007, the Company's expected
effective income tax rate based on projected pre-tax income was 40.3% and 37.3%,
respectively. The increase in effective tax rate is primarily attributable to
the expiration of the Research and Experimental Tax Credit at the end of 2007.
Also contributing to the increase in effective tax rate was the taxable portion
of the proceeds from the voluntary conversion of a Company-owned life insurance
policy in the quarter ended March 31, 2008. Due to the pre-tax loss for the
quarters ended March 31, 2008 and 2007, the Company provided a tax benefit of
40.3% and 37.3%, respectively, as its estimate of the annual effective income
tax rate based on projected pre-tax income as indicated above.
Liquidity and Capital Resources
The Company's primary sources of liquidity have been cash flow from
operations and lines of credit with various banks. Cash used by operations was
$4.1 million for the three months ended March 31, 2008 compared to $1.2 million
for 2007. In 2008, cash was impacted by the operating loss for the period and
the timing of vendor and salaries and benefits payments. This was partially
offset by the collection of accounts receivable. In 2007, cash was primarily
used to fund inventory growth and the operating loss for the period. This was
offset by a reduction in accounts receivable.
Cash generated by investing activities was $1 million for the three months
ended March 31, 2008 versus cash used of $793,000 for the same period in 2007.
In 2008, the Company received $1.6 million from the voluntary conversion of a
Company-owned life insurance policy. In 2008, capital expenditures were $178,000
and were primarily for computer equipment. Capitalized software costs relating
to software development of Hospitality segment products were $250,000 in 2008.
In 2007, capital expenditures were $332,000 and were principally for
manufacturing and research and development equipment. Capitalized software costs
relating to software development of Hospitality segment products were $401,000
in 2007.
Cash provided by financing activities was $1.9 million for the three months
ended March 31, 2008 versus $297,000 in 2007. In 2008, the Company increased its
short-term borrowings by $2.1 million and decreased its long-term debt by
$174,000. The Company also benefited $20,000 from the exercise of employee stock
options. In 2007, the Company increased its short-term bank borrowings by
$157,000, benefited $166,000 from the exercise of employee stock options and
decreased its long-term debt by $26,000.
The Company has an aggregate availability of $20,000,000 in unsecured bank
lines of credit. One line totaling $12,500,000 bears interest at the bank
borrowing rate (5.1% at March 31, 2008). The second line of $7,500,000 allows
the Company, at its option, to borrow funds at the LIBOR rate plus the
applicable interest rate spread or at the bank's prime lending rate (4.5% at
March 31, 2008). These lines expire in April 2009. At March 31, 2008, there was
$4,604,000 outstanding under these lines. The weighted average interest rate
paid by the Company was 5.6% during 2008 and 6.3% during 2007. These facilities
contain certain loan covenants including leverage and fixed charge coverage
ratios. In the first quarter of 2008, the Company did not attain the required
ratios but received waivers from its banks from these requirements.
Additionally, the waivers require the Company to refinance its existing credit
agreements by June 16, 2008. On May 7, 2008, the Company executed a commitment
letter with one of the lenders above to enter into a new credit facility. The
commitment initially provides the Company $7,500,000 in a working capital line
of credit along with a term loan of $5,550,000, and allows the lender to arrange
for participation by another lender in up to an additional $12,500,000 in
availability under the working capital line of credit. The terms and conditions
of the commitment letter will provide the Company with availability under the
line of credit up to 36 months from the date of closing and escalating principal
payments on the term loan through 2012. The waivers require a change in the
applicable interest rate spread effective May 7, 2008 based on the Company's
actual leverage ratio for the quarter. The committed credit facility will be
secured by certain assets of the Company. The commitment letter expires on June
16, 2008.
In 2006, the Company borrowed $6,000,000 under an unsecured term loan
agreement, executed as an amendment to one of its bank line of credit
agreements, in connection with the asset acquisition from SIVA Corporation. The
loan provides for interest only payments in the first year and escalating
principal payments through 2012. The loan bears interest at the LIBOR rate plus
the applicable interest rate spread (5.1% at March 31, 2008). The terms and
conditions of this line of credit agreement described above apply to the term
loan.
In September 2007, the Company entered into an interest rate swap agreement
associated with a $6,000,000 variable rate loan with principal and interest
payments due through August 2012. At September 30, 2007, the notional principal
amount totaled $6,000,000. This instrument was utilized by the Company to
minimize significant unplanned fluctuations in earnings and cash flows caused by
interest rate volatility. The Company did not adopt hedge accounting under the
provision of FASB Statement No 133, Accounting for Derivative Instruments and
Hedging Activities, but rather records the fair market value adjustments through
the consolidated statements of operations each period. The associated fair value
adjustment included within the consolidated statements of operations for the
three months ended March 31, 2008 was $164,000 and is included as an increase to
interest expense.
The Company has a $1,830,000 mortgage collateralized by certain real
estate. The annual mortgage payment including interest totals $226,000. The
mortgage bears interest at a fixed rate of 7% and matures in 2010.
During fiscal year 2008, the Company anticipates that its capital
requirements will be $2 - $3 million. The Company does not usually enter into
long term contracts with its major Hospitality segment customers. The Company
commits to purchasing inventory from its suppliers based on a combination of
internal forecasts and the actual orders from customers. This process, along
with good relations with suppliers, minimizes the working capital investment
required by the Company. Although the Company lists two major customers,
McDonald's and Yum! Brands, it sells to hundreds of individual franchisees of
these corporations, each of which is individually responsible for its own debts.
These broadly made sales substantially reduce the impact on the Company's
liquidity if one individual franchisee reduces the volume of its purchases from
the Company in a given year. The Company, based on internal forecasts, believes
its existing cash, line of credit facilities and its anticipated operating cash
flow will be sufficient to meet its cash requirements through at least the next
twelve months. However, the Company may be required, or could elect, to seek
additional funding prior to that time. The Company's future capital requirements
will depend on many factors including its rate of revenue growth, the timing and
extent of spending to support product development efforts, expansion of sales
and marketing, the timing of introductions of new products and enhancements to
existing products, and market acceptance of its products. The Company cannot
assure that additional equity or debt financing will be available on acceptable
terms or at all. The Company's sources of liquidity beyond twelve months, in
management's opinion, will be its cash balances on hand at that time, funds
provided by operations, funds available through its lines of credit and the
long-term credit facilities that it can arrange.
Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157"), which provides guidance for measuring the fair value of assets and
liabilities, as well as requires expanded disclosures about fair value
measurements. SFAS 157 indicates that fair value should be determined based on
the assumptions marketplace participants would use in pricing the asset or
liability, and provides additional guidelines to consider in determining the
market-based measurement. The Company adopted SFAS 157 as of January 1, 2008,
with the exception of the application of the statement to non-recurring
nonfinancial assets and nonfinancial liabilities. Refer to Note 5 to the
Unaudited Interim Consolidated Financial Statements for additional discussion on
fair value measurements. This did not have a material impact on the consolidated
financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 permits all
entities to choose to measure eligible items at fair value at specified election
dates. SFAS 159 is effective as of the beginning of an entity's first fiscal
year that begins after November 15, 2007. The Company adopted SFAS 159 as of
January 1, 2008 and has elected not to measure any additional financial
instruments and other items at fair value. This did not have a material impact
on the consolidated financial statements.
In December 2007, the FASB issued SFAS No.141 (revised 2007), Business
Combinations (SFAS 141(R)). The objective of this Statement is to improve the
relevance, representational faithfulness, and comparability of the information
that a reporting entity provides in its financial reports about a business
combination. Specifically, it establishes principles and requirements over how
the acquirer (1) recognizes and measures the identifiable assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree; (2)
recognizes and measures goodwill acquired in the business combination or a gain
from a bargain purchase, and; (3) determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. This Statement is effective for fiscal
years beginning after December 15, 2008 (fiscal year 2009). The Company is
currently assessing the impact of adopting SFAS 141(R) on its consolidated
financial statements.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements an amendment of ARB No. 51 (SFAS 160). The
objective of this Statement is to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards for the noncontrolling interest in a subsidiary (minority interests)
and for the deconsolidation of a subsidiary. This Statement is effective for
fiscal years, and interim periods within those fiscal years, beginning after
December 15, 2008 (fiscal year 2009). The Company is currently assessing the
impact of adopting SFAS 160 on its consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities, an amendment of FASB Statement No. 133"
(SFAS 161). This statement is intended to improve transparency in financial
reporting by requiring enhanced disclosures of an entity's derivative
instruments and hedging activities and their effects on the entity's financial
position, financial performance, and cash flows. SFAS 161 applies to all
derivative instruments within the scope of SFAS 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133) as well as related hedged items,
bifurcated derivatives, and nonderivative instruments that are designated and
qualify as hedging instruments. Entities with instruments subject to SFAS 161
must provide more robust qualitative disclosures and expanded quantitative
disclosures. SFAS 161 is effective prospectively for financial statements issued
for fiscal years and interim periods beginning after November 15, 2008 (fiscal
year 2009), with early application permitted. The Company is currently
evaluating the disclosure implications of this statement.
Critical Accounting Policies
In our Annual Report on Form 10-K for the year ended December 31, 2007, we
disclose accounting policies, referred to as critical accounting policies, that
require management to use significant judgment or that require significant
estimates. Management regularly reviews the selection and application of our
critical accounting policies. There have been no updates to the critical
accounting policies contained in our Annual Report on Form 10-K for the year
ended December 31, 2007.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
INFLATION
Inflation had little effect on revenues and related costs during the
first three months of 2008. Management anticipates that margins will be
maintained at acceptable levels to minimize the affects of inflation, if any.
INTEREST RATES
As of March 31, 2008, the Company has $5 million in variable long-term debt
and $5.4 million in variable short-term debt. The Company believes that an
adverse change in interest rates of 100 basis points would not have a material
impact on our business, financial condition, results of operations or cash
flows.
FOREIGN CURRENCY
The Company's primary exposures relate to certain non-dollar denominated
sales and operating expenses in Europe and Asia. These primary currencies are
the Euro, the Australian dollar and the Singapore dollar. Management believes
that foreign currency fluctuations should not have a significant impact on our
business, financial conditions, results of operations or cash flows due to the
low volume of business affected by foreign currencies.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures.
As of the end of the period covered by this report, our management,
including our Chief Executive Officer and Chief Financial Officer, carried out
an evaluation of the effectiveness of the Company's "disclosure controls and
procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e)
and 15d-15(e)) of the Company. These officers have concluded that our disclosure
controls and procedures are effective. As such, we believe that all material
information relating to us and our consolidated subsidiaries required to be
disclosed in our periodic filings with the Securities and Exchange Commission
(i) is recorded, processed, summarized and reported within the required time
period, and (ii) is accumulated and communicated to the Company's management,
including our Chief Executive Officer and Chief Financial Officer, as
appropriate, to allow timely decisions regarding required disclosure.
(b) Changes in Internal Control over Financial Reporting.
There was no change in the Company's internal controls over financial
reporting, as defined in Rule 13a-15(f) of the Exchange Act during the quarter
ended March 31, 2008 that has materially affected, or is reasonably likely to
materially affect, such internal controls over financial reporting.
PART II - OTHER INFORMATION
Item 1A. Risk Factors
The Company is exposed to certain risk factors that may effect operations
and/or financial results. The significant factors known to the Company are
described in the Company's most recently filed Annual Report on Form 10-K. There
have been no material changes from the risk factors as previously disclosed in
the Company's Annual Report on Form 10-K.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On January 8, 2008, PAR Technology Corporation furnished a report on Form
8-K pursuant to Items 5.02 and 9.01 (Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers) and (Financial Statements and Exhibits),
respectively.
On February 11, 2008, PAR Technology Corporation furnished a report on Form
8-K to report its results of operations for the quarterly period ending December
31, 2007.
Item 6. Exhibits
List of Exhibits
Exhibit No. Description of Instrument
----------- -------------------------
31.1 Certification of Chairman of the Board
and Chief Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2 Certification of Vice President, Chief
Financial Officer and Treasurer Pursuant
to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1 Certification of Chairman of the Board
and Chief Executive Officer and
Vice President, Chief Financial Officer
and Treasurer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
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 12, 2008
/s/RONALD J. CASCIANO
---------------------------------------
Ronald J. Casciano
Vice President, Chief Financial Officer
and Treasurer
Exhibit Index
Sequential
Page
Exhibit Number
------- ------
31.1 Certification of Chairman of the Board E-1
and Chief Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act
of 2002.
31.2 Certification of Vice President, Chief E-2
Financial Officer and Treasurer Pursuant
to Section 302 of the Sarbanes-Oxley Act
of 2002.
32.1 Certification of Chairman of the Board E-3
and Chief Executive Officer and
Vice President, Chief Financial Officer
and Treasurer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.1
PAR TECHNOLOGY CORPORATION
STATEMENT OF EXECUTIVE OFFICER
I, John W. Sammon certify that:
1. I have reviewed this report on Form 10-Q of PAR Technology Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)), for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluations; and
d. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter and that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors:
a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 12, 2008
/s/John W. Sammon
---------------------------
John W. Sammon
Chairman of the Board and
Chief Executive Officer
E-1
Exhibit 31.2
PAR TECHNOLOGY CORPORATION
STATEMENT OF EXECUTIVE OFFICER
I, Ronald J. Casciano, certify that:
1. I have reviewed this report on Form 10-Q of PAR Technology Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)), for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during
the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or
caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this
report based on such evaluations; and
d. Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter and that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors:
a. All significant deficiencies and material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial
information; and
b. Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 12, 2008
/s/Ronald J. Casciano
---------------------------
Ronald J. Casciano
Vice President, Chief Financial
Officer & Treasurer
E-2
Exhibit 32.1
PAR TECHNOLOGY CORPORATION
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of PAR Technology Corporation (the
"Company") on Form 10-Q for the quarter ended March 31, 2008 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), we, John
W. Sammon and Ronald J. Casciano, Chairman of the Board & Chief Executive
Officer and Vice President, Chief Financial Officer & Treasurer of the Company,
certify pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
(1) The Report fully complies with the requirement of section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operations of the Company.
/s/John W. Sammon
- -------------------------------
John W. Sammon
Chairman of the Board & Chief Executive Officer
May 12, 2008
/s/Ronald J. Casciano
- -------------------------------
Ronald J. Casciano
Vice President, Chief Financial Officer & Treasurer
May 12, 2008
E-3