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 June 30, 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 July
31, 2008 - 14,455,063 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 and six months ended June 30, 2008 and 2007
- Consolidated Statements of Comprehensive Income (Loss)
for the three and six months ended June 30, 2008 and 2007
- Consolidated Balance Sheets at
June 30, 2008 and December 31, 2007
- Consolidated Statements of Cash Flows
for the six months ended June 30, 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 For the six months
ended June 30, ended June 30,
---------------------- ----------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net revenues:
Product ...................................... $ 20,751 $ 18,320 $ 37,648 $ 35,026
Service ...................................... 17,729 16,100 34,144 31,629
Contract ..................................... 18,754 15,452 37,549 31,053
--------- --------- --------- ---------
57,234 49,872 109,341 97,708
--------- --------- --------- ---------
Costs of sales:
Product ...................................... 12,612 10,699 22,037 21,007
Service ...................................... 12,877 11,886 25,360 24,052
Contract ..................................... 17,713 14,652 35,553 29,206
--------- --------- --------- ---------
43,202 37,237 82,950 74,265
--------- --------- --------- ---------
Gross margin ........................... 14,032 12,635 26,391 23,443
--------- --------- --------- ---------
Operating expenses:
Selling, general and administrative .......... 8,742 9,186 17,803 17,895
Research and development ..................... 3,890 4,387 8,011 8,201
Amortization of identifiable intangible assets 389 394 779 784
--------- --------- --------- ---------
13,021 13,967 26,593 26,880
--------- --------- --------- ---------
Operating income (loss) ........................... 1,011 (1,332) (202) (3,437)
Other income, net ................................. 229 154 543 394
Interest expense .................................. (121) (237) (470) (459)
--------- --------- --------- ---------
Income (loss) before provision for income taxes ... 1,119 (1,415) (129) (3,502)
(Provision) benefit for income taxes .............. (445) 394 58 1,173
--------- --------- --------- ---------
Net income (loss) ................................. $ 674 $ (1,021) $ (71) $ (2,329)
========= ========= ========= =========
Earnings (loss) per share
Basic ........................................ $ .05 $ (.07) $ (.00) $ (.16)
Diluted ...................................... $ .05 $ (.07) $ (.00) $ (.16)
Weighted average shares outstanding
Basic ........................................ 14,394 14,348 14,386 14,334
========= ========= ========= =========
Diluted ...................................... 14,798 14,348 14,386 14,334
========= ========= ========= =========
See notes to unaudited interim consolidated financial statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
For the three months For the six months
ended June 30, ended June 30,
---------------------- ----------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net income (loss) ................................. $ 674 $ (1,021) $ (71) $ (2,329)
Other comprehensive income, net of tax:
Foreign currency translation adjustments ..... 140 613 36 529
--------- --------- --------- ---------
Comprehensive income (loss) ....................... $ 814 $ (408) $ (35) $ (1,800)
========= ========= ========= =========
See notes to unaudited interim consolidated financial statements
PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
(unaudited)
June 30, December 31,
2008 2007
--------- -----------
Assets
Current assets:
Cash and cash equivalents ......................... $ 3,357 $ 4,431
Accounts receivable-net ........................... 45,568 43,608
Inventories-net ................................... 40,808 40,319
Income tax refunds ................................ 1,352 521
Deferred income taxes ............................. 5,039 5,630
Other current assets .............................. 3,454 3,370
--------- ---------
Total current assets .......................... 99,578 97,879
Property, plant and equipment - net .................... 7,401 7,669
Deferred income taxes .................................. 443 503
Goodwill ............................................... 26,798 26,998
Intangible assets - net ................................ 9,263 9,899
Other assets ........................................... 1,978 3,570
--------- ---------
Total Assets ............................. $ 145,461 $ 146,518
========= =========
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt ................. $ 917 $ 772
Borrowings under lines of credit .................. 7,862 2,500
Accounts payable .................................. 11,746 16,978
Accrued salaries and benefits ..................... 9,286 9,919
Accrued expenses .................................. 3,241 3,860
Customer deposits ................................. 4,089 3,898
Deferred service revenue .......................... 14,260 14,357
--------- ---------
Total current liabilities ..................... 51,401 52,284
--------- ---------
Long-term debt ........................................ 6,430 6,932
--------- ---------
Other long-term liabilities ............................ 2,319 2,315
--------- ---------
Shareholders' Equity:
Preferred stock, $.02 par value,
1,000,000 shares authorized ..................... -- --
Common stock, $.02 par value,
29,000,000 shares authorized;
16,098,818 and 16,047,818 shares issued;
14,446,063 and 14,395,063 outstanding ........... 322 321
Capital in excess of par value .................... 39,610 39,252
Retained earnings ................................. 50,380 50,451
Accumulated other comprehensive income ............ 508 472
Treasury stock, at cost, 1,652,755 shares ......... (5,509) (5,509)
--------- ---------
Total shareholders' equity .................... 85,311 84,987
--------- ---------
Total Liabilities and Shareholders' Equity $ 145,461 $ 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 six months ended June 30,
---------------------------------
2008 2007
-------- --------
Cash flows from operating activities:
Net loss ................................................................. $ (71) $(2,329)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization ....................................... 2,045 1,955
Provision for bad debts ............................................. 48 1,066
Provision for obsolete inventory .................................... 731 663
Equity based compensation ........................................... 164 271
Deferred income tax ................................................. 692 (1,620)
Changes in operating assets and liabilities:
Accounts receivable ............................................. (2,008) 6,158
Inventories ..................................................... (1,220) (2,727)
Income tax refunds .............................................. (831) 746
Other current assets ............................................ (84) (137)
Other assets .................................................... 21 (529)
Accounts payable ................................................ (5,232) (2,574)
Accrued salaries and benefits ................................... (633) (301)
Accrued expenses ................................................ (463) 148
Customer deposits ............................................... 191 313
Deferred service revenue ........................................ (97) 88
Other long-term liabilities ..................................... 4 715
------- -------
Net cash provided by (used in) operating activities ........... (6,743) 1,906
------- -------
Cash flows from investing activities:
Capital expenditures ..................................................... (695) (649)
Capitalization of software costs ......................................... (487) (730)
Contingent purchase price paid on prior year acquisitions ................ (156) --
Cash received from voluntary conversion of long-lived other assets ....... 1,571 --
------- -------
Net cash provided by (used in) investing activities ........... 233 (1,379)
------- -------
Cash flows from financing activities:
Net borrowings under line-of-credit agreements ........................... 5,362 (1,670)
Payments of long-term debt ............................................... (357) (49)
Proceeds from the exercise of stock options .............................. 195 109
------- -------
Net cash provided by (used in) financing activities ........... 5,200 (1,610)
------- -------
Effect of exchange rate changes on cash and cash equivalents ................. 236 130
------- -------
Net decrease in cash and cash equivalents .................................... (1,074) (953)
Cash and cash equivalents at beginning of period ............................. 4,431 4,273
------- -------
Cash and cash equivalents at end of period ................................... $ 3,357 $ 3,320
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest ................................................................. $ 451 $ 474
Income taxes, net of refunds ............................................. (1) (331)
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 and six months ended June 30, 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)
June 30, December 31,
2008 2007
-------- --------
Finished goods $ 9,510 $ 9,965
Work in process 1,935 1,722
Component parts 10,579 10,408
Service parts . 18,784 18,224
------- -------
$40,808 $40,319
======= =======
At June 30, 2008 and December 31, 2007, the Company had recorded reserves
for shrinkage, excess and obsolete inventory of $3,768,000 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 and six months ended June 30, 2008 was
$60,000 and $164,000, respectively. Total compensation expense included in
operating expenses for the three and six months ended June 30, 2007 was
$134,000 and $271,000, respectively. At June 30, 2008, the unrecognized
compensation expense related to non-vested option awards was $548,000 (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 June 30,
--------------------
2008 2007
-------- --------
Net income (loss) ................................... $ 674 $ (1,021)
======== ========
Basic:
Shares outstanding at beginning of period ...... 14,382 14,343
Weighted average shares issued during the period 12 5
-------- --------
Weighted average common shares, basic .......... 14,394 14,348
======== ========
Earnings (loss) per common share, basic ........ $ .05 $ (.07)
======== ========
Diluted:
Weighted average common shares, basic .......... 14,394 14,348
Weighted average shares issued during the period 11 --
Dilutive impact of restricted stock awards ..... 17 --
Unamortized compensation expense ............... (18) --
Dilutive impact of stock options ............... 394 --
-------- --------
Weighted average common shares, diluted ........ 14,798 14,348
======== ========
Earnings (loss) per common share, diluted ...... $ .05 $ (.07)
======== ========
For the six months
ended June 30,
--------------------
2008 2007
-------- --------
Net income (loss) ................................... $ (71) $ (2,329)
======== ========
Basic:
Shares outstanding at beginning of period ...... 14,372 14,310
Weighted average shares issued during the period 14 24
-------- --------
Weighted average common shares, basic .......... 14,386 14,334
======== ========
Earnings (loss) per common share, basic ........ $ (.00) $ (.16)
======== ========
Diluted:
Weighted average common shares, basic .......... 14,386 14,334
Dilutive impact of stock options ............... -- --
-------- --------
Weighted average common shares, diluted ........ 14,386 14,334
======== ========
Earnings (loss) per common share, diluted ...... $ (.00) $ (.16)
======== ========
For the six months ended June 30, 2008, 395,823 incremental shares from the
assumed exercise of stock options and 28,157 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 June 30, 2008 was $171,000, and is included as a
component of accrued expenses within the consolidated balance sheet. The
associated fair value adjustments for the three months ended June 30, 2008
and the six months ended June 30, 2008, respectively, are: $148,000,
included as a decrease to interest expense; and $17,000, included as an
increase to interest expense.
6. In June 2008, the Company executed a new credit agreement with a bank.
Under this agreement, the Company has borrowing availability up to
$20,000,000 in the form of a line of credit. This agreement 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 (5.38%
at June 30, 2008). This agreement expires in June 2011. At June 30, 2008,
there was $7,862,000 outstanding under this agreement. The weighted average
interest rate paid by the Company was 5.2% during 2008. This agreement
contains certain loan covenants including leverage and fixed charge
coverage ratios. The Company is in compliance with these covenants at June
30, 2008. This credit facility is secured by certain assets of the Company.
In 2006, the Company borrowed $6,000,000 under an unsecured term loan
agreement, executed as an amendment to one of its then bank line of credit
agreements, in connection with the asset acquisition for 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 (5.38% at June 30,
2008). The terms and conditions of the line of credit agreement described
above also apply to the term loan.
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 For the six months
ended June 30, ended June 30,
--------------------- ----------------------
2008 2007 2008 2007
--------------------- ----------------------
Net revenues:
Hospitality ............. $ 38,480 $ 34,420 $ 71,792 $ 66,655
Government .............. 18,754 15,452 37,549 31,053
--------- --------- --------- ---------
Total ............ $ 57,234 $ 49,872 $ 109,341 $ 97,708
========= ========= ========= =========
Operating income (loss):
Hospitality ............. $ 58 $ (1,927) $ (1,981) $ (4,895)
Government .............. 943 729 1,873 1,729
Other ................... 10 (134) (94) (271)
--------- --------- --------- ---------
1,011 (1,332) (202) (3,437)
Other income, net ............ 229 154 543 394
Interest expense ............. (121) (237) (470) (459)
--------- --------- --------- ---------
Income (loss) before provision
for income taxes ........... $ 1,119 $ (1,415) $ (129) $ (3,502)
========= ========= ========= =========
Depreciation and amortization:
Hospitality ............. $ 900 $ 891 $ 1,807 $ 1,751
Government .............. 22 8 49 17
Other ................... 94 91 189 187
--------- --------- --------- ---------
Total ............ $ 1,016 $ 990 2,045 $ 1,955
========= ========= ========= =========
Capital expenditures:
Hospitality ............. $ 441 $ 286 $ 543 $ 577
Government .............. -- -- 35 32
Other ................... 76 31 117 40
--------- --------- --------- ---------
Total ............. $ 517 $ 317 $ 695 $ 649
========= ========= ========= =========
Revenues by geographic area:
United States ........... $ 50,141 $ 41,817 $ 96,089 $ 83,503
Other Countries ......... 7,093 8,055 13,252 14,205
--------- --------- --------- ---------
Total ............. $ 57,234 $ 49,872 $ 109,341 $ 97,708
========= ========= ========= =========
The following table represents identifiable assets by business segment:
(in thousands)
June 30, December 31,
2008 2007
-------- --------
Identifiable assets:
Hospitality .... $125,190 $122,442
Government ..... 13,154 14,429
Other .......... 7,117 9,647
-------- --------
Total .............. $145,461 $146,518
======== ========
The following table presents identifiable assets by geographic area based
on the location of the asset:
(in thousands)
June 30, December 31,
---------------------------
2008 2007
-------- ---------
United States . $132,588 $134,766
Other Countries 12,873 11,752
-------- --------
Total .. $145,461 $146,518
======== ========
The following table represents Goodwill by business segment:
(in thousands)
June 30, December 31,
-------------------------
2008 2007
------- ---------
Hospitality $26,149 $26,349
Government . 649 649
------- -------
Total $26,798 $26,998
======= =======
Customers comprising 10% or more of the Company's total revenues are
summarized as follows:
For the three months For the six months
ended June 30, ended June 30,
-------------------- -------------------
2008 2007 2008 2007
-------------------- -------------------
Restaurant Segment:
McDonald's Corporation 23% 27% 21% 26%
YUM! Brands, Inc. .... 16% 14% 14% 13%
Government Segment:
Department of Defense 33% 31% 34% 32%
All Others ................ 28% 28% 31% 29%
--- --- --- ---
100% 100% 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 solutions that
feature software, hardware and professional/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 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. Recently, the trend in the hospitality industry has
been for users to reduce their number 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 solutions,
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
innovative technology that meet and exceed our customers' requirements and also
have high probability for broader market appeal and success. PAR 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 34% 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 Contracting Services - due to its capabilities 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 June 30, 2008 Compared to Three Months Ended June 30, 2007
The Company reported revenues of $57.2 million for the quarter ended June
30, 2008, an increase of 15% from the $49.9 million reported for the quarter
ended June 30, 2007. The Company's net income for the quarter ended June 30,
2008 was $674,000, or $.05 diluted earnings per share, compared to a net loss of
$1 million and a $.07 diluted net loss per share for the same period in 2007.
Product revenues from the Company's Hospitality segment were $20.8 million
for the quarter ended June 30, 2008, an increase of 13% from the $18.3 million
recorded in 2007. This increase was due to a 31% improvement in domestic product
sales primarily due to sales to McDonald's, YUM! Brands, and other new
restaurant customers. This increase in domestic revenue was partially offset by
a 21% decline in international product sales. This decrease was due to the
timing of restaurant customer orders in Asia and Canada.
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 $17.7 million for the
quarter ended June 30, 2008, a 10% increase from $16.1 million reported for the
same period in 2007. The growth is primarily related to increases in several
service areas including onsite contracts, installation, and professional service
activities.
Contract revenues from the Company's Government segment were $18.8 million
for the quarter ended June 30, 2008, an increase of 21% when compared to the
$15.5 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 June 30, 2008 were 39.2%, a
decrease of 240 basis points from the 41.6% for the quarter ended June 30, 2007.
This decrease in margins was due to lower margins on increased hardware sales to
McDonald's in the quarter ended June 30, 2008 partially offset by an increase in
higher margin software sales to various restaurant customers as compared to the
previous quarter.
Customer service margins were 27.4% for the quarter ended June 30, 2008, an
increase of 120 basis points compared to 26.2% for the same period in 2007.
Service margins increased primarily due to improved margins in field service and
installation as revenue and productivity increased in both of these areas.
Contract margins were 5.6% for the quarter ended June 30, 2008, an increase
of 40 basis points compared to 5.2% for the same period in 2007. This increase
was due to slightly higher margins on certain fixed price contracts. The most
significant components of contract costs in 2008 and 2007 were labor and fringe
benefits. For 2008, labor and fringe benefits were $12.8 million or 72% of
contract costs compared to $11.4 million or 78% 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 June 30, 2008 were $8.7 million, a decrease of 5% from the
$9.2 million for the same period in 2007. This decrease resulted from several
factors including a decline in bad debts, benefit costs, and stock option
expense.
Research and development expenses relate primarily to the Company's
Hospitality segment. Research and development expenses were $3.9 million for the
quarter ended June 30, 2008, a decrease of 11% from the $4.4 million recorded in
2007. The decrease was primarily attributable to the near completion of certain
software development projects.
Amortization of identifiable intangible assets was $389,000 for the quarter
ended June 30, 2008, virtually unchanged from 2007. Amortization is on the
identifiable assets acquired in the Company's acquisitions over the last several
years.
Other income, net, was $229,000 for the quarter ended June 30, 2008
compared to $154,000 for the same period in 2007. Other income primarily
includes rental income and foreign currency gains and losses. The increase is
due to various factors including rental income.
Interest expense represents interest charged on the Company's short-term
borrowing requirements from banks and from long-term debt. Interest expense was
$121,000 for the quarter ended June 30, 2008 as compared to $237,000 in 2007.
The decline is primarily due to a reversal of interest expense recorded in prior
periods related to the Company's interest rate swap agreement that was entered
into in September 2007. In addition, the Company's average borrowing rate
decreased in 2008 compared to 2007. This was partially offset by an increase in
the Company's average borrowings in 2008 when compared to 2007.
For the quarters ended June 30, 2008 and 2007, the Company's expected
effective income tax rate based on projected pre-tax income was 39.8% and 27.8%,
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 June 30, 2008. Due to the pre-tax loss for the
quarter ended June 30, 2007, the Company provided a tax benefit of 27.8% as its
estimate of the annual effective income tax rate based on projected pre-tax
income as indicated above.
Results of Operations --
Six Months Ended June 30, 2008 Compared to Six Months Ended June 30, 2007
The Company reported revenues of $109.3 million for the six months ended
June 30, 2008, an increase of 12% from the $97.7 million reported for the six
months ended June 30, 2007. The Company's net loss for the six months ended June
30, 2008 was $71,000, or ($0.00) diluted net loss per share, compared to a net
loss of $2.3 million and $.16 diluted net loss per share for the same period in
2007.
Product revenues from the Company's Hospitality segment were $37.6 million
for the six months ended June 30, 2008, an increase of 7% from the $35 million
recorded in 2007. This increase was due to a 16% increase in domestic product
sales primarily due to solution sales to new restaurant customers and to YUM!
Brands. This increase in domestic revenue was partially offset by a 13% decrease
in international product sales. This decrease was the result of the timing of
orders from the Company's restaurant customers in Asia and Canada.
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 $34.1 million for the
six months ended June 30, 2008, an 8% increase from $31.6 million reported for
the same period in 2007. The growth is primarily related to increases in field
service and installation revenue primarily with McDonald's and YUM! Brands. Also
contributing to the growth was an increase in software maintenance contracts.
Contract revenues from the Company's Government segment were $37.5 million
for the six months ended June 30, 2008, an increase of 21% when compared to the
$31.1 million recorded in the same period in 2007. The increase was primarily
due to new contracts in the information technology outsourcing and imaging
information areas.
Product margins for the six months ended June 30, 2008 were 41.5%, an
increase of 150 basis points from the 40% for the six months ended June 30,
2007. The improved margins were the result of higher software sales in 2008
compared to 2007.
Customer Service margins were 25.7% for the six months ended June 30, 2008,
an increase of 170 basis points compared to 24% for the same period in 2007.
This increase is due to an increase in margins in field service and installation
as revenue and productivity rose in both of these areas.
Contract margins were 5.3% for the six months ended June 30, 2008, a
decline of 60 basis points versus 5.9% for the same period in 2007. The decrease
was due to a favorable cost share adjustment on the Company's Logistics
management program in 2007. The most significant components of contract costs in
2008 and 2007 were labor and fringe benefits. For 2008, labor and fringe
benefits were $26.4 million or 74% of contract costs compared to $24.1 million
or 82% 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 six months ended June 30, 2008 were $17.8 million, a decrease of .5 %
from the $17.9 million for the same period in 2007. This decrease resulted from
several factors including a decline in benefit costs, stock option expense and
bad debts. This was partially offset by the Company's investment in the
expansion of its dealer channel.
Research and development expenses relate primarily to the Company's
Hospitality segment. Research and development expenses were $8 million for the
six months ended June 30, 2008, a decrease of 2% from the $8.2 million recorded
in 2007. The decrease was primarily attributable to the near completion of
certain software development projects.
Amortization of identifiable intangible assets was $779,000 for the six
months ended June 30, 2008 compared to $784,000 for 2007. This relates to
amortization of intangible assets acquired in the Company's acquisitions over
the last several years.
Other income, net, was $543,000 for the six months ended June 30, 2008
compared to $394,000 for the same period in 2007. Other income primarily
includes rental income and foreign currency gains and losses. This increase is
primarily due to higher foreign currency gains and rental income in 2008
compared to 2007.
Interest expense represents interest charged on the Company's short-term
borrowing requirements from banks and from long-term debt. Interest expense was
$470,000 for the six months ended June 30, 2008 as compared to $459,000 in 2007.
The Company experienced higher average borrowings in 2008 when compared to 2007
under its lines of credit with banks. This is partially offset by a lower
average borrowing rate in 2008 when compared to 2007.
For the six months ended June 30, 2008, the Company's effective income tax
rate was 45%, compared to 33.5% in 2007. 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 2008. Due to the pre-tax loss for the six
months ended June 30, 2008 and 2007, the Company provided a tax benefit of 45%
and 33.5%, 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
$6.7 million for the six months ended June 30, 2008 compared to cash provided by
operations of $1.9 million for 2007. In 2008, cash was impacted by the timing of
payments to vendors and a growth in accounts receivable. In 2007, cash was
generated through collection of accounts receivable. This was partially offset
by a growth in inventory and the timing of payments to vendors.
Cash generated by investing activities was $233,000 for the six months
ended June 30, 2008 versus cash used in investing activities of $1.4 million 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 $695,000 and were primarily for manufacturing and computer
equipment. Capitalized software costs relating to software development of
Hospitality segment products were $487,000 in 2008. In 2007, capital
expenditures were $649,000 and were principally for manufacturing and research
and development equipment. Capitalized software costs relating to software
development of Hospitality segment products were $730,000 in 2007.
Cash provided by financing activities was $5.2 million for the six months
ended June 30, 2008 versus cash used in financing activities of $1.6 million in
2007. In 2008, the Company increased its short-term borrowings by $5.4 million
and decreased its long-term debt by $357,000. The Company also benefited
$195,000 from the exercise of employee stock options. In 2007, the Company
decreased its short-term bank borrowings by $1.7 million, benefited $109,000
from the exercise of employee stock options and decreased its long-term debt by
$49,000.
In June 2008, the Company executed a new credit agreement with a bank.
Under this agreement, the Company has a borrowing availability up to $20,000,000
in the form of a line of credit. This agreement 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 (5.38% at June 30, 2008). This
agreement expires in June 2011. At June 30, 2008, there was $7,862,000
outstanding under this agreement. The weighted average interest rate paid by the
Company was 5.2% during 2008. This agreement contains certain loan covenants
including leverage and fixed charge coverage ratios. The Company is in
compliance with these covenants at June 30, 2008. This credit facility is
secured by certain assets of the Company.
In 2006, the Company borrowed $6,000,000 under an unsecured term loan
agreement, executed as an amendment to one of its then bank line of credit
agreements, in connection with the asset acquisition for 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 (5.38% at June 30, 2008). The terms and
conditions of the line of credit agreement described above also 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
adjustments for the three months ended June 30, 2008 and the six months ended
June 30, 2008, respectively, are: $148,000, included as a decrease to interest
expense; and $17,000, included as an increase to interest expense.
The Company has a $1,806,000 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
six 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 June 30, 2008, the Company has $4.7 million in variable long-term
debt and $8.7 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, and 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 June 30, 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 April 29, 2008, PAR Technology Corporation furnished a report on Form
8-K pursuant to its results of operations for the quarterly period ending March
31, 2008.
On June 20, 2008, PAR Technology Corporation furnished a report on Form 8-K
pursuant to Items 1.01 (Entry into a Material Definitive Agreement); 1.02
(Termination of a Material Definitive Agreement); and 2.03 (Creation of a Direct
Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of
a Registrant).
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: August 11, 2008
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: August 11, 2008
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: August 11, 2008
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 June 30, 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.
John W. Sammon
- --------------------------
John W. Sammon
Chairman of the Board
& Chief Executive Officer
August 11, 2008
Ronald J. Casciano
- --------------------------
Ronald J. Casciano
Vice President, Chief Financial
Officer & Treasurer
August 11, 2008
E-3