NEW HARTFORD, N.Y.--(BUSINESS WIRE)--PAR Technology Corporation (NYSE: PAR) today announced results for the second quarter ended June 30, 2011. PAR reported revenues of $58.3 million and net earnings of $1 million or $0.07 per diluted share, on a non-GAAP reporting basis, excluding restructuring charges and charges related to goodwill impairment in the quarter. This compares with the prior-year quarter of $56.2 million in revenues and net earnings of $849,000 or $0.06 per diluted share.
During the second quarter, the Company incurred non-recurring charges totaling $29.4 million. The largest of the charges was a non-cash charge of $20.8 million, to reduce the carrying value of goodwill and intangible assets associated with prior acquisitions. The other charges, totaling $8.6 million, were associated with reserves for discontinued inventory, severance, office closure, and certain other assets. Of the $8.6 million total, non-cash charges totaled $8 million. Including these non-recurring charges, the resulting net loss on a GAAP basis was $17.8 million, or $1.19 loss per diluted share.
Commenting on the second quarter, Paul B. Domorski, Chairman and Chief Executive Officer, stated, “Since joining PAR three months ago, I have stressed focusing and streamlining our organization so that we can best realize the potential of the important hospitality investments made to date. We introduced the quick-service restaurant industry’s most advanced enterprise point-of-sale system, PAR EverServ® QSR. In June, we introduced the ATRIO™ Guest Experience Management platform, an innovative cloud-computing solution for the hotel/resort industry. We believe ATRIO represents a paradigm shift, perhaps the most significant software development in hospitality in 25 years, with the potential to rapidly become the preeminent platform in hospitality management systems. In addition, ATRIO provides us a compelling solution for mid-market properties, thereby significantly expanding our addressable market.”
Mr. Domorski continued, “Our three businesses performed to expectations for the quarter, with improved sequential results in the hospitality technology segment. Government contracting has been steady for some time, but growth has been constrained by the ongoing deferral of funding authorizations by government agencies. Our Logistics Management business saw sequential revenue growth, and is focused on achieving near-term profitability. However, based on a thorough analysis of the carrying value of certain legacy assets and charges associated with streamlining our organization, we believe the charges we incurred were appropriate. In summary, we are improving execution, addressing the near-term challenges in our businesses, while redirecting resources and energy toward our promising future.”
Hospitality segment revenues accounted for 69% of consolidated revenues for the second quarter and grew 8% sequentially and 5% over the same period of the prior year, despite the fact 2010 results benefited from a large McDonald’s technology upgrade. In the second quarter, important new customers included Dunkin’ Brands Baskin-Robbins chain, which is currently installing PAR’s complete solution including hardware, software and services domestically. International hospitality product revenues grew 34% in the quarter as we saw an increase in sales to McDonald’s internationally, principally in Europe and China. PAR continues to focus on expanding its channel base for restaurant solutions, as evidenced by the signing of 15 new channel partners during the second quarter. Despite uncertain demand from the recovering hotel/resort market, several property management systems were deployed for new and existing customers, most notably further expansion of the worldwide relationship with the Mandarin Oriental chain. Non-GAAP pre-tax income for the Hospitality segment improved sharply for the second quarter, both sequentially and year over year, reflecting increased revenues and expense control.
Government segment revenues accounted for 28% of consolidated revenues for the second quarter, and contract backlog totaled $147 million at the end of the quarter. Quarterly revenue declined 3.4% sequentially and was essentially unchanged year over year, reflecting the slow pace at which funding has been authorized for new and renewed contracts. Notable contracts announced during the quarter included an $11.3 million multi-year contract with the U.S. Navy to operate a Naval Satellite Communications Facility in Chesapeake, VA, and a $1.6 million R&D contract with the Air Force Research Laboratory Information Directorate regarding their COMINT (Communications Intelligence) Information Operations. Pre-tax income for the Government segment was essentially flat reflecting a mix of contract revenue and costs recognized during the quarter.
Logistics Management segment revenues represented 3% of consolidated revenues for the second quarter and increased 10.2% sequentially and 21% over the same period of the prior year. In the quarter, we expanded our cold chain solutions in support of the industry’s growing concern for ensuring food safety. We signed contracts with six new reefer fleet customers and continued the ongoing roll out of our cold chain solution for a major restaurant chain. Additionally in June we announced a significant new customer, Alliance Shippers, a large intermodal (rail and road) shipper of refrigerated products.
Non-GAAP Financial Measures
The Company has presented earnings and earnings per share on a non-GAAP basis, excluding non-recurring charges. Management believes these non-GAAP financial measures provide meaningful supplemental information regarding the Company’s performance, thereby enhancing the ability of investors to evaluate PAR’s results for the periods presented. Please refer to the table below for supplemental information and corresponding reconciliation of non-GAAP adjusted financial measures to GAAP financial measures for the three months and six months ended June 30, 2011.
Certain Company information in this release or statements made by its spokespersons from time to time may contain forward-looking statements. Any statements in this document that do not describe historical facts are forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including without limitation, delays in new product introduction, risks in technology development and commercialization, risks in product development and market acceptance of and demand for the Company’s products, risks of downturns in economic conditions generally, and in the quick service sector of the restaurant market specifically, risks of intellectual property rights associated with competition and competitive pricing pressures, risks associated with foreign sales and high customer concentration, and other risks detailed in the Company’s filings with the Securities and Exchange Commission.
About PAR Technology Corporation
PAR Technology Corporation's stock is traded on the New York Stock Exchange under the symbol PAR. PAR has three operating segments:
- PAR’s Hospitality segment has been a leading provider of restaurant and retail technology for more than 30 years. ParTech, Inc. offers technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. PAR Springer-Miller Systems, Inc. offers hotel management systems that provide a complete suite of powerful tools for guest management, recreation management, and timeshare/condo management. PAR Springer-Miller Systems also provides the spa industry a leading management application that was specifically designed to support the unique needs of the resort spa and day spa markets, a rapidly growing hospitality segment. Products from PAR also can be found in retailers, cinemas, cruise lines, stadiums and food service companies.
- PAR’s Government segment is comprised of PAR Government Systems Corporation, which provides system solutions to Federal/State Government agencies, and Rome Research Corporation, which is a leading provider of communications and information technology support services to the United States Department of Defense.
- PAR’s Logistics Management segment provides asset tracking and management solutions to the “cold chain” owners and operators of untethered trailers and intermodal containers, chassis, and gensets. PAR Logistics Management Systems Corporation offers systems to help customers improve operations by accurately monitoring and controlling their assets through state-of-the-art wireless, GPS, cellular communications, satellite communications, sensor, and internet technologies.
Visit www.partech.com for more information.
There will be a conference call at 4:30 p.m. eastern time on August 10, 2011, during which the Company’s management will discuss the financial results for the second quarter of 2011. If you would like to participate in this conference please call 1-866-383-7989 approximately 10 minutes before the call is scheduled to begin and use the PAR passcode 36219378. Individual & Institutional Investors will have the opportunity to listen to the conference call/event over the Internet. Individual Investors can listen to the call by visiting PAR’s website at www.partech.com, and through CCBN’s individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN’s Individual Investor Network. Institutional investors can access the call via CCBN’s password-protected site, StreetEvents (www.streetevents.com). In case you are unable to participate in the conference call, an automatic replay will be available on the World Wide Web via www.companyboardroom.com until August 17, 2011 or dial 1-888-286-8010 and use the Pass Code number 37164446 until August 17, 2011.
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PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) (unaudited) |
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| June 30, | December 31, | |||||||
| 2011 | 2010 | |||||||
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Assets
Current assets: |
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| Cash and cash equivalents | $ | 3,688 | $ | 6,781 | ||||
| Accounts receivable-net | 37,154 | 43,517 | ||||||
| Inventories-net | 35,245 | 38,707 | ||||||
| Income tax refunds | 379 | 152 | ||||||
| Deferred income taxes | 10,136 | 5,719 | ||||||
| Other current assets | 3,775 | 3,067 | ||||||
| Total current assets | 90,377 | 97,943 | ||||||
| Property, plant and equipment - net | 5,646 | 5,796 | ||||||
| Deferred income taxes | 6,529 | 1,079 | ||||||
| Goodwill | 6,852 | 26,954 | ||||||
| Intangible assets - net | 14,229 | 10,389 | ||||||
| Other assets | 2,227 | 2,124 | ||||||
| Total Assets | $ | 125,860 | $ | 144,285 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 1,865 | $ | 1,711 | ||||
| Borrowings under lines of credit | 3,000 | − | ||||||
| Accounts payable | 17,923 | 19,902 | ||||||
| Accrued salaries and benefits | 8,325 | 9,055 | ||||||
| Accrued expenses | 2,847 | 2,843 | ||||||
| Customer deposits | 956 | 2,286 | ||||||
| Deferred service revenue | 15,687 | 16,260 | ||||||
| Total current liabilities | 50,603 | 52,057 | ||||||
| Long-term debt | 1,772 | 2,744 | ||||||
| Other long-term liabilities | 2,870 | 2,725 | ||||||
| Shareholders’ Equity: | ||||||||
| Preferred stock, $.02 par value, | ||||||||
| 1,000,000 shares authorized | − | − | ||||||
| Common stock, $.02 par value, | ||||||||
| 29,000,000 shares authorized; | ||||||||
| 16,863,868 and 16,746,618 shares issued; | ||||||||
| 15,156,584 and 15,039,334 outstanding | 337 | 335 | ||||||
| Capital in excess of par value | 42,625 | 42,264 | ||||||
| Retained earnings | 33,161 | 50,605 | ||||||
| Accumulated other comprehensive income (loss) | 324 | (613 | ) | |||||
| Treasury stock, at cost, 1,707,284 shares | (5,832 | ) | (5,832 | ) | ||||
| Total shareholders’ equity | 70,615 | 86,759 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 125,860 | $ | 144,285 | ||||
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PAR TECHNOLOGY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) (unaudited) |
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For the three months
ended June 30, |
For the six months
ended June 30, |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net revenues: | ||||||||||||||||
| Product | $ | 23,990 | $ | 23,084 | $ | 46,874 | $ | 44,335 | ||||||||
| Service | 18,037 | 16,862 | 34,178 | 36,101 | ||||||||||||
| Contract | 16,258 | 16,268 | 33,080 | 33,897 | ||||||||||||
| 58,285 | 56,214 | 114,132 | 114,333 | |||||||||||||
| Costs of sales: | ||||||||||||||||
| Product | 15,021 | 15,006 | 29,102 | 29,391 | ||||||||||||
| Service | 20,691 | 10,901 | 31,733 | 23,949 | ||||||||||||
| Contract | 15,336 | 15,218 | 31,145 | 31,813 | ||||||||||||
| 51,048 | 41,125 | 91,980 | 85,153 | |||||||||||||
| Gross margin | 7,237 | 15,089 | 22,152 | 29,180 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 10,157 | 9,781 | 20,065 | 19,321 | ||||||||||||
| Research and development | 3,720 | 4,321 | 7,860 | 7,766 | ||||||||||||
| Impairment of goodwill and intangible assets | 20,843 | − | 20,843 | − | ||||||||||||
| Amortization of identifiable intangible assets | 205 | 235 | 410 | 469 | ||||||||||||
| 34,925 | 14,337 | 49,178 | 27,556 | |||||||||||||
| Operating income (loss) | (27,688 | ) | 752 | (27,026 | ) | 1,624 | ||||||||||
| Other income (expense), net | (157 | ) | 278 | (129 | ) | 419 | ||||||||||
| Interest expense | (67 | ) | (71 | ) | (115 | ) | (142 | ) | ||||||||
| Income (loss) before provision for income taxes | (27,912 | ) | 959 | (27,270 | ) | 1,901 | ||||||||||
| (Provision) benefit for income taxes | 10,064 | (110 | ) | 9,826 | (470 | ) | ||||||||||
| Net income (loss) | $ | (17,848 | ) | $ | 849 | $ | (17,444 | ) | $ | 1,431 | ||||||
| Earnings (loss) per share | ||||||||||||||||
| Basic | $ | (1.19 | ) | $ | .06 | $ | (1.17 | ) | $ | .10 | ||||||
| Diluted | $ | (1.19 | ) | $ | .06 | $ | (1.17 | ) | $ | .10 | ||||||
| Weighted average shares outstanding | ||||||||||||||||
| Basic | 14,996 | 14,800 | 14,960 | 14,751 | ||||||||||||
| Diluted | 14,996 | 15,031 | 14,960 | 14,993 | ||||||||||||
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PAR TECHNOLOGY CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share data) |
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| For the three months ended June 30, 2011 | ||||||||||||
|
Reported |
Adjustments |
Comparable |
For the |
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| Net revenues | $58,285 | $58,285 | $56,214 | |||||||||
| Costs of sales | 51,048 | 7,732 | 43,316 | 41,125 | ||||||||
| Gross Margin | 7,237 | 7,732 | 14,969 | 15,089 | ||||||||
| Operating Expenses | ||||||||||||
| Selling, general and administrative | 10,157 | 595 | 9,562 | 9,781 | ||||||||
| Research and development | 3,720 | 3,720 | 4,321 | |||||||||
| Impairment of goodwill and intangible assets | 20,843 | 20,843 | - | - | ||||||||
| Amortization of identifiable intangible assets | 205 | 205 | 235 | |||||||||
| Total operating expenses | 34,925 | 21,438 | 13,487 | 14,337 | ||||||||
| Operating income (loss) | (27,688 | ) | 29,170 | 1,482 | 752 | |||||||
| Other income (expense) | (157 | ) | 253 | 96 | 278 | |||||||
| Interest expense | (67 | ) | (67 | ) | (71 | ) | ||||||
| Income (loss) before provision for income taxes | (27,912 | ) | 29,423 | 1,511 | 959 | |||||||
| (Provision)benefit for income taxes | 10,064 | (10,568 | ) | (504 | ) | (110 | ) | |||||
| Net Income (loss) | $(17,848 | ) | $18,855 | $1,007 | $849 | |||||||
| Earnings (loss) per diluted share | $(1.19 | ) | $0.07 | $0.06 | ||||||||
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PAR TECHNOLOGY CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES (in thousands, except per share data) |
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| For the six months ended June 30, 2011 | ||||||||||||
|
Reported |
Adjustments |
Comparable |
For the six |
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| Net revenues | $114,132 | $114,132 | $114,333 | |||||||||
| Costs of sales | 91,980 | 7,732 | 84,248 | 85,153 | ||||||||
| Gross Margin | 22,152 | 7,732 | 29,884 | 29,180 | ||||||||
| Operating Expenses | ||||||||||||
| Selling, general and administrative | 20,065 | 595 | 19,470 | 19,321 | ||||||||
| Research and development | 7,860 | 7,860 | 7,766 | |||||||||
| Impairment of goodwill and intangible assets | 20,843 | 20,843 | - | - | ||||||||
| Amortization of identifiable intangible assets | 410 | 410 | 469 | |||||||||
| Total operating expenses | 49,178 | 21,438 | 27,740 | 27,556 | ||||||||
| Operating income (loss) | (27,026 | ) | 29,170 | 2,144 | 1,624 | |||||||
| Other income (expense) | (129 | ) | 253 | 124 | 419 | |||||||
| Interest expense | (115 | ) | (115 | ) | (142 | ) | ||||||
| Income (loss) before provision for income taxes | (27,270 | ) | 29,423 | 2,153 | 1,901 | |||||||
| (Provision)benefit for income taxes | 9,826 | (10,568 | ) | (742 | ) | (470 | ) | |||||
| Net Income (loss) | $(17,444 | ) | $18,855 | $1,411 | $1,431 | |||||||
| Earnings (loss) per diluted share | $(1.17 | ) | $0.09 | $0.10 | ||||||||
| The Company reports its financial results in accordance with GAAP. However, non-GAAP adjusted financial measures, as defined in the reconciliation table above, are provided herein because management uses such measures in evaluating the results of the continuing operations of the Company and believes this information provides investors better insight into underlying business trends and performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. |
| For the three and six months ended June 30, 2011, the Company recorded total charges of $29.4 million primarily related to an impairment of goodwill and intangible assets of $20.8 million. Additionally, the Company recorded a charge of $7.7 million related to a non-recurring write-down of certain inventory associated with discontinued products, and charges of $0.9 million related to the consolidation of some of its facilities. The aforementioned charges have been recorded net of tax benefit of $10.6 million and have been excluded in the Company’s non-GAAP measures because they are considered non-recurring in nature and are quantitatively and qualitatively different from the Company’s core operations during any particular period. |