PAR Technology Corporation (NYSE:PAR) today announced results from continuing operations for the second quarter ended June 30, 2014. PAR reported revenues from continuing operations of $57.4 million and net loss of $519,000 or $0.03 loss per share. On a non-GAAP basis, the Company’s net loss from continuing operations for the second quarter was $336,000 or $0.02 loss per share. During the second quarter of 2013, PAR reported revenue from continuing operations of $59.5 million and net income of $248,000 or $0.02 per diluted share. On a non-GAAP basis, the Company’s net income from continuing operations was $302,000 or $0.02 per diluted share for the second quarter of 2013. These non-GAAP results exclude charges related to the Company’s equity based compensation plans.

Commenting on the second quarter, Ronald J. Casciano, Chief Executive Officer & President, stated, “Although not unexpected, our results were impacted in the quarter by lower revenues in our Government segment due to the timing of certain task orders. Our bottom line results were impacted by the continuing investments in our hospitality segment and specifically regarding our next generation hotel products. However, we continue to make progress on executing that investment strategy and are making important strides towards broadening our customer base as well. While certainly not satisfied with our results, we remain confident in our market opportunities and our leading technology and services in our Hospitality and Government segments.”

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 and 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’s Hospitality segment has been a leading provider of restaurant and retail technology for more than 30 years. PAR offers technology solutions for the full spectrum of restaurant operations, from large chain and independent table service restaurants to international quick service chains. PAR’s Hospitality business also provides hotel management systems with a complete suite of powerful tools for guest management, recreation management, and timeshare/condo management. In addition, PAR offers the spa industry a leading management application 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 Business is a leader in providing computer-based system design, engineering and technical services to the Department of Defense and various federal agencies. Visit www.partech.com for more information.

There will be a conference call at 10:00 a.m. (Eastern) on July 31, 2014, during which the Company’s management will discuss the financial results for the second quarter of 2014. If you would like to participate in this conference call, please dial 1-877-546-5018 approximately 10 minutes before the scheduled beginning and use the PAR passcode 40572879. Individual and institutional investors also will have the opportunity to listen to the conference call live over the Internet. Individual investors can listen by visiting PAR’s website at www.partech.com. If you are unable to participate in the conference call, an automatic replay will be available until August 7, 2014 via www.partech.com or via telephone by dialing 1-888-286-8010 and using the passcode 72099280.

 

PAR TECHNOLOGY CORPORATION

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

     
June 30,

December 31,

Assets

 2014 2013
Current assets:
Cash and cash equivalents $ 12,953 $ 10,015
Accounts receivable-net 31,333 30,688
Inventories-net 22,425 24,465
Income tax refund 256 -
Deferred income taxes 4,694 3,747
Other current assets   3,249     3,418  
Total current assets 74,910 72,333
Property, plant and equipment - net 5,935 5,494
Deferred income taxes 14,491 15,083
Goodwill 6,852 6,852
Intangible assets - net 15,664 15,071
Other assets   2,896     2,675  

Total Assets

 $ 120,748   $ 117,508  
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of long-term debt $ 169 $ 166
Accounts payable 17,735 17,200
Accrued salaries and benefits 5,962 6,663
Accrued expenses 3,711 2,701
Customer deposits 751 1,071
Deferred service revenue 15,921 12,170
Income taxes payable   -     185  
Total current liabilities   44,249     40,156  
Long-term debt   833     918  
Other long-term liabilities   3,705     3,714  
Total liabilities   48,787     44,788  
Commitments and contingencies
Shareholders’ Equity:
Preferred stock, $.02 par value, 1,000,000 shares authorized - -

Common stock, $.02 par value, 29,000,000 shares authorized; 17,332,218 and 17,301,925 shares

issued; 15,624,109 and 15,593,816 outstanding

347 344
Capital in excess of par value 44,466 43,635
Retained earnings 33,608 35,116
Accumulated other comprehensive loss (624 ) (539 )
Treasury stock, at cost, 1,708,109 shares   (5,836 )   (5,836 )
Total shareholders’ equity   71,961     72,720  
Total Liabilities and Shareholders’ Equity $ 120,748   $ 117,508  
 
 

PAR TECHNOLOGY CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 
       

For the three
months ended
June 30,

   

For the three
months ended
June 30,

   

For the six
months ended
June 30,

   

For the six
months ended
June 30,

 
2014 2013 2014

2013

 
Net revenues:
Product

 

$

22,953

 

$

22,257

 

$

41,545

 

$

46,173

Service 14,920 15,314 29,170 31,334
Contract     19,529           21,945       43,228           48,683  
    57,402          

59,516

      113,943           126,190  
Costs of sales:
Product 15,815 14,841 28,718 31,314
Service 10,831 10,904 20,384 22,456
Contract     18,495           20,312       40,567           45,791  
    45,141           46,057       89,669           99,561  
Gross margin     12,261           13,459       24,274           26,629  
Operating expenses:
Selling, general and administrative 9,513 9,494 18,776 19,699
Research and development     3,761           3,706       7,625           7,846  
    13,274           13,200       26,401           27,545  
Operating income (loss) from continuing operations (1,013 ) 259 (2,127 ) (916 )
Other income, net 406 255 328 221
Interest expense     (25 )         (13 )     (42 )         (26 )
Income (loss) from continuing operations before (provision) benefit for income taxes (632 ) 501 (1,841 ) (721 )
(Provision) benefit for income taxes     113           (253 )     333           600  
Income (loss) from continuing operations (519 ) 248 (1,508 ) (121 )
Discontinued operations
Loss on discontinued operations (net of tax)     -           (191 )     -           (206 )
Net Income (loss)

 

$

(519

)

 

   

$

57

 

 

$

(1,508

)

 

   

$

(327

)
Basic Earnings per Share:
Income (loss) from continuing operations (0.03 ) 0.02 (0.10 ) (0.01 )
Loss from discontinued operations     -           (0.01 )     -           (0.01 )
Net income (loss)

 

$

(0.03

)

 

   

$

0.00

 

 

$

(0.10

)

 

   

$

(0.02

)
Diluted Earnings per Share:
Loss from continuing operations (0.03 ) 0.02 (0.10 ) (0.01 )
Loss from discontinued operations     -           (0.01 )     -           (0.01 )
Net income (loss)

 

$

(0.03

)

 

   

$

0.00

 

 

$

(0.10

)

 

   

$

(0.02

)
Weighted average shares outstanding
Basic     15,612           15,171       15,473           15,162  
Diluted     15,612           15,340       15,473           15,162  
 
 
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
 
For the three months ended June 30, 2014   For the three months ended June 30, 2013
 

Reported
basis (GAAP)

  Adjustments  

Comparable
basis
(Non-GAAP)

Reported basis
(GAAP)

  Adjustments  

Comparable
basis (Non-
GAAP)

 
Net revenues $ 57,402 - $ 57,402 $ 59,516 - $ 59,516
Costs of sales 45,141 - 45,141 46,057 - 46,057
Gross Margin 12,261 - 12,261 13,459 - 13,459
 
Operating Expenses
Selling, general and administrative 9,513 278 9,235 9,494 82 9,412
Research and development 3,761 - 3,761 3,706 - 3,706
Total operating expenses 13,274 278 12,996 13,200 82 13,118
Operating (income) loss from continuing operations (1,013) 278 (735) 259 82 341
Other income (expense), net 406 - 406 255 - 255
Interest expense (25) - (25) (13) - (13)
Income (loss) from continuing operations before (provision) benefit for income taxes (632) 278 (354) 501 82 583
(Provision) benefit for income taxes 113 (95) 18 (253) (28) (281)
Income (loss) from continuing operations $ (519) $ 183 $ (336) $ 248 $ 54 $ 302
Income (loss) from discontinued operations, (net of tax) $ - $ - $ (191) $ (191)
Net income (loss) $ (519) $ (336) $ 57 $ 111
Income (loss) per diluted share from continuing operations $ (0.03) $ (0.02) $ 0.02 $ 0.02
Income (loss) per diluted share from discontinuing operations - - $ (0.01) $ (0.01)

Income (loss) per diluted share

$ (0.03) $ (0.02) $ 0.00 $ 0.01
 

The Company reports its financial results in accordance with GAAP, which refers to financial information presented in accordance with generally accepted accounting principles in the United States. 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.

The adjustments for the three months ended June 30, relate to the Company’s stock compensation expense included within the Company’s operating expenses. During the second quarter of 2014, the Company recorded equity based compensation charges of $278,000 as compared to $82,000 recorded during the second quarter of 2013.

 
PAR TECHNOLOGY CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(in thousands, except per share data)
 
  For the six months ended June 30, 2014   For the six months ended June 30, 2013

Reported

basis (GAAP)

  Adjustments  

Comparable

basis (Non-

GAAP)

Reported basis

(GAAP)

  Adjustments  

Comparable

basis (Non-

GAAP)

 
Net revenues $ 113,943 - $ 113,943 $ 126,190 - $ 126,190
Costs of sales   89,669     -     89,669     99,561     -     99,561  
Gross Margin 24,274 - 24,274 26,629 - 26,629
 
Operating Expenses
Selling, general and administrative 18,776 802 17,974 19,699 822 18,877
Research and development   7,625       7,625     7,846     106     7,740  
Total operating expenses 26,401 802 25,599 27,545 928 26,617
Operating income (loss) from continuing operations (2,127 ) 802 (1,325 ) (916 ) 928 12
Other expense, net 328 - 328 221 - 221
Interest expense   (42 )   -     (42 )   (26 )   -     (26 )
Income (loss) from continuing operations before (provision) benefit for income taxes (1,841 ) 802 (1,039 ) (721 ) 928 207
(Provision) benefit for income taxes   333     (273 )   60     600     (316 )   284  
Income (loss) from continuing operations $ (1,508 ) $ 529   $ (979 ) $ (121 ) $ 612   $ 491  
Income (loss) from discontinued operations, (net of tax) $ -   $ -   $ (206 ) $ (206 )
Net income (loss) $ (1,508 ) $ (979 ) $ (327 ) $ 285  
Income (loss) per diluted share from continuing operations $ (0.10 ) $ (0.06 ) $ (0.01 ) $ 0.03  
Income (loss) per diluted share from discontinuing operations   -     -   $ (0.01 ) $ (0.01 )

Income (loss) per diluted share

$ (0.10 ) $ (0.06 ) $ (0.02 ) $ 0.02  
 

During the six months ended June 30, 2014, the Company recorded $802,000 for equity based compensation expense. During the first six months of 2013, the Company recorded total charges of $928,000, which included a benefit of $281,000 related to equity compensation expense. The other charges of $1,209,000 were composed of $938,000 for separation related charges and legal costs of $271,000 associated with an intellectual property matter that was settled during 2013. The aforementioned charges, along with an associated adjustment to the Company’s provision for income taxes 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.