SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
Amendment No. 1
to
Form 8-K
as filed on December 17, 2004
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 7, 2004
Date of Report (Date of earliest event reported)
PAR TECHNOLOGY CORPORATION
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 1-09720 16-1434688
----------------- --------------------- -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
PAR Technology Park, 8383 Seneca Turnpike, New Hartford, NY 13413-4991
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (315) 738-0600
--------------
Not applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c)
Item 2.01. Acquisition or Disposition of Assets.
PAR Technology Corporation hereby amends its Current Report on Form 8-K
originally filed with the United States Securities and Exchange Commission on
October 7, 2004 relating to the acquisition of PAR Springer-Miller Systems, Inc.
to include the financial statements of the business acquired, the pro forma
financial information and related exhibits as set forth below.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
1. The audited consolidated financial statements of Springer-Miller
Systems, Inc. and Subsidiaries as of and for the years ended
December 31, 2003 and 2002 are filed with this report as Exhibit
99.1.
2. The unaudited interim consolidated financial statements of
Springer-Miller Systems, Inc. and Subsidiaries as of September
30, 2004 and for the three and nine months ended September 30,
2004 and 2003 are filed with this report as Exhibit 99.2
(b) Pro forma Financial Information.
1. The unaudited pro forma Consolidated Statement of Income for the
year ended December 31, 2003 and for the nine months ended
September 30, 2004 and the unaudited pro forma Consolidated
Balance Sheet as of September 30, 2004.
(c) Exhibits.
Exhibit
Number Description
------ -----------
99.1 The audited consolidated financial statements of
Springer-Miller Systems, Inc. and Subsidiaries as of and for
the years ended December 31, 2003 and 2002
99.2 The unaudited interim consolidated financial statements
of Springer-Miller Systems, Inc. and Subsidiaries as of
September 30, 2004 and for the three and nine months ended
September 30, 2004 and 2003
99.3 The unaudited pro forma Consolidated Statement of Income for
the year ended December 31, 2003 and for the nine months
ended September 30, 2004 and the unaudited pro forma
Consolidated Balance Sheet as of September 30, 2004.
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 hereunto duly authorized.
PAR TECHNOLOGY CORPORATION
Date: December 17, 2004 By: /s/ Ronald J. Casciano
-------------------------------
Ronald J. Casciano
Vice President, Chief Financial
Officer and Treasurer
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
99.1 The audited consolidated financial statements of
Springer-Miller Systems, Inc. and Subsidiaries as of and for
the years ended December 31, 2003 and 2002
99.2 The unaudited interim consolidated financial statements
of Springer-Miller Systems, Inc. and Subsidiaries as of
September 30, 2004 and for the three and nine months ended
September 30, 2004 and 2003
99.3 The unaudited pro forma Consolidated Statement of Income for
the year ended December 31, 2003 and for the nine months
ended September 30, 2004 and the unaudited pro forma
Consolidated Balance Sheet as of September 30, 2004.
EX-99.1 The audited consolidated financial statements of Springer-Miller
Systems, Inc. and Subsidiaries as of and for the years ended
December 31, 2003 and 2002
CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
SPRINGER-MILLER SYSTEMS, INC., AND SUBSIDIARIES
DECEMBER 31, 2003 AND 2002
SPRINGER-MILLER SYSTEMS, INC.,
AND SUBSIDIARIES
DECEMBER 31, 2003 AND 2002
CONTENTS
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
CONSOLIDATED FINANCIAL STATEMENTS
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF STOCKHOLDER'S DEFICIT
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
[GRAPHIC OMITTED]
Report of Independent Certified Public Accountants
To the Stockholder of
Springer-Miller Systems Inc.,
and Subsidiaries
We have audited the accompanying consolidated balance sheets of Springer-Miller
Systems, Inc., and Subsidiaries as of December 31, 2003 and 2002, and the
related consolidated statements of operations, stockholder's deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Springer-Miller Systems, Inc., and Subsidiaries as of December 31, 2003 and
2002, and the consolidated results of their operations and their consolidated
cash flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
/s/Gallagher, Flynn & Company LLP
March 4, 2004
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31
2003 2002
----------- ------------
Current Assets
Cash and cash equivalents ......................... $ 2,000,968 $ 924,495
Accounts receivable, less allowance for doubtful
Accounts of $291,069 in 2003 and $353,402 in 2002 2,774,194 2,954,882
Inventories ........................................ 28,844 31,742
Current portion of notes receivable ................ 113,556 107,313
Costs on uncompleted contracts ..................... 62,360 55,628
Other current assets ............................... 327,832 240,200
----------- -----------
Total current assets ........................... 5,307,754 4,314,260
----------- -----------
Property and equipment, net of accumulated
Depreciation and amortization ......................... 1,078,340 1,212,956
----------- -----------
Other Assets
Software held for resale, net of accumulated amortization
of $688,567 in 2003 and $232,550 in 2002 .............. 1,651,656 1,926,179
Marketable securities and other investments ............. -- 112,731
Notes receivable, less current portion .................. 708,837 822,393
Other ................................................... 8,500 8,500
----------- -----------
2,368,993 2,869,803
----------- -----------
$ 8,755,087 $ 8,397,019
=========== ===========
Current Liabilities
Notes payable - bank ............................... $ 75,000 $ 300,000
Accounts payable ................................... 615,346 919,617
Accrued liabilities ................................ 632,475 308,362
Billings on uncompleted contracts .................. 3,693,576 2,637,127
Deferred revenue ................................... 3,725,204 3,639,319
Current portion of acquisition liability ........... 327,454 560,000
Income tax payable ................................. 2,848 2,205
----------- -----------
Total current liabilities ...................... 9,071,903 8,366,630
----------- -----------
Acquisition liability, less current portion ............. 1,082,925 1,082,925
----------- -----------
Accounts payable, less current portion .................. 126,000 --
----------- -----------
Stockholder's deficit:
Common stock, no par value,
100 shares authorized; issued and outstanding .... -- --
Additional paid-in capital ......................... 462,401 462,401
Accumulated deficit ................................ (2,103,908) (1,525,559)
Accumulated other comprehensive income ............. 115,766 10,622
----------- -----------
(1,525,741) (1,052,536)
----------- -----------
$ 8,755,087 $ 8,397,019
=========== ===========
The accompany notes are an integral part of these statements
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Years ended December 31,
2003 2002
------------ ------------
Revenue .............................................. $ 13,962,500 $ 11,685,771
------------ ------------
Operating expenses:
Direct project and support service costs ........ 5,684,764 4,067,900
Research and development ........................ 2,326,865 2,250,594
Selling, general and administrative ............. 6,499,495 5,927,900
------------ ------------
14,511,124 12,246,394
------------ ------------
Loss from operations ................................. (548,624) (560,623)
------------ ------------
Other income (Expense)
Amortization of deferred credit
and other acquisition related income .......... -- 203,597
Interest income ................................. 91,788 78,531
Interest expense ................................ (12,135) (12,233)
Other income .................................... 120,453 75,593
Unrealized and realized gain (loss) on
marketable securities ......................... 405 (75,730)
Gain (loss) on disposal of property and equipment (1,258) 131
Other ........................................... (4,724) (8,816)
------------ ------------
194,529 261,073
------------ ------------
Loss before income taxes ............................. (354,095) (299,550)
Provision for income taxes ........................... 2,134 1,561
------------ ------------
Loss before extraordinary item ....................... (356,229) (301,111)
Extraordinary gain - negative goodwill
recognition (net of income taxes of $0) ............ -- 1,842,261
------------ ------------
Net earnings (loss) .................................. $ (356,229) $ 1,541,150
============ ============
The accompany notes are an integral part of these statements
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
YEARS ENDED DECEMBER 31, 2003 AND 2002
Accumulated
Additional Other
Common Paid-in Accumulated Comprehensive Comprehensive
Stock Capital Deficit Income (loss) Income Total
----------------------------------------------------------------------------------------
Balance,
January 1, 2002 ............. $ -- $ 462,401 $(2,809,849) $ 1,315 $(2,346,133)
Net earnings for the year .. -- -- 1,541,150 $ 1,541,150 -- 1,541,150
Translation adjustments .... -- -- -- 9,307 9,307 9,307
-----------
Comprehensive income ....... -- -- -- $ 1,550,457 -- --
===========
Distributions to stockholder -- -- (256,860) -- (256,860)
----------- ----------- ----------- ----------- -----------
Balance,
December 31, 2002 ........... -- 462,401 (1,525,559) 10,622 $(1,052,536)
Net loss for the year ...... -- -- (356,229) $ (356,229) -- (356,229)
Translation adjustments .... -- -- -- 105,144 105,144 105,144
-----------
Comprehensive loss ......... -- -- -- $ (251,085) -- --
===========
Distributions to stockholder -- -- (222,120) -- (222,120)
----------- ----------- ----------- ----------- -----------
Balance,
December 31, 2003 ........... $ -- $ 462,401 $(2,103,908) $ 115,766 $(1,525,741)
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these statements
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
2003 2002
------------ -----------
Decrease In Cash and Cash Equivalents
Cash flows from operating activities:
Net earnings (loss) .................................. $ (356,229) $ 1,541,150
----------- -----------
Noncash items included in net earnings (loss):
Provision for doubtful accounts .................. 75,926 497,457
Depreciation and amortization .................... 814,196 407,309
Revenues from reduction of acquisition liability . (59,960) --
Change in accounting principle - negative goodwill -- (1,842,261)
Unrealized loss on marketable securities ......... -- 84,510
(Gain) loss on disposal of property and equipment 1,258 (131)
Changes in assets and liabilities:
Accounts receivable .............................. (22,244) (922,465)
Inventory ........................................ 2,898 12,367
Costs on uncompleted contracts ................... (6,732) 11,106
Marketable securities ............................ 112,731 (15,215)
Other current assets ............................. (87,632) (19,479)
Accounts payable and accrued liabilities ......... (25,257) 79,222
Deferred revenue and billings on
uncompleted contracts .......................... 1,142,334 1,107,302
----------- -----------
1,947,518 (600,278)
----------- -----------
Net cash provided by operating activities . 1,591,289 940,872
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment ............... (224,821) (196,243)
Proceeds from disposal of property and equipment . -- 4,835
Costs of software held for resale ................ (55,332) --
Business acquisition ............................. -- (640,847)
Loan to stockholder .............................. -- (250,000)
Payments received on notes receivable
from stockholder ............................... 107,313 135,784
----------- -----------
Net cash used in investing activities ..... (172,840) (946,471)
----------- -----------
Subtotal (forward) ........................ $ 1,418,449 $ (5,599)
----------- -----------
(CONTINUED)
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31
2003 2002
------------- ------------
Subtotal (forwarded) ............... $ 1,418,449 $ (5,599)
------------- ------------
Cash flows from financing activities:
Distributions to stockholder .................. (222,120) (256,860)
Net payments on note payable - bank ........... (225,000) --
Principal payments on capital lease obligations -- (8,999)
----------- -----------
Net cash used in financing activities ..... (447,120) (265,859)
----------- -----------
Foreign currency translation adjustment ... 105,144 9,307
----------- -----------
Net increase (decrease) in cash and
cash equivalents ........................ 1,076,473 (262,151)
Cash and cash equivalents, beginning of year ..... 924,495 1,186,646
----------- -----------
Cash and cash equivalents, end of period ......... $ 2,000,968 $ 924,495
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest ...................................... $ 12,135 $ 12,233
=========== ===========
Income taxes .................................. $ 1,491 $ 2,089
=========== ===========
Noncash investing and financing activities:
During 2003, the Company capitalized $168,000 of software costs and
recorded long-term accounts payable for this amount. Also in 2003, the Company
reduced the acquisition liability by $172,586 through adjustments to accounts
receivable, software held for resale and accounts payable.
During 2002, the Company paid cash $640,847 and incurred acquisition
liabilities of $1,642,925 to acquire assets totaling $2,517,674 and assume
liabilities totaling $233,902 from clubessential, Inc., (see Note B).
The accompanying notes are an integral part of these statements.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES
Operations:
Springer-Miller Systems, Inc., (the Company) was founded in 1983 in
Stowe, Vermont and develops comprehensive property management computer
systems for hotels, resorts and time-share properties. The geographic
market for the Company is primarily the United States and international
locations in Canada, the Caribbean, Southeast Asia and Europe.
Springer-Miller International, LLC, (SMI) a wholly owned subsidiary of
the Company, provides services to the customers in Southeast Asia and
Europe. This subsidiary opened branch offices in Malaysia in December 1998,
Hong Kong in 2002 and acquired an office in Great Britain in 2001.
Springer-Miller Canada, ULC, (SMC) a wholly owned subsidiary of SMI,
provides services to the customers in Canada. SMC began operations in 2002.
Accounting policies:
A summary of the Company's significant accounting policies applied in
the preparation of the accompanying financial statements follows:
1. Basis of presentation
The accompanying consolidated financial statements of the Company have
been prepared in conformity with generally accepted accounting
principles. The consolidated financial statements include the accounts
of Springer-Miller Systems, Inc., and its wholly owned subsidiaries,
Springer-Miller International, LLC and Springer-Miller Canada, ULC.
All significant intercompany transactions have been eliminated in
consolidation.
2. Foreign currency transactions
All balance sheet accounts of the Company's foreign subsidiary are
translated into U.S. dollars at the year-end rate of exchange and
statement of earnings items are translated at the weighted average
exchange rates for the year. The resulting translation adjustments are
made directly to a separate component of stockholder's equity.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)
3. Cash and cash equivalents
For purposes of the statements of cash flows, the Company considers
all highly liquid instruments purchased with maturities of three
months or less to be cash equivalents.
4. Accounts receivable
Current earnings are charged with an allowance for doubtful accounts
receivable based on collection experience and a review of the
collectibility of specific accounts. Accounts deemed uncollectible are
charged against this allowance.
5. Inventories Inventories are stated at the lower cost or market. Cost
is determined principally by the first-in, first-out method.
6. Property and equipment
Depreciation and amortization are provided for in amounts sufficient
to relate the cost of depreciable assets to operations over their
estimated service lives. Leasehold improvements are amortized over the
lives of the respective leases or the service lives of the
improvements, whichever is shorter. Leased property under capital
leases is amortized over the lives of the respective leases or over
the service lives of the assets for those leases that substantially
transfer ownership. The straight-line method of depreciation is
followed for substantially all assets for financial reporting
purposes, but accelerated methods are used for tax purposes.
7. Software held for resale
Software held for resale represents costs related to the development
and acquisition of software product masters. These costs are
capitalized as incurred and are amortized on a straight-line basis
over three to five years, the estimated economic lives of the software
products, which exceeds revenue-based amortization. Amortization
expense charged to operations for these costs was $490,261 in 2003 and
$66,566 in 2002. The estimated minimum amortization expense for each
of the ensuing years through December 31, 2008 is $541,881, $506,985,
$392,995, $203,081 and $6,714, respectively.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)
8. Marketable securities and other investments
Investments in marketable securities that are bought and held
principally for the purpose of selling them in the near term are
classified as trading securities. Trading securities are recorded at
fair value on the balance sheet, with the change in fair value during
the period included in earnings. The Company liquidated its marketable
securities during 2003. The net realized gains, which were included in
earnings during 2003, were $405. Net unrealized losses on such
securities, which were included in earnings during 2002, were $84,510.
Marketable securities also included cash equivalents of $3,156 at
December 31, 2002.
9. Income taxes
Springer-Miller Systems, Inc., has elected to be taxed under
provisions of Subchapter S of the Internal Revenue code. Income taxes
on net earnings are payable personally by the stockholder pursuant to
this election. Accordingly, no provision has been made for income
taxes other than certain minimum state taxes and the subsidiary's
foreign income taxes.
10. Revenue recognition
Installations - revenue is recognized upon delivery and completed
installation of the system, fulfillment of all significant contract
obligations and determination that collectibility of any remaining
receivable is probable.
Master license agreements - revenue from license fees is recognized
upon the latter of shipment of product or completion of significant
obligations to customers.
Support services - software support is billed and collected prior to
the coverage period and revenue is recognized on a straight-line basis
over the coverage period.
Software development - through 2002, revenue from a long-term software
development contract was recognized as work on the contract
progressed, using the percentage of completion method.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)
11. Billings and costs of uncompleted contracts
The Company generally requires that customers place a deposit of 65%
of the contract value upon the signing of an installment contract or
master license agreement. These deposits are recorded as a liability
until the project is completed and are presented as billings on
uncompleted contracts. Direct project costs on work in progress are
presented as costs on uncompleted contracts. Management periodically
reviews the profitability of uncompleted contracts based on their
estimate of costs to complete the project. Losses on contracts are
recorded in the period in which such losses are determined. There are
no estimated losses recorded at December 31, 2003 and 2002.
12. Excess of fair value of net assets of company acquired over cost
Prior to 2002, negative goodwill (excess of fair value of net assets
acquired over cost) was recorded as a deferred credit and was being
amortized on a straight-line basis over the remaining benefit period
of the credit. As of January 1, 2002, the Company adopted FASB
Statement No. 141, Business Combinations, issued July 20, 2001. Upon
initial application of Statement No. 141, the negative goodwill
remaining from a business combination prior to applying the Statement
was recognized as extraordinary income.
13. Advertising
Advertising costs are charged to operations as incurred. Advertising
expense was $26,383 in 2003 and $42,450 in 2002.
14. Research and development
Research and development costs are expensed as incurred.
15. Comprehensive income
Comprehensive income is the total of (1) net earnings plus (2) all
other changes in net assets arising from nonowner sources, which are
referred to as other comprehensive income. The Company has presented a
statement of stockholder's deficit that includes other comprehensive
income and an analysis of changes in components of accumulated other
comprehensive income.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
A) SUMMARY OF OPERATIONS AND ACCOUNTING POLICIES (continued)
16. Product warranties
The Company's software contracts include a warranty period of ninety
days during which the customer is entitled to receive support at no
charge. The Company estimates the costs that may be incurred during
this period, and if necessary, records a liability in the amount of
such costs at the time the product revenue is recognized. Factors that
affect the Company's anticipated warranty costs include the number of
new installations, and historical and anticipated costs per claim. No
warranty liability was required at December 31, 2003 and 2002.
17. Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
B) BUSINESS ACQUISITION
On November 28, 2002, the Company acquired certain assets of
clubessential, Inc., in a business combination accounted for as a purchase.
clubessential, Inc., was primarily engaged in the business of developing
spa management software for hotels, resorts and time-share properties. The
total cost of the acquisition was $2,283,772 and was allocated as follows:
Current assets ............ $ 368,754
Property and equipment .... 185,191
Software held for resale .. 1,963,729
-----------
2,517,674
Current liabilities assumed (233,902)
-----------
Net assets acquired ....... $ 2,283,772
===========
The consideration paid for the acquisition was allocated as follows:
Cash ................................ $ 640,847
Acquisition liabilities due to seller 1,642,925
----------
$2,283,772
==========
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
B) BUSINESS ACQUISITION (continued)
The software held for resale is being amortized over the weighted
average estimated useful life of 4.6 years. It is not anticipated that such
assets will have significant residual values. The acquisition liabilities
due to the seller include cash and credits against future sales of products
and services, and the Company is contingently liable for additional
consideration of up to $1,500,000 based on 25% of certain revenues
generated by the acquired products.
In conjunction with the acquisition referred to in Note A.12, the
Company was entitled to earn fees from the collection of certain accounts
receivable balances. This income had no effect on negative goodwill and was
included in other income in 2002, totalling $203,597. The Company also
entered into a $2,500,000 long-term software development contract with the
seller and an agreement to settle certain commitments to customers through
2002, for which the Company was compensated $2,400,000.
C) CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS
In 2002, a substantial portion of the Company's revenues were from one
customer. Revenues from this customer approximated $1,700,000 (15% of total
revenues) for the year ended December 31, 2002. The amount due from this
customer, included in trade accounts receivable, was approximately $157,000
at December 31, 2002.
The Company maintains domestic bank account balances, which, at times,
may exceed federally insured limits. The Company has not experienced any
losses with these accounts. Management believes the Company is not exposed
to any significant credit risk on domestic cash balances. The Company also
maintains certain foreign bank balances that are not covered by deposit
insurance totalling approximately $88,000 at December 31, 2003.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
D) PROPERTY AND EQUIPMENT
Property and equipment consist of the following at December 31:
2003 2002
---------- ----------
Furniture and fixtures .......................... $ 766,629 $ 742,675
Leasehold improvements .......................... 749,762 390,668
Computer hardware and software .................. 1,167,499 1,012,643
Vehicles ........................................ -- 5,598
Construction in progress - leasehold improvements -- 339,621
---------- ----------
2,683,890 2,491,205
Less accumulated depreciation and amortization .. 1,605,550 1,278,249
---------- ----------
$1,078,340 $1,212,956
========== ==========
E) NOTES RECEIVABLE
Notes receivable consist of the following at December 31:
2003 2002
-------- --------
Stockholder -
Due in equal monthly installments of $10,436,
including interest at 6%, due July 2009 ........ $592,895 $679,706
Due in equal monthly installments of $2,561,
including interest at 4.25%, due December 1, 2013 229,498 250,000
-------- --------
822,393 929,706
Less current portion ............................... 113,556 107,313
-------- --------
$708,837 $822,393
======== ========
F) NOTE PAYABLE - BANK
Note payable - bank represents the amount due under a $300,000 line of
credit from a bank due December 2004. Interest is payable monthly at The
Wall Street Journal prime rate (4% at December 31, 2004), adjusted monthly.
The note is secured by substantially all business assets and is personally
guaranteed by the stockholder of the Company.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
G) OPERATING LEASES
The Company leases office space and office equipment under various
operating lease agreements. The Company also rents a building on a
month-to-month basis from its sole stockholder (see Note I). Future minimum
payments for all noncancellable operating leases having a term in excess of
one year at December 31, 2003, are as follows:
Years ending
December 31, Amount
------------ ------
2004 $ 291,857
2005 225,139
2006 200,676
2007 39,763
2008 39,071
Thereafter 18,508
-----------
$ 815,014
===========
Total rent expense charged to operations was $1,002,468 for 2003 and
$765,801 for 2002.
H) PROFIT SHARING PLAN
The Company has a 401(k) profit sharing plan (the Plan) that covers
substantially all employees. All employees over the age of 20 1/2 years who
have completed three months of service are eligible to participate in the
Plan. Contributions to the Plan are at the discretion of the board of
directors. Contributions to the Plan were $200,000 in 2003 and $0 in 2002.
SPRINGER-MILLER SYSTEMS INC.,
AND SUBSIDIARIES
NOTES TO CONSOLIDATED STATEMENTS
DECEMBER 31, 2003 AND 2002
I) RELATED PARTY TRANSACTIONS AND GUARANTEES
The Company has a loan agreement with its sole stockholder (see Note
E). Interest income related to this note included in operations was $48,650
in 2003 and $43,464 in 2002.
The Company rents a building on a month-to-month basis from its
stockholder. Rent expense under these agreements was approximately $360,000
in 2003 and $230,000 in 2002.
The Company's sole stockholder obtained unsecured bank financing
totalling $1,388,308 at December 31, 2003, which is due in full at its
maturity in January 2021. For no consideration, the Company agreed to
guarantee the bank debt on behalf of the stockholder because the purpose of
the loan was to finance the expansion of office facilities. The Company can
be required to perform on the guarantee only in the event of nonpayment of
the debt by the stockholder. Management evaluates the Company's exposure to
loss at each balance sheet date and provides accruals for such as deemed
necessary. No accruals were deemed necessary at December 31, 2003 and 2002.
The Company has recourse only to the general credit of the stockholder
should the Company be required to perform under the guarantee.
[GRAPHIC OMITTED]
To the Board of Directors of
Springer-Miller Systems, Inc.,
and Subsidiaries
We consent to the use of our report dated March 4, 2004, included herein with
respect to the consolidated balance sheets of Springer-Miller Systems, Inc., and
Subsidiaries as of December 31, 2003 and 2002, and the related consolidated
statements of operations, stockholder's deficit, and cash flows for each of the
years in the two-year period ended December 31, 2003.
[GRAPHIC OMITTED]
/s/Gallagher, Flynn & Company LLP
Burlington, Vermont 05401
December 15, 2004
EX-99.2 The unaudited interim consolidated financial statements of
Springer-Miller Systems, Inc. and Subsidiaries as of September 30, 2004
and for the three and nine months ended September 30, 2004 and 2003.
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share amounts)
(unaudited)
September 30, December 31,
2004 2003
-------- --------
Assets
Current assets:
Cash and cash equivalents .................... $ 2,574 $ 2,001
Accounts receivable-net ....................... 1,761 2,774
Inventories-net ............................... 19 29
Current portion of notes receivable ........... 29 114
Costs on uncompleted contracts ................ 187 62
Other current assets .......................... 322 328
------- -------
Total current assets ...................... 4,892 5,308
Property and equipment - net ....................... 1,330 1,078
Notes receivable, less current portion ............. 709 709
Other assets ....................................... 1,025 1,660
------- -------
$ 7,956 $ 8,755
======= =======
Liabilities and Stockholder's Deficit
Current liabilities:
Notes payable - bank .......................... $ -- $ 75
Accounts payable .............................. 618 615
Accrued liabilities ........................... 461 633
Billings on uncompleted contracts ............. 4,993 3,694
Deferred revenue .............................. 3,094 3,725
Current portion of acquisition liability ...... 212 327
Income tax payable ............................ 52 3
------- -------
Total current liabilities ................. 9,430 9,072
------- -------
Acquisition liability .............................. 1,000 1,083
------- -------
Accounts payable - less current portion ............ 126 126
------- -------
Stockholder's deficit:
Common stock, no par value,
100 shares authorized; issued and outstanding -- --
Additional paid-in capital .................... 462 462
Accumulated deficit ........................... (3,205) (2,104)
Accumulated other comprehensive income ........ 143 116
------- -------
Total stockholder's deficit ............... (2,600) (1,526)
------- -------
$ 7,956 $ 8,755
======= =======
Continued
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)
(unaudited)
For the three months For the nine months
ended September 30, ended September 30,
--------------------------------------------
2004 2003 2004 2003
-------- -------- -------- --------
Net revenues:
Product ........................... $ 1,186 $ 974 $ 4,256 $ 3,352
Service ........................... 2,660 2,070 7,946 6,328
-------- -------- -------- --------
3,846 3,044 12,202 9,680
-------- -------- -------- --------
Costs of sales:
Product ........................... 148 207 693 573
Service ........................... 1,346 1,122 3,798 3,357
-------- -------- -------- --------
1,494 1,329 4,491 3,930
-------- -------- -------- --------
Gross margin ................ 2,352 1,715 7,711 5,750
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 1,876 1,694 5,182 5,148
Research and development .......... 674 513 1,843 1,548
-------- -------- -------- --------
2,550 2,207 7,025 6,696
-------- -------- -------- --------
Operating income (loss) ................ (198) (492) 686 (946)
Other income (expense), net ............ (113) 8 232 120
Interest expense ....................... (1) (8) (2) (10)
-------- -------- -------- --------
Income (loss) before provision
for income taxes ..................... (312) (492) 916 (836)
Provision for income taxes ............. -- -- -- --
-------- -------- -------- --------
Net income (loss) ...................... $ (312) $ (492) $ 916 $ (836)
-------- -------- -------- --------
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
(unaudited)
For the three For the nine
months ended months ended
September 30, September 30,
--------------------------------
2004 2003 2004 2003
------- ------- ------- ------
Net income (loss) ............................ $(312) $(492) $ 916 $(836)
Other comprehensive income (loss):
Foreign currency translation adjustments 45 (6) 27 53
----- ----- ----- -----
Comprehensive income (loss) .................. $(267) $(498) $ 943 $(783)
===== ===== ===== =====
SPRINGER-MILLER SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the nine months
ended September 30,
-------------------
2004 2003
-------- ---------
Cash flows from operating activities:
Net income (loss) .................................... $ 916 $ (836)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ..................... 599 605
Provision for bad debts ........................... 30 6
Increase (decrease) from changes in:
Accounts receivable ............................. 983 1,580
Inventories ..................................... 10 4
Costs on uncompleted contracts .................. (125) 8
Other current assets ............................ 6 25
Other assets .................................... (47) (17)
Accounts payable and accrued expenses ........... (120) (358)
Deferred revenue and billings on
uncompleted contracts ......................... 668 658
------- -------
Net cash provided by operating activities ...... 2,920 1,675
------- -------
Cash flows from investing activities:
Marketable securities ................................ -- 113
Capital expenditures ................................. (169) (186)
Payments received on notes receivable from stockholder 85 80
------- -------
Net cash provided (used) in investing activities (84) 7
------- -------
Cash flows from financing activities:
Net payments on note payable - bank .................. (75) (85)
Acquisition liability ................................ (198) (233)
Distributions to stockholder ......................... (2,017) (133)
------- -------
Net cash used in
financing activities .......................... (2,290) (451)
------- -------
Effect of exchange rate changes on cash and
cash equivalents ...................................... 27 53
------- -------
Net increase in cash and cash equivalents ............... 573 1,284
Cash and cash equivalents at
beginning of year ..................................... 2,001 924
------- -------
Cash and cash equivalents at
end of period ......................................... $ 2,574 $ 2,208
======= =======
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 2 $ 10
SPRINGER-MILLER SYTEMS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying unaudited interim consolidated financial statements have
been prepared by Springer-Miller Systems, Inc. and Subsidiaries (the
"Company") in accordance with accounting principles generally accepted in
the United States of America for interim financial statements. Accordingly,
these interim financial statements do not include all information and
footnotes required by accounting principles generally accepted in the
United States of America 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 nine months ended September 30, 2004 are not necessarily indicative of
the results of operations to be expected for any future period. The
unaudited interim consolidated financial statements and notes thereto
should be read in conjunction with the audited consolidated financial
statements and notes (included in this SEC Form 8-K/A in Exhibit 99.1) as
of and for the years ended December 31, 2003 and 2002.
2. On October 1, 2004, PAR Technology Corporation ("PAR") and its wholly-owned
subsidiary, PAR Springer-Miller Systems, Inc. (f/k/a PSMS Acquisition Inc.)
(the "Subsidiary"), completed its previously-announced transaction with
Springer-Miller Systems, Inc. ("Springer-Miller") and John Springer-Miller
pursuant to which the Subsidiary acquired substantially all of the assets
(including the equity interests in each of Springer-Miller International,
LLC and Springer-Miller Canada, ULC), and assumed certain liabilities, of
Springer-Miller. The purchase price of the net assets acquired was $16.1
million adjusted, in accordance with the purchase agreement, to $15.0
million based on changes in the balance sheet of Springer-Miller through
September 30, 2004 plus approximately $3.2 million (an amount equal to the
cash and cash equivalents held by Springer-Miller and its subsidiaries at
the closing date of the acquisition, October 1, 2004). The purchase price
consisted of $1.9 million worth of PAR common stock (208,653 shares of PAR
Technology Corporation common stock) and the remainder in cash.
EX-99.3 The unaudited pro forma Consolidated Statements of Income for the year
ended December 31, 2003 and for the nine months ended September 30, 2004
and the unaudited pro forma Consolidated Balance Sheet as of September
30, 2004.
On October 1, 2004, PAR Technology Corporation (the "Company") and its
wholly-owned subsidiary, PAR Springer-Miller Systems, Inc. (f/k/a PSMS
Acquisition Inc.) (the "Subsidiary"), completed its previously-announced
transaction with Springer-Miller Systems, Inc. ("Springer-Miller") and John
Springer-Miller pursuant to which the Subsidiary acquired substantially all
of the assets (including the equity interests in each of Springer-Miller
International, LLC and Springer-Miller Canada, ULC), and assumed certain
liabilities, of Springer-Miller. The purchase price of the net assets
acquired was $16.1 million adjusted, in accordance with the purchase
agreement, to $15.0 million based on changes in the consolidated balance
sheet of Springer-Miller through September 30, 2004 plus approximately $3.2
million (an amount equal to the cash and cash equivalents held by
Springer-Miller and its subsidiaries at the closing date of the
acquisition, October 1, 2004). The purchase price consisted of $1.9 million
worth of Company common stock (208,653 shares of PAR Technology Corp.
common stock) and the remainder in cash.
Springer-Miller, based in Stowe, Vermont, is a developer of software for
hotel and restaurant management.
PAR TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the year ended December 31, 2003
(in thousands except per share amounts)
Acquisition Pro forma
PAR Technology Springer-Miller Pro forma PAR Technology
Corporation Systems, Inc. Adjustments Corporation
------------------------------------------------------------------------
Net revenues:
Product $ 60,223 $ 5,156 $ $ 65,379
Service 37,865 8,807 46,672
Contract 41,682 -- 41,682
----------- ------------- ----------- -------------
139,770 13,963 153,733
----------- ------------- ----------- -------------
Costs of sales:
Product 39,024 594 39,618
Service 32,140 5,091 37,231
Contract 39,613 -- 39,613
----------- ------------- ----------- -------------
110,777 5,685 116,462
----------- ------------- ----------- -------------
Gross margin 28,993 8,278 37,271
----------- ------------- ----------- -------------
Operating expenses:
Selling, general and
administrative 19,340 6,499 25,839
Research and development 5,310 2,328 7,638
Amortization of identifiable
intangible assets -- -- 1,343 (i) 1,343
----------- ------------- ----------- -------------
24,650 8,827 1,343 34,820
----------- ------------- ----------- -------------
Operating income (loss) 4,343 (549) (1,343) 2,451
Other income, net 582 207 -- 789
Interest expense (540) (12) (537) (j) (1,089)
----------- ------------- ----------- -------------
Income (loss) from continuing operations
before provision for income taxes 4,385 (354) (1,880) 2,151
(Provision) benefit for income taxes (1,593) (2) 754 (k) (841)
----------- ------------- ----------- -------------
Income (loss) from continuing operations 2,792 (356) (1,126) 1,310
----------- ------------- ----------- -------------
Discontinued operations:
Loss from operations of
discontinued component (570) -- (570)
Income tax benefit 207 -- -- 207
----------- ------------- ----------- -------------
Loss from discontinued operations (363) -- -- (363)
----------- ------------- ----------- -------------
Net income (loss) $ 2,429 $ (356) $ (1,126) $ 947
=========== ============= =========== =============
Continued
PAR Technology Corporation
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME (Continued)
For the year ended December 31, 2003
(in thousands except per share amounts)
Acquisition Pro forma
PAR Technology Springer-Miller Pro forma PAR Technology
Corporation Systems, Inc. Adjustments Corporation
------------------------------------------------------------------------
Earnings per share:
Basic:
Income from continuing operations $ .33 $ -- $ -- $ .15
Loss from discontinued operations $ (.04) $ -- $ -- $ (.04)
Net income $ .29 $ -- $ -- $ .11
Diluted:
Income from continuing operations $ .32 $ -- $ -- $ .14
Loss from discontinued operations $ (.04) $ -- $ -- $ (.04)
Net income $ .27 $ -- $ -- $ .10
Weighted average shares outstanding
Basic 8,438 209 (f) 8,647
========= ========= ========= =========
Diluted 8,861 209 (f) 9,070
========= ========= ========= =========
See notes to unaudited pro forma Consolidated Financial Statements.
PAR Technology Corporation
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
September 30, 2004
(in thousands except share amounts)
Acquisition Pro forma
PAR Technology Springer-Miller Pro forma PAR Technology
Corporation Systems, Inc. Adjustments Corporation
------------------------------------------------------------------------
Assets
Current assets:
Cash and cash equivalents $ 5,505 $ 2,574 $ (2,547) (a) $ 5,532
Accounts receivable-net 28,052 1,761 29,813
Inventories-net 31,086 19 31,105
Current portion of notes receivable -- 29 (29) (b) --
Deferred income taxes 6,102 -- -- 6,102
Costs on uncompleted contracts -- 187 187
Other current assets 2,658 322 2,980
------------- ------------- ------------- -------------
Total current assets 73,403 4,892 (2,576) 75,719
Property and equipment - net 7,307 1,330 (469) (c) 8,168
Notes receivable -- 709 (709) (b) --
Deferred income taxes 1,467 -- 1,467
Other assets 3,397 1,025 21,354 (d) 25,776
------------- ------------- ------------- -------------
$ 85,574 $ 7,956 $ 17,600 $ 111,130
============= ============= ============= =============
PAR Technology Corporation
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET (Continued)
September 30, 2004
(in thousands except share amounts)
Acquisition Pro forma
PAR Technology Springer-Miller Pro forma PAR Technology
Corporation Systems, Inc. Adjustments Corporation
------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 87 $ -- $ -- $ 87
Notes payable - bank -- -- 13,100 (e) 13,100
Accounts payable 10,081 618 10,699
Accrued salaries and benefits 6,029 -- -- 6,029
Accrued expenses 2,074 513 2,587
Billings on uncompleted contracts -- 4,993 4,993
Deferred revenue 5,506 3,094 8,600
Current portion of acquisition liability -- 212 212
Total liabilities of discontinued
operations 390 -- -- 390
------------- ------------- ------------- -------------
Total current liabilities 24,167 9,430 13,100 46,697
------------- ------------- ------------- -------------
Acquisition liability -- 1,000 1,000
------------- ------------- ------------- -------------
Accounts payable - less current portion -- 126 126
------------- ------------- ------------- -------------
Long-term debt 2,027 -- 2,027
------------- ------------- ------------- -------------
Stockholders' equity (deficit):
Preferred stock, $.02 par value,
1,000,000 shares authorized
Common stock, $.02 par value,
19,000,000 shares authorized;
10,080,182 shares issued;
8,669,495 outstanding
(Pro forma PAR; 10,288,835 issued;
8,878,148 outstanding 202 -- 4 (f) 206
Additional paid-in capital 30,309 462 1,434 (f)(g) 32,205
Retained earnings (Accumulated deficit) 36,157 (3,205) 3,205 (g) 36,157
Accumulated other
comprehensive income (loss) (235) 143 (143) (h) (235)
Treasury stock, at cost, 1,410,687 shares (7,053) -- -- (7,053)
------------- ------------- ------------- -------------
Total stockholders' equity (deficit) 59,380 (2,600) 4,500 61,280
------------- ------------- ------------- -------------
$ 85,574 $ 7,956 $ 17,600 $ 111,130
============= ============= ============= =============
See notes to unaudited pro forma Consolidated Financial Statements.
PAR Technology Corporation
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the nine months ended September 30, 2004
(in thousands except per share amounts)
Acquisition Pro forma
PAR Technology Springer-Miller Pro forma PAR Technology
Corporation Systems, Inc. Adjustments Corporation
------------------------------------------------------------------------
Net revenues:
Product $ 54,212 $ 4,256 $ $ 58,468
Service 32,490 7,946 40,436
Contract 36,756 0 36,756
----------- ----------- ----------- -------------
123,458 12,202 135,660
----------- ----------- ----------- -------------
Costs of sales:
Product 36,413 693 37,106
Service 28,079 3,798 31,877
Contract 34,245 0 34,245
----------- ----------- ----------- -------------
98,737 4,491 103,228
----------- ----------- ----------- -------------
Gross margin 24,721 7,711 32,432
----------- ----------- ----------- -------------
Operating expenses:
Selling, general and administrative 15,143 5,182 20,325
Research and development 3,914 1,843 5,757
Amortization of identifiable
intangible assets -- -- 1,007 (l) 1,007
----------- ----------- ---------- -------------
19,057 7,025 1,007 27,089
----------- ----------- ---------- -------------
Operating income 5,664 686 (1,007) 5,343
Other income, net 588 232 -- 820
Interest expense (146) (2) (378) (m) (526)
----------- ----------- ---------- -------------
Income (loss) from continuing operations
before provision for income taxes 6,106 916 (1,385) 5,637
(Provision) benefit for income taxes (2,324) -- 227 (n) (2,097)
----------- ----------- ----------- -------------
Net income (loss) $ 3,782 $ 916 $ (1,158) $ 3,540
=========== =========== =========== =============
PAR Technology Corporation
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
For the nine months ended September 30, 2004
(in thousands except per share amounts)
Acquisition Pro forma
PAR Technology Springer-Miller Pro forma PAR Technology
Corporation Systems, Inc. Adjustments Corporation
-----------------------------------------------------------------------
Earnings per share:
Basic: $ 0.44 $ -- $ -- $ .40
======== ========
Diluted: $ 0.41 $ -- $ -- $ .38
======== ========
Weighted average shares outstanding
Basic 8,625 209 (f) 8,834
========= ========= ========= =========
Diluted 9,159 209 (f) 9,368
========= ========= ========= =========
See notes to unaudited pro forma Consolidated Financial Statements
Notes to unaudited pro forma Consolidated Financial Statements
1. Purchse Price Allocation
The total purchase price discussed above is allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed by the
Company based on their estimated fair values as of the closing date of the
acquisition. The following table presents the preliminary estimated fair
value of the assets acquired and liabilities assumed:
(in thousands)
Cash and cash equivalents .................... $ 3,227
Accounts receivable, net ..................... 1,761
Prepaid and other current assets ............. 528
Property and equipment, net .................. 861
Accounts payable ............................. (618)
Accrued expenses and other current liabilities (725)
Deferred revenues ............................ (8,087)
Long-term liabilities ........................ (1,126)
--------
Net liabilities assumed ...................... (4,179)
Identifiable intangible assets acquired
Software .............................. 3,500
Customer relationships ................ 2,800
Trademark and trade names ............. 2,100
Others ................................ 300
Goodwill ..................................... 13,679
--------
Total estimated purchase price ............... $ 18,200
========
The identifiable intangible assets acquired and their estimated useful
lives (based on preliminary third party valuation) are as follows:
Estimated
(in thousands) Fair Value Useful Life
-------------- ---------- -----------
Software $ 3,500 5 Years
Customer relationships 2,800 5 Years
Trademarks and trade names 2,100 Indefinite
Others 300 3 - 4 Years
-------------
$ 8,700
=============
2. Pro forma assumptions
The accompanying unaudited pro forma consolidated balance sheet at
September 30, 2004 and the unaudited pro forma consolidated statements of
income for the nine months ended September 30, 2004 and the year ended
December 31, 2003 give effect to the acquisition referred to above. The pro
forma consolidated statements of income assume the acquisition took place
on January 1, 2003. The pro forma consolidated balance sheet at September
30, 2004 assumes the acquisition took place on September 30, 2004. The pro
forma consolidated balance sheet and statements of income are presented for
illustrative purposes only and do not necessarily reflect the results of
operations that would have occurred had the acquisition actually occurred
during the periods presented.
The accompanying unaudited pro forma consolidated balance sheet and
statements of income are subject to a number of estimates, assumptions and
uncertainties, and do not purport to be indicative of actual results had
the acquisition taken place on the date indicated, nor do these statements
of income purport to be indicative of the results of operations that may be
achieved in the future.
The unaudited pro forma consolidated balance sheet at September 30, 2004
and the unaudited pro forma consolidated statements of income for the nine
months ended September 30, 2004 and the year ended December 31, 2003 have
been adjusted as discussed in the notes below:
a) Reflects the cash portion of the purchase price held by
Springer-Miller and its subsidiaries at the closing.
b) To eliminate the note receivable which is not included in the purchase
agreement.
c) To eliminate certain specifically identified property and equipment
which are not included in the purchase agreement.
d) To record the identifiable intangibles and goodwill resulting from the
acquisition as detailed in note 1.
e) To record the debt incurred in connection with the acquisition.
f) To record the 208,653 shares of PAR Technology Corp. common stock
issued in connection with the acquisition. The number of shares issued
was determined based on a formula in the purchase agreement. For
purposes of recording the acquisition, these shares were valued based
upon the average value of the Company's common stock based on the
average closing share price for the period of 2 days preceding through
the 2 days following the announcement of the acquisition.
g) To eliminate historical Springer-Miller additional paid in capital and
accumulated deficit.
h) To eliminate historical Springer-Miller accumulated other
comprehensive income.
i) To record pro forma amortization of the identifiable intangible assets
with finite lives acquired based on periods indicated in note 1 for
the year ended December 31, 2003.
j) To record pro forma interest expense on debt incurred for the year
ended December 31, 2003. Interest expense assumes the entire amount of
debt incurred of $13.1 million was outstanding for all of 2003 at an
average annual borrowing rate of 4.1%.
k) To record pro forma tax benefit using statutory tax rates assuming
results of Springer Miller (formerly an S-Corp) combined with PAR
Technology Corp. and after giving effect to the pro forma adjustments.
l) To record pro forma amortization for identifiable intangible assets
with finite lives acquired based on periods indicated in note 1 for
the nine months ended September 30, 2004.
m) To record pro forma interest expense on debt incurred for the nine
months ended September 30, 2004. Interest expense assumes the entire
amount of debt incurred of $13.1 million was outstanding for the first
6 months of 2004 at an average borrowing rate for that period of 3.9%,
reduced to $11.6 million (from available cash flow for 2004) for the
three months ended September 30, 2004 at an average borrowing rate for
that period of 4.3%.
n) To record pro forma tax provision using statutory tax rates assuming
results of Springer Miller (formerly an S-Corp) combined with PAR
Technology Corp. and after giving effect to the pro forma adjustments.