UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 2008
TRANSACT TECHNOLOGIES INCORPORATED
(Exact name of registrant as specified in its charter)
| Delaware | 0-21121 | 06-1456680 | ||
| (State or other jurisdiction of incorporation) |
(Commission file number) | (I.R.S. employer identification no.) |
| One Hamden Center 2319 Whitney Ave, Suite 3B, Hamden, CT |
06518 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (203) 859-6800
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 2.02. | Results of Operations and Financial Condition. |
The following information is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition” of Form 8-K. Such information, including the Exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
On March 6, 2008, TransAct Technologies Incorporated issued a press release announcing its financial results for the quarter and year ended December 31, 2007. A copy of the press release is furnished as Exhibit 99.1 to this report.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits: |
| Exhibit |
Description | |
| 99.1 | Press Release dated March 6, 2008 of TransAct Technologies Incorporated |
SIGNATURE
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.
| TRANSACT TECHNOLOGIES INCORPORATED | ||
| By: | /s/ Steven A. DeMartino | |
| Steven A. DeMartino | ||
| Executive Vice President, Chief Financial Officer, | ||
| Treasurer and Secretary | ||
Date: March 6, 2008
EXHIBIT LIST
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits: |
| Exhibit |
Description | |
| 99.1 | Press Release dated March 6, 2008 of TransAct Technologies Incorporated |
Exhibit 99.1
TRANSACT TECHNOLOGIES REPORTS
FOURTH QUARTER 2007 RESULTS
Hamden, CT, March 6, 2008 – TransAct Technologies Incorporated (NASDAQ: TACT), a global leader in market-specific printers for transaction-based industries, today announced financial results for the three months and year ended December 31, 2007.
Revenues for the fourth quarter of 2007 were $11.6 million, compared to $15.7 million in the same period a year ago. The Company recorded a GAAP net loss of $(1.3) million in the fourth quarter of 2007, compared to GAAP net income of $1.0 million in the same period of 2006. The GAAP net loss per share for the three months ended December 31, 2007 was $(0.14) per diluted share, compared to GAAP net income of $0.10 per diluted share in the same period a year ago. The GAAP results for the fourth quarter of 2007 included an incremental inventory reserve charge of $528,000 specifically related to certain obsolete electronic components and discontinued printer products, a charge of $39,000 for severance associated with the termination of certain employees under the previously announced business structure change, and $1.2 million of legal fees related to the ongoing litigation against FutureLogic, Inc. Excluding these items, pro forma net loss in the fourth quarter of 2007 was approximately $(0.1) million, or $(0.01) per diluted share. For further information regarding the presentation of pro forma non-GAAP financial measures, please refer to the “Financial Presentation” paragraph below.
Revenues for the year ended December 31, 2007 were $48.8 million, compared to $64.3 million in the same period a year ago. The Company recorded a GAAP net loss in 2007 of $(2.3) million, compared to GAAP net income of $3.9 million in 2006. The GAAP net loss per share in 2007 was $(0.24) per diluted share, compared to GAAP net income of $0.40 per diluted share in 2006. The GAAP results for 2007 included an incremental inventory reserve charge of $528,000 specifically related to certain obsolete electronic components and discontinued printer products, a charge of $187,000 for severance associated with the termination of certain employees under the previously announced business structure change, and $2.9 million of legal fees related to the ongoing litigation against FutureLogic, Inc. Excluding these items, pro forma net income in 2007 was approximately $0.1 million, or $0.01 per diluted share. For further information regarding the presentation of pro forma non-GAAP financial measures, please refer to the “Financial Presentation” paragraph below.
Bart C. Shuldman, Chairman, President and Chief Executive Officer of TransAct Technologies, said, “We are becoming increasingly optimistic about the prospects for all of 2008. Beginning with the first quarter of 2008, we believe we will experience revenue growth in most of our printer product lines compared to 2007. We are optimistic that the softness in the domestic casino and worldwide lottery market that affected our revenues in all of 2007 appears to be coming to an end. Industry reports indicate that as the year progresses the domestic casino market will continue to improve as new casinos are built and existing casinos begin upgrading their machines for server based gaming. Of note in the lottery market, we have already received approximately $8.0 million in thermal printer orders for shipment in 2008. We are also pleased with what we see for all of 2008 in our
off-premise gaming market. This is an exciting opportunity for TransAct, especially in the international markets. And finally, having recently launched our new BANKjet® 2500 printer and implemented focused sales initiatives in the point of sale market, we expect to see revenues improve in our banking and point of sale market during 2008. Overall, we believe we are in an excellent position to capitalize on the initiatives we put in place in 2007.”
Steven A. DeMartino, Executive Vice President and Chief Financial Officer of TransAct Technologies, commented, “Over the past year, we made significant efforts to reduce costs in our business while also focusing our sales efforts in specific areas of growth and profitability. We believe the cost controls that we implemented in 2007, coupled with our new sales initiatives, will favorably impact our results and improve our margins in 2008. Further, our balance sheet remains strong and we ended 2007 with $2.6 million of cash and no debt.”
Mr. DeMartino continued, “During the fourth quarter of 2007, we purchased approximately 47,000 shares of our common stock for approximately $0.2 million under our $15 million stock repurchase program. This brings total shares purchased to date under the buyback plan to 1,034,000, for a total of approximately $8.0 million, at an average price of $7.73 per share.”
Financial Presentation
The Company has provided pro forma non-GAAP financial measures because the Company believes that these amounts are helpful to investors and others to more accurately assess the ongoing nature of TransAct’s core operations. The pro forma non-GAAP measures exclude the effect in the three months and year ended December 31, 2007 and 2006 of an incremental inventory reserve charge related to certain obsolete electronic components and discontinued printer products, severance associated with the termination of certain employees, legal fees related to the lawsuit with FutureLogic, Inc., and restructuring expenses related to the closing of the Company’s Wallingford, CT facility. These items have been excluded from pro forma non-GAAP financial measures, as management does not believe that they are representative of underlying trends in the Company’s performance. Their exclusion provides investors and others with additional information to more readily assess the Company’s operating results. The Company uses the non-GAAP financial measures internally to focus management on the results of the Company’s core business. The presentation of this additional non-GAAP information is not considered superior to or a substitute for the financial information prepared in accordance with GAAP.
Investor Conference Call / Webcast Details
TransAct will review detailed fourth quarter 2007 results during a conference call today at 5:00 PM ET. The conference call-in number is 201-689-8471. A replay of the call will be available from 8:00 PM ET on Thursday, March 6 through midnight ET on Thursday, March 13 by telephone at 201-612-7415. The account number to access the replay is 3055 and the password is 271524. Investors can also access the conference call via a live webcast on the Company’s Web site at www.transact-tech.com. A replay of the call will be archived on that Web site for one week.
About TransAct Technologies Incorporated
TransAct Technologies Incorporated (NASDAQ:TACT) is a leader in developing and manufacturing market-specific printers for transaction-based industries. These industries include casino, gaming, lottery, banking, kiosk and point-of-sale. Each individual market has distinct, critical requirements for printing and the transaction is not complete until the receipt and/or ticket is produced. TransAct printers are designed from the ground up based on market specific requirements and are sold under the Ithaca® and Epic product brands. TransAct distributes its products through OEMs, value-added resellers, selected distributors, and direct to end-users. TransAct has over two million printers installed around the world. TransAct also has a strong focus on the after-market side of the business, with a high commitment to printer service, supplies and spare parts. TransAct is headquartered in Hamden, CT. For more information on TransAct, visit http://www.transact-tech.com or call 203-859-6800.
Contacts:
Steven DeMartino, Chief Financial Officer, 203-859-6810
or Tyler Wilson, 646-536-7018 with The Ruth Group
# # #
Forward-Looking Statements:
Certain statements in this press release include forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “project” or “continue” or the negative thereof or other similar words. All forward-looking statements involve risks and uncertainties, including, but are not limited to, customer acceptance and market share gains, both domestically and internationally, in the face of substantial competition from competitors that have broader lines of products and greater financial resources; introduction of new products into the marketplace by competitors; successful product development; dependence on significant customers; reductions, delays or cancellations in orders from significant customers; dependence on significant vendors; the ability to recruit and retain quality employees as the Company grows; dependence on third parties for sales outside the United States, including Australia, New Zealand, Europe, Latin America and Asia; economic and political conditions in the United States, Australia, New Zealand, Europe, Latin America and Asia; marketplace acceptance of new products; risks associated with foreign operations; availability of third-party components at reasonable prices; price wars or other significant pricing pressures affecting the Company’s products in the United States or abroad; risks associated with potential future acquisitions; and the outcome of the lawsuit between TransAct and FutureLogic, Inc. Actual results may differ materially from those discussed in, or implied by, the forward-looking statements. The forward-looking statements speak only as of the date of this release and the Company assumes no duty to update them to reflect new, changing or unanticipated events or circumstances.
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| (In thousands, except per share data) | Three months ended December 31, 2007 |
Three months ended December 31, 2006 | ||||||||||||||||||||
| GAAP Basis |
Adjustments | Pro Forma Basis |
GAAP Basis |
Adjustments | Pro Forma Basis | |||||||||||||||||
| Net sales |
$ | 11,614 | $ | — | $ | 11,614 | $ | 15,713 | $ | — | $ | 15,713 | ||||||||||
| Cost of sales |
8,196 | (528) | a | 7,668 | 10,219 | — | 10,219 | |||||||||||||||
| Gross profit |
3,418 | 528 | 3,946 | 5,494 | — | 5,494 | ||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||
| Engineering, design and product development |
845 | — | 845 | 673 | — | 673 | ||||||||||||||||
| Selling and marketing |
1,740 | — | 1,740 | 2,008 | — | 2,008 | ||||||||||||||||
| General and administrative |
1,649 | (39) | b | 1,610 | 1,729 | (5) | b | 1,724 | ||||||||||||||
| Legal fees associated with lawsuit |
1,192 | (1,192) | c | — | 40 | (40) | c | — | ||||||||||||||
| Business consolidation and restructuring |
— | — | — | (479) | 479 | d | — | |||||||||||||||
| 5,426 | (1,231) | 4,195 | 3,971 | 434 | 4,405 | |||||||||||||||||
| Operating income (loss) |
(2,008) | 1,759 | (249) | 1,523 | (434) | 1,089 | ||||||||||||||||
| Other income (expense): |
||||||||||||||||||||||
| Interest, net |
18 | — | 18 | 42 | — | 42 | ||||||||||||||||
| Other, net |
17 | — | 17 | (22) | — | (22) | ||||||||||||||||
| 35 | — | 35 | 20 | — | 20 | |||||||||||||||||
| Income (loss) before income taxes |
(1,973) | 1,759 | (214) | 1,543 | (434) | 1,109 | ||||||||||||||||
| Income tax provision (benefit) |
(654) | 542 | e | (112) | 560 | (158) | e | 402 | ||||||||||||||
| Net income (loss) |
$ | (1,319) | $ | 1,217 | $ | (102) | $ | 983 | $ | (276) | $ | 707 | ||||||||||
| Net income (loss) per share: |
||||||||||||||||||||||
| Basic |
$ | (0.14) | $ | (0.01) | $ | 0.10 | $ | 0.07 | ||||||||||||||
| Diluted |
$ | (0.14) | $ | (0.01) | $ | 0.10 | $ | 0.07 | ||||||||||||||
| Shares used in per share calculation: |
||||||||||||||||||||||
| Basic |
9,284 | 9,284 | 9,546 | 9,546 | ||||||||||||||||||
| Diluted |
9,284 | 9,284 | 9,783 | 9,783 | ||||||||||||||||||
| a | Incremental inventory reserve charge of $528,000 specifically related to certain obsolete electronic components and discontinued printer products. |
| b | Severance charge of $39,000 and $5,000 in 2007 and 2006, respectively, associated with the termination of certain employees. |
| c | Legal expenses of $1,192,000 and $40,000 in 2007 and 2006, respectively, related to the lawsuit with FutureLogic, Inc. |
| d | Reversal of benefit of $479,000 in 2006 related to the closing of the Company’s Wallingford, CT facility. |
| e | The tax effect on the adjustments. |
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
| (In thousands, except per share data) | Year ended December 31, 2007 |
Year ended December 31, 2006 |
||||||||||||||||||||||||||
| GAAP Basis |
Adjustments | Pro Forma Basis |
GAAP Basis |
Adjustments | Pro Forma Basis |
|||||||||||||||||||||||
| Net sales |
$ | 48,766 | $ | — | $ | 48,766 | $ | 64,328 | $ | — | $ | 64,328 | ||||||||||||||||
| Cost of sales |
32,770 | (528 | ) | a | 32,242 | 41,963 | — | 41,963 | ||||||||||||||||||||
| Gross profit |
15,996 | 528 | 16,524 | 22,365 | — | 22,365 | ||||||||||||||||||||||
| Operating expenses: |
||||||||||||||||||||||||||||
| Engineering, design and product development |
3,129 | — | 3,129 | 2,824 | — | 2,824 | ||||||||||||||||||||||
| Selling and marketing |
6,708 | — | 6,708 | 6,892 | — | 6,892 | ||||||||||||||||||||||
| General and administrative |
6,995 | (187 | ) | b | 6,808 | 6,925 | (112 | ) | b | 6,813 | ||||||||||||||||||
| Legal fees associated with lawsuit |
2,907 | (2,907 | ) | c | — | 115 | (115 | ) | c | — | ||||||||||||||||||
| Business consolidation and restructuring |
12 | (12 | ) | d | — | (479 | ) | 479 | d | — | ||||||||||||||||||
| 19,751 | (3,106 | ) | 16,645 | 16,277 | 252 | 16,529 | ||||||||||||||||||||||
| Operating income (loss) |
(3,755 | ) | 3,634 | (121 | ) | 6,088 | (252 | ) | 5,836 | |||||||||||||||||||
| Other income (expense): |
||||||||||||||||||||||||||||
| Interest, net |
76 | — | 76 | 104 | — | 104 | ||||||||||||||||||||||
| Other, net |
21 | — | 21 | (159 | ) | — | (159 | ) | ||||||||||||||||||||
| 97 | — | 97 | (55 | ) | — | (55 | ) | |||||||||||||||||||||
| Income (loss) before income taxes |
(3,658 | ) | 3,634 | (24 | ) | 6,033 | (252 | ) | 5,781 | |||||||||||||||||||
| Income tax provision (benefit) |
(1,384 | ) | 1,268 | e | (116 | ) | 2,117 | (88 | ) | e | 2,029 | |||||||||||||||||
| Net income (loss) |
$ | (2,274 | ) | $ | 2,366 | $ | 92 | $ | 3,916 | $ | (164 | ) | $ | 3,752 | ||||||||||||||
| Net income (loss) per share: |
||||||||||||||||||||||||||||
| Basic |
$ | (0.24 | ) | $ | 0.01 | $ | 0.41 | $ | 0.39 | |||||||||||||||||||
| Diluted |
$ | (0.24 | ) | $ | 0.01 | $ | 0.40 | $ | 0.38 | |||||||||||||||||||
| Shares used in per share calculation: |
||||||||||||||||||||||||||||
| Basic |
9,364 | 9,364 | 9,577 | 9,577 | ||||||||||||||||||||||||
| Diluted |
9,364 | 9,552 | 9,870 | 9,870 | ||||||||||||||||||||||||
| a | Incremental inventory reserve charge of $528,000 specifically related to certain obsolete electronic components and discontinued printer products. |
| b | Severance charge of $187,000 and $112,000 in 2007 and 2006, respectively, associated with the termination of certain employees. |
| c | Legal expenses of $2,907,000 and $115,000 in 2007 and 2006, respectively, related to the lawsuit with FutureLogic, Inc. |
| d | Charge of $12,000 in 2007 and reversal of benefit of $479,000 in 2006 related to the closing of the Company’s Wallingford, CT facility. |
| e | The tax effect on the adjustments. |
SUPPLEMENTAL INFORMATION – SALES BY SALES UNIT:
| Three months ended December 31, |
Year ended December 31, | |||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||
| Banking and point-of-sale |
$ | 2,341 | $ | 4,140 | $ | 11,046 | $ | 16,858 | ||||
| Gaming and lottery |
6,758 | 8,394 | 25,338 | 34,677 | ||||||||
| TransAct services group |
2,515 | 3,179 | 12,382 | 12,793 | ||||||||
| Total net sales |
$ | 11,614 | $ | 15,713 | $ | 48,766 | $ | 64,328 | ||||
TRANSACT TECHNOLOGIES INCORPORATED
CONSOLIDATED BALANCE SHEETS
| (In thousands) | December 31, 2007 |
December 31, 2006 |
||||||
| Assets: |
||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 2,561 | $ | 3,436 | ||||
| Receivables, net |
6,128 | 11,422 | ||||||
| Inventories |
8,665 | 7,567 | ||||||
| Refundable income taxes |
51 | 42 | ||||||
| Deferred tax assets |
1,529 | 2,167 | ||||||
| Other current assets |
362 | 506 | ||||||
| Total current assets |
19,296 | 25,140 | ||||||
| Fixed assets, net |
6,338 | 5,938 | ||||||
| Goodwill, net |
1,469 | 1,469 | ||||||
| Deferred tax assets |
3,019 | 542 | ||||||
| Intangibles and other assets |
482 | 617 | ||||||
| 11,308 | 8,566 | |||||||
| Total assets |
$ | 30,604 | $ | 33,706 | ||||
| Liabilities and Shareholders’ Equity: |
||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 4,688 | $ | 3,997 | ||||
| Accrued liabilities |
2,852 | 3,796 | ||||||
| Accrued restructuring expenses |
— | 315 | ||||||
| Deferred revenue |
522 | 389 | ||||||
| Total current liabilities |
8,062 | 8,497 | ||||||
| Deferred revenue, net of current portion |
211 | 508 | ||||||
| Accrued warranty, net of current portion |
91 | 160 | ||||||
| Accrued rent |
507 | 251 | ||||||
| Other liabilities |
125 | — | ||||||
| 934 | 919 | |||||||
| Total liabilities |
8,996 | 9,416 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock |
104 | 104 | ||||||
| Additional paid-in capital |
19,872 | 19,105 | ||||||
| Retained earnings |
9,449 | 11,405 | ||||||
| Accumulated other comprehensive income |
178 | 168 | ||||||
| Treasury stock |
(7,995 | ) | (6,492 | ) | ||||
| Total shareholders’ equity |
21,608 | 24,290 | ||||||
| $ | 30,604 | 33,706 | ||||||