UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC. 20549
FORM
10-Q
(Mark
One)
|
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended: March 31, 2009
or
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the transition period
from
to .
Commission file
number: 0-21121
______________________________________________________________________
______________________________________________________________________
(Exact
name of registrant as specified in its charter)
|
Delaware
|
06-1456680
|
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
One
Hamden Center, 2319 Whitney Avenue, Suite 3B, Hamden,
CT
|
06518
|
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Registrant's
telephone number, including area code 203-859-6800
(Former
name, former address and former fiscal year, if changed since last
report.)
Indicate
by check mark whether the registrant: (1) has filed all reports required to be
filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ý No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes o No o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated
filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2
of the Exchange Act. (check one):
|
Large
accelerated filer o
|
Accelerated
filer ý
|
|
Non-accelerated
filer o (Do not check if
a smaller reporting company)
|
Smaller
reporting company ý
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes o No ý
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
|
Class
|
Outstanding
as of April 30, 2009
|
|
|
Common
stock, $.01 par value
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9,307,738
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INDEX
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Page
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||
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Item
1
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||
|
3
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||
|
4
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||
|
5
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||
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6
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||
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Item
2
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10
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|
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Item
3
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16
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|
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Item
4
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16
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|
|
Item
1
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16
|
|
|
Item
1A
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16
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|
|
Item
2
|
16
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|
|
Item
6
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16
|
|
|
17
|
||
CONDENSED
CONSOLIDATED BALANCE SHEETS
(unaudited)
|
March
31,
|
December
31,
|
|||||||
|
(In
thousands, except per share data)
|
2009
|
2008
|
||||||
|
Assets:
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 1,321 | $ | 2,000 | ||||
|
Receivables,
net
|
6,904 | 8,734 | ||||||
|
Inventories,
net
|
12,081 | 9,919 | ||||||
|
Refundable
income taxes
|
35 | 35 | ||||||
|
Deferred
tax assets
|
2,054 | 2,054 | ||||||
|
Other
current assets
|
556 | 352 | ||||||
|
Total
current assets
|
22,951 | 23,094 | ||||||
|
Fixed
assets, net
|
5,260 | 5,563 | ||||||
|
Goodwill
|
1,469 | 1,469 | ||||||
|
Deferred
tax assets
|
1,732 | 1,759 | ||||||
|
Intangible
and other assets, net of accumulated amortization of $327 and $306,
respectively
|
315 | 349 | ||||||
| 8,776 | 9,140 | |||||||
|
Total
assets
|
$ | 31,727 | $ | 32,234 | ||||
|
Liabilities
and Shareholders’ Equity:
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 4,992 | $ | 4,863 | ||||
|
Accrued
liabilities
|
1,886 | 2,847 | ||||||
|
Deferred
revenue
|
435 | 333 | ||||||
|
Total
current liabilities
|
7,313 | 8,043 | ||||||
|
Deferred
revenue, net of current portion
|
240 | 259 | ||||||
|
Accrued
warranty, net of current portion
|
103 | 133 | ||||||
|
Deferred
rent
|
463 | 473 | ||||||
|
Other
liabilities
|
44 | 44 | ||||||
| 850 | 909 | |||||||
|
Total
liabilities
|
8,163 | 8,952 | ||||||
|
Commitments
and contingencies (Note 9)
|
||||||||
|
Shareholders’
equity:
|
||||||||
|
Common
stock, $0.01 par value, 20,000,000 authorized at March 31,
|
||||||||
|
2009
and December 31, 2008; 10,467,088 and 10,465,588 shares
|
||||||||
|
issued,
respectively; 9,302,988 and 9,301,488 shares outstanding
|
||||||||
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at
March 31, 2009 and December 31, 2008, respectively
|
105 | 105 | ||||||
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Additional
paid-in capital
|
21,068 | 20,890 | ||||||
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Retained
earnings
|
11,014 | 10,893 | ||||||
|
Accumulated
other comprehensive loss, net of tax
|
(85 | ) | (68 | ) | ||||
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Treasury
stock, 1,164,100 shares, at cost
|
(8,538 | ) | (8,538 | ) | ||||
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Total
shareholders’ equity
|
23,564 | 23,282 | ||||||
|
Total
liabilities and shareholders’ equity
|
$ | 31,727 | $ | 32,234 | ||||
See notes
to condensed consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
|
Three
Months Ended
|
||||||||
|
March
31,
|
||||||||
|
(In
thousands, except per share data)
|
2009
|
2008
|
||||||
|
Net
sales
|
$ | 12,202 | $ | 14,285 | ||||
|
Cost
of sales
|
8,076 | 9,506 | ||||||
|
Gross
profit
|
4,126 | 4,779 | ||||||
|
Operating
expenses:
|
||||||||
|
Engineering,
design and product development
|
694 | 715 | ||||||
|
Selling
and marketing
|
1,398 | 1,451 | ||||||
|
General
and administrative
|
1,855 | 1,775 | ||||||
|
Legal
fees associated with lawsuit (See Note 9)
|
- | 1,897 | ||||||
| 3,947 | 5,838 | |||||||
|
Operating
income (loss)
|
179 | (1,059 | ) | |||||
|
Interest
and other income (expense):
|
||||||||
|
Interest,
net
|
(15 | ) | 4 | |||||
|
Other,
net
|
20 | 2 | ||||||
| 5 | 6 | |||||||
|
Income
(loss) before income taxes
|
184 | (1,053 | ) | |||||
|
Income
tax provision (benefit)
|
63 | (361 | ) | |||||
|
Net
income (loss)
|
$ | 121 | $ | (692 | ) | |||
|
Earnings
(loss) per common share:
|
||||||||
|
Basic
|
$ | 0.01 | $ | (0.07 | ) | |||
|
Diluted
|
$ | 0.01 | $ | (0.07 | ) | |||
|
Shares
used in per-share calculation:
|
||||||||
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Basic
|
9,257 | 9,278 | ||||||
|
Diluted
|
9,259 | 9,278 | ||||||
See notes
to condensed consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
Three
Months Ended
|
||||||||
|
March
31,
|
||||||||
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(In
thousands)
|
2009
|
2008
|
||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income (loss)
|
$ | 121 | $ | (692 | ) | |||
|
Adjustments
to reconcile net income (loss) to net cash used in operating
activities:
|
||||||||
|
Share-based
compensation expense
|
170 | 202 | ||||||
|
Depreciation
and amortization
|
435 | 502 | ||||||
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Deferred
income taxes
|
33 | (381 | ) | |||||
|
Foreign
currency transaction (gain) loss
|
(20 | ) | 1 | |||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
1,828 | (873 | ) | |||||
|
Inventories
|
(2,162 | ) | (190 | ) | ||||
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Other
current assets
|
(204 | ) | (38 | ) | ||||
|
Other
assets
|
8 | 6 | ||||||
|
Accounts
payable
|
130 | 823 | ||||||
|
Accrued
liabilities and other liabilities
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(913 | ) | 334 | |||||
|
Net
cash used in operating activities
|
(574 | ) | (306 | ) | ||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of fixed assets
|
(108 | ) | (374 | ) | ||||
|
Net
cash used in investing activities
|
(108 | ) | (374 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Proceeds
from option exercises
|
8 | 15 | ||||||
|
Net
cash provided by financing activities
|
8 | 15 | ||||||
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Effect
of exchange rate changes on cash and cash equivalents
|
(5 | ) | (11 | ) | ||||
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Net
decrease in cash and cash equivalents
|
(679 | ) | (676 | ) | ||||
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Cash
and cash equivalents, beginning of period
|
2,000 | 2,561 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 1,321 | $ | 1,885 | ||||
See notes
to condensed consolidated financial statements.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1.
Basis of presentation
The
accompanying unaudited financial statements of TransAct Technologies
Incorporated have been prepared in accordance with accounting principles
generally accepted in the United States of America for interim financial
information. Accordingly, they do not include all of the information
and footnotes required by accounting principles generally accepted in the United
States of America to be included in full year financial
statements. In the opinion of management, all adjustments considered
necessary for a fair statement of the results for the periods presented have
been included. The December 31, 2008 condensed consolidated balance
sheet data was derived from audited financial statements, but does not include
all disclosures required by accounting principles generally accepted in the
United States of America. These interim financial statements should
be read in conjunction with the audited financial statements for the year ended
December 31, 2008 included in our Annual Report on Form 10-K.
The
financial position and results of operations of our U.K. foreign subsidiary is
measured using local currency as the functional currency. Assets and
liabilities of such subsidiary have been translated at the end of period
exchange rates, and related revenues and expenses have been translated at the
weighted average exchange rates with the resulting translation gain or loss
recorded in accumulated other comprehensive income in the condensed consolidated
balance sheets. Transaction gains and losses are included in other
income in the condensed consolidated statement of operations.
The
results of operations for the three months ended March 31, 2009 are not
necessarily indicative of the results to be expected for the full
year. Certain prior period amounts in the Condensed Consolidated
Financial Statements have been reclassified to conform with current period
presentation.
2.
Recently issued accounting pronouncements
Fair Value
Measurements: In September 2006, the Financial Accounting Standards Board
(“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157,
“Fair Value Measurements”. SFAS No. 157 provides enhanced guidance
for using fair value to measure assets and liabilities and expands disclosure
with respect to fair value measurements. In February 2008, the FASB
issued a FASB Staff Position (“FSP”) 157-2 which allowed companies to elect a
one year deferral of adoption of SFAS No. 157 for nonfinancial assets and
nonfinancial liabilities that are recognized or disclosed at fair value in the
financial statements on a non-recurring basis. In October 2008, the
FASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When
the Market for That Asset is Not Active”. In April 2009, the FASB
issued FSP FAS 157-4, “Determining Fair Value When the Volume and Level of
Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly”. We currently do not have any
financial assets or liabilities that are valued in inactive or non-orderly
markets, and as such are not currently impacted by the issuance of FSP FAS 157-3
or FSP FAS 157-4. We have adopted SFAS No. 157 as of January 1, 2008
and FSP 157-2 as of January 1, 2009.
Business
Combinations: In December 2007, the FASB issued SFAS No. 141(R) “Business
Combinations”, which replaces SFAS No. 141. SFAS No. 141(R)
establishes principles and requirements for how an acquirer in a business
combination recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any controlling interest;
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase; and determines what information to disclose to
enable users of the financial statements to evaluate the nature and financial
effects of the business combination. In April 2009, the FASB issued
FSP 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a
Business Combination that arise from Contingencies”, which amends and clarifies
the initial and subsequent accounting and disclosures of contingencies in a
business combination. We have adopted SFAS No. 141(R) effective
January 1, 2009 and will apply it and FSP 141(R)-1 prospectively to business
combinations completed after January 1, 2009.
Noncontrolling
Interests: In December 2007, the FASB issued SFAS No. 160 “Noncontrolling
Interests in Consolidated Financial Statements – an amendment to ARB No.
51”. SFAS No. 160 establishes accounting and reporting standards that
require the ownership interest in subsidiaries held by parties other than the
parent be clearly identified and presented in the consolidated balance sheet
within equity, but separate from the parent’s equity; the amount of consolidated
net income attributable to the parent and the noncontrolling interest be clearly
identified and presented on the face of the consolidated statement of earnings;
and changes in a parent’s ownership interest while the parent retains its
controlling financial interest in its subsidiary be accounted for
consistently. We have adopted SFAS No. 160 as of January 1,
2009. This statement will not have any effect on our financial
statements since we do not participate in noncontrolling interests.
Participating
Securities: In June 2008, the FASB issued FSP Emerging
Issues Task Force (“EITF”) 03-6-1, “Determining Whether Instruments Granted in
Share-Based Payment Transactions Are Participating Securities”. FSP
EITF 03-6-1 clarified that all outstanding unvested share-based payment awards
that contain rights to nonforfeitable dividends participate in undistributed
earnings with common shareholders. Awards of this nature are
considered participating securities and the two-class method of computing basic
and diluted earnings per share must be applied. We have adopted FSP
EITF 03-6-1 as of January 1, 2009. See Note 5 – Earnings per
share.
TRANSACT
TECHNOLOGIES INCORPORATED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. Inventories
The
components of inventories are:
|
March
31,
|
December
31,
|
|||||||
|
(In
thousands)
|
2009
|
2008
|
||||||
|
Raw
materials and purchased component parts
|
$ | 7,125 | $ | 7,207 | ||||
|
Work-in-process
|
30 | 27 | ||||||
|
Finished
goods
|
4,926 | 2,685 | ||||||
| $ | 12,081 | $ | 9,919 | |||||
4.
Accrued product warranty liability
The
following table summarizes the activity recorded in the accrued product warranty
liability during the three months ended March 31, 2009 and 2008:
|
Three
months ended
|
||||||||
|
March
31,
|
||||||||
|
(In
thousands)
|
2009
|
2008
|
||||||
|
Balance,
beginning of period
|
$ | 393 | $ | 500 | ||||
|
(Reversals)
additions related to warranties issued
|
(14 | ) | 135 | |||||
|
Warranty
costs incurred
|
(51 | ) | (117 | ) | ||||
|
Balance,
end of period
|
$ | 328 | $ | 518 | ||||
The
current portion of the accrued product warranty liability is included in accrued
liabilities in the condensed consolidated balance sheets.
5.
Restructuring and other charges
The
Company continually evaluates its cost structure to ensure that it is
appropriately positioned to respond to changing market conditions. Given recent
economic trends, in 2008 and continuing in the first quarter of 2009, the
Company initiated and completed certain restructuring programs to better utilize
its workforce. These restructuring activities reduced the number of employees
and caused the Company to incur costs for employee termination benefits related
to the employee reductions. During the first quarter of 2009, the
Company recorded pre-tax restructuring charges of approximately $122,000 in
accordance with FAS 146 "Accounting for Costs
Associated with Exit or Disposal Activities." These one time
termination benefit charges have been included within general and administrative
expenses. The restructuring activity includes severance related costs related to
the termination of 12 employees.
Accrued
severance and related restructuring costs were as follows at March 31,
2009:
|
Balance
at December 31, 2008
|
$ | 18 | ||
|
Pre-tax
severance and related charges
|
122 | |||
|
Cash
paid
|
(33 | ) | ||
|
Balance
at March 31, 2009
|
$ | 107 |
TRANSACT
TECHNOLOGIES INCORPORATED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
6.
Earnings per share
The
following table sets forth the reconciliation of basic weighted average shares
outstanding and diluted weighted average shares outstanding:
|
Three
months ended
|
||||||||
|
March
31,
|
||||||||
|
(In
thousands, except per share data)
|
2009
|
2008
|
||||||
|
Net
income (loss)
|
$ | 121 | $ | (692 | ) | |||
|
Shares:
|
||||||||
|
Basic: Weighted
average common shares outstanding
|
9,257 | 9,278 | ||||||
|
Add: Dilutive
effect of outstanding options and restricted stock as determined by the
treasury stock method
|
2 | - | ||||||
|
Diluted: Weighted
average common and common equivalent shares outstanding
|
9,259 | 9,278 | ||||||
|
Net
income (loss) per common share:
|
||||||||
|
Basic
|
$ | 0.01 | $ | (0.07 | ) | |||
|
Diluted
|
$ | 0.01 | $ | (0.07 | ) | |||
In June
2008, the FASB issued FSP Emerging Issues Task Force (“EITF”) 03-6-1,
“Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities”. FSP EITF 03-6-1 clarified that all
outstanding unvested share-based payment awards that contain rights to
nonforfeitable dividends participate in undistributed earnings with common
shareholders. Awards of this nature are considered participating
securities and the two-class method of computing basic and diluted earnings per
share must be applied. FSP EITF 03-6-1 was applicable to us beginning
on January 1, 2009. This statement did not have a material effect on
our computation of basic and diluted earnings per share since our unvested
restricted stock awards do not contain rights to nonforfeitable
dividends.
Unvested
restricted stock is excluded from the calculation of weighted average common
shares for basic EPS. For diluted EPS, weighted average common shares
include the impact of unvested restricted stock under the treasury stock
method.
For the
three months ended March 31, 2009 and 2008, there were 839,649 and 958,647,
respectively, potentially dilutive shares consisting of stock options and
nonvested restricted stock, that were excluded from the calculation of earnings
per diluted share.
7.
Comprehensive income (loss)
The
following table summarizes our comprehensive income (loss):
|
Three
months ended
|
||||||||
|
March
31,
|
||||||||
|
(In
thousands)
|
2009
|
2008
|
||||||
|
Net
income (loss)
|
$ | 121 | $ | (692 | ) | |||
|
Foreign
currency translation adjustment
|
(17 | ) | (10 | ) | ||||
|
Total
comprehensive income (loss)
|
$ | 104 | $ | (702 | ) | |||
TRANSACT
TECHNOLOGIES INCORPORATED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
8.
Stockholder’s equity
Changes
in stockholders’ equity for the three months ended March 31, 2009 were as
follows (in thousands):
|
Balance
at December 31, 2008
|
$ | 23,282 | ||
|
Net
income
|
121 | |||
|
Proceeds from
issuance of shares from exercise of stock options
|
8 | |||
|
Share-based
compensation expense
|
170 | |||
|
Foreign
currency translation adjustment
|
(17 | ) | ||
|
Balance
at March 31, 2009
|
$ | 23,564 |
9.
Commitments and contingencies
The
Company had been involved in patent litigation with FutureLogic, Inc.
(“FutureLogic”) with respect to our patents U.S. Patent 6,924,903 and U.S.
Patent 7,099,035. On May 13, 2008, the Company signed a Patent
License and Settlement Agreement with FutureLogic that settled the current
patent litigation and all other legal matters outstanding between the two
parties. Under the Patent License and Settlement Agreement,
FutureLogic has agreed to license our dual port technology for printers and
upgrade kits that utilize the patented technology. The license
granted FutureLogic worldwide, perpetual rights for U.S. Patent 6,924,903, U.S.
Patent 7,099,035, related applications and patents, and foreign
counterparts.
10. Income
taxes
We
recorded an income tax provision for the first quarter of 2009 of $63,000 at an
effective tax rate of 34.2%, compared to an income tax benefit during the first
quarter of 2008 of $361,000 at an effective tax rate of 34.3%.
As of March 31, 2009, we had a net deferred
tax asset of $3,786,000. In order
to utilize this deferred tax asset, we will need to generate approximately $10.8
million of taxable income in future years. Based on future
projections of taxable income, we have determined that it is more likely than
not that the existing net deferred tax asset will be
realized.
We are
subject to U.S. federal income tax as well as income tax of certain state and
foreign jurisdictions. We have substantially concluded all U.S.
federal income tax, state and local, and foreign tax matters through
2002. During 2008, a limited scope audit of our 2005 and 2006 federal
tax returns was completed. However, our federal tax returns for the
years 2003 through 2007 remain open to examination. Various state and
foreign tax jurisdiction tax years remain open to examination as well, though we
believe that any additional assessment would be immaterial to the condensed
consolidated financial statements. No federal, state or foreign tax
jurisdictions are currently under examination.
As of
March 31, 2009, we had $160,000
of total gross unrecognized tax benefits that, if recognized, would favorably
affect the effective income tax rate in any future periods. We are
not aware of any events that could occur within the next twelve months that
could cause a significant change in the total amount of unrecognized tax
benefits.
Forward
Looking Statements
Certain
statements included in this report, including without limitation statements in
this Management’s Discussion and Analysis of Financial Condition and Results of
Operations, which are not historical facts are “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
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. Forward-looking statements involve
risks and uncertainties, including, but not limited to those listed in Item 1A
of our most recently filed Form 10-K. 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 report and we assume no duty to
update them.
Overview
TransAct
Technologies Incorporated designs, develops, assembles, markets and services
world-class transaction printers under the Epic and Ithaca® brand
names. Known and respected worldwide for innovative designs and real-world
service reliability, our thermal, inkjet and impact printers generate
top-quality transaction records such as receipts, tickets, coupons, register
journals and other documents. We focus on the following core markets: banking
and point-of-sale, casino and gaming, and lottery. We sell our products to
original equipment manufacturers, value-added resellers, selected distributors,
as well as directly to end-users. Our product distribution spans across the
Americas, Europe, the Middle East, Africa, Asia, Australia, the Caribbean
Islands and the South Pacific. In addition, we have a strong focus on the
after-market side of the business, with a growing commitment to printer service,
supplies and spare parts. We operate in one reportable segment, the design,
development, assembly and marketing of transaction printers and printer-related
service, supplies and spare parts.
Critical
Accounting Judgments and Estimates
Our
discussion and analysis of our financial condition and results of operations are
based upon our condensed consolidated financial statements, which have been
prepared by us in accordance with accounting principles generally accepted in
the United States of America. The presentation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenue and expenses, and disclosure of
contingent assets and liabilities. Our estimates include those
related to revenue recognition, inventory obsolescence, the valuation of
deferred tax assets and liabilities, depreciable lives of equipment, warranty
obligations, and contingent liabilities. We base our estimates on
historical experience and on various other assumptions that we believe to be
reasonable under the circumstances.
For a
complete description of our accounting policies, see Item 7 - Management’s
Discussion and Analysis of Financial Condition and Results of
Operations, “Critical Accounting Policies and Estimates,” included in
our Form 10-K for the year ended December 31, 2008. We have reviewed
those policies and determined that they remain our critical accounting policies
for the three months ended March 31, 2009.
Results
of Operations: Three months ended March 31, 2009 compared with three
months ended March 31, 2008
Net
Sales. Net sales,
which include printer sales and sales of spare parts, consumables and repair
services, by market for the three months ended March 31, 2009 and 2008 were as
follows:
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
March
31, 2009
|
March
31, 2008
|
$ |
%
|
||||||||||||||||||||
|
Banking
and point-of-sale
|
$ | 2,441 | 20.0 | % | $ | 2,733 | 19.1 | % | $ | (292 | ) | (10.7 | %) | |||||||||||
|
Casino
and gaming
|
4,857 | 39.8 | % | 4,837 | 33.9 | % | 20 | 0.4 | % | |||||||||||||||
|
Lottery
|
1,106 | 9.1 | % | 3,610 | 25.3 | % | (2,504 | ) | (69.4 | %) | ||||||||||||||
|
TransAct
Services Group
|
3,798 | 31.1 | % | 3,105 | 21.7 | % | 693 | 22.3 | % | |||||||||||||||
| $ | 12,202 | 100.0 | % | $ | 14,285 | 100.0 | % | $ | (2,083 | ) | (14.6 | %) | ||||||||||||
|
International
*
|
$ | 3,670 | 30.1 | % | $ | 2,182 | 15.3 | % | $ | 1,488 | 68.2 | % | ||||||||||||
|
*
|
International
sales do not include sales of printers made to domestic distributors or
other domestic customers who may in turn ship those printers to
international destinations.
|
Net sales
for the first quarter of 2009 decreased $2,083,000, or 15%, from the same period
last year due primarily to lower printer sales into our lottery (a decrease of
$2,504,000, or 69%) and banking and point-of-sale markets (a decrease of
$292,000, or 11%) partially offset by a $693,000, or 22% increase from our
TransAct Services Group (“TSG”). Sales from our casino and gaming market
remained consistent. Printer sales volume decreased by 28% while the
average selling price of our printers increased by approximately 5% from the
first quarter of 2008 to the first quarter of 2009.
Overall, international sales increased $1,488,000, or 68%, largely due to
higher international shipments of our casino and gaming printers.
Banking
and point-of-sale:
Revenue
from the banking and point-of-sale (“POS”) market includes sales of printers
used by banks, credit unions, and other financial institutions to print and/or
validate receipts and checks at bank teller stations. Revenue from
this market also includes sales of inkjet, thermal and impact printers used
primarily by retailers in the restaurant (including fine dining, casual dining
and fast food), hospitality, and specialty retail industries to print receipts
for consumers, validate checks, or print on other inserted
media. Sales of our banking and POS printers worldwide decreased
$292,000, or 11%.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
March
31, 2009
|
March
31, 2008
|
$
|
% | ||||||||||||||||||||
|
Domestic
|
$ | 1,958 | 80.2 | % | $ | 2,512 | 91.9 | % | $ | (554 | ) | (22.1 | %) | |||||||||||
|
International
|
483 | 19.8 | % | 221 | 8.1 | % | 262 | 118.6 | % | |||||||||||||||
| $ | 2,441 | 100.0 | % | $ | 2,733 | 100.0 | % | $ | (292 | ) | (10.7 | %) | ||||||||||||
Domestic
banking and POS revenue decreased to $1,958,000, representing a $554,000, or
22%, decrease from the first quarter of 2008 primarily driven by lower sales of
our POS printers. Sales of our POS printers declined by approximately 22%
largely due to the general economic slowdown that we believe is currently
impacting, and will continue to adversely impact for the remainder of 2009 the
capital spending of our retail and hospitality
customers. Contributing to the decline in sales of our POS printers,
sales of our legacy line of POS impact printers decreased by approximately
57%. We expect sales of our legacy impact printers for the remainder
of 2009 to continue to be lower than those reported for the comparable 2008
period, as these printers continue to be replaced by our newer thermal and
inkjet printers. Despite these declines, sales of our two new printer
products for McDonalds, the Ithaca 8000 and Ithaca 8040®, more than tripled in
the first quarter of 2009 as compared to the first quarter of
2008. We expect sales of these printer products to continue to
increase in the second and third quarters of 2009, compared to the first quarter
of 2009, as McDonalds increases the pace of its rollout of printers used in its
new combined beverage initiative. Banking printer sales remained
consistent in the first quarter of 2009 compared to the first quarter of
2008. However, we expect banking printer sales to increase in the
second and third quarters of 2009, compared to the first quarter of 2009, as we
begin to ship in greater volume a $4.9 million order we received from a large
banking customer in February 2009.
International
banking and POS printer shipments increased $262,000, or 119%, to $483,000, due
primarily to higher POS printer sales to our international distributors in Latin
America.
Casino
and gaming:
Revenue
from the casino and gaming market includes sales of printers used in slot
machines, video lottery terminals (“VLTs”), and other gaming machines that print
tickets instead of issuing coins (“ticket-in, ticket-out” or “TITO”) at casinos
and racetracks (“racinos”) and other gaming venues worldwide. Revenue
from this market also includes sales of printers used in the international
off-premise gaming market in gaming machines at non-casino gaming establishments
such as Amusement with Prizes (“AWP”), Skills with Prizes (“SWP”), and Fixed
Odds Betting Terminals (“FOBT”). Sales of our casino and
gaming products increased $20,000, or less than 1%, from the first quarter of 2008.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
March
31, 2009
|
March
31, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 1,940 | 39.9 | % | $ | 3,039 | 62.8 | % | $ | (1,099 | ) | (36.2 | %) | |||||||||||
|
International
|
2,917 | 60.1 | % | 1,798 | 37.2 | % | 1,119 | 62.2 | % | |||||||||||||||
| $ | 4,857 | 100.0 | % | $ | 4,837 | 100.0 | % | $ | 20 | 0.4 | % | |||||||||||||
Domestic
sales of our casino and gaming printers decreased $1,099,000, or 36%, due
largely to a decrease in sales of our thermal casino printers, which have been
impacted by the downturn in the domestic casino market. We expect the
domestic casino and gaming market to continue to be weak for the remainder of
2009 as we believe the current uncertain economic environment is negatively
impacting the casino industry’s level of capital expenditures. In
light of these negative market conditions, our future sales to the domestic
casino and gaming market could be unpredictable and adversely
affected.
International
casino and gaming printer sales increased $1,119,000, or 62%, to $2,917,000 in
the first quarter of 2009. This increase was due primarily to the
826% increase in our thermal casino printer sales in Australia and Asia as well
as the more than doubling of our off-premise gaming printer sales largely due to
new customers in Australia. The excessive change in our thermal casino
printer sales in Australia and Asia was due to an unusually low first quarter
sales to these particular customers in 2008.
Lottery:
Revenue
from the lottery market includes sales of lottery printers to Lottomatica’s
GTECH Corporation (“GTECH”), the world’s largest provider of lottery terminals,
for various lottery applications. Sales of our lottery
products decreased $2,504,000, or 69%, from the first
quarter of 2008, due to lower domestic sales of lottery
printers to GTECH.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
March
31, 2009
|
March
31, 2008
|
$
|
%
|
||||||||||||||||||||
|
Domestic
|
$ | 1,002 | 90.6 | % | $ | 3,506 | 97.1 | % | $ | (2,504 | ) | (71.4 | %) | |||||||||||
|
International
|
104 | 9.4 | % | 104 | 2.9 | % | - | 0.0 | % | |||||||||||||||
| $ | 1,106 | 100.0 | % | $ | 3,610 | 100.0 | % | $ | (2,504 | ) | (69.4 | %) | ||||||||||||
Domestic
printer sales to GTECH, which include thermal on-line and other lottery
printers, decreased $2,504,000, or 71%, due to the timing of
orders. International printer sales remained consistent in the first
quarter of 2009 compared to the first quarter of 2008. Our quarterly sales
to GTECH are directly dependent on the timing and number of new and upgraded
lottery terminal installations GTECH performs, and as a result, may fluctuate
significantly quarter-to-quarter. Our sales to GTECH are not
indicative of GTECH’s overall business or revenue. We expect as we
ship a $3.6 million order we received from GTECH in April 2009, as well as other
orders in our backlog combined with anticipated new future orders, sales to
GTECH will increase for the rest of 2009.
TransAct
Services Group:
Revenue
from TSG includes sales of consumable products (inkjet cartridges, ribbons and
receipt paper), replacement parts, maintenance and repair services, refurbished
printers, accessories, and shipping and handling charges. Sales from
TSG increased $693,000, or 22%.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
March
31, 2009
|
March
31, 2008
|
$
|
% | ||||||||||||||||||||
|
Domestic
|
$ | 3,632 | 95.6 | % | $ | 3,046 | 98.1 | % | $ | 586 | 19.2 | % | ||||||||||||
|
International
|
166 | 4.4 | % | 59 | 1.9 | % | 107 | 181.4 | % | |||||||||||||||
| $ | 3,798 | 100.0 | % | $ | 3,105 | 100.0 | % | $ | 693 | 22.3 | % | |||||||||||||
Domestic
revenue from TSG increased $586,000, or 19%, largely due to an increase of
approximately 44% in sales of consumable products compared to the same period in
2008, including higher sales of inkjet cartridges, as well as growing sales of
paper and other consumable products through our new e-commerce website,
TransActSupplies.com.
Internationally,
TSG revenue increased $107,000, or 181%, to $166,000, due to increased sales of
consumables and replacement parts.
Gross
Profit. Gross profit information is summarized below (in thousands,
except percentages):
|
March
31,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 4,126 | $ | 4,779 | (13.7 | %) | 33.8 | % | 33.5 | % | ||||||||||
Gross
profit is measured as revenue less cost of goods sold. Cost of goods
sold includes primarily the cost of all raw materials and component parts,
direct labor and the associated manufacturing overhead expenses, and the cost of
finished products purchased directly from contract
manufacturers. Gross profit decreased $653,000, or 14%, to $4,126,000
from $4,779,000 primarily due to a 15% decrease in sales from the first quarter
2009 compared to the first quarter 2008. Despite a 15% decline in sales,
gross margin increased to 33.8% from 33.5%, due primarily to lower component
part and labor costs resulting from our continued focus to increasingly move
production of our products to a lower cost contract manufacturer in
Asia. Gross profit for the first quarter of 2009 was also favorably
impacted by approximately $300,000 of increased absorption of certain
manufacturing overhead expenses due to the transition of more of our production
to Asia compared to the first quarter of 2008.
Engineering and
Product Development. Engineering and product development
information is summarized below (in thousands, except percentages):
|
March
31,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 694 | $ | 715 | (2.9 | %) | 5.7 | % | 5.0 | % | ||||||||||
Engineering,
design and product development expenses primarily include salary and payroll
related expenses for our engineering staff, depreciation and design expenses
(including prototype printer expenses, outside design and testing services, and
supplies). Such expenses for the first quarter of 2009 decreased
$21,000, or 3%, due primarily to lower outside testing and pre-production
expenses related to new product development. Engineering
and product development expenses increased as a percentage of net sales due
primarily to a lower volume of sales in the first quarter of 2009 compared to
the first quarter of 2008.
Selling
and Marketing. Selling and
marketing information is summarized below (in thousands, except
percentages):
|
March
31,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 1,398 | $ | 1,451 | (3.7 | %) | 11.4 | % | 10.2 | % | ||||||||||
Selling
and marketing expenses primarily include salaries and payroll related expenses
for our sales and marketing staff, sales commissions, travel expenses, expenses
associated with the lease of sales offices, advertising, trade show expenses,
e-commerce and other promotional marketing expenses. Selling and
marketing expenses for the first quarter of 2009 decreased $53,000, or 4%, due
to approximately $22,000 of lower travel related expenses, approximately $20,000
of lower consulting and professional fees and a reduction of approximately
$34,000 promotional marketing expenses offset by approximately $30,000 of higher
employee compensation. Selling and marketing expenses increased as a
percentage of net sales due primarily to a lower volume of sales in the first
quarter of 2009 compared to the first quarter of 2008.
General
and Administrative. General and
administrative information is summarized below (in thousands, except
percentages):
|
March
31,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 1,855 | $ | 1,775 | 4.5 | % | 15.2 | % | 12.4 | % | ||||||||||
General
and administrative expenses primarily include salaries and payroll related
expenses for our executives, accounting, human resource, business development
and information technology staff, expenses for our corporate headquarters,
professional and legal expenses, telecommunication expenses, and other expenses
related to being a publicly-traded company. General and
administrative expenses increased $80,000, or 5%, due primarily to approximately
$23,000 in increased legal expenses related to general corporate matters,
increased employee compensation related expenses associated to the hiring of our
new Vice President of Business Development in May 2008, partially offset by
approximately $128,000 reduction in employee compensation related expenses for
all other G&A departments and approximately $34,000 lower professional fee
expenses. In addition, general and administrative expenses for the
first quarter of 2009 included a severance charge of approximately $120,000
related to the termination of approximately 12 employees. General and administrative
expenses increased as a percentage of net sales due primarily to a lower volume
of sales as well as higher expenses in the first quarter of 2009 as compared to
the first quarter of 2008.
Legal Fees
associated with lawsuit. During the first quarter of 2009, we did not incur
any legal fees related to the recently settled lawsuit with FutureLogic,
Inc. compared to $1,897,000 of fees incurred in the first quarter of
2008. We settled our litigation with FutureLogic, Inc. in May 2008
and as a result of this settlement, we do not expect to incur any
additional legal fees related to the lawsuit.
Operating
Income
(Loss). Operating
income (loss) information is summarized below (in thousands, except
percentages):
|
March
31,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 179 | $ | (1,059 | ) | 116.9 | % | 1.5 | % | (7.4 | %) | |||||||||
During
the first quarter of 2009, we reported operating income of $179,000, or 2% of
net sales, compared to an operating loss of ($1,059,000), or (7%) of net sales
in the first quarter of 2008. The increase in our operating income
and operating margin was primarily due to lower operating expenses (primarily
the non-recurrence of legal expense related to the FutureLogic lawsuit),
partially offset by lower gross profit resulting from the 15% decline
in sales in the first quarter of 2009 compared to that of 2008.
Interest. We
recorded net interest expense of $15,000 in the first quarter of 2009 compared
to net interest income of $4,000 in the first quarter of 2008. The
decrease was largely due to a lower average cash balance in the first quarter of
2009 compared to the first quarter of 2008, coupled with a lower overall rate of
return on our invested cash balance due to the decreasing interest rate
environment. See
“Liquidity and Capital Resources” below for more information.
Other Income
(Expense). We recorded other income of $20,000 in the first quarter
of 2009 compared to $2,000 in the first quarter of 2008. The increase was
primarily due to foreign currency exchange gains recorded by our UK subsidiary
resulting from the strengthening of the U.S. dollar against the British pound
during the first quarter of 2009 as compared to the first quarter of
2008.
Income Taxes. We
recorded an income tax provision for the first quarter of 2009 of $63,000 at an
effective tax rate of 34.2%, compared to an income tax benefit during the first
quarter of 2008 of $361,000 at an effective tax rate of 34.3%. We
expect our annual effective tax rate for 2009 to be between 34% and
35%.
Net Income
(Loss). We
reported net income during the first quarter of 2009 of $121,000, or $0.01 per
diluted share, compared to a net loss of $692,000 or ($0.07) per diluted share,
for the first quarter of 2008.
Liquidity
and Capital Resources
Cash
Flow
In the
first three months of 2009, our cash flows reflected the results of lower sales
volume, decreased capital spending and increased inventory
investment. Our cash balance decreased $679,000 from December 31,
2008 and we ended the first quarter of 2009 with approximately $1,321,000 in
cash and cash equivalents and no debt outstanding.
Operating
activities: The following significant factors affected our
cash used in operations of $574,000 in the first three months of 2009 as
compared to our cash used in operations of $306,000 in the first three months
of 2008:
During
the first three months of 2009:
|
·
|
We
reported net income of $121,000.
|
|
·
|
We
recorded depreciation, amortization, and non-cash compensation expense of
$605,000.
|
|
·
|
Accounts
receivable decreased $1,828,000 due to lower sales in the first three
months of 2009 compared to the fourth quarter of
2008.
|
|
·
|
Gross
inventories increased $2,162,000 due to higher stocking levels resulting
from initiatives to increasingly move production to Asia. As
we transition more of our printer production to Asia, we decided to
temporarily increase our stocking levels as a cautionary measure to
minimize any potential disruption to our customers. As a
result, we experienced an increase in inventories in the first quarter of
2009. We expect our inventories to decline starting in the
second quarter of 2009, as we complete the transition of our production to
Asia.
|
|
·
|
Accounts
payable increased $130,000 due to the timing of payments during the
quarter.
|
|
·
|
Accrued
liabilities and other liabilities decreased $913,000 due primarily to
lower payroll and fringe benefit related accruals based on the payment of
2008 annual bonuses in March 2009.
|
During
the first three months of 2008:
|
·
|
We
reported a net loss of $692,000.
|
|
·
|
We
recorded depreciation, amortization, and non-cash compensation expense of
$704,000.
|
|
·
|
Accounts
receivable increased $873,000 due to higher sales during the first three
months of 2008 compared to the fourth quarter of
2007.
|
|
·
|
Inventories
increased $190,000 due to higher stocking levels resulting from
initiatives to increasingly move production to Asia and increased sales
volume in the first quarter of
2008.
|
|
·
|
Accounts
payable increased $823,000 due to higher inventory purchases related to
higher sales volume and the timing of payments during the
quarter.
|
|
·
|
Accrued
liabilities and other liabilities increased $334,000 due primarily to
increased accrued legal fees primarily related to the now-settled lawsuit
with FutureLogic, Inc. during the
quarter.
|
Investing activities: Our capital
expenditures were $108,000 and $374,000 in the first three months of 2009 and
2008, respectively. Expenditures in 2009 included approximately
$51,000 for the purchase of new product tooling, $35,000 for the purchase of
manufacturing equipment, and the remaining amount primarily for the purchase of
engineering and computer equipment. Expenditures in 2008 included
approximately $280,000 for the purchase of new product tooling, $60,000 for the
purchase of manufacturing equipment, and the remaining amount primarily for the
purchase of computer hardware. Capital expenditures for 2009 are expected
to be approximately $1,000,000, primarily for new product tooling and tooling
enhancements to our existing products.
Financing
activities: We generated $8,000 of cash from financing
activities during the first three months of 2009 from proceeds from stock option
exercises. During the first three months of 2008, we generated
approximately $15,000 of cash from financing activities from proceeds from stock
option exercises.
Working
Capital
Our
working capital increased to $15,638,000 at March 31, 2009 from $15,051,000 at December
31, 2008. Our current ratio increased to 3.1 to 1 at March 31,
2009 compared to 2.9 to 1 at December 31, 2008. The increase in
both our working capital and current ratio was largely due to higher inventory
balances resulting from higher stocking levels based on our initiatives to
increasingly move production to Asia, as well as lower accrued liabilities
balances primarily due to lower payroll and fringe benefit related accruals,
offset by lower accounts receivable resulting from lower sales volume during the
first quarter of 2009.
Deferred
Taxes
As of
March 31,
2009, we had
a net deferred tax asset of $3,786,000. In
order to utilize this deferred tax asset, we will need to generate approximately
$10.8 million of taxable income in future years. Based
on future projections of taxable income, we have determined that it is more
likely than not that the existing net deferred tax asset will be
realized.
Credit
Facility and Borrowings
On
November 28, 2006, we signed a five-year $20 million credit facility (the “TD
Banknorth Credit Facility”) with TD Banknorth, N.A. (“TD Banknorth”). The credit
facility provides for a $20 million revolving credit line expiring on November
28, 2011. Borrowings under the revolving credit line bear a floating
rate of interest at the prime rate minus one percent and are collateralized by a
lien on all of our assets. We also pay a fee of 0.25% on unused
borrowings under the revolving credit line. The total deferred
financing costs relating to expenses incurred to complete the TD Banknorth
Credit Facility was $94,000. The TD Banknorth Credit Facility imposes
certain quarterly financial covenants on us and restricts, among other things,
our ability to incur additional indebtedness, the payment of dividends on our
common stock and the creation of other liens. We were in compliance
with all financial covenants of the TD Banknorth Credit Facility at March 31,
2009. The following table lists the financial covenants and the
performance measurements at March 31, 2009:
|
Financial
Covenant
|
Requirement/Restriction
|
Calculation
at March 31, 2009
|
||
|
Operating
cash flow / Debt service
|
Total
Minimum of 1.25 times
|
81.7
times
|
||
|
Funded
Debt / EBITDA
|
Maximum
of 3.25 times
|
0
times
|
As of
March 31, 2009, we had no balances outstanding on the revolving credit
line. Undrawn commitments under the TD Banknorth Credit facility were
$20,000,000 at March 31, 2009.
Stock
Repurchase Program
On March
25, 2005 our Board of Directors approved a stock repurchase program (the “Stock
Repurchase Program”). Under the Stock Repurchase Program, we were
authorized to repurchase up to $10 million of our outstanding shares of common
stock from time to time in the open market over a three-year period, depending
on market conditions, share price and other factors.
On
November 1, 2007, our Board of Directors approved an increase in our stock
repurchase authorization under the Stock Repurchase Program to $15 million from
$10 million. In addition, the Board approved a two-year extension of
the Stock Repurchase Program to March 31, 2010. During the three
months ended March 31, 2009, we made no repurchases of common
stock. As of March 31, 2009, we have repurchased a total of 1,164,100
shares of common stock for approximately $8,538,000, at an average price of
$7.33 per share, since the inception of the Stock Repurchase
Program.
Contractual
Obligations / Off-Balance Sheet Arrangements
The
disclosure of payments we have committed to make under our contractual
obligations is set forth under the heading "Management's Discussion and Analysis
of Financial Condition and Results of Operations—Contractual Obligations" in our
2008 Form 10-K. There have been no material changes in our
contractual obligations outside the ordinary course of business since December
31, 2008. We have no material off-balance sheet arrangements as
defined in Regulation S-K 303(a)(4)(ii).
Resource
Sufficiency
We
believe that our cash on hand, cash flows generated from operations and
borrowings available under the TD Banknorth Credit Facility will provide
sufficient resources to meet our working capital needs, finance our capital
expenditures, fund our Stock Repurchase Program, and meet our liquidity
requirements through at least the next twelve months.
The
disclosure of our exposure to market risk is set forth under the heading
“Quantitative and Qualitative Disclosures about Market Risk” in our 2008 Form
10-K. There has been no material changes in our exposure to market
risk during the three months ended March 31, 2009.
The
Company, under the supervision and with the participation of its management,
including the Chief Executive Officer and the Chief Financial Officer, evaluated
the effectiveness of the design and operation of the company’s “disclosure
controls and procedures” (as defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934 (the “Exchange Act”)) as of the end of the period covered
by this report. Based on that evaluation, the Chief Executive Officer
and the Chief Financial Officer concluded that the Company’s disclosure controls
and procedures were effective as of March 31, 2009. There has been no
change in the Company’s internal control over financial reporting during the
quarter ended March 31, 2009, that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
None.
Information regarding risk
factors appears in Item 1A of our Annual Report on Form 10-K for the
year ended December 31, 2008, There have been no material
changes from the risk factors previously disclosed in that Annual Report on
Form 10-K. The risks described in our Annual Report on
Form 10-K are not the only risks facing our Company. Additional risks
and uncertainties not currently known to us or that we currently deem to be
immaterial also may materially adversely affect our business, financial
condition or future results.
ISSUER
PURCHASES OF EQUITY SECURITIES
On March
25, 2005 our Board of Directors approved a stock repurchase program (the “Stock
Repurchase Program”). Under the Stock Repurchase Program, management
was authorized to repurchase up to $10 million of our outstanding shares of
common stock from time to time in the open market over a three-year period,
depending on market conditions, share price and other factors.
On
November 1, 2007, our Board of Directors approved an increase in our stock
repurchase authorization under the Stock Repurchase Program to $15 million from
$10 million. In addition, the Board approved a two-year extension of
the Stock Repurchase Program to March 31, 2010.
For the
three months ended March 31, 2009, we made no repurchases of common
stock. As of March 31,
2009, we have repurchased a total of 1,164,100 shares of common stock for
approximately $8,538,000, at an average price of $7.33 per share since the
inception of the Stock Repurchase Program. As of March 31, 2009,
$6,462,000 remains available to purchase common stock pursuant to the Stock
Repurchase Program.
|
Exhibit
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Exhibit
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
|
Exhibit
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
|
Exhibit
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
TRANSACT TECHNOLOGIES
INCORPORATED
|
|
|
(Registrant)
|
|
|
/s/
Steven A. DeMartino
|
|
|
May
11, 2009
|
Steven
A. DeMartino
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|
Executive
Vice President, Chief Financial Officer,
|
|
|
Treasurer
and Secretary
|
|
|
(Principal
Financial and Accounting
Officer)
|
17
EXHIBIT
LIST
The
following exhibits are filed herewith.
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Exhibit
|
|
31.1
|
Certification
of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
31.2
|
Certification
of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
|
|
32.1
|
Certification
of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
|
32.2
|
Certification
of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of
2002
|
18
Exhibit
31.1
CERTIFICATION
I, Bart
C. Shuldman, certify that:
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of TransAct Technologies
Incorporated;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: May
11, 2009
|
/s/
Bart C. Shuldman
|
|
|
Bart
C. Shuldman
|
|
|
Chairman,
President and Chief Executive Officer
|
Exhibit
31.2
CERTIFICATION
I, Steven
A. DeMartino, certify that:
|
1.
|
I
have reviewed this quarterly report on Form 10-Q of TransAct Technologies
Incorporated;
|
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
|
|
3.
|
Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
report;
|
|
4.
|
The
registrant’s other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and
have:
|
|
a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
|
b)
|
Designed
such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles;
|
|
c)
|
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation;
and
|
|
d)
|
Disclosed
in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial
reporting; and
|
|
5.
|
The
registrant’s other certifying officer and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to
the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent
functions):
|
|
a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report information;
and
|
|
b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant’s internal control
over financial reporting.
|
Date: May
11, 2009
|
/s/
Steven A. DeMartino
|
|
|
Steven
A. DeMartino
|
|
|
Executive
Vice President, Chief Financial Officer,
|
|
|
Treasurer
and Secretary
|
EXHIBIT
32.1
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of TransAct Technologies Incorporated (the
“Company”) on Form 10-Q for the period ending March 31, 2009, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Bart C.
Shuldman, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
§ 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to
the best of my knowledge:
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date: May
11, 2009
|
/s/
Bart C. Shuldman
|
|
|
Bart
C. Shuldman
|
|
|
Chief
Executive Officer
|
EXHIBIT
32.2
CERTIFICATION
PURSUANT TO
18
U.S.C. SECTION 1350
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of TransAct Technologies Incorporated (the
“Company”) on Form 10-Q for the period ending March 31, 2009, as filed with the
Securities and Exchange Commission on the date hereof (the “Report”), I, Steven
A. DeMartino, Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that to the best of my knowledge:
|
(1)
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
|
(2)
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
|
Date: May
11, 2009
|
/s/
Steven A. DeMartino
|
|
|
Steven
A. DeMartino
|
|
|
Chief
Financial Officer
|