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: September 30, 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
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 No
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
|
Accelerated
filer ý
|
|
Non-accelerated
filer (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 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 October 30, 2009
|
|
|
Common
stock, $.01 par value
|
9,318,738
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TRANSACT TECHNOLOGIES
INCORPORATED
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Page
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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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6
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Item
2
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10
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Item
3
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18
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Item
4
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18
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Item
1
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19
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Item
1A
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19
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Item
2
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19
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Item
6
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19
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20
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CONDENSED
CONSOLIDATED BALANCE SHEETS
(unaudited)
|
September
30,
|
December
31,
|
|||||||
|
(In
thousands, except share data)
|
2009
|
2008
|
||||||
|
Assets:
|
||||||||
|
Current
assets:
|
||||||||
|
Cash
and cash equivalents
|
$ | 5,511 | $ | 2,000 | ||||
|
Receivables,
net
|
11,028 | 8,734 | ||||||
|
Inventories
|
6,414 | 9,919 | ||||||
|
Refundable
income taxes
|
28 | 35 | ||||||
|
Deferred
tax assets
|
1,955 | 2,054 | ||||||
|
Other
current assets
|
546 | 352 | ||||||
|
Total
current assets
|
25,482 | 23,094 | ||||||
|
Fixed
assets, net
|
4,772 | 5,563 | ||||||
|
Goodwill
|
1,469 | 1,469 | ||||||
|
Deferred
tax assets
|
1,120 | 1,759 | ||||||
|
Intangible
and other assets, net of accumulated amortization of $369 and $306,
respectively
|
245 | 349 | ||||||
| 7,606 | 9,140 | |||||||
|
Total
assets
|
$ | 33,088 | $ | 32,234 | ||||
|
Liabilities
and Shareholders’ Equity:
|
||||||||
|
Current
liabilities:
|
||||||||
|
Accounts
payable
|
$ | 3,659 | $ | 4,863 | ||||
|
Accrued
liabilities
|
2,048 | 2,847 | ||||||
|
Deferred
revenue
|
614 | 333 | ||||||
|
Total
current liabilities
|
6,321 | 8,043 | ||||||
|
Deferred
revenue, net of current portion
|
427 | 259 | ||||||
|
Accrued
warranty, net of current portion
|
74 | 133 | ||||||
|
Deferred
rent
|
435 | 473 | ||||||
|
Other
liabilities
|
44 | 44 | ||||||
| 980 | 909 | |||||||
|
Total
liabilities
|
7,301 | 8,952 | ||||||
|
Commitments
and contingencies (Note 9)
|
||||||||
|
Shareholders’
equity:
|
||||||||
|
Common
stock, $0.01 par value, 20,000,000 authorized at September 30,
2009
|
||||||||
|
and
December 31, 2008; 10,482,838 and 10,465,588 shares
|
||||||||
|
issued,
respectively; 9,318,738 and 9,301,488 shares outstanding
|
||||||||
|
at
September 30, 2009 and December 31, 2008, respectively
|
105 | 105 | ||||||
|
Additional
paid-in capital
|
21,439 | 20,890 | ||||||
|
Retained
earnings
|
12,847 | 10,893 | ||||||
|
Accumulated
other comprehensive loss, net of tax
|
(66 | ) | (68 | ) | ||||
|
Treasury
stock, 1,164,100 shares, at cost
|
(8,538 | ) | (8,538 | ) | ||||
|
Total
shareholders’ equity
|
25,787 | 23,282 | ||||||
|
Total
liabilities and shareholders’ equity
|
$ | 33,088 | $ | 32,234 | ||||
See notes
to condensed consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
(In
thousands, except per share data)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Net
sales
|
$ | 17,982 | $ | 17,326 | $ | 44,420 | $ | 47,930 | ||||||||
|
Cost
of sales
|
12,457 | 11,432 | 29,913 | 31,797 | ||||||||||||
|
Gross
profit
|
5,525 | 5,894 | 14,507 | 16,133 | ||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Engineering,
design and product development
|
683 | 713 | 2,043 | 2,119 | ||||||||||||
|
Selling
and marketing
|
1,434 | 1,430 | 4,287 | 4,397 | ||||||||||||
|
General
and administrative
|
1,614 | 1,838 | 5,162 | 5,335 | ||||||||||||
|
Legal
fees associated with lawsuit (See Note 9)
|
- | - | - | 3,029 | ||||||||||||
| 3,731 | 3,981 | 11,492 | 14,880 | |||||||||||||
|
Operating
income
|
1,794 | 1,913 | 3,015 | 1,253 | ||||||||||||
|
Interest
and other income (expense):
|
||||||||||||||||
|
Interest,
net
|
(15 | ) | (3 | ) | (48 | ) | (6 | ) | ||||||||
|
Other,
net
|
2 | 102 | (28 | ) | 96 | |||||||||||
| (13 | ) | 99 | (76 | ) | 90 | |||||||||||
|
Income
before income taxes
|
1,781 | 2,012 | 2,939 | 1,343 | ||||||||||||
|
Income
taxes
|
597 | 802 | 985 | 535 | ||||||||||||
|
Net
income
|
$ | 1,184 | $ | 1,210 | $ | 1,954 | $ | 808 | ||||||||
|
Earnings
per common share:
|
||||||||||||||||
|
Basic
|
$ | 0.13 | $ | 0.13 | $ | 0.21 | $ | 0.09 | ||||||||
|
Diluted
|
$ | 0.13 | $ | 0.13 | $ | 0.21 | $ | 0.08 | ||||||||
|
Shares
used in per-share calculation:
|
||||||||||||||||
|
Basic
|
9,294 | 9,340 | 9,279 | 9,309 | ||||||||||||
|
Diluted
|
9,418 | 9,630 | 9,326 | 9,509 | ||||||||||||
See notes
to condensed consolidated financial statements.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
|
Nine
Months Ended
|
||||||||
|
September
30,
|
||||||||
|
(In
thousands)
|
2009
|
2008
|
||||||
|
Cash
flows from operating activities:
|
||||||||
|
Net
income
|
$ | 1,954 | $ | 808 | ||||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
|
Share-based
compensation expense
|
494 | 609 | ||||||
|
Depreciation
and amortization
|
1,347 | 1,389 | ||||||
|
Deferred
income taxes
|
734 | 440 | ||||||
|
Foreign
currency transaction loss (gain)
|
33 | (97 | ) | |||||
|
Gain
on sale of fixed assets
|
- | 4 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Receivables
|
(2,294 | ) | (2,044 | ) | ||||
|
Inventories
|
3,506 | (81 | ) | |||||
|
Refundable
income taxes
|
7 | 1 | ||||||
|
Other
current assets
|
(194 | ) | (51 | ) | ||||
|
Other
assets
|
28 | 22 | ||||||
|
Accounts
payable
|
(1,205 | ) | 1,122 | |||||
|
Accrued
liabilities and other liabilities
|
(472 | ) | (191 | ) | ||||
|
Net
cash provided by operating activities
|
3,938 | 1,931 | ||||||
|
Cash
flows from investing activities:
|
||||||||
|
Purchases
of fixed assets
|
(478 | ) | (729 | ) | ||||
|
Net
cash used in investing activities
|
(478 | ) | (729 | ) | ||||
|
Cash
flows from financing activities:
|
||||||||
|
Proceeds
from option exercises
|
55 | 298 | ||||||
|
Net
cash provided by financing activities
|
55 | 298 | ||||||
|
Effect
of exchange rate changes on cash and cash equivalents
|
(4 | ) | 17 | |||||
|
Net
increase in cash and cash equivalents
|
3,511 | 1,517 | ||||||
|
Cash
and cash equivalents, beginning of period
|
2,000 | 2,561 | ||||||
|
Cash
and cash equivalents, end of period
|
$ | 5,511 | $ | 4,078 | ||||
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 income.
The
results of operations for the three and nine months ended September 30, 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 the current period
presentation.
2.
Recently issued accounting pronouncements
Codification:
On July 1, 2009, the Financial Accounting Standards Board (“FASB”) issued
Statement of Financial Accounting Standard (“SFAS”) No. 168, “The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles”, also known as FASB Accounting Standards Codification
(“ASC”) 105, “Generally Accepted Accounting Principles” (“ASC 105”) (the
“Codification”). ASC 105 establishes the exclusive authoritative
reference for U.S. GAAP for use in financial statements, except for Securities
and Exchange Commission (“SEC”) rules and interpretive releases, which are also
authoritative GAAP for SEC registrants. The Codification supersedes
all existing non-SEC accounting and reporting standards. Going
forward, the FASB will not issue new standards in the form of Statements, FASB
Staff Positions or Emerging Issues Task Force Abstracts. Instead, it
will issue Accounting Standards Updates (“ASU”), which will serve to update the
Codification, provide background information about the guidance and provide the
basis for conclusions on the changes to the Codification. We have
included references to the Codification, as appropriate, in these financial
statements.
Noncontrolling
Interests: FASB ASC 810-10-65 “Consolidation” (“ASC 810-10-65”)
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 ASC 810-10-65 as of January 1,
2009. The provisions of ASC 810-10-65 will not have any effect on our
financial statements since we do not participate in noncontrolling
interests.
Participating
Securities: FASB ASC 260-10-45 “Earnings Per Share” (“ASC
260-10-45”) clarifies 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 the
provisions of ASC 260-10-45 as of January 1, 2009. See Note 6 –
Earnings per share.
Transfers of
Financial Assets: FASB ASC 860 “Transfers and Servicing” (“ASC
860”) improves the relevance and comparability of information that a reporting
entity provides in its financial statements about transfers of financial
assets. The provisions of ASC 860 will be applicable on January 1,
2010 and will be applied prospectively to transfers of financial assets
completed after December 31, 2009. We do not anticipate these
provisions will have a material impact on our financial statements.
Consolidation of
Variable Interest Entities: FASB ASC 810 “Consolidation” (“ASC
810”) amends the consolidation guidance for variable interest
entities. The provisions will be applicable on January 1,
2010. The provisions will not have any effect on our financial
statements since we do not have any variable-interest entities.
Subsequent
Events: FASB ASC 855-10 “Subsequent Events” requires
disclosure of the date through which an entity has evaluated subsequent
events. We adopted this provision in the second quarter of
2009. See Note 11 – Subsequent events.
TRANSACT
TECHNOLOGIES INCORPORATED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
2.
Recently issued accounting pronouncements (continued)
Measuring
Liabilities at Fair Value: In August 2009, the FASB issued ASU 2009-5,
“Fair Value Measurements and Disclosures (Topic 820) – Measuring Liabilities at
Fair Value” (“ASU 2009-5”). This update provides clarification of the
fair value measurement of financial liabilities when a quoted price in an active
market for an identical liability (level 1 input of the valuation hierarchy) is
not available. ASU 2009-5 is effective in the fourth quarter of
2009. We do not anticipate this update will have a material impact on
our financial statements or disclosures.
3.
Inventories
The
components of inventories are:
|
September
30,
|
December
31,
|
|||||||
|
(In
thousands)
|
2009
|
2008
|
||||||
|
Raw
materials and purchased component parts
|
$ | 4,963 | $ | 7,207 | ||||
|
Work-in-process
|
3 | 27 | ||||||
|
Finished
goods
|
1,448 | 2,685 | ||||||
| $ | 6,414 | $ | 9,919 | |||||
4.
Accrued product warranty liability
We
generally warrant our products for up to 24 months and record the estimated cost
of such product warranties at the time the sale is recorded. Estimated warranty
costs are based upon actual past experience of product repairs and the related
estimated cost of labor and material to make the necessary repairs. If actual
future product repair rates or the actual costs of material and labor differ
from the estimates, adjustments to the accrued warranty liability and related
warranty expense would be made.
The
following table summarizes the activity recorded in the accrued product warranty
liability during the nine months ended September 30, 2009.
|
Nine
months ended
|
||||
|
(In
thousands)
|
September
30, 2009
|
|||
|
Balance,
beginning of period
|
$ | 393 | ||
|
Accruals
for warranties issued during the period
|
92 | |||
|
Changes
in estimates
|
(82 | ) | ||
|
Settlements
during the period
|
(133 | ) | ||
|
Balance,
end of period
|
$ | 270 | ||
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 nine months 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 three and nine months ended
September 30, 2009, the Company recorded pre-tax restructuring charges of
approximately $19,000 and $165,000, respectively, in accordance with FASB ASC
420-10-25-4 “Exit or Disposal Cost Obligations”. These one-time
termination benefit charges have been included within general and administrative
expenses. The restructuring activity during the three and nine months ended
September 30, 2009 includes severance costs related to the termination of 1 and
14 employees, respectively.
The
following table summarizes the activity recorded in accrued restructuring
expenses during the three and nine months ended September 30, 2009 and is
included in accrued liabilities in the condensed consolidated balance
sheets.
TRANSACT
TECHNOLOGIES INCORPORATED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
5.
Restructuring and other charges (continued)
|
Three
months ended
|
Nine
months ended
|
|||||||
|
September
30,
|
September
30,
|
|||||||
|
(In
thousands)
|
2009
|
2009
|
||||||
|
Accrual
balance, beginning of period
|
$ | 51 | $ | 18 | ||||
|
Pre-tax
severance charges
|
19 | 165 | ||||||
|
Cash
payments
|
(52 | ) | (165 | ) | ||||
|
Accrual
balance, end of period
|
$ | 18 | $ | 18 | ||||
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
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
(In
thousands, except per share data)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Net
income
|
$ | 1,184 | $ | 1,210 | $ | 1,954 | $ | 808 | ||||||||
|
Shares:
|
||||||||||||||||
|
Basic: Weighted
average common shares outstanding
|
9,294 | 9,340 | 9,279 | 9,309 | ||||||||||||
|
Add: Dilutive
effect of outstanding options and restricted stock as
determined
by the treasury stock method
|
124 | 290 | 47 | 200 | ||||||||||||
|
Diluted: Weighted
average common and common equivalent shares
outstanding
|
9,418 | 9,630 | 9,326 | 9,509 | ||||||||||||
|
Net
income per common share:
|
||||||||||||||||
|
Basic
|
$ | 0.13 | $ | 0.13 | $ | 0.21 | $ | 0.09 | ||||||||
|
Diluted
|
$ | 0.13 | $ | 0.13 | $ | 0.21 | $ | 0.08 | ||||||||
FASB ASC
260-10-45 “Earnings Per Share” (“ASC 260-10-45”) clarifies 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. ASC 260-10-45 was effective on January 1,
2009. This provision 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 net income per share. For diluted net income per
share, weighted average common shares include the impact of unvested restricted
stock under the treasury stock method.
For the
three months ended September 30, 2009 and 2008, there were 508,000 and 37,250,
potentially dilutive shares (prior to consideration of the treasury stock
method), consisting of stock options and unvested restricted stock, that were
excluded from the calculation of earnings per diluted share,
respectively. For the nine months ended September 30, 2009 and 2008,
there were 531,100 and 258,250, potentially dilutive shares (prior to
consideration of the treasury stock method), consisting of stock options and
unvested restricted stock, that were excluded from the earnings per share
calculation as the effect of such shares would be anti-dilutive,
respectively.
7.
Comprehensive income
The
following table summarizes the Company’s comprehensive income:
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
|
September
30,
|
September
30,
|
|||||||||||||||
|
(In
thousands)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Net
income
|
$ | 1,184 | $ | 1,210 | $ | 1,954 | $ | 808 | ||||||||
|
Foreign
currency translation adjustment
|
(4 | ) | (71 | ) | 2 | (80 | ) | |||||||||
|
Total
comprehensive income
|
$ | 1,180 | $ | 1,139 | $ | 1,956 | $ | 728 | ||||||||
TRANSACT
TECHNOLOGIES INCORPORATED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
8.
Stockholder’s equity
Changes
in stockholders’ equity for the nine months ended September 30, 2009 were as
follows (in thousands):
|
Balance
at December 31, 2008
|
$ | 23,282 | ||
|
Net
income
|
1,954 | |||
|
Proceeds
from issuance of shares from exercise of stock options
|
55 | |||
|
Share-based
compensation expense
|
494 | |||
|
Foreign
currency translation adjustment
|
2 | |||
|
Balance
at September 30, 2009
|
$ | 25,787 |
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 patent
litigation and all other legal matters outstanding between the two
parties. Under the Patent License and Settlement Agreement,
FutureLogic 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 third quarter of 2009 of $597,000 at an
effective tax rate of 33.5%, compared to an income tax provision during the
third quarter of 2008 of $802,000 at an effective tax rate of
39.9%. For the nine months ended September 30, 2009, we recorded an
income tax provision of $985,000 at an effective tax rate of 33.5%, compared to
an income tax provision during the nine months ended September 30, 2008 of
$535,000 at an effective tax rate of 39.8%.
As of
September 30, 2009, we had a net deferred tax asset of $3,075,000. In
order to utilize this deferred tax asset, we will need to generate approximately
$8.7 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 2008 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
September 30, 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.
11.
Subsequent events
Our
financial statements for the quarter ended September 30, 2009 were issued on
November 9, 2009. We have determined that no other events or
transactions have occurred through the date of issuance that would require
recognition or disclosure within the financial statements.
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. Beyond printers, TransAct is a leader in
providing printing supplies to the full transaction printer
market. Through our TransAct Services Group we provide a complete
range of supplies and consumables items used in the printing and scanning
activities of customers in the hospitality, banking, retail, gaming, and
government markets. Through our webstore, www.transactsupplies.com,
and our direct selling team, we address the on-line demand for these
products. 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 nine months ended September 30, 2009.
Results
of Operations
Three
months ended September 30, 2009 compared to three months ended September 30,
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 September 30, 2009 and 2008 were as follows:
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Banking
and point-of-sale
|
$ | 5,822 | 32.4 | % | $ | 2,984 | 17.2 | % | $ | 2,838 | 95.1 | % | ||||||||||||
|
Casino
and gaming
|
4,726 | 26.3 | % | 6,681 | 38.6 | % | (1,955 | ) | (29.3 | %) | ||||||||||||||
|
Lottery
|
3,335 | 18.5 | % | 4,728 | 27.3 | % | (1,393 | ) | (29.5 | %) | ||||||||||||||
|
TransAct
Services Group
|
4,099 | 22.8 | % | 2,933 | 16.9 | % | 1,166 | 39.8 | % | |||||||||||||||
| $ | 17,982 | 100.0 | % | $ | 17,326 | 100.0 | % | $ | 656 | 3.8 | % | |||||||||||||
|
International
*
|
$ | 3,209 | 17.8 | % | $ | 2,982 | 17.2 | % | $ | 227 | 7.6 | % | ||||||||||||
|
*
|
International
sales do not include sales of printers made to domestic distributors or
other customers who in turn ship those printers to international
destinations.
|
Net sales
for the third quarter of 2009 increased $656,000, or 4%, from the same period
last year due primarily to higher printer sales in our banking and point-of-sale
market (an increase of $2,838,000, or 95%), and our TransAct Services Group
(“TSG”) (an increase of $1,166,000, or 40%) offset by a $1,955,000, or 29%
decrease from our casino and gaming markets as well as a $1,393,000, or 30%,
decrease from our lottery market. Printer sales volume decreased by
9% while the average selling price of our printers increased by approximately 7%
from the
third
quarter of 2008 to the third quarter of 2009 due primarily to an increase in
sales of banking printers with higher average selling
prices. Overall, international sales increased by $227,000, or
8%, largely due to higher international sales from TSG.
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 increased
approximately $2,838,000, or 95%.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 5,590 | 96.0 | % | $ | 2,798 | 93.8 | % | $ | 2,792 | 99.8 | % | ||||||||||||
|
International
|
232 | 4.0 | % | 186 | 6.2 | % | 46 | 24.7 | % | |||||||||||||||
| $ | 5,822 | 100.0 | % | $ | 2,984 | 100.0 | % | $ | 2,838 | 95.1 | % | |||||||||||||
Domestic
banking and POS revenue increased to $5,590,000, representing a $2,792,000, or
100%, increase from the third quarter of 2008 primarily driven by higher sales
of our banking printers. Sales of our banking printers increased by
over ten times the amount sold in the third quarter of 2008 as we finished
shipping against the $4.9 million order we received from a large banking
customer in February 2009 as well as additional orders for this same
customer. We expect our banking printer sales in the fourth quarter
of 2009 to be substantially lower than those reported in the third quarter of
2009 as we finish shipping against the additional orders received from this
large banking customer. Although sales of our POS printers decreased
by 19% in the third quarter of 2009 compared to the third quarter of 2008, sales
of our two new printer products for McDonalds, the Ithaca® 8000 (for McDonald’s
grill initiative) and Ithaca® 8040 (for McDonald’s combined beverage
initiative), increased by 25% in the third quarter of 2009 compared to the third
quarter of 2008. We expect sales of these printer products to remain
consistent in the fourth quarter of 2009 as compared to the third quarter of
2009, as McDonalds continues the current pace of its rollout of printers used in
its new combined beverage and grill initiatives. The increase in POS
printer sales resulting from sales of the two new printer products for McDonalds
was largely offset by a decline in sales of non-McDonalds POS printers due to
the general economic slowdown that we believe will continue to adversely impact
sales of POS printers to our retail and hospitality customers for the remainder
of 2009. Contributing to this decline, sales of our legacy line of POS impact
printers decreased by approximately 43%. 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.
International
banking and POS printer shipments increased by approximately $46,000, or 25%, to
$232,000, due primarily to higher sales to our international distributors in
Latin America, Europe and the Middle East somewhat offset by lower sales to
distributors in Mexico and Asia.
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 or receipts 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 decreased by $1,955,000, or 29%, from the
third quarter of 2008.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 2,112 | 44.7 | % | $ | 4,052 | 60.6 | % | $ | (1,940 | ) | (47.9 | %) | |||||||||||
|
International
|
2,614 | 55.3 | % | 2,629 | 39.4 | % | (15 | ) | (0.6 | %) | ||||||||||||||
| $ | 4,726 | 100.0 | % | $ | 6,681 | 100.0 | % | $ | (1,955 | ) | (29.3 | %) | ||||||||||||
Domestic
sales of our casino and gaming printers decreased by $1,940,000, or 48%, due
largely to a decrease in sales of our thermal casino printers, which have been
impacted by the downturn in the domestic casino market. Although we
experienced an increase in domestic casino printer sales in the third quarter of
2009 compared to the second quarter of 2009, 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 decreased by less than 1% to $2,614,000 in the
third quarter of 2009. International casino printer sales decreased
by 20% due to lower sales in Europe somewhat offset by an increase in casino
printer sales to Australia and Canada. The decrease in international
casino printer sales was almost entirely offset by a 49% increase in sales of
our line of off-premise gaming printers, including our newly launched Epic 880,
to our European distributor and a customer in Australia.
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 by $1,393,000, or 30%, from the third quarter of 2008, due to lower
sales of lottery printers to GTECH domestically.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 3,231 | 96.9 | % | $ | 4,636 | 98.1 | % | $ | (1,405 | ) | (30.3 | %) | |||||||||||
|
International
|
104 | 3.1 | % | 92 | 1.9 | % | 12 | 13.0 | % | |||||||||||||||
| $ | 3,335 | 100.0 | % | $ | 4,728 | 100.0 | % | $ | (1,393 | ) | (29.5 | %) | ||||||||||||
Domestic
and international printer sales to GTECH, which include thermal on-line and
other lottery printers, decreased $1,393,000, or 30%, in the third quarter of
2009 compared to the third quarter of 2008, due to the timing of orders, with
domestic sales decreasing approximately $1,405,000, or 30%, and international
sales increasing approximately $12,000, or 13%. 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 sales to
GTECH for the fourth quarter of 2009 to be consistent with those of the third
quarter of 2009.
TransAct Services
Group:
Revenue
from TSG includes sales of consumable products (inkjet cartridges, ribbons,
receipt paper and other printing supplies), replacement parts, maintenance and
repair services, refurbished printers, accessories and shipping and handling
charges. Sales from TSG increased $1,166,000, or 40% from the third
quarter of 2008.
|
Three
months ended
|
Three
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 3,840 | 93.7 | % | $ | 2,858 | 97.4 | % | $ | 982 | 34.4 | % | ||||||||||||
|
International
|
259 | 6.3 | % | 75 | 2.6 | % | 184 | 245.3 | % | |||||||||||||||
| $ | 4,099 | 100.0 | % | $ | 2,933 | 100.0 | % | $ | 1,166 | 39.8 | % | |||||||||||||
Domestic
revenue from TSG increased $982,000, or 34%, largely due to an increase of
approximately 67% in sales of consumable products mostly due to significantly
higher inkjet cartridge sales to a large customer for a project that was
substantially completed in the third quarter of 2009 as well as recurring sales
of inkjet cartridges based on the growing installed base of our line of inkjet
printers. As a result, we expect TSG sales for the fourth quarter of
2009 to be lower than those for the third quarter of 2009.
Internationally,
TSG revenue increased $184,000, or 245%, to $259,000, due primarily to increased
sales of replacements parts.
Gross
Profit. Gross profit information is summarized below (in
thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 5,525 | $ | 5,894 | (6.3 | %) | 30.7 | % | 34.0 | % | ||||||||||
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 $369,000, or 6%, to $5,525,000
from $5,894,000 and gross margin decreased to 30.7% from 34.0%. The
decreases were due primarily to (1) higher sales of lower margin products and
(2) higher material and labor costs as we depleted a substantial portion of our
higher cost domestic inventory in preparation for the completion of the
transition of full production of 70% of our printers to China. With
our higher cost domestic inventories nearly depleted, we will begin to source
lower cost product from China beginning in the fourth quarter of
2009. As a result, we expect our gross margin to begin to improve in
the fourth quarter of 2009 compared to the third quarter of 2009.
Engineering and
Product Development. Engineering and product development
information is summarized below (in thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 683 | $ | 713 | (4.2 | %) | 3.8 | % | 4.1 | % | ||||||||||
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 third
quarter 2009 decreased by $30,000, or 4%, due primarily to lower outside testing
and pre-production expenses related to new product development.
Selling and
Marketing. Selling and marketing information is summarized
below (in thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 1,434 | $ | 1,430 | 0.3 | % | 8.0 | % | 8.3 | % | ||||||||||
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 third quarter of 2009 remained consistent as compared
to the third quarter of 2008, as approximately $15,000 of higher employee
compensation related expenses and $14,000 of higher tradeshow related expenses
were offset by a reduction of approximately $19,000 in promotional marketing
expenses. We expect selling and marketing expenses in the fourth
quarter of 2009 to be higher than the third quarter of 2009 due to expenses
related to trade shows occurring in the fourth quarter.
General and
Administrative. General and
administrative information is summarized below (in thousands, except
percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 1,614 | $ | 1,838 | (12.2 | %) | 8.9 | % | 10.6 | % | ||||||||||
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 decreased by $224,000 or 12%, due primarily to
approximately $153,000 of lower employee compensation related expenses, $46,000
of lower recruitment related expenses, $21,000 of lower professional fees, and
$26,000 of lower legal fees. In addition, general and administrative
expenses for the third quarter of 2009 included severance charges of
approximately $19,000 related to an employee
termination.
Operating
Income. Operating income information is summarized below (in
thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Three
months ended
|
$ | 1,794 | $ | 1,913 | (6.2 | %) | 10.0 | % | 11.0 | % | ||||||||||
During
the third quarter of 2009, we reported operating income of $1,794,000, or 10.0%
of net sales, compared to operating income of $1,913,000, or 11.0% of net sales
in the third quarter of 2008. The decrease in our operating income
and operating margin was primarily due to lower gross margin and the resulting
gross profit, partially offset by lower operating expenses in the third quarter
of 2009 as compared to the third quarter of 2008.
Interest. We
recorded net interest expense of $15,000 in the third quarter of 2009 compared
to $3,000 in the third quarter of 2008. The increase in our net
interest expense was largely due to lower interest income resulting from a lower
overall rate of return on our invested cash balance due to the decreasing
interest rate environment. Interest expense related to the unused
line fee and amortization of deferred financing costs on our revolving credit
facility with TD Bank remained consistent in the third quarter of 2009 compared
to the third quarter of 2008. See “Liquidity and Capital Resources”
below for more information.
Other
Income. We recorded other income of $2,000 in the third
quarter of 2009 compared to $102,000 in the third quarter of
2008. Other income for the third quarter of 2009 was low as we
significantly reduced the balances of our U.K. subsidiary that are exposed to
foreign currency fluctuations. Other income for the third quarter of
2008 primarily included foreign currency exchange gains recorded by our U.K.
subsidiary resulting from a 9% strengthening of the U.S. dollar against the
British pound.
Income
Taxes. We recorded an income tax provision for the third
quarter of 2009 of $597,000 at an effective tax rate of 33.5%, compared to
$802,000 at an effective tax rate of 39.9% in 2008. The effective tax
rate for the third quarter of 2008 was abnormally high as it did not include any
benefit from the federal research and development credit that expired at the end
of 2007 and was not reinstated until October 2008. We expect our
annual effective tax rate for 2009 to be between 33% and 34%.
Net
Income. We reported net
income during the third quarter of 2009 of $1,184,000, or $0.13 per diluted
share, compared to net income of $1,210,000, or $0.13 per diluted share, for the
third quarter of 2008.
Nine
months ended September 30, 2009 compared to nine months ended September 30,
2008
Net
Sales. Net sales, which include printer sales and sales of
spare parts, consumables and repair services, by market for the nine months
ended September 30, 2009 and 2008 were as follows:
|
Nine
months ended
|
Nine
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Banking
and point-of-sale
|
$ | 13,780 | 31.0 | % | $ | 8,730 | 18.2 | % | $ | 5,050 | 57.8 | % | ||||||||||||
|
Casino
and gaming
|
13,042 | 29.4 | % | 16,958 | 35.4 | % | (3,916 | ) | (23.1 | %) | ||||||||||||||
|
Lottery
|
6,401 | 14.4 | % | 13,124 | 27.4 | % | (6,723 | ) | (51.2 | %) | ||||||||||||||
|
TransAct
Services Group
|
11,197 | 25.2 | % | 9,118 | 19.0 | % | 2,079 | 22.8 | % | |||||||||||||||
| $ | 44,420 | 100.0 | % | $ | 47,930 | 100.0 | % | $ | (3,510 | ) | (7.3 | %) | ||||||||||||
|
International
*
|
$ | 9,050 | 20.4 | % | $ | 7,735 | 16.1 | % | $ | 1,315 | 17.0 | % | ||||||||||||
|
*
|
International
sales do not include sales of printers made to domestic distributors or
other customers who in turn ship those printers to international
destinations.
|
Net sales
for the first nine months of 2009 decreased $3,510,000, or 7%, from the same
period last year due primarily to lower printer shipments in our lottery (a
decrease of $6,723,000, or 51%) and casino and gaming (a decrease of $3,916,000,
or 23%) markets, partially offset by a $5,050,000, or 58%, increase from our
banking and point-of-sale market as well as a $2,079,000, or 23%, increase from
TSG. Printer sales volume decreased by 21% while the average selling
price of our printers increased by approximately 8% (due primarily to an
increase in sales of banking printers with higher average selling prices) from
the first nine months of 2008 to the first nine months of
2009. Overall, international sales increased by $1,315,000, or 17%,
largely due to higher international shipments of our casino and gaming
printers.
Banking and
point-of-sale:
Sales of
our banking and POS printers worldwide increased approximately $5,050,000, or
58%.
|
Nine
months ended
|
Nine
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 12,923 | 93.8 | % | $ | 8,058 | 92.3 | % | $ | 4,865 | 60.4 | % | ||||||||||||
|
International
|
857 | 6.2 | % | 672 | 7.7 | % | 185 | 27.5 | % | |||||||||||||||
| $ | 13,780 | 100.0 | % | $ | 8,730 | 100.0 | % | $ | 5,050 | 57.8 | % | |||||||||||||
Domestic
banking and POS revenue increased to $12,923,000, representing a $4,865,000, or
60%, increase from the first nine months of 2008 primarily driven by higher
sales of our banking printers. Sales of our banking printers
increased by more than 500% in the first nine months of 2009 compared to the
first nine months of 2008 as we finished shipping against the $4.9 million order
we received from a large banking customer in February 2009 as well as additional
orders from this same customer. Sales of our POS printers declined by
approximately 15% largely due to the general economic slowdown that we believe
is currently impacting, and will continue to adversely impact the remainder of
2009, the capital spending of a number 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
50%. We expect sales of our legacy impact printers for the fourth
quarter 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 8000Ò (for McDonald’s
grill initiative) and Ithaca 8040® (for McDonald’s combined beverage
initiative), increased by approximately 150% during the first nine months of
2009 compared to the first nine months of 2008.
International
banking and POS printer shipments increased $185,000, or 28%, to $857,000, due
primarily to higher POS printer sales to our international distributors in Latin
America.
Casino
and gaming:
Sales of
our casino and gaming products decreased by $3,916,000, or 23%, from the first
nine months of 2008.
|
Nine
months ended
|
Nine
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 5,830 | 44.7 | % | $ | 10,606 | 62.5 | % | $ | (4,776 | ) | (45.0 | %) | |||||||||||
|
International
|
7,212 | 55.3 | % | 6,352 | 37.5 | % | 860 | 13.5 | % | |||||||||||||||
| $ | 13,042 | 100.0 | % | $ | 16,958 | 100.0 | % | $ | (3,916 | ) | (23.1 | %) | ||||||||||||
Domestic
sales of our casino and gaming printers decreased by $4,776,000, or 45%, due
largely to a decrease in sales of our thermal casino printers, which have been
impacted by the downturn in the domestic casino market. Although we
experienced an increase in domestic casino printer sales in the third quarter of
2009 compared to the second quarter of 2009, 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 $860,000, or 14%, to $7,212,000 in the
first nine months of 2009. International gaming printer sales
increased by 74%, led largely by continued growing sales of our line of
off-premise gaming printers in both Europe and
Australia. International casino printer sales declined by 7%,
primarily due to 48% lower sales to our distributor in Europe, largely offset by
a 173% increase in sales to our Australian distributor.
Lottery:
Sales of
our lottery products decreased by $6,723,000, or 51%, from the first nine months
of 2008, due to lower sales of lottery printers to GTECH
domestically.
|
Nine
months ended
|
Nine
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 5,968 | 93.2 | % | $ | 12,691 | 96.7 | % | $ | (6,723 | ) | (53.0 | %) | |||||||||||
|
International
|
433 | 6.8 | % | 433 | 3.3 | % | - | 0 | % | |||||||||||||||
| $ | 6,401 | 100.0 | % | $ | 13,124 | 100.0 | % | $ | (6,723 | ) | (51.2 | %) | ||||||||||||
Domestic
printer sales to GTECH, which include thermal on-line and other lottery
printers, decreased $6,723,000, or 53%, in the first nine months of 2009
compared to the first nine months of 2008, due to the timing of orders, while
international sales remained the same. 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 year
over year. Our sales to GTECH are not indicative of GTECH’s overall
business or revenue.
TransAct
Services Group:
Sales
from TSG increased by $2,079,000, or 23% from the first nine months of
2008.
|
Nine
months ended
|
Nine
months ended
|
Change
|
||||||||||||||||||||||
|
(In
thousands)
|
September
30, 2009
|
September
30, 2008
|
$ | % | ||||||||||||||||||||
|
Domestic
|
$ | 10,649 | 95.1 | % | $ | 8,840 | 97.0 | % | $ | 1,809 | 20.5 | % | ||||||||||||
|
International
|
548 | 4.9 | % | 278 | 3.0 | % | 270 | 97.1 | % | |||||||||||||||
| $ | 11,197 | 100.0 | % | $ | 9,118 | 100.0 | % | $ | 2,079 | 22.8 | % | |||||||||||||
Domestic
revenue from TSG increased by approximately $1,809,000, or 21%, largely due to
an increase of approximately 47% in sales of consumable products compared to the
same period in 2008, mostly due to significantly higher inkjet cartridge sales
to a large customer for a project that was substantially completed in the third
quarter of 2009 as well as recurring sales of inkjet cartridges based on the
growing installed base of our line of inkjet printers. The increase
was partially offset by an 11% decrease in sales of replacement parts for
certain legacy printers, as the installed base of these legacy printers in the
market continues to decline.
Internationally,
TSG revenue increased $270,000, or 97%, to $548,000, due primarily to a $145,000
increase in sales of replacement parts and a $90,000 increase in sales of
printer accessories as compared to the same period in 2008.
Gross
Profit. Gross profit information is summarized below (in
thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Nine
months ended
|
$ | 14,507 | $ | 16,133 | (10.1 | %) | 32.7 | % | 33.7 | % | ||||||||||
Gross
profit decreased $1,626,000, or 10%, to $14,507,000 from $16,133,000, and both
gross profit and gross margin declined due primarily to (1) a 7% decrease in
sales in the first nine months of 2009 compared to the first nine months of
2008, (2) higher sales of lower margin products and (3) higher material and
labor cost as we depleted a substantial portion of our higher cost domestic
inventory in the third quarter of 2009 in preparation for the completion of the
transition of full production of 70% of our printers in China. These
decreases were partially offset by (1) approximately $224,000 of lower product
warranty expense from improved repair history and a 21% decline in printer
shipments in the first nine months of 2009 compared to the first nine months of
2008 and (2) approximately $330,000 of lower average per unit costs of certain
manufacturing expenses due to the transition of more of our production to
China. We expect our gross margin to begin to improve in the fourth
quarter of 2009 compared to the third quarter of 2009 as we have nearly depleted
our higher cost domestic inventories and we begin to source lower cost product
from China in full force beginning in the fourth quarter of 2009.
Engineering and
Product Development. Engineering and product development
information is summarized below (in thousands, except
percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Nine
months ended
|
$ | 2,043 | $ | 2,119 | (3.6 | %) | 4.6 | % | 4.4 | % | ||||||||||
Engineering,
design and product development expenses decreased by $76,000, or 4%, to
$2,043,000. Approximately 50% of the decrease was due to lower
outside testing and pre-production expenses related to new product development
and 40% of the decrease was due to lower employee compensation related
expenses.
Selling and
Marketing. Selling and marketing information is summarized
below (in thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Nine
months ended
|
$ | 4,287 | $ | 4,397 | (2.5 | %) | 9.7 | % | 9.2 | % | ||||||||||
Selling
and marketing expenses for the first nine months of 2009 decreased by $110,000,
or 3%, due primarily to approximately $30,000 of lower sales commissions
resulting from a 7% decrease in sales, approximately $50,000 of lower travel
related expenses, approximately $75,000 in reduced promotional marketing
expenses, and a reduction of approximately $32,000 in consulting and
professional fees due to the cost control initiatives that were put in place for
2009. These decreases were partially offset by an increase of
approximately $67,000 in employee compensation related expenses. We
expect selling and marketing expense in the fourth quarter of 2009 to be higher
than the third quarter of 2009 due to expenses related to trade shows occurring
in the fourth quarter.
General and
Administrative. General and administrative information is
summarized below (in thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Nine
months ended
|
$ | 5,162 | $ | 5,335 | (3.2 | %) | 11.6 | % | 11.1 | % | ||||||||||
General
and administrative expenses decreased by $173,000, or 3%, due primarily to a
reduction of approximately $420,000 in employee compensation related expenses
for general and administrative departments and lower professional fee expenses
of approximately $60,000. These decreases were largely offset by
approximately $41,000 in increased legal expenses related to general corporate
matters, increased employee compensation related expenses associated with the
full nine month affect of the hiring of our new Vice President of Business
Development in May 2008, and $66,000 in increased depreciation. In
addition, general and administrative expenses for the first nine months of 2009
included severance charges of approximately $165,000 related to the termination
of approximately 14 employees.
Legal Fees
associated with lawsuit. During the first nine months of 2009,
we did not incur any legal fees related to the settled lawsuit with FutureLogic,
Inc. compared to $3,029,000 in the first nine months of 2008. We
settled our litigation with FutureLogic, Inc. in May 2008 and as a result of the
settlement, we do not expect to incur any additional legal fees related to the
lawsuit.
Operating
Income. Operating income information is summarized below (in
thousands, except percentages):
|
September
30,
|
Percent
|
Percent
of
|
Percent
of
|
|||||||||||||||||
|
2009
|
2008
|
Change
|
Total Sales - 2009
|
Total Sales - 2008
|
||||||||||||||||
|
Nine
months ended
|
$ | 3,015 | $ | 1,253 | 140.6 | % | 6.8 | % | 2.6 | % | ||||||||||
During
the first nine months of 2009, we reported operating income of $3,015,000, or
6.8% of net sales, compared to operating income of $1,253,000, or 2.6% of net
sales in the first nine months of 2008. The increase in our operating
income and operating margin was due to lower operating expenses (including the
absence of legal expense related to the FutureLogic lawsuit), partially offset
by lower gross profit on a 7% decline in sales in the first nine months of 2009
compared to the first nine months of 2008.
Interest. We
recorded net interest expense of $48,000 in the first nine months of 2009
compared to $6,000 in the first nine months of 2008. The increase was
largely due to lower interest income resulting from a lower overall rate of
return on our invested cash balance due to the decreasing interest rate
environment. Interest expense related to the unused line fee and
amortization of deferred financing costs on our revolving credit facility with
TD Bank remained consistent the first nine months of 2009 and
2008. See “Liquidity and Capital Resources” below for more
information.
Other Income
(Expense). We recorded other expense of $28,000 in the first
nine months of 2009 compared to other income of $96,000 in the first nine months
of 2008. The decrease was primarily due to foreign currency exchange
losses recorded by our U.K. subsidiary resulting from a 10% weakening of the
U.S. dollar against the British pound during the first nine months of 2009, as
compared to a foreign currency exchange gain resulting from a 9% strengthening
of the U.S. dollar against the British pound in the first nine months of
2008.
Income
Taxes. We recorded an income tax provision for the first nine
months of 2009 of $985,000 at an effective tax rate of 33.5% compared to
$535,000 at an effective tax rate of 39.8%. The effective tax rate
for the third quarter of 2008 was abnormally high as it did not include any
benefit from the federal research and development credit that expired at the end
of 2007 and was not reinstated until October 2008. We expect our
annual effective tax rate for 2009 to be between 33% and 34%.
Net
Income. We reported net
income during the first nine months of 2009 of $1,954,000, or $0.21 per diluted
share, compared to $808,000, or $0.08 per diluted share, for the first nine
months of 2008.
Liquidity and Capital
Resources
Cash
Flow
In the
first nine months of 2009, our cash flows reflected increased cash generation
from improved operating results, significantly reduced inventory balances and
lower capital spending. Our cash balance increased $3,511,000, or
176%, from December 31, 2008 and we ended the first nine months of 2009 with
approximately $5,511,000 in cash and cash equivalents and no debt
outstanding.
Operating
activities: The following significant factors affected our
cash provided by operations of $3,938,000 in the first nine months of 2009 as
compared to our cash provided by operations of $1,931,000 in the first nine
months of 2008:
During
the first nine months of 2009:
|
·
|
We
reported a net income of
$1,954,000.
|
|
·
|
We
recorded depreciation, amortization, and non-cash compensation expense of
$1,841,000.
|
|
·
|
We
recorded non-cash deferred income tax expense of
$734,000.
|
|
·
|
Accounts
receivable increased $2,294,000 due to the timing of
sales.
|
|
·
|
Inventories
decreased $3,506,000 as we worked to deplete a substantial portion of our
domestic inventory prior to the final transition of full production of 70%
of our printers to a contract manufacturer in
China.
|
|
·
|
Accounts
payable decreased $1,205,000 due to the timing of payments and a reduction
in inventory purchases as we depleted our current inventory on
hand.
|
|
·
|
Accrued
liabilities and other liabilities decreased $472,000 due primarily to
lower payroll and fringe benefit related accruals based on the payment of
2008 annual bonuses in March 2009.
|
During
the first nine months of 2008:
|
·
|
We
reported a net income of $808,000.
|
|
·
|
We
recorded depreciation, amortization, and non-cash compensation expense of
$1,998,000.
|
|
·
|
We
recorded non-cash deferred income tax expense of
$440,000.
|
|
·
|
Accounts
receivable increased by $2,044,000 due to higher sales in the first nine
months of 2008 compared to the first nine months of
2007.
|
|
·
|
Inventories
increased by $81,000 due to higher stocking levels resulting from
initiatives to increasingly move production to China and increased sales
volume.
|
|
·
|
Accounts
payable increased by $1,122,000 due to higher inventory purchases related
to higher sales volume during the first nine months of
2008.
|
|
·
|
Accrued
liabilities and other liabilities decreased by $191,000 due primarily to
decreased accrued legal fees primarily related to our lawsuit with
FutureLogic, Inc. during the first nine months of
2008.
|
Investing
activities: Our capital expenditures were approximately
$478,000 and $729,000 in the first nine months of 2009 and 2008,
respectively. Expenditures in 2009 included approximately $224,000
for the purchase of new product tooling, approximately $170,000 for the purchase
of computer, networking equipment, and software, approximately $56,000 for the
purchase of manufacturing equipment, and the remaining amount primarily for the
purchase of engineering equipment. Expenditures in 2008 included
approximately $389,000 for the purchase of new product tooling, approximately
$250,000 for the purchase of computer, networking equipment, and software,
approximately $82,000 for the purchase of manufacturing equipment, and the
remaining amount primarily for the purchase of engineering equipment and
leasehold improvements. Capital expenditures for 2009 are expected to
be approximately $600,000 to $800,000, primarily for new product tooling and
tooling enhancements to our existing products.
Financing
activities: We generated approximately $55,000 of cash from
financing activities during the first nine months of 2009 from proceeds from
stock option exercises. During the first nine months of 2008, we
generated approximately $298,000 from financing activities from proceeds from
stock option exercises.
Working
Capital
Our
working capital increased to $19,161,000 at September 30, 2009 from $15,051,000
at December 31, 2008. Our current ratio increased to 4.0 to 1 at
September 30, 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
cash balances, accounts receivable balances resulting from the timing of sales,
and lower inventory and accounts payable balances resulting from decreased
purchases of inventory and the utilization of inventory on hand.
Deferred
Taxes
As of
September 30, 2009, we had a net deferred tax asset of approximately
$3,075,000. In order to utilize this deferred tax asset, we will need
to generate approximately $8.7 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
Bank Credit Facility”) with TD Bank, N.A. (“TD Bank”). The TD Bank 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 Bank Credit
Facility was $94,000. The TD Bank 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 Bank Credit Facility at September 30,
2009. The following table lists the financial covenants and the
performance measurements at September 30, 2009:
|
Financial
Covenant
|
Requirement/Restriction
|
Calculation
at September 30, 2009
|
|
Operating
cash flow / Debt service
|
Total
Minimum of 1.25 times
|
85.7
times
|
|
Funded
Debt / EBITDA
|
Maximum
of 3.25 times
|
0
times
|
As of
September 30, 2009, we had no balances outstanding on the revolving credit
line. Undrawn commitments under the TD Bank Credit Facility were
$20,000,000 at September 30, 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 and
nine months ended September 30, 2009, we made no repurchases of common
stock. As of September 30, 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 Bank 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 September 30, 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 September 30, 2009. There has
been no change in the Company’s internal control over financial reporting during
the quarter ended September 30, 2009, that has materially affected, or is
reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
II. OTHER INFORMATION
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 and nine months ended September 30, 2009, we made no repurchases of common
stock. As of September 30, 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 September 30, 2009, approximately $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
|
|
|
November
9, 2009
|
Steven
A. DeMartino
|
|
Executive
Vice President, Chief Financial Officer,
|
|
|
Treasurer
and Secretary
|
|
|
(Principal
Financial and Accounting
Officer)
|
EXHIBIT
LIST
The
following exhibits are filed herewith.
|
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
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to section 906 of
the Sarbanes-Oxley Act of 2002.
|
|
21
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: November
9, 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: November
9, 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 September 30, 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: November
9, 2009
|
/s/
Bart C. Shuldman
|
|
|
Bart
C. Shuldman
|
|
|
Chairman,
President and 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 September 30, 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: November
9, 2009
|
/s/
Steven A. DeMartino
|
|
|
Steven
A. DeMartino
|
|
|
Executive
Vice President, Chief Financial Officer,
|
|
|
Treasurer
and Secretary
|