UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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, 2007
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
TRANSACT TECHNOLOGIES INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 06-1456680
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE HAMDEN CENTER, 2319 WHITNEY AVENUE, SUITE 3B, HAMDEN, CT 06518
(Address of principal executive offices)
(Zip Code)
(203) 859-6800
(Registrant's telephone number, including area code)
7 LASER LANE, WALLINGFORD, CT 06492
(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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (check
one):
Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
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 26, 2007
----- --------------------------------
COMMON STOCK, $.01 PAR VALUE 9,504,136
TRANSACT TECHNOLOGIES INCORPORATED
INDEX
Page No.
--------
PART I. Financial Information:
Item 1 Financial Statements (unaudited)
Condensed consolidated balance sheets as of March 31, 2007
and December 31, 2006 3
Condensed consolidated statements of operations for the
three months ended March 31, 2007 and 2006 4
Condensed consolidated statements of cash flow for the
three months ended March 31, 2007 and 2006 5
Notes to condensed consolidated financial statements 6 - 11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 12 - 17
Item 4 Controls and Procedures 17
PART II. Other Information:
Item 1 Legal Proceedings 17 - 18
Item 1a Risk Factors 18
Item 2c Stock Repurchase 18
Item 6 Exhibits 19
Signatures 20
Certifications 22 - 25
2
ITEM 1. FINANCIAL STATEMENTS
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, December 31,
(In thousands, except share amounts) 2007 2006
--------- ------------
ASSETS:
Current assets:
Cash and cash equivalents $ 3,387 $ 3,436
Receivables, net 8,332 11,422
Inventories 9,552 7,567
Refundable income taxes 197 42
Deferred tax assets 2,605 2,167
Other current assets 418 506
------- -------
Total current assets 24,491 25,140
------- -------
Fixed assets, net 5,853 5,938
Goodwill 1,469 1,469
Deferred tax assets 556 542
Intangible and other assets, net of accumulated amortization of $143
and $122, respectively 585 617
------- -------
8,463 8,566
------- -------
Total assets $32,954 $33,706
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable $ 4,860 $ 3,997
Accrued liabilities 2,820 4,047
Accrued restructuring expenses 205 315
Deferred revenue 344 389
------- -------
Total current liabilities 8,229 8,748
------- -------
Deferred revenue, net of current portion 428 508
Accrued warranty, net of current portion 144 160
Other liabilities 112 --
------- -------
684 668
------- -------
Total liabilities 8,913 9,416
------- -------
Commitments and contingencies (Note 11)
Shareholders' equity:
Common stock 104 104
Additional paid-in capital 19,282 19,105
Retained earnings 11,500 11,405
Accumulated other comprehensive income 168 168
Treasury stock, 871,300 and 801,300 shares at cost (7,013) (6,492)
------- -------
Total shareholders' equity 24,041 24,290
------- -------
Total liabilities and shareholders' equity $32,954 $33,706
======= =======
See notes to condensed consolidated financial statements.
3
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------
(In thousands, except per share data) 2007 2006
------- --------
Net sales $11,468 $16,434
Cost of sales 7,715 10,747
------- -------
Gross profit 3,753 5,687
------- -------
Operating expenses:
Engineering, design and product
development 714 761
Selling and marketing 1,642 1,580
General and administrative 1,850 1,710
------- -------
4,206 4,051
------- -------
Operating income (loss) (453) 1,636
------- -------
Other income (expense):
Interest, net 28 14
Other, net (1) (11)
------- -------
27 3
------- -------
Income (loss) before income taxes (426) 1,639
Income tax provision (benefit) (203) 582
------- -------
Net income (loss) $ (223) $ 1,057
======= =======
Net income (loss) per common share:
Basic $ (0.02) $ 0.11
Diluted $ (0.02) $ 0.11
Shares used in per-share calculation
Basic 9,424 9,558
Diluted 9,424 9,868
See notes to condensed consolidated financial statements.
4
TRANSACT TECHNOLOGIES INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------
(In thousands) 2007 2006
------- --------
Cash flows from operating activities:
Net income (loss) $ (223) $ 1,057
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Share-based compensation expense 176 155
Incremental tax benefits from stock options exercised -- (35)
Depreciation and amortization 434 368
Deferred income taxes (340) --
Changes in operating assets and liabilities:
Receivables 3,090 (1,723)
Inventories (1,985) (1,189)
Refundable income taxes (155) 145
Other current assets 88 (220)
Other assets 8 1
Accounts payable 863 2,672
Accrued liabilities and other liabilities (1,050) 1,044
Accrued restructuring expenses (110) (107)
------- -------
Net cash provided by operating activities 796 2,168
------- -------
Cash flows from investing activities:
Purchases of fixed assets (324) (973)
------- -------
Net cash used in investing activities (324) (973)
------- -------
Cash flows from financing activities:
Proceeds from option exercises 1 170
Purchases of common stock for treasury (521) (698)
Payment of deferred financing costs (1) --
Incremental tax benefits from stock options exercised -- 35
------- -------
Net cash used in financing activities (521) (493)
------- -------
Effect of exchange rate changes -- 8
------- -------
Increase (decrease) in cash and cash equivalents (49) 710
Cash and cash equivalents at beginning of period 3,436 4,579
------- -------
Cash and cash equivalents at end of period $ 3,387 $ 5,289
======= =======
See notes to condensed consolidated financial statements.
5
TRANSACT TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. DESCRIPTION OF BUSINESS
TransAct Technologies Incorporated ("TransAct"), which has its headquarters
in Hamden, CT and its primary operating facility in Ithaca, NY, operates in
one industry segment, market-specific printers for transaction-based
industries. These industries include gaming, lottery, banking, kiosk and
hospitality. Our printers are designed based on market specific
requirements and are sold under the Ithaca(R) and Epic(TM) product brands.
We distribute our products through OEMs, value-added resellers, selected
distributors, and 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. We also generate revenue from the
after-market side of the business, providing printer service, supplies and
spare parts.
2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.
These accounting principles were applied on a basis consistent with those
of the consolidated financial statements contained in the Company's Annual
Report on Form 10-K for the year ended December 31, 2006. In our opinion,
the accompanying unaudited condensed consolidated financial statements
contain all adjustments (consisting only of normal recurring adjustments)
necessary to fairly state TransAct's financial position as of March 31,
2007, the results of our operations for the three months ended March 31,
2007 and 2006, and our cash flows for the three months ended March 31, 2007
and 2006. The December 31, 2006 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, 2006 included in our Annual Report on Form 10-K. Certain
amounts from the December 31, 2006 condensed consolidated balance sheet
have been reclassified to conform with the current period presentation.
The financial position and results of operations of our foreign subsidiary
are measured using local currency as the functional currency. Assets and
liabilities of such subsidiary have been translated at end of period
exchange rates, and related revenues and expenses have been translated at
weighted average exchange rates with the resulting translation gain or loss
recorded in accumulated other comprehensive income. Transaction gains and
losses are included in other income.
The results of operations for the three months ended March 31, 2007 are not
necessarily indicative of the results to be expected for the full year.
3. SHARE-BASED PAYMENTS
STOCK OPTION ACTIVITY. The 1996 Stock Plan, 1996 Directors' Stock Plan,
2001 Employee Stock Plan and 2005 Equity Incentive Plan option activity is
summarized below:
Weighted
Average
Weighted Remaining Aggregate
Average Contractual Intrinsic
Exercise Life Value (in
Options Price (in years) thousands)
------- -------- ----------- ----------
Options outstanding at December 31, 2006: 707,344 $ 6.67
Granted 112,500 $ 9.51
Exercised (199) $ 4.54
Canceled (5,000) $10.08
-------
Options outstanding at March 31, 2007 814,645 $ 7.04 5.99 $1,414
=======
Options exercisable at March 31, 2007 618,145 $ 6.35 4.88 $1,414
=======
6
TRANSACT TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. SHARE-BASED PAYMENTS (CONTINUED)
As of March 31, 2007, unrecognized compensation cost related to stock
options totaled $1,155,000, which is expected to be recognized over a
weighted average period of 4.4 years. The total intrinsic value of stock
options exercised was $1,000 and $117,000, during the three months ended
March 31, 2007 and 2006, respectively.
RESTRICTED STOCK ACTIVITY. Under the 1996 Stock Plan, 2001 Employee Stock
Plan and 2005 Equity Incentive Plan, we have granted shares of restricted
common stock, for no consideration, to our officers, directors and certain
key employees. Restricted stock activity for the 1996 Stock Plan, 2001
Employee Stock Plan and 2005 Equity Incentive Plan is summarized below:
Weighted
Average
Restricted Grant Date
Stock Fair Value
---------- ----------
Nonvested shares at December 31, 2006 154,116 $12.22
Granted -- --
Vested (31,083) 12.84
Canceled (500) 8.54
-------
Nonvested shares at March 31, 2007 122,533 $12.08
=======
As of March 31, 2007, unrecognized compensation cost related to restricted
stock totaled $1,289,000, which is expected to be recognized over a
weighted average period of 2.9 years. The intrinsic value of restricted
stock that vested during the three months ended March 31, 2007 was
$237,000.
SHARE-BASED COMPENSATION EXPENSE. During the quarters ended March 31, 2007
and 2006, we recognized compensation expense of $43,000 and $21,000,
respectively, for stock options and $133,000 and $134,000, respectively,
for restricted stock, which was recorded in our condensed consolidated
statements of operations in accordance with SFAS No. 123 (revised 2004),
Share-Based Payment ("SFAS No. 123(R)"). The income tax benefits from
share-based payments recorded in the income statement totaled $65,000 and
$57,000 for the three months ended March 31, 2007 and 2006, respectively.
ASSUMPTIONS FOR ESTIMATING FAIR VALUE OF SHARE-BASED PAYMENTS. We use the
Black-Scholes option-pricing model to calculate the fair value of share
based awards. The key assumptions for this valuation method include the
expected term of the option, stock price volatility, risk-free interest
rate, dividend yield and exercise price. Many of these assumptions are
judgmental and highly sensitive in the determination of compensation
expense. In addition, we estimate forfeitures when recognizing compensation
expense, and we will adjust our estimate of forfeitures over the requisite
service period based on the extent to which actual forfeitures differ, or
are expected to differ, from such estimates. Changes in estimated
forfeitures will be recognized through a cumulative true-up adjustment in
the period of change and will also impact the amount of compensation
expense to be recognized in future periods.
7
TRANSACT TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
3. SHARE-BASED PAYMENTS (CONTINUED)
Under the assumptions indicated below, the weighted-average fair value of
stock option grants for the three months ended March 31, 2007 and 2006 was
$6.13 and $5.91, respectively. The table below indicates the key
assumptions used in the option valuation calculations for options granted
in the respective periods:
Three months ended
March 31,
---------------------
2007 2006
--------- ---------
Expected option term 5.6 years 5.2 years
Expected volatility 70.5% 78.4%
Risk-free interest rate 4.5% 4.5%
Dividend yield 0% 0%
4. INVENTORIES
The components of inventories are:
March 31, December 31,
(In thousands) 2007 2006
--------- ------------
Raw materials and purchased
component parts $9,104 $7,337
Work in process 133 --
Finished goods 315 230
------ ------
$9,552 $7,567
====== ======
5. ACCRUED PRODUCT WARRANTY LIABILITY
The following table summarizes the activity recorded in the accrued product
warranty liability during the three months ended March 31, 2007 and 2006.
Three months
ended March 31,
---------------
(In thousands) 2007 2006
------ ------
Balance, beginning of period $ 603 $ 644
Additions related to warranties issued 149 68
Warranty costs incurred (144) (112)
----- -----
Balance, end of period $ 608 $ 600
===== =====
The current portion of the accrued product warranty liability is included
in accrued liabilities in the accompanying balance sheet.
6. ACCRUED BUSINESS CONSOLIDATION AND RESTRUCTURING
In February 2001, we undertook a plan to consolidate all manufacturing and
engineering into our existing Ithaca, NY facility and to close our
Wallingford, CT manufacturing facility (the "Consolidation"). As of
December 31, 2001, substantially all Wallingford product lines were
successfully transferred to Ithaca, NY. We continue to apply the consensus
set forth in EITF 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (Including Certain
Costs Incurred in a Restructuring)" in recognizing the accrued
restructuring expenses relating to the Consolidation.
8
TRANSACT TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
6. ACCRUED BUSINESS CONSOLIDATION AND RESTRUCTURING (CONTINUED)
In November 2006, we executed an agreement effective May 1, 2007 to
terminate the lease agreement for our Wallingford, CT facility (the
"Release Agreement"). Prior to the execution of the Release Agreement, we
accrued for the remaining non-cancelable lease payments and other related
costs for the unused portion of this facility through the expiration date
of the lease (March 31, 2008). As a result of the Release Agreement and the
early termination of the lease, we were released from the legal obligation
for lease payments after May 1, 2007 and, accordingly, we reversed
approximately $479,000 of previously accrued restructuring reserve in the
fourth quarter of 2006. As of March 31, 2007, our restructuring accrual was
$205,000, which represents the estimated remaining non-cancelable lease
payments and other related costs for the unused portion of this facility
through the new termination date of the lease (May 1, 2007).
The following table summarizes the activity recorded in accrued
restructuring expenses during the three months ended March 31, 2007 and
2006.
Three Months
Ended March 31,
---------------
(In thousands) 2007 2006
----- -------
Accrual balance, beginning of period $ 315 $1,007
Cash payments (110) (107)
----- ------
Accrual balance, end of period $ 205 $ 900
===== ======
7. EARNINGS PER SHARE
Basic and diluted earnings per share are calculated in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 128, "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) 2007 2006
------ ------
Net income (loss) $ (223) $1,057
====== ======
Shares (in thousands):
Basic: Weighted average common shares
outstanding 9,424 9,558
Add: Dilutive effect of outstanding
options and restricted stock as
determined by the treasury stock
method -- 310
------ ------
Diluted: Weighted average common and
common equivalent shares
outstanding 9,424 9,868
====== ======
Net income (loss)per common share:
Basic $(0.02) $ 0.11
Diluted $(0.02) $ 0.11
9
TRANSACT TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
7. EARNINGS PER SHARE (CONTINUED)
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 restricted stock under the treasury
stock method.
For the three months ended March 31, 2007, there were 937,178 potentially
dilutive shares (prior to consideration of the treasury stock method),
consisting of stock options and nonvested restricted stock, that were
excluded from the earnings per share calculation as such shares would be
anti-dilutive due to the Company's net loss in the quarter. For the three
months ended March 31, 2006, there were 109,750 potentially dilutive shares
(prior to consideration of the treasury stock method) related to
out-of-the-money stock options that were excluded from the diluted earnings
per share calculation.
8. COMPREHENSIVE INCOME (LOSS)
The following table summarizes the Company's comprehensive income (loss):
Three Months
Ended March 31,
---------------
(In thousands) 2007 2006
----- -------
Net income (loss) $(223) $1,057
Foreign currency translation
adjustment -- 8
----- ------
Total comprehensive income (loss) $(223) $1,065
===== ======
9. STOCKHOLDER'S EQUITY
Changes in stockholders' equity for the three months ended March 31, 2007
were as follows (in thousands):
Balance at December 31, 2006 $24,290
Net loss (223)
Issuance of shares from exercise
of stock options 1
Adjustment resulting from the
adoption of FIN 48 318
Purchases of treasury stock (521)
Share-based compensation 176
-------
Balance at March 31, 2007 $24,041
=======
10. SIGNIFICANT TRANSACTIONS
On March 25, 2005, our Board of Directors approved a stock repurchase
program (the "Stock Repurchase Program"). Under the program, we are
authorized to repurchase up to $10 million of our outstanding shares of
common stock from time to time on the open market over a three year period
ending on March 25, 2008, depending on market conditions, share price and
other factors. During the three months ended March 31, 2007, we repurchased
a total of 70,000 shares of common stock for approximately $521,000 at an
average price of $7.44 per share. As of March 31, 2007, we have repurchased
a total of 871,300 shares of common stock for approximately $7,013,000, at
an average price of $8.05 per share, since the inception of the Stock
Repurchase Program.
10
TRANSACT TECHNOLOGIES INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
11. COMMITMENTS AND CONTINGENCIES
In April 2005, we announced a complaint against FutureLogic, Inc.
("FutureLogic") in Connecticut, which charges FutureLogic with
disseminating false and misleading statements. We assert claims of
defamation and certain other charges. In May 2005, FutureLogic filed a
complaint against us in California, asserting false advertising,
defamation, trade libel and certain other charges. We moved to dismiss
FutureLogic's action in California, on the grounds that any claims raised
in that action should have been brought as part of the case filed by us in
Connecticut. In the alternative, we moved to stay the California action
pending the resolution of jurisdictional motions in the Connecticut court.
In January 2006, the California court filed an order granting our motion to
stay the California proceeding pending the resolution of jurisdictional
motions in the Connecticut case. Under the California court's order, should
the Connecticut court find that it has jurisdiction over FutureLogic,
FutureLogic's case will be transferred to the Connecticut court for
consolidation with the action pending in that forum. In September 2006, the
District of Connecticut dismissed our case because of a lack of
jurisdiction. The decision was not on the merits of our claims, but on the
jurisdiction of the court in which the suit was brought. The California
District Court has been notified of this development. The action is
currently in the pre-trial motion stage and, as of March 31, 2007, we are
currently unable to estimate any potential liability or range of loss
associated with this litigation. Accordingly, no amounts have been accrued
in the financial statements related to this matter.
12. INCOME TAXES
We have adopted FASB Interpretation 48, Accounting for Uncertainty in
Income Taxes ("FIN 48"), at the beginning of fiscal year 2007. As a result
of the implementation we recognized a decrease to reserves for uncertain
tax positions. This decrease was accounted for as a $318,000 adjustment to
the beginning balance of retained earnings on the Condensed Consolidated
Balance Sheet. Including the cumulative effect decrease, at the beginning
of 2007, we had approximately $79,000 of total gross unrecognized tax
benefits that, if recognized, would favorably affect the effective income
tax rate in any future periods.
During the current period ending March 31, 2007, we recorded approximately
$33,000 of gross unrecognized tax benefits related to tax positions taken
in prior periods. Including this amount, at March 31, 2007, we had
approximately $112,000 of total gross unrecognized tax benefits that, if
recognized, would favorably affect the effective income tax rate in any
future periods.
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.
Our federal tax returns for the years 2003 - 2005 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 consolidated financial statements. No
income tax returns are currently under examination.
We do not anticipate that the total unrecognized tax benefits will
significantly change due to the settlement of audits and the expiration of
statute of limitations prior to March 31, 2008.
We recognize interest and penalties related to uncertain tax positions in
income tax expense. As of March 31, 2007, we have approximately $3,000 of
accrued interest related to uncertain tax positions.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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.
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 to reflect new, changing or unanticipated events or circumstances.
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, contingent liabilities and
restructuring accruals. 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, 2006. We have reviewed those policies and determined
that, in addition to the policies noted below, they remain our critical
accounting policies for the three months ended March 31, 2007.
INCOME TAXES - We adopted Financial Accounting Standards Board ("FASB")
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes," ("FIN 48")
on January 1, 2007. FIN 48 prescribes a recognition threshold and measurement
attribute for the financial statement recognition and measurement of a tax
position that an entity takes or expects to take in a tax return. Additionally,
FIN 48 provides guidance on de-recognition, classification, interest and
penalties, accounting in interim periods, disclosure, and transition. Under FIN
48, an entity may only recognize or continue to recognize tax positions that
meet a "more likely than not" threshold. See Footnote No. 12, "Income Taxes,"
for additional information.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2007 COMPARED TO THREE MONTHS ENDED MARCH 31, 2006
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,
2007 and 2006 were as follows:
Change
Three months ended Three months ended ---------------
(In thousands) March 31, 2007 March 31, 2006 $ %
------------------ ------------------ ------- -----
Point of sale and banking $ 2,651 23.1% $ 4,664 28.4% $(2,013) (43.2%)
Gaming and lottery 5,273 46.0% 8,644 52.6% (3,371) (39.0%)
TransAct Services Group 3,544 30.9% 3,126 19.0% 418 13.4%
------- ----- ------- ----- -------
$11,468 100.0% $16,434 100.0% $(4,966) (30.2%)
======= ===== ======= ===== =======
International* $ 2,596 22.6% $ 3,809 23.2% $(1,213) (31.8%)
======= ===== ======= ===== =======
* 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 quarter of 2007 decreased $4,966,000, or 30%, from the
same period last year due primarily to lower printer shipments into our point of
sale ("POS") and banking (a decrease of approximately $2,013,000, or 43%) and
our gaming and lottery (a decrease of approximately $3,371,000, or 39%) markets.
Sales from our
12
TransAct Services Group ("TSG") increased by $418,000, or 13%.
Overall, international sales decreased by $1,213,000, or 32%, due largely to
lower international shipments of our gaming printers, primarily to Europe, as
well as lower international shipments of our lottery printers to GTECH
Corporation.
POINT OF SALE AND BANKING:
Revenue from the POS and banking market includes sales of inkjet, thermal and
impact printers used primarily by retailers in the hospitality, restaurant
(including fine dining, casual dining and fast food) and specialty retail
industries to print receipts for consumers, validate checks, or print on other
inserted media. Revenue from this market also includes sales of printers used by
banks, credit unions and other financial institutions to print and/or validate
receipts at bank teller stations. Sales of our POS and banking printers
worldwide decreased approximately $2,013,000, or 43%.
Change
Three months ended Three months ended ---------------
(In thousands) March 31, 2007 March 31, 2006 $ %
------------------ ------------------ ------- -----
Domestic $2,431 91.7% $4,262 91.4% $(1,831) (43.0%)
International 220 8.3% 402 8.6% (182) (45.3%)
------ ----- ------ ----- -------
$2,651 100.0% $4,664 100.0% $(2,013) (43.2%)
====== ===== ====== ===== =======
Domestic POS and banking revenue decreased to $2,431,000, representing a
$1,831,000, or 43%, decrease from the first quarter of 2006, due largely to
approximately $1.4 million of Bankjet(R) bank teller printer sales to a large,
existing banking customer in the first quarter of 2006 that did not recur in the
first quarter of 2007. Although we are currently pursuing several banking
opportunities, due to the project-oriented nature of these sales, we cannot
predict if and when future sales may occur. This decrease was augmented by
decreasing sales of our legacy POS impact printers. We expect sales of our
legacy impact printers to decline as these printers are being replaced by our
newer thermal and inkjet printers. International POS and banking printer
shipments decreased by approximately $182,000, or 45%, to $220,000, due
primarily to lower sales of our line of inkjet printers to one of our
international POS distributors in Latin America.
GAMING AND LOTTERY:
Revenue from the gaming and lottery 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, racetracks ("racinos") and other gaming venues worldwide. Revenue from
this market also includes sales of lottery printers to GTECH, the world's
largest provider of lottery terminals, for various lottery applications. Sales
of our gaming and lottery products decreased by $3,371,000, or 39%, from the
first quarter of 2006, due to lower sales of lottery printers to GTECH, both
domestically and internationally, and a decrease in sales of our slot machine
and other gaming printers, both domestically and internationally.
Change
Three months ended Three months ended ---------------
(In thousands) March 31, 2007 March 31, 2006 $ %
------------------ ------------------ ------- -----
Domestic $3,714 70.4% $6,003 69.4% $(2,289) (38.1%)
International 1,559 29.6% 2,641 30.6% (1,082) (41.0%)
------ ----- ------ ----- -------
$5,273 100.0% $8,644 100.0% $(3,371) (39.0%)
====== ===== ====== ===== =======
Domestic sales of our gaming and lottery printers decreased by $2,289,000, or
38%, due largely to a decrease in domestic sales of lottery printers to GTECH
and, to a lesser extent, a decrease in sales of thermal casino printers due to
softness in the domestic casino market during the first quarter of 2007.
Domestic and international printer sales to GTECH, which include thermal on-line
lottery printers, decreased by approximately $2,401,000, or 68%, in the first
quarter of 2007 compared to the first quarter of 2006, with domestic sales
declining approximately $1,832,000 and international sales declining
approximately $569,000. 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.
International gaming and lottery printer sales decreased $1,082,000, or 41%, to
$1,559,000 in the first quarter of 2007. Such sales represented 30% and 31% of
total sales into our gaming and lottery market during the first quarters of 2007
and 2006, respectively. This decrease was due primarily to decreased sales of
our gaming printers in Europe, largely as a result of unusually low shipments to
one specific European customer, and lower international
13
lottery printer sales to GTECH. These decreases were partly offset by continued
growth in gaming printer sales in Asia and Australia as these international
markets continue to expand ticket printing in slot machines and other gaming
machines.
TRANSACT SERVICES GROUP:
Revenue from TSG includes sales of consumable products (inkjet cartridges,
ribbons and paper), replacement parts, maintenance and repair services,
refurbished printers, and shipping and handling charges. Sales from TSG
increased by approximately $418,000, or 13%.
Change
Three months ended Three months ended -----------
(In thousands) March 31, 2007 March 31, 2006 $ %
------------------ ------------------ ---- ----
Domestic $2,727 76.9% $2,360 75.5% $367 15.6%
International 817 23.1% 766 24.5% 51 6.7%
------ ----- ------ ----- ----
$3,544 100.0% $3,126 100.0% $418 13.4%
====== ===== ====== ===== ====
Domestic revenue from TSG increased by approximately $367,000, or 16% largely
due to increased sales of consumable products, including higher sales of inkjet
cartridges as we continue to benefit from the agreement we signed in August 2006
to supply inkjet cartridges to a leading national office supply chain. The
increase in domestic TSG revenue was also due, to a lesser extent, to higher
service revenue as we continue to win new contracts and expand existing
contracts for our service products including extended warranty contracts and our
24-hour guaranteed replacement product service called TransAct Xpress(TM). These
increases were somewhat offset by a decline in the sales of refurbished
printers. Internationally, TSG revenue increased by approximately $51,000, or
7%, to $817,000 due largely to an increase in maintenance contract and repair
services revenue from a service contract with a single customer in the United
Kingdom.
The primary operations of our United Kingdom subsidiary, a European sales and
service center, relate to revenue generated from a service contract with a
single customer in the United Kingdom. The contract was renewed in April 2007 at
a lower minimum sales value compared to the minimum sales value of the prior
year's contract.
GROSS PROFIT. 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. Gross
profit decreased $1,934,000, or 34%, to $3,753,000 from $5,687,000 and gross
margin decreased to 32.7% from 34.6%, due primarily to a lower volume of sales
in the first quarter of 2007 compared to the first quarter of 2006.
ENGINEERING AND PRODUCT DEVELOPMENT. Engineering, design and product development
expenses primarily include salary and payroll related expenses for our
engineering staff, depreciation and design expenses (including prototype printer
expense, outside design and testing services, and supplies). Such expenses
decreased by $47,000, or 6%, to $714,000, as we incurred lower expenses related
to product development and outside testing, which were partly offset by higher
expenses related to employee compensation related expenses. Engineering and
product development expenses increased as a percentage of net sales to 6.2% from
4.6%, due primarily to lower sales in the first quarter of 2007 compared to the
first quarter of 2006.
SELLING AND MARKETING. 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 and other promotional marketing
expenses. Selling and marketing expenses for the first quarter of 2007 increased
by $62,000, or 4%, to $1,642,000, as we incurred higher employee compensation
related expenses due to the full-year effect of new sales staff in our POS and
banking sales unit and increased marketing expenses, and higher trade show and
marketing consulting expenses. These increases were partly offset by lower
promotional marketing and demonstration printer expenses compared with the first
quarter of 2006. Selling and marketing expenses increased as a percentage of net
sales to 14.3% from 9.6%, due primarily to lower sales volume and an increase in
expenses in the first quarter of 2007 compared to the first quarter of 2006.
GENERAL AND ADMINISTRATIVE. General and administrative expenses primarily
include salaries and payroll related expenses for our executive, accounting,
human resource and information technology staff, expenses for our corporate
headquarters, professional and legal expenses, and telecommunication expenses.
General and
14
administrative expenses increased by $140,000, or 8%, to $1,850,000, due
primarily to (1) increased employee compensation related expenses including the
hiring of our new vice president of human resources, (2) higher recruiting
expenses, (3) higher legal expense related to the expansion of our international
patent portfolio, (4) higher depreciation expense associated with the completion
of the implementation of new Oracle software at the beginning of 2007, and (5)
severance costs related to a reduction in staff in the first quarter of 2007.
These increases were partly offset by lower audit fees, as well as a decrease in
data conversion expenses related to Oracle software that we incurred in the
first quarter of 2006 that did not recur in the first quarter of 2007. General
and administrative expenses increased as a percentage of net sales to 16.1% from
10.4% due primarily to lower sales volume and increased expenses in the first
quarter of 2007 as compared to the first quarter of 2006.
OPERATING INCOME. During the first quarter of 2007 we reported an operating loss
of $453,000, or 4.0% of net sales, compared to operating income of $1,636,000,
or 10.0% of net sales in the first quarter of 2006. The substantial decrease in
our operating income and operating margin was due largely to lower sales and the
resulting lower gross profit, coupled with higher operating expenses, in the
first quarter of 2007 compared to that of 2006.
INTEREST. We recorded net interest income of $28,000 in the first quarter of
2007 compared to $14,000 in the first quarter of 2006. Even though our average
cash balance was lower in the first quarter of 2007 compared to the first
quarter of 2006, our net interest income still increased as we substantially
improved our overall rate of return on our invested cash balance See "Liquidity
and Capital Resources" below for more information.
INCOME TAXES. We recorded an income tax benefit for the first quarter of 2007 of
$203,000 at an effective tax rate of 47.7%, compared to an income tax provision
during the first quarter of 2006 of $582,000 at an effective tax rate of 35.5%.
The higher effective tax rate for the first quarter of 2007 was largely due to
an increase in the recognition of certain credits as a result of the adoption of
FIN 48. We expect our annual effective tax rate for 2007 to be between 35% and
36%.
NET INCOME. We reported a net loss during the first quarter of 2007 of $223,000,
or $0.02 per diluted share, compared to net income of $1,057,000, or $0.11 per
diluted share, for the first quarter of 2006.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
Overview: In the first three months of 2007, our cash flows reflected the
results of lower sales volume and a decreased investment in infrastructure,
compared to the same period in 2006, as we converted over to our new Oracle
enterprise resource planning and accounting system in early January 2007. Even
with the repurchase of approximately $521,000 of our common stock and capital
expenditures of approximately $324,000 during the first quarter of 2007, our
cash balance decreased by only $49,000 from December 31, 2006. We ended the
first quarter of 2007 with approximately $3.4 million in cash and cash
equivalents and no debt outstanding. We expect to earn interest income on our
available cash balance throughout 2007.
Operating activities: The following significant factors affected our cash
provided by operations of $796,000 in the first three months of 2007:
- We reported a net loss of $223,000.
- We recorded depreciation and amortization expense of $434,000.
- Accounts receivable decreased by $3,090,000 due to the collection of
outstanding accounts receivable from the fourth quarter of 2006 and
lower sales and timing of sales during the first quarter of 2007.
- Inventory increased by $1,985,000 due to an unanticipated slowdown in
our business and an increase in consigned inventory programs with
certain of our customers.
- Accounts payable increased by $863,000 due to higher inventory
purchases and the timing of payments during the quarter.
- Accrued liabilities and other liabilities decreased by $1,050,000 due
primarily to the following: (1) lower income tax accrual based on the
loss before taxes for the first quarter of 2007 and (2) lower payroll
and fringe benefits related accruals related to the payment of 2006
annual bonuses in March 2007.
- As of March 31, 2007 and December 31, 2006, our restructuring accrual
amounted to $205,000 and $315,000, respectively. The decrease of
$110,000 is related solely to payments made on our Wallingford lease
obligation.
15
Investing activities: Our capital expenditures were approximately $324,000 and
$973,000 in the first three months of 2007 and 2006, respectively. Expenditures
in 2007 included approximately $172,000 for the purchase of hardware, software
and outside consulting costs related to our Oracle software implementation,
$30,000 for the purchase of leasehold improvements made on the new corporate
headquarters in Hamden, CT and the remaining amount primarily for the purchase
of new product tooling.
Financing activities: We used approximately $521,000 in financing activities
during the first three months of 2007 due to the repurchase of Company stock.
WORKING CAPITAL
Our working capital decreased slightly to $16,262,000 at March 31, 2007 from
$16,438,000 at December 31, 2006. The current ratio increased slightly to 3.0 to
1 at March 31, 2007 from 2.9 to 1 at December 31, 2006. The decrease in working
capital was largely due to lower accounts receivable resulting from collections
of sales from the fourth quarter of 2006 and lower sales volume during the first
quarter of 2007 and a decrease in accrued expenses, partly offset by higher
inventory levels and accounts payable.
DEFERRED TAXES
As of March 31, 2007, we had a net deferred tax asset of approximately
$3,161,000. In order to utilize this deferred tax asset, we will need to
generate approximately $7.8 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 new, five-year $20 million credit facility
(the "New TD Banknorth Credit Facility") with TD Banknorth, N.A. ("TD
Banknorth"). The new credit facility provides for a $20 million revolving credit
line expiring on November 28, 2011. The New TD Banknorth Credit facility
replaces a previous $11.5 million credit facility also with TD Banknorth. Due to
TransAct's improved financial performance, our New TD Banknorth Credit Facility
provides substantially improved terms compared to our prior credit facility,
including lower on-going costs, fewer financial covenants, reduced reporting
requirements and a lower interest rate. Borrowings under the new revolving
credit line bear a floating rate of interest at the prime rate minus one percent
and are secured 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 New TD Banknorth Credit
Facility was $89,000. The New TD Banknorth Credit Facility imposes certain
quarterly financial covenants on us and restricts the payment of dividends on
our common stock and the creation of other liens. We were in compliance with all
financial covenants of the New TD Banknorth Credit Facility at March 31, 2007.
As of March 31, 2007, we had no balances outstanding on the revolving credit
line. Undrawn commitments under the New TD Banknorth Credit facility were
approximately $20,000,000 at March 31, 2007.
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 are
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 ending March
25, 2008, depending on market conditions, share price and other factors. For the
three months ended March 31, 2007, we repurchased a total of 70,000 shares of
common stock for approximately $521,000 at an average price of $7.44 per share.
As of March 31, 2007, we have repurchased a total of 871,300 shares of common
stock for approximately $7,013,000 at an average price of $8.05 per share since
the inception of the Stock Repurchase Program.
SHAREHOLDERS' EQUITY
Shareholders' equity decreased by $249,000 to $24,041,000 at March 31, 2007 from
$24,290,000 at December 31, 2006. The decrease was primarily due to the
following for the three months ended March 31, 2007: (1) net loss of $223,000
and (2) treasury stock purchases of 70,000 shares of common stock for
approximately $521,000. These decreases were partly offset by a cumulative
adjustment to retained earnings due to the implementation of FIN 48 in the
amount of $318,000 and compensation expense related to stock options and
restricted stock of $176,000.
CONTRACTUAL OBLIGATIONS / OFF-BALANCE SHEET ARRANGEMENTS
We have experienced no material changes in our contractual obligations outside
the ordinary course of business during the three months ended March 31, 2007. We
have no material off-balance sheet arrangements as defined in Regulation S-K
303(a)(4)(ii).
RESOURCE SUFFICIENCY
16
We believe that our cash on hand, cash flows generated from operations and
borrowings available under the New TD Banknorth Credit Facility will provide
sufficient resources to meet our working capital needs, including costs
associated with the Consolidation, to finance our capital expenditures, to fund
our Stock Repurchase Program, and meet our liquidity requirements through at
least the next twelve months.
ITEM 4. CONTROLS AND PROCEDURES
As of the end of the period covered by this quarterly report, an evaluation of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures was conducted under the supervision and with the
participation of the Chief Executive Officer and Chief Financial Officer. Based
on this evaluation, the Chief Executive Officer and Chief Financial Officer have
concluded that the Company's disclosure controls and procedures were adequate
and designed to ensure that information required to be disclosed by the Company
in this report is recorded, processed, summarized and reported in a timely
manner, including that such information is accumulated and communicated to
management, including the Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure.
Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all errors and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a controls system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, within the Company have been detected.
These inherent limitations include the realities that judgments in
decision-making can be faulty and that breakdowns can occur because of simple
error or mistake. Controls can also be circumvented by the individual acts of
some persons, by collusion of two or more people, or by management overriding
the controls. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions. Projections of any evaluation of controls effectiveness to
future periods are subject to risks. Over time, controls may become inadequate
because of changes in conditions or deterioration in the degree of compliance
with policies or procedures.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
The implementation of our new Oracle enterprise resource planning and accounting
system, completed effective January 8, 2007, required us to modify and
add/remove certain internal controls and processes and procedures. Otherwise, no
change in our internal control over financial reporting (as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the three months
ended March 31, 2007 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On April 28, 2005, we announced that we filed a complaint in Connecticut
Superior Court against FutureLogic, Inc. ("FutureLogic") of Glendale,
California. The complaint charges FutureLogic with disseminating false and
misleading statements, which impugn our business reputation with the intent of
damaging our business. We assert claims of defamation, tortious interference
with contractual relations, tortious interference with business expectancy, and
violation of the Connecticut Unfair Trade Practices Act, and seek an award of
compensatory and punitive damages, attorneys' fees and costs. FutureLogic
removed this action to the United States District Court for the District of
Connecticut and, on June 7, 2005, filed a motion to dismiss the claims for lack
of jurisdiction. On December 7, 2005, we amended our complaint in the action
pending in the District of Connecticut to add claims that FutureLogic's conduct
violated the Lanham Act's bar on false and deceptive advertising.
On May 20, 2005, FutureLogic filed a complaint in the United States District
Court for the Central District of California against us. The complaint charges
us with false advertising, defamation, trade libel, intentional interference
with prospective economic advantage, common law unfair competition and statutory
unfair competition and seeks an award of compensatory and punitive damages,
attorneys' fees and costs. On August 3, 2005, FutureLogic amended its complaint
in California to seek a declaratory judgment that Patent No. 6,924,903 issued to
17
us by the United States Patent and Trademark Office ("PTO") on August 2, 2005,
for our dual-port printer technology, is invalid, and that FutureLogic is not
infringing our patent. We moved to dismiss FutureLogic's action in California,
on the grounds that any claims raised in that action should have been brought as
part of the case filed by us in the District of Connecticut. In the alternative,
we moved to stay the California action pending the resolution of jurisdictional
motions in the Connecticut court.
On January 20, 2006, the California District Court filed an order granting our
motion to stay the California proceeding pending the resolution of
jurisdictional motions in the Connecticut case. Under the California court's
order, should the Connecticut court find that it has jurisdiction over
FutureLogic, FutureLogic's case will be transferred to the District of
Connecticut for consolidation with the action pending in that forum. On
September 1, 2006, the District of Connecticut dismissed our case because of a
lack of jurisdiction. The decision was not on the merits of our claims, but on
the jurisdiction of the court in which the suit was brought. The California
District Court has been notified of this development. We intend to vigorously
defend TransAct against FutureLogic's claims, which we believe to be without
merit. At this stage in the proceedings we are unable to estimate any potential
or probable liability.
ITEM 1A. RISK FACTORS
Risk factors that may impact future results include those disclosed in our Form
10-K for the year ended December 31, 2006. No changes have occurred during the
three months ended March 31, 2007.
In addition to the other information set forth in this report, you should
carefully consider the factors discussed in Part I, "Item 1A. Risk Factors" in
our Annual Report on Form 10-K for the year ended December 31, 2006, which could
materially affect our business, financial condition or future results. 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 and/or operating results.
ITEM 2C. STOCK REPURCHASE
On March 25, 2005 our Board of Directors approved a stock repurchase program
(the "Stock Repurchase Program"). Under the Stock Repurchase Program, management
is 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
ending March 25, 2008, depending on market conditions, share price and other
factors. For the three months ended March 31, 2007, we had repurchased a total
of 70,000 shares of common stock for approximately $521,000. As of March 31,
2007, we had repurchased a total of 871,300 shares of common stock for
approximately $7,013,000, at an average price of $8.05 per share since the
inception of the Stock Repurchase Program.
The following table summarizes repurchases of our common stock in the three
months ended March 31, 2007.
Approximate Dollar
Total Number of Value of
Shares Purchased as Shares that May Yet
Total Number Average Part of Publicly Be
of Shares Price Paid Announced Purchased under the
Period Purchased per Share Plans or Programs Plans or Programs
------ ------------ ---------- ------------------- -------------------
January 1, 2007 - January 31, 2007 -- $ -- -- $3,508,000
February 1, 2007 - February 28, 2007 -- -- -- $3,508,000
March 1, 2007 - March 31, 2007 70,000 7.44 70,000 $2,987,000
------ ---- ------
Total 70,000 $7.44 70,000
====== ===== ======
18
ITEM 6. EXHIBITS
a. Exhibits filed herein
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
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANSACT TECHNOLOGIES INCORPORATED
(Registrant)
/s/ Steven A. DeMartino
----------------------------------------
May 10, 2007 Steven A. DeMartino
Executive Vice President, Chief
Financial Officer,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
20
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 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
21