<PAGE>
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 DECEMBER 31, 1996
-----------------
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: 0-28946
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Vivid Technologies, Inc.
------------------------
(Exact name of registrant as specified in its charter)
Delaware 04-3054475
-------- ----------
(State of incorporation) (I.R.S. Employer Identification No.)
10E Commerce Way, Woburn, Massachusetts 01801
----------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 938-7800
--------------
(Registrant's telephone number, including area code)
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 ___ No X
---
As of February 1, 1997, 9,181,470 shares of the registrant's Common Stock, $.01
par value, were issued and outstanding.
<PAGE>
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
December 31, 1996 and September 30, 1996.......... 3
Consolidated Statements of Operations
Three Months Ended December 31, 1996
and 1995.......................................... 4
Consolidated Statements of Cash Flows
Three Months Ended December 31, 1996
and 1995.......................................... 5
Notes to Consolidated Financial Statements........ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 9
PART II - OTHER INFORMATION................................... 13
SIGNATURES.................................................... 15
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
December 31, September 30,
1996 1996
---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .................... $16,728,974 $1,661,724
Accounts receivable .......................... 4,427,158 3,720,478
Inventories ................................... 5,961,953 4,741,658
Deferred tax asset ........................... 181,000 181,000
Other current assets .......................... 671,414 444,902
----------- ----------
Total current assets ....................... 27,970,499 10,749,762
----------- ----------
PROPERTY AND EQUIPMENT, at cost:
Machinery and equipment ...................... 1,762,708 1,681,659
Furniture and fixtures ...................... 60,187 58,855
Leasehold improvements ........................ 144,826 143,776
Equipment under capital leases................. 198,580 198,580
----------- ----------
2,166,301 2,082,870
Less- accumulated depreciation and amortization. 1,206,930 1,097,717
----------- ----------
959,371 985,153
----------- ----------
Other assets, net ............................. 102,577 228,077
----------- ----------
$29,032,447 $11,962,992
=========== ==========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
1996 1996
---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Obligation under capital leases .............. $ 7,634 $ 36,888
Accounts payable ............................. 2,246,612 1,493,874
Accrued expenses ............................. 2,770,314 3,432,914
Currently redeemable series A preferred stock.. --- 2,343,750
Currently redeemable series C preferred stock.. --- 3,436,900
Customer deposits ............................. 1,446,369 1,042,085
----------- ----------
Total current liabilities ................... 6,470,929 11,786,411
=========== ==========
Commitments and contingencies (Note 5)
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $.01 par value--
Series B--
Authorized-- 250,000 shares, Issued and
outstanding-- no shares and 250,000 shares,
respectively ................................. --- 2,500
Series D--
Authorized--254,585 shares, Issued and
outstanding--no shares and 254,585 shares,
respectively ................................. --- 2,546
Common stock, $.01 par value-
Authorized - 30,000,000 shares, Issued and
outstanding - 8,880,870 and 1,740,520 shares,
respectively ................................. 88,809 17,405
Capital in excess of par value ............... 22,108,658 594,279
Retained earnings (deficit) ................... 364,051 (440,149)
----------- ----------
Total stockholders' equity .................. 22,561,518 176,581
----------- ----------
$29,032,447 $11,962,992
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 31,
1996 1995
---- ----
<S> <C> <C>
Revenues..................................... $ 5,865,536 $ 3,017,347
Cost of revenues............................. 2,527,529 1,259,149
----------- -----------
Gross margin............................ 3,338,007 1,758,198
Operating expenses:
Research and development..................... 974,936 788,712
Selling and marketing........................ 606,505 284,660
General and administrative................... 479,035 341,645
Litigation expenses.......................... 125,000 61,013
----------- -----------
Total operating expenses................ 2,185,476 1,476,030
----------- -----------
Income from operations....................... 1,152,531 282,168
Interest income, net......................... 67,471 18,196
----------- -----------
Income before provision for income taxes..... 1,220,002 300,364
Provision for income taxes................... 415,802 ---
----------- -----------
Net income.............................. $ 804,200 $ 300,364
=========== ===========
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE...................... $ .10 $ .04
=========== ===========
WEIGHTED AVERAGE NUMBER
OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING................ 8,377,776 7,271,837
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................... $804,200 $300,364
Adjustments to reconcile net income to net cash
used in operating activities-
Depreciation and amortization.................. 110,154 69,641
Changes in assets and liabilities-
Accounts receivable......................... (706,680) (191,870)
Inventories................................. (1,220,295) (363,975)
Other current assets........................ (226,512) (85,144)
Accounts payable............................ 752,738 217,903
Accrued expenses............................ (662,599) (85,750)
Customer deposits........................... 404,284 --
----------- ----------
Net cash used in operating activities..... (744,710) (138,831)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net....... (83,431) (210,743)
Decrease in other assets....................... 124,558 --
----------- ----------
Net cash provided by (used in)
investing activities.................... 41,127 (210,743)
----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from initial public offering...... 21,554,088 --
Proceeds from exercise of stock options........ 26,650 1,270
Redemption of preferred stock.................. (5,780,650) --
Payments on capital lease obligations.......... (29,255) (38,333)
----------- ----------
Net cash provided by financing activities. 15,770,833 (37,063)
----------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS............................... 15,067,250 (386,637)
CASH AND CASH EQUIVALENTS, beginning of period. 1,661,724 2,561,912
----------- ----------
CASH AND CASH EQUIVALENTS, end of period....... $16,728,974 $2,175,275
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for -
Interest.................................... $ 1,545 $ 3,313
=========== ==========
Income taxes................................ $ 415,802 $ --
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) BASIS OF PRESENTATION
The consolidated financial statements of Vivid Technologies, Inc. (the
Company) presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do not
include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year ended
September 30, 1996, included in the Company's Form S-1 Registration Statement
(File No: 333-14311) as filed with the Securities and Exchange Commission.
The consolidated balance sheet as of December 31, 1996, the consolidated
statements of income for the three months ended December 31, 1996 and 1995, and
the consolidated statements of cash flows for the three months ended December
31, 1996 and 1995, are unaudited but, in the opinion of management, include all
adjustments (consisting of normal, recurring adjustments) necessary for a fair
presentation of results for these interim periods.
The results of operations for the three months ended December 31, 1996 are
not necessarily indicative of the results to be expected for the entire fiscal
year ending September 30, 1997.
(2) CASH AND CASH EQUIVALENTS
The Company considers all highly liquid securities with original maturities
of three months or less to be cash equivalents.
The Company accounts for investments in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Under SFAS No. 115, investments for
which the Company has the positive intent and ability to hold to maturity are
reported at amortized cost, which approximates fair market value, and are
classified as held-to-maturity, and accordingly does not record gains or losses
based on market fluctuations. At December 31, 1996 and September 30, 1996,
substantially all of the Company's cash equivalents were invested in a pooled
fund managed by the Company's bank, which invests primarily in U.S. Government
fixed income securities. The Company has deemed these securities as held-to-
maturities.
6
<PAGE>
(3) INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or market
and consist of the following:
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
---- ----
<S> <C> <C>
Raw materials................................... $4,207,761 $3,336,696
Work-in-process................................. 1,247,436 858,983
Finished goods.................................. 506,756 545,979
---------- ----------
$5,961,953 $4,741,658
========== ==========
</TABLE>
Finished goods consist of material, labor and manufacturing overhead.
(4) SIGNIFICANT CUSTOMER AND CONCENTRATION OF CREDIT RISK
In the three months ended December 31, 1996 and 1995, the Company had one
customer who comprised 64% and 84% of revenues, respectively. This customer had
amounts due to the Company of approximately $2,199,000 at December 31, 1996, all
of which were within the payment terms of the sales.
(5) PATENT LITIGATION
In October 1994, EG&G Astrophysics Research Corporation ("EG&G") filed a
patent infringement claim against the Company in the United States District
Court for the District of Massachusetts, alleging that certain of the Company's
products infringed a patent held by EG&G. EG&G sought damages and expenses from
the Company and sought to enjoin the Company from selling products that
allegedly infringed the EG&G patent. In December 1994, the Company filed an
answer denying any infringement and counterclaims seeking to invalidate the EG&G
patent and alleging that EG&G infringed three patents owned or licensed by the
Company. On November 6, 1996, the Company and EG&G entered into a Settlement
Agreement relating to this litigation.
In May 1996, in response to allegations made by American Science &
Engineering ("AS&E") to third parties that the Company was infringing AS&E's
patents, the Company filed an action in the United States District Court for the
District of Massachusetts seeking a declaratory judgment that the
Company is not infringing AS&E's patents. In August 1996, AS&E filed an
answer and counterclaim alleging that the Company is infringing one or more
of eight AS&E patents. In October 1996, the court dismissed AS&E's infringement
counterclaim, but allowed AS&E to raise more specific infringement counterclaims
upon asserting factual support for such claims. In December 1996, AS&E filed a
motion for leave to file an amended counterclaim asserting that the Company was
violating one AS&E patent. In February 1997, the court dismissed AS&E's motion,
but again allowed AS&E to raise more specific infringement counterclaims AS&E's
asserting factual support for such claims. Although the Company does not believe
that it is infringing any valid patent of AS&E, there can be no assurance that
AS&E will not raise more specific infringement
7
<PAGE>
counterclaims. Currently, management does not believe that it is probable that
this litigation will have a material adverse effect on the Company's business
and financial condition; however, there can be no assurance that this will be
the case.
6) INITIAL PUBLIC OFFERING
A registration statement relating to the Company's initial public offering
of common stock was declared effective on December 10, 1996. In connection with
this offering 2,300,000 shares of common stock were sold to the public
(including 300,000 shares sold pursuant to an over-allotment option exercised by
the underwriters in January 1997). All shares were sold by the Company at a
price of $12.00 per share which resulted in net proceeds (after deducting
issuance costs including underwriters commission) of approximately $21,500,000.
In December 1996, the Company used $5.8 million of the net proceeds to redeem
all of its outstanding shares of non-convertible redeemable Series A preferred
stock and Series C preferred stock. In connection with the Company's initial
public offering, all of its Series B preferred stock and Series D preferred
stock was converted into an aggregate of 5,045,850 shares of common stock.
7) RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123 "Accounting for Stock-Based Compensation," which becomes effective for
fiscal years beginning after December 15, 1995. SFAS No. 123 establishes new
financial accounting and reporting standards for stock-based compensation
plans. However, entities are allowed to elect whether to measure compensation
expense for stock-based compensation under SFAS No. 123 or Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The
Company has elected to remain with the accounting under APB No. 25 and will make
the required pro forma disclosures of net income and earnings per share as if
the provisions of SFAS No. 123 had been applied in its September 30, 1997
financial statements. The potential impact of adopting this standard on the
Company's pro forma disclosures of net income and earnings per share has not
been quantified at this time.
(8) COMMON STOCK
During the first quarter of fiscal 1997, the Company granted options to
purchase 126,500 shares of common stock at exercise prices ranging from $9.50 to
$12.50 per share which vest over a period of five years.
8
<PAGE>
PART I - FINANCIAL INFORMATION (Continued)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
The Company's results of operations have and may continue to be subject to
significant quarterly fluctuation due to several factions, including the overall
demand for explosives detection systems, market acceptance of the Company's
products, timing of the announcement, introduction and delivery of new products
and product enhancements by the Company and its competitors, variations in
component costs, timing of customer orders, adjustments of delivery schedules to
accommodate customers programs, the availability of components from suppliers,
the timing and level of expenditures in anticipation of future sales, and
pricing and other competitive conditions. Customers may also cancel or
reschedule shipments and production difficulties could delay shipments.
Relatively few system sales to relatively few customers comprise a significant
portion of the Company's revenues in each quarter. Therefore, small variations
in the number of systems sold could have a significant effect on the Company's
results of operations.
Results of Operations
Revenues. Revenues for the first quarter of fiscal 1997 increased 94% to
$5,865,536 from $3,017,347 for the first quarter of fiscal 1996. This increase
was primarily due to the increase in the total number of product shipments to
Europe as well as the initial shipments to Kuala Lumpur International Airport in
Malaysia, partially offset by lower average selling prices of the Company's
products.
In the three months ended December 31, 1996 and 1995, sales to one customer
accounted approximately 64% and 84% of revenues, respectively. This customer is
scheduled to complete the deployment of check baggage explosive detection
systems by the end of 1997. As a result, the Company expects that its revenues
from this customer will become increasingly dependent upon sales of upgrades,
replacement equipment and services. New orders from the customer will decrease
during fiscal 1997 and revenues from this customer will decrease during the
second half of fiscal 1997. The Company recently received orders to purchase an
aggregate of approximately 50 automated explosives detection systems from Kuala
Lumpur International Airport and Chek Lap Kok Airport in Hong Kong. The Company
began delivery of the initial shipments to Kuala Lumpur International Airport in
the first quarter of fiscal 1997 and expects that it will deliver the remainder
of these orders over the next four fiscal quarters. In addition, the Company
received repeat orders from France and Spain during the first fiscal quarter of
1997.
9
<PAGE>
In the first three months of fiscal 1997, 100% of product revenues were
generated internationally, approximately 70% in Europe, and 30% in Asia. In the
three months of fiscal 1996, 100% of revenues were generated in Europe.
Gross Margin. Gross margin decreased as a percentage of sales to 57% in
the current quarter from 58% in the first quarter of fiscal 1996. This decrease
was primarily attributable to the change in a Company's product mix, lower
average selling prices and the elimination of revenues associated with the
Company's FAA grant which were partially offset by manufacturing efficiencies
and, during a portion of the first quarter of fiscal 1997, the reduction in the
royalty rate, as a percentage of sales, due to Hologic, Inc. from 5% to 3%.
Research and Development Expenses. Research and development expenses
increased 24% to $974,963 (17% of revenues) in the current quarter from $788,712
(26% of revenues) in the first quarter of fiscal 1996. The increase in research
and development expenses was primarily due to the addition of engineering
personnel and outside consultants working on the development of new products and
enhancements to existing products. As a percentage of revenues, research and
development expenses declined in the current year, reflecting increased revenues
in the first quarter of fiscal 1997.
Selling and Marketing Expenses. Selling and marketing expenses increased
113% to $606,505 (10% of revenues) in the current quarter from $284,660 (9% of
revenues) in the first quarter of fiscal 1996. The increase in selling and
marketing expenses was primarily due to an increase in sales and support
personnel, consulting services, trade show costs, and an increase in commissions
principally due to a shift in sales to Asia.
General and Administrative Expenses. General and administrative expenses
increased 40% to $479,035 (8% of revenues) in the current quarter from $341,645
(11% of revenues) in the first quarter of fiscal 1996. The increase in general
and administrative expenses was primarily due to increased headcount and other
payroll-related expenditures.
Litigation Expenses. The Company incurred $125,000 and $61,000 of
litigation expenses in the first quarter of fiscal 1997 and 1996, respectively,
primarily, in connection with the Company's patent litigation with EG&G. On
November 6, 1996, the Company entered into an agreement with EG&G to settle this
litigation. The litigation expenses in fiscal 1997 also include expenses
incurred in connection with the Company's litigation with AS&E. In October 1996,
the court dismissed AS&E's infringement counterclaims, but allowed AS&E to raise
more specific counterclaims upon AS&E asserting factual support for such claims.
In December 1996, AS&E filed a motion for leave to file an amended counterclaim
asserting that the Company is violating one AS&E patent. In February 1997, the
court dismissed AS&E's motion, but again allowed AS&E to raise more specific
infringement counterclaims upon AS&E's asserting factual support for such
claims. Currently, management does not believe that it is probable that this
litigation will have a material adverse effect on the Company's business and
financial condition; however, there can be no assurance that this will be the
case.
Interest Income. The Company recognized net interest income of $67,471 in
the current quarter compared to $18,196 in the first quarter of fiscal 1996.
The increase was
10
<PAGE>
primarily due to interest income earned from the investment of the net proceeds
of the initial public offering received in mid-December 1996.
Provision for Income Taxes. The Company's effective tax rate for the first
three months of fiscal 1997 was 34.1%. The Company's effective tax rate is
lower than the federal and state statutory tax rates due primarily to the
utilization of tax credits and other tax benefits associated the Company's
foreign sales corporation. The Company had no tax provision in fiscal 1996 due
to the recognition of a deferred tax asset that management believed was more
likely than not to be utilized.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations and capital expenditures primarily
through internally generated cash flow, proceeds from the sale of securities and
the availability of a working capital line of credit. At December 31, 1996, the
Company had working capital of $21.5 million including $16.7 million in cash and
cash equivalents. The Company also has a $3.0 million bank line of credit which
expires on February 28, 1997. At December 31, 1996, the Company had no amounts
outstanding under this line of credit. The Company expects to renew its bank
line of credit and is currently discussing with the bank the possibility of
increasing the amount available under the renewed line.
During the first fiscal quarter of 1997, the Company's net cash used in
operating activities was approximately $700,000. During that period, $1.2
million and $700,000 increases in inventory and accounts receivable,
respectively, and a $700,000 decrease in accrued expenses, were partially offset
by net income and non-cash depreciation and amortization expenses totaling
$900,000 and an increase in accounts payable and customer deposits of $800,000
and $400,000 respectively. At December 31, 1996, one of the Company's customers
had accounts receivable outstanding of approximately $2.2 million, which were
current within their payment terms. The increase in accounts receivable and
inventories in the first quarter of fiscal 1997 reflects the Company's increased
sales activity including its expansion into the Asia/Pacific region.
The Company's capital expenditures during the first quarter of fiscal 1997
were $83,000. While the Company does not have any significant commitments for
capital expenditures, the Company anticipates that it will continue to purchase
equipment to support its anticipated growth.
During the first quarter of fiscal 1997, net cash provided by financing
activities was $15.8 million. Net cash provided by financing activities in the
first quarter of fiscal 1997 was primarily attributable to the receipt of net
proceeds of approximately $21.5 million from the initial public offering of the
Company's common stock. The Company used approximately $5.8 million of the net
proceeds of the offering to redeem all of its outstanding shares of non-
convertible redeemable preferred stock.
The Company does not currently have any significant capital commitments and
believes that existing sources of liquidity, including the net proceeds of its
initial public offering, funds expected to be generated from operations and its
line of credit will provide adequate cash to fund the Company's anticipated
working capital and other cash needs
11
<PAGE>
through at least the next twelve months. However, for a brief discussion of the
factors that could adversely affect the Company's financial position and results
of operations, see the opening paragraph of Item 2 above.
RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board issued SFAS No.
123 "Accounting for Stock-Based Compensation," which becomes effective for
fiscal years beginning after December 15, 1995. SFAS No. 123 establishes new
financial accounting and reporting standards for stock-based compensation
plans. However, entities are allowed to elect whether to measure compensation
expense for stock-based compensation under SFAS No. 123 or Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees." The
Company has elected to remain with the accounting under APB No. 25 and will
make the required pro forma disclosures of net income and earnings per share as
if the provisions of SFAS No. 123 had been applied in its September 30, 1997
financial statements. The potential impact of adopting this standard on the
Company's pro forma disclosures of net income and earnings per share has not
been quantified at this time.
12
<PAGE>
PART II - OTHER INFORMATION
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
Item 1. Legal Proceedings.
Patent Litigation. In October 1994, EG&G Astrophysics Research
Corporation ("EG&G") filed a patent infringement claim against the Company in
the United States District Court for the District of Massachusetts, alleging
that certain of the Company's products infringed a patent held by EG&G. EG&G
sought damages and expenses from the Company and sought to enjoin the Company
from selling products that allegedly infringed the EG&G patent. In December
1994, the Company filed an answer denying any infringement and counterclaims
seeking to invalidate the EG&G patent and alleging that EG&G infringed three
patents owned or licensed by the Company. On November 6, 1996, the Company and
EG&G entered into a Settlement Agreement relating to this litigation.
In May 1996, in response to allegations made by American Science &
Engineering ("AS&E") to third parties that the Company was infringing AS&E's
patents, the Company filed an action in the United States District Court for the
District of Massachusetts seeking a declaratory judgment that the Company is not
infringing As&E's patents. In August 1996, AS&E filed an answer and counterclaim
alleging that the Company is not infringing one or more of eight AS&E patents.
In October 1996, the court dismissed AS&E's infringement counterclaim, but
allowed AS&E to raise more specific infringement counterclaims upon asserting
factual support for such claims. In December 1996, AS&E filed a motion for leave
to file an amended counterclaim asserting that the Company was violating one
AS&E patent. In February 1997, the court dismissed AS&E's motion, but again
allowed AS&E to raise more specific infringement counterclaims upon AS&E's
asserting factual support for such claims. Although the Company does not believe
that it is infringing any valid patent of AS&E, there can be no assurance that
AS&E will not raise more specific infringement counterclaims. Currently,
management does not believe that it is probable that this litigation will have a
material adverse effect on the Company's business and financial condition;
however, there can be no assurance that this will be the case.
Item 2. Changes in Securities.
From October 1, 1996 through December 31, 1996, options to purchase a total
of 94,500 shares of Common Stock, granted under the Registrant's 1989
Combination Stock Option Plan were exercised at prices ranging from $0.10 to
$1.00 per share at an aggregate price of $26,650. The issuance of these
securities was exempt from registration pursuant to Rule 701 promulgated under
Section 3(b) of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
Item 5. Other Information.
None.
13
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Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits furnished:
(11) Statement Re: Computation of Earnings Per Share.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
None.
14
<PAGE>
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
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.
Vivid Technologies, Inc.
(Registrant)
February 14, 1997 /s/ S. David Ellenbogen
- ----------------- ------------------------
Date S. David Ellenbogen
Chief Executive Officer and President
February 14, 1997 /s/ William J. Frain
- ----------------- ---------------------
Date William J. Frain
Chief Financial Officer and Treasurer
(Principal Financial and Chief
Accounting Officer)
15
<PAGE>
VIVID TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 31,
1996 1995
---- ----
<S> <C> <C>
PRIMARY:
Net income........................................... $804,200 $300,364
======== ========
Weighted average common stock outstanding............ 2,222,281 1,675,230
Conversion of Series B and Series D convertible
preferred stock............................... 5,045,850 5,045,850
Stock issued within twelve months of initial public
offering...................................... 116,159 148,419
Common stock equivalents............................. 993,486 402,338
------- -------
Primary weighted average number of common and
common equivalent shares outstanding.......... 8,377,776 7,271,837
========= =========
Per share amount..................................... $ .10 $ .04
========== ==========
</TABLE>
<TABLE> <S> <C>
<PAGE>
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<S> <C> <C>
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<PERIOD-START> OCT-01-1996 OCT-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 16,728,974 1,661,724
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0 5,780,650
0 5,046
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