<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1997 Commission File Number 0-8623
-------------- ------
ROBOTIC VISION SYSTEMS, INC.
----------------------------
(Exact name of Registrant as specified in charter)
DELAWARE 11-2400145
- ------------------------------- --------------------------
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
425 RABRO DRIVE EAST, HAUPPAUGE, NEW YORK 11788
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (516) 273-9700
--------------
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 twelve 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
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Number of shares of Common Stock outstanding
as of May 7 , 1997 20,932,273
----------
No. of Pages 10
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
PART 1. Financial Information
---------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
-------------------------- -------------
(UNAUDITED) RESTATED
(NOTE 2)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................... $14,652,000 $18,192,000
Investments (Note 3).................................... 1,000,000 1,500,000
Receivable--net (including unbilled receivables of
$3,145,000 at March 31, 1997 and $2,206,000 at
September 30, 1996...................................... 31,556,000 27,338,000
Inventories (Note 4).................................... 26,410,000 23,590,000
Deferred income taxes................................... 6,913,000 8,116,000
Other current assets.................................... 1,841,000 1,348,000
----------- -----------
Total Current Assets......................... 82,372,000 80,084,000
Plant and equipment, net................................ 9,833,000 9,266,000
Investments............................................. -- 665,000
Goodwill, net........................................... 2,541,000 2,627,000
Other assets............................................ 6,013,000 4,343,000
----------- -----------
TOTAL........................................ $100,759,000 $96,985,000
----------- -----------
----------- -----------
LIABILITIES
Current Liabilities:
Notes Payable......................................... $ 7,111,000 $ 7,159,000
Accounts Payable...................................... 14,073,000 11,880,000
Accrued expenses and other current liabilities........ 12,074,000 12,332,000
Current Portion of Long-Term Debt..................... -- 1,066,000
Advance Contract Payments Received.................... 1,134,000 1,671,000
----------- -----------
Total Current Liabilities.................. 34,392,000 34,108,000
Other Liabilities..................................... 265,000 479,000
----------- -----------
Total Liabilities.......................... 34,657,000 34,587,000
STOCKHOLDERS' EQUITY
Common stock, authorized 30,000,000 shares, $.01 par
value; issued and outstanding
20,912,000 shares at March 31, 1997 and
20,267,000 shares at September 30, 1996................. 209,000 207,000
Additional paid-in capital.............................. 143,978,000 143,264,000
Accumulated deficit..................................... (78,326,000) (81,395,000)
Unrealized gain on investments available for sale....... -- 147,000
Cumulative translation adjustment....................... 241,000 175,000
----------- -----------
Total Stockholders' Equity................. 66,102,000 62,398,000
----------- -----------
TOTAL...................................... $100,759,000 $96,985,000
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</TABLE>
2
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
1996 1996
1997 (RESTATED) 1997 (RESTATED)
------------- ------------- ------------- -------------
Revenues............................................ $ 67,789,000 $ 72,413,000 $ 32,388,000 $ 36,134,000
Cost of Revenues.................................... 34,029,000 35,086,000 16,526,000 17,879,000
------------- ------------- ------------- -------------
Gross Profit...................................... 33,760,000 37,327,000 15,862,000 18,255,000
------------- ------------- ------------- -------------
Research and Development Costs...................... 10,684,000 9,390,000 5,459,000 4,863,000
Selling, General and Administrative Expenses........ 19,689,000 18,967,000 10,189,000 9,572,000
Merger Expenses..................................... 49,000 226,000 5,000 2,000
Interest income..................................... (198,000) (307,000) (117,000) (193,000)
------------- ------------- ------------- -------------
Income Before Provision (Benefit) from Income
Taxes............................................. 3,536,000 9,051,000 326,000 4,011,000
Provision (Benefit) for Income Taxes................ 467,000 436,000 (592,000) 123,000
------------- ------------- ------------- -------------
Net Income.......................................... $ 3,069,000 $ 8,615,000 $ 918,000 $ 3,888,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net Income Per Common Share......................... $ .14 $ .40 $ .04 $ .18
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted Average Number of Common Shares
Outstanding....................................... 21,716,000 21,606,000 21,826,000 21,582,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
3
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
-------------------------------
<S> <C> <C>
1997 1996
---------------- -------------
OPERATING ACTIVITIES:
Net income.......................................................... $3,069,000 $ 8,615,000
Adjustments to reconcile net income to net cash from operating
activities:
Deferred income taxes............................................... 1,203,000 302,000
Depreciation and amortization....................................... 1,992,000 1,835,000
Other............................................................... (221,000) (101,000)
Changes in assets and liabilities:
Accounts Receivables............................................. (4,354,000) (5,376,000)
Inventories...................................................... (2,846,000) (5,426,000)
Prepaid expenses & other current assets.......................... (435,000) (726,000)
Other assets..................................................... (1,978,000) (458,000)
Accounts payable................................................. 2,199,000 2,463,000
Accrued expenses and other current liabilities................... (244,000) (73,000)
Advanced contract payments received.............................. (530,000) (574,000)
Other liabilities................................................ (159,000) (26,000)
---------- ------------
Net cash (used in) operating activities............................. (2,304,000) 455,000
---------- ------------
INVESTING ACTIVITIES:
Additions to plant and equipment.................................... (2,170,000) (2,886,000)
Proceeds from investments........................................... 1,321,000 1,000,000
---------- ------------
Net cash used in investing activities............................... (849,000) (1,886,000)
---------- ------------
FINANCING ACTIVITIES:
Issuance of Common Stock in connection with the exercise of stock
options and warrants.............................................. 716,000 2,159,000
Net proceeds (repayments) from short-term borrowings................ (48,000) 1,854,000
Repayments of long-term borrowings.................................. (1,151,000) (1,020,000)
---------- ------------
Net cash (used in) provided by financing activities................. (483,000) 2,993,000
---------- ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS........ 96,000 (50,000)
---------- ------------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS................ (3,540,000) 1,512,000
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD....................... 18,192,000 18,302,000
---------- ------------
CASH AND CASH EQUIVALENTS-END OF PERIOD............................. $14,652,000 $ 19,814,000
---------- ------------
---------- ------------
SUPPLEMENTAL INFORMATION:
Interest paid....................................................... $ 246,000 $ 351,000
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---------- ------------
Taxes paid.......................................................... $ 1,470,000 $ 648,000
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</TABLE>
4
<PAGE>
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated balance sheet of Robotic Vision Systems, Inc. and
Subsidiaries (The "Company") as of March 31, 1997, the condensed consolidated
statements of operations for the three and six month periods ended March 31,
1997 and 1996 and the condensed consolidated statements of cash flows for the
six month periods ended March 31, 1997 and 1996 have been prepared by the
Company, without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial condition, results of operations and cash flows at March 31, 1997
and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the Company's
September 30, 1996 Form 10-K. The results of operations for the period ended
March 31, 1997 are not necessarily indicative of the operating results for
the full year.
2. ACQUISITIONS
On August 30, 1996, the Company acquired the outstanding shares of Computer
Identics Corporation ("CI") for approximately 2,127,000 shares of the
Company's common stock, having a market value at the date of merger of
approximately $30,580,000. Outstanding CI stock options were converted into
options to purchase approximately 186,000 shares of the Company's common
stock. Outstanding CI warrants were converted into warrants to purchase
approximately 39,000 shares of the Company's common stock. CI designs,
manufactures, markets and sells standard barcode products, data collection
networks and systems for data collection and material handling/industrial
markets.
On October 1, 1996, the Company acquired the outstanding shares of
Systemation Engineered Products, Inc. ("SEP") for approximately 1,740,000
shares of the Company's common stock, having a market value at the date of
the merger of approximately $22,838,000. SEP designs, manufactures, markets
and sells specialized high speed production machinery for the electronics
component industry. SEP's principal product lines include tape and reel
packaging equipment and automatic optical inspection systems.
Both acquisitions were accounted for as poolings of interests and
accordingly, the consolidated financial statements have been retroactively
restated to include the accounts of CI and SEP for all periods presented. The
following is a reconciliation of certain restated amounts with amounts
previously reported.
<TABLE>
<CAPTION>
SIX MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31,1996
-------------- -------------
<S> <C> <C>
Revenues:
As previously reported......................................... $ 41,460,000 $20,998,000
Effect of CI and SEP poolings of interests..................... 30,953,000 15,136,000
------------- ------------
As restated.................................................... $ 72,413,000 $36,134,000
------------- ------------
------------- ------------
Net Income:
As previously reported......................................... $ 7,891,000 $ 4,005,000
Effect of CI and SEP poolings of interests..................... 724,000 (117,000)
------------- -------------
As restated.................................................... $ 8,615,000 $ 3,888,000
------------- -------------
------------- -------------
Net income per share:
As previously reported......................................... $ 0.45 $ 0.23
Effect of CI and SEP poolings of interests..................... (0.05) (0.05)
------------- -------------
As restated.................................................... $ 0.40 $ 0.18
------------- -------------
------------- -------------
</TABLE>
5
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
(Unaudited)
3. INVESTMENTS
At March 31, 1997 and September 30, 1996, investments consisted of certain
debt securities issued by the United States government with maturities
through November 1997.
4. INVENTORIES
Inventories at March 31, 1997 and September 30, 1996 consisted of the
following:
<TABLE>
<CAPTION>
MARCH 31, 1997 SEPTEMBER 30, 1996
-------------- ------------------
<S> <C> <C>
Raw Materials............................................. $ 15,567,000 $ 9,995,000
Work-in-Process........................................... 8,629,000 10,920,000
Finished Goods............................................ 2,214,000 2,675,000
------------ --------------
Total........................................... $ 26,410,000 $ 23,590,000
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</TABLE>
6
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Three and Six Months Ended March 31, 1997 and 1996
RESULTS OF OPERATIONS
Revenues of $67,789,000 for the six months ended March 31, 1997 represent a
decrease of $4,624,000, or approximately 6.4%, in comparison to revenues of
$72,413,000 for the six months ended March 31, 1996. For the three months
ended March 31, 1997 revenues of $32,388,000 represent a decrease of
$3,746,000 or approximately 10.4%, off the comparable period in 1996. The
decrease in revenues is primarily attributable to the Company's semiconductor
related business which was affected by a recent lengthening of order lead
times, as contrasted with the short lead times that have been characteristic
of the semiconductor equipment market for the past several quarters. The
Company has observed an upward trend in bookings for its LS- and GS- Series
semiconductor lead scanning products in Q1, Q2 and continuing thus far in Q3.
Gross profit margins for the six months ended March 31, 1997 and March 31,
1996 were 49.8% and 51.5%, respectively. The decrease in margins was
primarily attributed to pricing pressures in the semiconductor sector.
Continued development of the LS-3000 and GS-5000 Series of lead scanning
systems, computerized visual inspection equipment, barcode scanning and data
collection equipment and the ID-1 aircraft ice detection system primarily
accounted for $10,684,000 and $5,459,000 in research and development expense
during the six and three months ended March 31, 1997 as contrasted with
$9,390,000 and $4,863,000 during the comparable periods in fiscal 1996.
Certain software development costs are capitalized in accordance with the
provisions of Statement of Financial Accounting Standards No. 86. For the six
and three months ended March 31, 1997, $1,806,000 and $1,218,000,
respectively, of these costs were capitalized as compared to $473,000 and
$347,000, respectively, for the comparable periods in fiscal 1996.
Selling, general and administrative costs increased by $722,000 or
approximately 3.8%, and $617,000 or approximately 6.4%, for the six and three
months ended March 31, 1997 as compared to the prior comparable periods,
primarily as a result of increased marketing and distribution costs. The
Company incurred $49,000 for merger expenses for the six months ended March
31, 1997. Acuity incurred a non-recurring charge of $220,000 as a consequence
of a contract cancellation notice received by one of Acuity's customers
which, in turn, caused such customer to cancel its own order to Acuity.
The Company incurred litigation expenses of $873,000 and $633,000 during the
six and three month periods ending March 31, 1997 relating to its patent
infringement suits instituted against View Engineering and a fraud suit
instituted against View's parent, General Scanning Inc. Although the Company
expects this litigation activity to continue, it anticipates that the level
of expenses will taper off in the second half of the fiscal year.
For the six months ended March 31, 1997 the Company recorded a provision for
income taxes of $467,000, which is net of an income tax benefit for the
liquidation of its Belgian subsidiary of $805,000.
7
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS--CONTINUED
Net income for the six months ended March 31, 1997 was $3,069,000, or $.14
per share as compared to net income of $8,615,000, or $.40 per share. Net
income for the three months ended March 31, 1997 was $918,000, or $.04 per
share as compared to net income of $3,888,000, or $.18 per share for the
three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating, investing, and financing activities for the six
months ended March 31, 1997 utilized net cash and cash equivalents of
$3,540,000 as follows:
- Operating activities utilized $2,304,000 during the six months ended
March 31, 1997;
- $1,321,000 was generated from the maturity of short-term investments;
- $2,170,000 was used to purchase property and equipment, primarily systems
for engineering development, leasehold improvements, and office furniture
and equipment, during the six months ended March 31, 1997;
- $716,000 was generated through the issuance of common stock upon the
exercise of stock options and warrants;
- $48,000 was used to repay short-term borrowings;
- $1,151,000 was used to repay long-term borrowings;
- The effect of exchange rate changes increased cash and cash equivalents by
$96,000.
The Company has a revolving line of credit from a bank that provides for
maximum borrowings of $6,000,000. The agreement expires on January 31, 1999.
Borrowings under the agreement are secured by all accounts receivable of the
Company and bear interest at the adjusted LIBOR rate, as defined, plus 1.75
percent. The Company is required to pay a commitment fee of one quarter of
one percent per annum on any unused portion of the credit facility. The terms
of the agreement, among other matters, require the Company to maintain
certain tangible net worth, debt to equity, working capital, and earnings
before depreciation and amortization to long-term debt ratios and restrict
the payment of cash dividends. As of March 31, 1997, $4,924,000 was
outstanding under this credit facility. The Company also has available
$3,000,000 under an additional credit facility from the same bank which is
secured by various assets of the Company. As of March 31, 1997, $1,500,000
was outstanding under this credit facility.
CI has an unconditional line of credit in the amount of DM 1,500,000 with a
second bank. Borrowings under this line of credit bear interest at the
prevailing Lombard Rate plus two percent and are payable on demand.
Borrowings outstanding under this line of credit totaled DM 1,150,000 as of
March 31, 1997 (approximately $687,000).
The Company anticipates that its working capital needs for fiscal 1997 will
be satisfied by existing cash and cash equivalents, operating revenues and,
if necessary, through borrowings under its existing lines of credit.
8
<PAGE>
FOREIGN CURRENCY TRANSACTIONS
The Company does not currently engage in international currency hedging
transactions to mitigate its foreign currency exposure. To the extent the
Company is unable to match revenues received in foreign currencies with
expenses paid in the same currency, it is exposed to possible losses on
international currency transactions. During the quarter ended March 31, 1997
the Company incurred a charge of $245,000 related to foreign currency
exchange losses in CiMatrix. Steps are being taken to reduce the Company's
future exposure as a result of foreign currency exchange fluctuations.
EFFECT OF INFLATION
Management believes that during the six months ended March 31, 1997 the
effect of inflation was not material.
FLUCTUATIONS IN THE SEMICONDUCTOR MARKET
The semiconductor industry has been subject to significant market
fluctuations and periodic downturns, which often have a disproportionately
negative effect on both revenues and earnings of semiconductor capital
equipment companies. The future financial results of RVSI may, therefore,
depend significantly on the market demand for integrated circuit devices.
PART II. OTHER INFORMATION
ITEM 3. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11--Statement regarding computation of net income per common
share.
(b) Exhibit 27--Financial Data Schedule.
(c) Registrant filed an 8-K/A-1, Item 7, on January 22, 1997.
9
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE AMOUNTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
<S> <C> <C>
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
Net income........................................................ $ 3,069,000 $ 8,615,000
------------ ------------
------------ ------------
Weighted average number of common shares.......................... 20,808,000 19,761,000
Assumed number of shares issued from common share equivalents..... 908,000 1,845,000
------------ ------------
Weighted average number of common and common equivalent shares.... 21,716,000 21,606,000
------------ ------------
------------ ------------
Net income per share.............................................. $ 0.14 $ 0.40
------------ ------------
------------ ------------
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
<S> <C> <C>
31, 1997 31, 1996
MARCH MARCH
------------ ------------
Net income........................................................ $ 918,000 $ 3,888,000
------------ ------------
------------ ------------
Weighted average number of common shares.......................... 20,879,000 20,163,000
Assumed number of shares issued from common share equivalents..... 947,000 1,419,000
------------ ------------
Weighted average number of common and common equivalent shares.... 21,826,000 21,582,000
------------ ------------
------------ ------------
Net income per share.............................................. $ 0.04 $ 0.18
------------ ------------
------------ ------------
</TABLE>
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBOTIC VISION SYSTEMS, INC.
--------------------------------------------
REGISTRANT
DATED: MAY 13, 1997 /S/ PAT V. COSTA
--------------------------------------------
PAT V. COSTA
PRESIDENT AND CEO
(PRINCIPAL EXECUTIVE OFFICER)
DATED: MAY 13, 1997 /S/ ROBERT H. WALKER
--------------------------------------------
ROBERT H. WALKER
EXECUTIVE VICE PRESIDENT AND TREASURER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,652
<SECURITIES> 1,000
<RECEIVABLES> 31,556
<ALLOWANCES> 0
<INVENTORY> 26,410
<CURRENT-ASSETS> 82,372
<PP&E> 9,833
<DEPRECIATION> 0
<TOTAL-ASSETS> 100,759
<CURRENT-LIABILITIES> 34,392
<BONDS> 0
0
0
<COMMON> 209
<OTHER-SE> 65,893
<TOTAL-LIABILITY-AND-EQUITY> 100,759
<SALES> 0
<TOTAL-REVENUES> 67,789
<CGS> 34,029
<TOTAL-COSTS> 34,029
<OTHER-EXPENSES> 30,224
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,536
<INCOME-TAX> 467
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,069
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
