<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 JUNE 30, 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
---- ----
Number of shares of Common Stock outstanding
as of August 1, 1997 20,999,000
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No of Pages 10
--
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
PART 1. FINANCIAL INFORMATION
Item 1. Consolidated financial statements
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
1997 1996
-------------- --------------
<S> <C> <C>
(UNAUDITED) RESTATED
(NOTE 2)
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 10,720,000 $ 18,192,000
Investments (Note 3)........................................................... 500,000 1,500,000
Accounts receivable, net (including unbilled
receivables of $3,754,000 at June 30, 1997
and $2,206,000 at September 30, 1996)....................................... 37,902,000 27,338,000
Inventories (Note 4)........................................................... 32,592,000 23,590,000
Deferred income taxes.......................................................... 5,963,000 8,116,000
Other current assets........................................................... 1,926,000 1,348,000
-------------- --------------
Total Current Assets..................................................... 89,603,000 80,084,000
Plant and equipment, net......................................................... 10,575,000 9,266,000
Investments...................................................................... -- 665,000
Goodwill, net.................................................................... 5,346,000 2,627,000
Other assets..................................................................... 6,769,000 4,343,000
-------------- --------------
TOTAL.................................................................... $ 112,293,000 $ 96,985,000
-------------- --------------
-------------- --------------
LIABILITIES
Current Liabilities:
Notes payable.................................................................. 4,618,000 7,159,000
Accounts payable............................................................... 17,289,000 11,880,000
Accrued expenses and other current liabilities................................. 13,377,000 12,332,000
Current portion of term loan................................................... 1,600,000 1,066,000
Advance contract payments received............................................. 1,121,000 1,671,000
-------------- --------------
Total Current Liabilities................................................ 38,005,000 34,108,000
Term loan........................................................................ 6,400,000
Other liabilities................................................................ 50,000 479,000
-------------- --------------
Total Liabilities................................................................ 44,455,000 34,587,000
-------------- --------------
STOCKHOLDERS' EQUITY
Common stock, authorized 30,000,000
shares, $.01 par value; issued and outstanding
20,937,000 shares at June 30, 1997 and
20,697,000 shares at September 30, 1996........................................ 209,000 207,000
Additional paid-in capital....................................................... 144,063,000 143,264,000
Accumulated deficit.............................................................. (76,618,000) (81,395,000)
Unrealized gain on investments available for sale................................ 147,000
Cumulative translation adjustment................................................ 184,000 175,000
-------------- --------------
Total Stockholders' Equity............................................... 67,838,000 62,398,000
-------------- --------------
TOTAL.................................................................... $ 112,293,000 $ 96,985,000
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</TABLE>
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
RESTATED RESTATED
(NOTE 2) (NOTE 2)
1997 1996 1997 1996
-------------- -------------- ------------- -------------
Revenues.......................................... $ 105,719,000 $ 108,496,000 $ 37,930,000 $ 36,083,000
Cost of Revenues.................................. 52,569,000 54,285,000 18,540,000 19,199,000
-------------- -------------- ------------- -------------
Gross Profit...................................... 53,150,000 54,211,000 19,390,000 16,884,000
Research and Development Costs.................... 16,974,000 13,982,000 6,290,000 4,592,000
Selling, General and Administrative Expenses...... 30,116,000 28,908,000 10,427,000 9,941,000
Merger expense.................................... 49,000 300,000 -- 74,000
Interest Income................................... (183,000) (394,000) 15,000 (87,000)
-------------- -------------- ------------- -------------
Income Before Provision (Benefit) for Income
Taxes........................................... 6,194,000 11,415,000 2,658,000 2,364,000
Provision (Benefit) for Income Taxes.............. 1,417,000 (57,000) 950,000 (493,000)
-------------- -------------- ------------- -------------
Net Income........................................ $ 4,777,000 $ 11,472,000 $ 1,708,000 $ 2,857,000
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Net Income Per CommonShare........................ $ .22 $ .53 $ .08 $ .13
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Weighted Average Number of Common
Shares Outstanding............................... 21,670,000 21,619,000 21,578,000 21,647,000
</TABLE>
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30,
--------------------------
<S> <C> <C>
1997 1996
------------- -----------
OPERATING ACTIVITIES: Net income..................................................... $ 4,777,000 $11,472,000
Adjustments to reconcile net income to net cash from operating activities:
Deferred income taxes................................................................ 2,153,000 261,000
Depreciation and amortization........................................................ 3,157,000 2,239,000
Other................................................................................ (290,000) 49,000
Changes in assets & liabilities:
Accounts Receivable................................................................ (10,410,000) (4,314,000)
Inventories........................................................................ (9,047,000) (6,117,000)
Other current assets............................................................... (435,000) (637,000)
Other assets....................................................................... (3,434,000) (1,532,000)
Accounts payable................................................................... 5,402,000 267,000
Accrued expenses and other current liabilities..................................... 779,000 645,000
Advanced contract paymentsreceived................................................. (543,000) (938,000)
Other liabilities.................................................................. (165,000) (34,000)
------------ ------------
Net cash (used in) provided by operating activities.................................. (8,056,000) 1,361,000
------------ ------------
INVESTING ACTIVITIES:
Additions to plant and equipment..................................................... (3,428,000) (4,315,000)
Payment for purchase of business, net of cash acquired............................... (2,993,000) --
Proceeds from investments............................................................ 1,821,000 1,000,000
------------ ------------
Net cash used in investing activities................................................ (4,600,000) (3,315,000)
------------ ------------
FINANCING ACTIVITIES:
Issuance of Common Stock in connection with the exercise of stock options and
warrants........................................................................... 801,000 2,465,000
Proceeds from term loan.............................................................. 8,000,000 --
Net proceeds (repayments) from short-term borrowings................................. (2,008,000) (275,000)
Repayments of long-term borrowings................................................... (1,637,000) (1,270,000)
------------ ------------
Net cash provided by financing activities............................................ 5,156,000 920,000
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS......................... 28,000 (73,000)
NET DECREASE IN CASH AND CASH EQUIVALENTS............................................ (7,472,000) (1,107,000)
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD........................................ 18,192,000 18,302,000
------------ ------------
CASH AND CASH EQUIVALENTS-END OF PERIOD.............................................. $ 10,720,000 $17,195,000
------------ ------------
------------ ------------
SUPPLEMENTAL INFORMATION: Interest paid.............................................. $ 423,000 $ 704,000
------------ ------------
------------ ------------
Taxes paid........................................................................... $ 228,000 $ 935,000
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</TABLE>
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONDENSED FINANCIAL STATEMENTS
The condensed consolidated balance sheet of Robotic Vision Systems, Inc.
and Subsidiaries (The "Company") as of June 30, 1997, the condensed
consolidated statements of operations for the three and nine month periods
ended June 30, 1997 and 1996 and the condensed consolidated statements of
cash flows for the nine month periods ended June 30, 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 June 30, 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 June 30, 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 the 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>
THREE MONTHS NINE MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30,1996
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<S> <C> <C>
Revenues:
As previously reported............................................................ $ 21,455,000 $ 62,916,000
Effect of CI and SEP poolings ofinterests......................................... 14,628,000 45,580,000
------------- --------------
As restated....................................................................... $ 36,083,000 $ 108,496,000
------------- --------------
------------- --------------
Net Income:
As previously reported............................................................ $ 3,850,000 $ 11,741,000
Effect of CI and SEP poolings ofinterests......................................... (993,000) (269,000)
------------- --------------
As restated....................................................................... $ 2,857,000 $ 11,472,000
------------- --------------
------------- --------------
Net income per common share:
Primary:
As previously reported............................................................ $ 0.22 $ 0.66
Effect of CI and SEP poolings of interests........................................ (0.09) (0.13)
------------- --------------
As restated....................................................................... $ 0.13 $ 0.53
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</TABLE>
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)-- Continued
On June 30, 1997, RVSI purchased the outstanding shares of Trigon
Technologies, Inc. ("Trigon"), a privately held company located in Farmington
Hills, Michigan, for $3.0 million in cash plus additional consideration to be
paid over a five year period based on the number of units of certain products
sold. This acquisition was accounted for as a purchase. Trigon markets a line of
2-D machine vision products for the semiconductor industry, and is a major
supplier to RVSI's Systemation Engineered Products subsidiary, along with other
semiconductor OEM's. Trigon has been merged into the operations of Acuity
Imaging, a RVSI subsidiary, thereby adding PC-based coplanarity inspection for
perimeter leaded devices to Acuity's semiconductor industry product offerings.
3. INVESTMENTS
At June 30, 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 June 30, 1997 and September 30, 1996 consisted of the
following:
<TABLE>
<CAPTION>
JUNE 30, 1997 SEPTEMBER 30, 1996
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<S> <C> <C>
Raw Materials.................................................................. $ 18,978,000 $ 9,995,000
Work-in-Process................................................................ 10,792,000 10,920,000
Finished Goods................................................................. 2,822,000 2,675,000
------------- ------------------
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Total.................................................................. $ 32,592,000 $ 23,590,000
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</TABLE>
5. TERM LOAN
The Company has negotiated a term loan from a bank in the amount of
$8,000,000. The term loan matures on the fifth anniversary date of the closing
date. The closing date was June 27, 1997, and borrowings under the term loan are
secured by all accounts receivable of the Company and bear interest of 8.05% per
annum. The terms of the loan, 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 June 30, 1997, $8,000,000 was
outstanding under this credit facility.
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Three and Nine Months Ended June 30, 1997 and 1996
RESULTS OF OPERATIONS
Revenues of $105,719,000 for the nine months ended June 30, 1997
represent a decrease of $2,777,000, or approximately 2.6%, in comparison to
revenues of $108,496,000 for the nine months ended June 30, 1996. For the
three months ended June 30, 1997 revenues of $37,930,000 represent an
increase of $1,847,000, or approximately 5.1%, over the comparable period in
1996. The decrease in revenues for the 9 month period is primarily
attributable to the Company's semiconductor related business. The Company has
observed an upward trend in bookings for its LS- and GS- Series semiconductor
lead scanning products in Q1, Q2 and Q3.
Gross profit margins for the nine months ended June 30, 1997 and June 30,
1996 were 50.3% and 50.0%, respectively.
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 $16,974,000 and $6,290,000 in research and development expense
during the nine and three months ended June 30, 1997 as contrasted with
$13,982,000 and $4,592,000 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 nine and three
months ended June 30, 1997, $2,954,000 and $1,086,000, respectively, of these
costs were capitalized as compared to $1,475,000 and $993,000, respectively, for
the comparable periods in fiscal 1996.
Selling, general and administrative costs increased by $1,208,000, or
approximately 4.2%, and $486,000, or approximately 4.9%, for the nine and three
months ended June 30, 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 nine months ended June 30, 1997.
Acuity Imaging, Inc. ("Acuity"), an RVSI subsidiary, 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 $1,839,000 and $966,000 during
the nine and three month periods ending June 30, 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 start to taper off in the fourth quarter of the fiscal year.
For the nine months ended June 30, 1997 the Company recorded a provision for
income taxes of $1,417,000, which is net of an income tax benefit for the
liquidation of its Belgian subsidiary of $805,000.
Net income for the nine months ended June 30, 1997 was $4,777,000, or $.22
per share as compared to net income of $11,472,000, or $.53 per share for the
nine months ended June 30, 1996. Net income for the three months ended June 30,
1997 was $1,708,000, or $.08 per share as compared to net income of $2,857,000,
or $.13 per share for the three months ended June 30, 1996.
-7-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's operating, investing, and financing activities for the nine
months ended June 30, 1997 utilized net cash and cash equivalents of $7,472,000
as follows:
- Operating activities utilized $8,056,000 during the nine months
ended June 30, 1997;
- $1,821,000 was generated from the maturity of short-term investments;
- $3,428,000 was used to purchase property and equipment, primarily
systems for engineering development, leasehold improvements,
and office furniture and equipment, during the nine months ended
June 30, 1997;
- $2,993,000 was used to purchase the capital stock of Trigon
Technology, Inc., net of cash acquired;
- $801,000 was generated through the issuance of common
stock upon the exercise of stock options and warrants;
- $8,000,000 was received as proceeds from term loan;
- $2,008,000 was used to repay short-term borrowings;
- $1,637,000 was used to repay long-term borrowings;
- The effect of exchange rate changes increased cash and
cash equivalents by $28,000.
The Company has a revolving line of credit from a bank that provides for
maximum borrowings of $6,000,000. The agreement expires on May 31, 2000.
Borrowings under the agreement are secured by all accounts receivable of the
Company and bear interest at the adjusted LIBOR rate, as defined, plus 1.50
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 June 30, 1997, $3,924,000 was outstanding under this credit
facility.
The Company also has a term loan from the same bank in the amount of
$8,000,000. The term loan matures on the fifth anniversary date of the closing
date. The closing date was June 27, 1997, and borrowings under the term loan are
secured by all accounts receivable of the Company and bear interest of 8.05% per
annum. The terms of the loan, 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 June 30, 1997, $8,000,000 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 June 30, 1997
(approximately $644,000 ).
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 an existing line of credit.
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 revenue received in foreign currencies with expenses
paid in the same currency, it is exposed to possible losses on international
currency transactions.
-8-
<PAGE>
EFFECT OF INFLATION
Management believes that during the nine months ended June 30, 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 semiconductors.
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) During the quarter ended June 30, 1997, Registrant did not file any
reports on Form 8-K.
-9-
<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: August 12, 1997 /s/ PAT V. COSTA
-----------------------------
PAT V. COSTA
President and CEO
(Principal Executive Officer )
Dated: August 12, 1997 /s/ ROBERT H. WALKER
-----------------------------
ROBERT H. WALKER
Executive Vice President and Treasurer
(Principal Financial Officer)
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<PAGE>
EXHIBIT 11
ROBOTIC VISION SYSTEMS, INC.
EXHIBIT 11
COMPUTATION OF PER SHARE AMOUNTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
----------------------------
<S> <C> <C>
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
Net income............................................................. $ 4,777,000 $ 11,472,000
------------- -------------
------------- -------------
Weighted average number of common shares............................... 20,849,000 19,993,000
Assumed number of shares issued from common equivalents................ 821,000 1,626,000
------------- -------------
Weighted average number of common and common equivalent shares......... 21,670,000 21,619,000
------------- -------------
------------- -------------
Net income per share................................................... $ 0.22 $ 0.53
------------- -------------
------------- -------------
THREE MONTHS ENDED
-----------------------------
<S> <C> <C>
JUNE 30, 1997 JUNE 30, 1996
-------------- -------------
Net income............................................................. $ 1,708,000 $ 2,857,000
-------------- -------------
-------------- -------------
Weighted average number of common shares............................... 20,930,000 20,456,000
Assumed number of shares issued from common equivalents................ 648,000 1,191,000
-------------- -------------
Weighted average number of common and common equivalent shares......... 21,578,000 21,647,000
-------------- -------------
-------------- -------------
Net income per share................................................... $ 0.08 $ 0.13
------------- -------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000225868
<NAME> ROBOTIC VISION SYSTEM, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 10,720
<SECURITIES> 500
<RECEIVABLES> 37,902
<ALLOWANCES> 0
<INVENTORY> 32,592
<CURRENT-ASSETS> 89,603
<PP&E> 10,575
<DEPRECIATION> 0
<TOTAL-ASSETS> 112,293
<CURRENT-LIABILITIES> 38,005
<BONDS> 0
0
0
<COMMON> 209
<OTHER-SE> 67,838
<TOTAL-LIABILITY-AND-EQUITY> 112,293
<SALES> 0
<TOTAL-REVENUES> 105,719
<CGS> 52,569
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 46,956
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 6,194
<INCOME-TAX> 1,417
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,777
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
