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 December 31, 1996 Commission File Number 0-8623
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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
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (516) 273-9700
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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 February 6, 1997 20,874,908
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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
December 31, September 30,
1996 1996
---- ----
(Unaudited) Restated
ASSETS (Note 2)
Current Assets:
Cash and cash equivalents ..................... $ 15,802,000 $ 18,192,000
Investments (Note 3) .......................... 1,500,000 1,500,000
Receivables - net (including unbilled
receivables of $3,168,000 at December 31,
1996 and $2,206,000 at September 30, 1996) . 30,818,000 27,338,000
Inventories (Note 4) .......................... 22,714,000 23,590,000
Deferred income taxes ......................... 7,121,000 8,116,000
Other current assets .......................... 1,468,000 1,348,000
------------- -------------
Total Current Assets ....................... 79,423,000 80,084,000
Plant and equipment, net ........................ 9,169,000 9,266,000
Investments ..................................... -- 665,000
Goodwill, net ................................... 2,586,000 2,627,000
Other assets .................................... 4,840,000 4,343,000
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TOTAL ........................................... $ 96,018,000 $ 96,985,000
============= =============
LIABILITIES
Current Liabilities:
Notes payable (Note 5) ....................... $ 4,929,000 $ 7,159,000
Current portion of long-term debt ............ -- 1,066,000
Accounts payable ............................. 10,842,000 11,880,000
Accrued expenses and other current liabilities 13,476,000 12,332,000
Advance contract payments received ............ 1,291,000 1,671,000
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Total Current Liabilities .................. 30,538,000 34,108,000
Other liabilities ............................... 448,000 479,000
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Total Liabilities .......................... 30,986,000 34,587,000
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STOCKHOLDERS' EQUITY
Common stock, authorized 30,000,000
shares, $.01 par value; issued and outstanding
20,824,000 shares at December 31, 1996 and
20,697,000 shares at September 30, 1996 ......... 208,000 207,000
Additional paid-in capital ...................... 143,739,000 143,264,000
Accumulated deficit ............................. (79,244,000) (81,395,000)
Unrealized gain on investments available for sale -- 147,000
Cumulative translation adjustment ............... 329,000 175,000
------------- -------------
Total Stockholders' Equity ................. 65,032,000 62,398,000
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TOTAL ........................................... $ 96,018,000 $ 96,985,000
============= =============
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
December 31,
----------------------------
1996 1995
Restated
(Note 2)
Revenues ....................................... $ 35,401,000 $ 36,279,000
Cost of revenues ............................... 17,503,000 17,207,000
------------ ------------
Gross profit ................................... 17,898,000 19,072,000
Research and development costs ................. 5,225,000 4,527,000
Selling, general and administrative expenses ... 9,500,000 9,395,000
Merger expenses ................................ 44,000 224,000
Interest income - net .......................... (81,000) (114,000)
------------ ------------
Income before provision for income taxes ....... 3,210,000 5,040,000
Provision for income taxes ..................... 1,059,000 313,000
------------ ------------
Net income ..................................... $ 2,151,000 $ 4,727,000
============ ============
Net income per common share .................... $ 0.10 $ 0.22
============ ============
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income ................................................ $ 2,151,000 $ 4,727,000
Adjustments to reconcile net income to net
cash from operating activities:
Deferred income taxes ..................................... 995,000 302,000
Depreciation and amortization ............................. 944,000 724,000
Other ..................................................... (325,000) 26,000
Changes in assets & liabilities:
Accounts Receivables .................................... (3,744,000) (3,746,000)
Inventories ............................................. 965,000 (2,435,000)
Prepaid expenses and other current assets ............... (162,000) (419,000)
Other assets ............................................ (503,000) (76,000)
Accounts payable ........................................ (675,000) 3,051,000
Accrued expenses and other current liabilities .......... 1,131,000 576,000
Advanced contract payments received ..................... (393,000) (608,000)
------------ ------------
Net cash provided by operating activities ................. 384,000 2,122,000
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INVESTING ACTIVITIES:
Additions to plant & equipment ............................ (671,000) (974,000)
Proceeds from investments ................................. 821,000 500,000
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Net cash provided by (used in) investing activities ....... 150,000 (474,000)
------------ ------------
FINANCING ACTIVITIES:
Issuance of Common Stock in connection with the exercise of
stock options and warrants .............................. 476,000 1,035,000
Net proceeds (repayments) from short-term borrowings....... (2,252,000) 998,000
Repayments of long-term borrrowings ....................... (1,066,000) (1,020,000)
------------ ------------
Net cash (used in) provided by financing activities ....... (2,842,000) 1,013,000
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EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS ...................................... (82,000) 3,000
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NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS ............................................... (2,390,000) 2,664,000
CASH AND CASH EQUIVALENTS - BEGINNING
OF YEAR ................................................... 18,192,000 18,302,000
------------ ------------
CASH AND CASH EQUIVALENTS - END
OF YEAR ................................................... 15,802,000 20,966,000
============ ============
SUPPLEMENTAL INFORMATION:
Interest paid ............................................. 157,000 185,000
Taxes paid ................................................ 1,285,000 396,000
</TABLE>
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<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Condensed Consolidated Financial Statements
The condensed consolidated balance sheet of Robotic Vision Systems, Inc and
Subsidiaries (The "Company") as of December 31, 1996, the condensed consolidated
statements of operations for the three month periods ended December 31, 1996 and
1995 and the condensed consolidated statements of cash flows for the three month
periods ended December 31, 1996 and 1995 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 December 31, 1996 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 December 31, 1996
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 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.
Three Months
ended
December 31, 1995
-----------------
Revenues:
As previously reported ................................... $20,462,000
Effect of CI and SEP poolings of interests ............... 15,817,000
-----------
As restated .............................................. $36,279,000
===========
Net Income:
As previously reported ................................... $ 3,886,000
Effect of CI and SEP poolings of interests ............... 841,000
-----------
As restated .............................................. $ 4,727,000
===========
Net income per common share:
Primary:
As previously reported ................................... $ 0.22
Effect of CI and SEP poolings of interests ............... --
-----------
As restated .............................................. $ 0.22
===========
-5-
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
(Unaudited)
3. Investments
At December 31, 1996 and September 30, 1996, investments consist of certain debt
securities issued by the United States government with maturities through
November 1997.
4. Inventories
Inventories at December 31, 1996 and September 30, 1996 consisted of the
following;
December 31, 1996 September 30, 1996
----------------- ------------------
Raw Materials $ 13,982,000 $ 9,995,000
Work-in-Process 5,864,000 10,920,000
Finished Goods 2,868,000 2,675,000
------------ ------------
Total $ 22,714,000 $ 23,590,000
============ ============
5. Notes Payable
The Company has a revolving line of credit from a bank that provides for maximum
borrowing 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 two 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 December 31, 1996, $4,174,000 was outstanding under this credit
facility.
CI has an uncommitted line of credit in the amount of DM 1,500,000 with a bank.
Borrowings under this line of credit bear interest at the prevailing Lombard
Rate plus 2 percent and are payable on demand. Borrowings outstanding under this
line of credit totaled DM 1,139,000 as of December 31, 1996 (approximately
$755,000).
-6-
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
Item 2. Management's discussion and analysis of financial condition results of
operations.
Three Months Ended December 31, 1996 and 1995
Results of Operations
Revenues of $35,401,000 for the three months ended December 31, 1996 represent a
decrease of $878,000, or approximately 2.4%, in comparison to revenues of
$36,279,000 for the three months ended December 31, 1995. The decrease in
revenues is primarily attributed to the general downturn in the semiconductor
industry in 1996, affecting shipments at RVSI Electronics and Systemation
Engineered Products.
Gross profit margins for the three months ended December 31, 1996 and 1995 were
50.6% and 52.6%, 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, the ID-1 aircraft ice detection system, computerized visual inspection
equipment, and barcode scanning and data collection equipment primarily
accounted for $5,225,000 in research and development expense during the three
months ended December 31, 1996 as contrasted with $4,527,000 during the
comparable period in fiscal 1996. Certain software development costs are
capitalized in accordance with the provisions of Statement of Financial
Accounting Standards No. 86. For the three months ended December 31, 1996,
$588,000 of these costs were capitalized as compared to $126,000 for the
comparable period in fiscal 1996.
Selling, general and administrative costs increased by $105,000, or 1.1% for the
three months ended December 31, 1996 as compared to the prior comparable period.
Tax provision for the three months ended December 31, 1996 was $1,059,000 as
compared to $313,000 for the comparable period in fiscal 1996. This increase is
attributed to the fact that this is the first quarter in which the Company is
incurring substantial taxes versus prior quarters that had the benefit of tax
loss carryforwards in the core RVSI Electronics business.
Net income for the three months ended December 31, 1996 was $2,151,000, or $.10
per share as compared to net income of $4,727,000, or $.22 for the three months
ended December 31, 1995.
-7-
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
Item 2. Management's discussion and analysis of financial condition results of
operations - Continued
Liquidity and Capital Resources
The Company's operating, investing, and financing activities for the three
months ended December 31, 1996 utilized net cash and cash equivalents of $
2,390,000 as follows:
- Operating activities provided $ 384,000 during the three months ended
December 31, 1996;
- $ 821,000 was generated from the maturity of short-term investments;
- $ 671,000 was used to purchase property and equipment, primarily
leasehold improvements and office furniture and equipment, during the
three months ended December 31, 1996;
- $ 476,000 was generated through the issuance of common stock upon the
exercise of stock options and warrants;
- $ 2,252,000 was used to repay short-term borrowings;
- $ 1,066,000 was used to repay long-term borrowings;
- The effect of exchange rate changes reduced cash and cash equivalents
by $ 82,000.
On November 20, 1995, the Company obtained 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 two 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 December 31, 1996, $4,174,000 was
outstanding under this credit facility.
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 revenues received in foreign currencies with expenses
paid in the same currency, it is exposed to possible losses on international
currency transactions.
Effect of Inflation
Management believes that during the three months ended December 31, 1996 the
effect of inflation was not material.
-8-
<PAGE>
ROBOTIC VISION SYSTEMS, INC., AND SUBSIDIARIES
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 - Computation of per share amounts
(b) Exhibit 27 - Financial Data Schedule
(c) During the quarter ended December 31, 1996, Registrant filed a current
report on Form 8-K, dated October 9, 1996 (Items 2 and 7) to disclose
its acquisition of Systemation Engineered Products, Inc. ("SEP"), and
an amendment on December 17, 1996 to disclose the audited historical
financial statements and related notes of SEP, as well as unaudited
proforma financial statements.
-9-
<PAGE>
EXHIBIT 11
ROBOTIC VISION SYSTEMS, INC AND SUBSIDIARIES
COMPUTATION OF PER SHARE AMOUNTS
<TABLE>
<CAPTION>
Three Months Ended
December 31, 1996 December 31, 1995
------------------------ -------------------------
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
------------------------ ------------------------
<S> <C> <C> <C> <C>
Net income ...................................... $ 2,151,000 $ 2,151,000 $ 4,727,000 $ 4,727,000
=========== =========== =========== ===========
Weighted average number of common shares ........ 20,738,000 20,738,000 19,359,000 19,359,000
Assumed number of shares issued from common share
equivalents ................................... 869,000 869,000 2,270,000 2,287,000
Weighted average number of common and common
equivalent shares ............................. 21,607,000 21,607,000 21,629,000 21,646,000
=========== =========== =========== ===========
Net income per share ............................ $ 0.10 $ 0.10 $ 0.22 $ 0.22
=========== =========== =========== ===========
</TABLE>
<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: February 14, 1997 /s/ PAT V. COSTA
--------------------------------------
PAT V. COSTA
President and CEO
(Principal Executive Officer )
Dated: February 14, 1997 /s/ ROBERT H. WALKER
--------------------------------------
ROBERT H. WALKER
Executive Vice President and Treasurer
(Principal Financial Officer)
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 15,802
<SECURITIES> 1,500
<RECEIVABLES> 30,818
<ALLOWANCES> 0
<INVENTORY> 22,714
<CURRENT-ASSETS> 79,423
<PP&E> 9,169
<DEPRECIATION> 0
<TOTAL-ASSETS> 96,018
<CURRENT-LIABILITIES> 30,538
<BONDS> 0
208
0
<COMMON> 0
<OTHER-SE> 64,824
<TOTAL-LIABILITY-AND-EQUITY> 96,018
<SALES> 0
<TOTAL-REVENUES> 35,401
<CGS> 17,503
<TOTAL-COSTS> 17,503
<OTHER-EXPENSES> 14,688
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,210
<INCOME-TAX> 1,059
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,151
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
</TABLE>
