<PAGE>
As Filed with the Securities and Exchange Commission on January 20, 1998
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
ROBOTIC VISION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-2400145
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
425 Rabro Drive East
Hauppauge, New York 11788
(516) 273-9700
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
PAT V. COSTA
President and Chief Executive Officer
Robotic Vision Systems, Inc.
425 Rabro Drive East
Hauppauge, New York 11788
(516) 273-9700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications and notices to:
IRA I. ROXLAND, Esq.
Cooperman Levitt Winikoff Lester & Newman, P.C.
800 Third Avenue
New York, New York 10017
Tel: (212) 688-7000
Fax: (212) 755-2839
Approximate date of commencement of proposed sale to the public: At such
time after the effective date of this Registration Statement as the Selling
Stockholders shall determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<CAPTION>
==============================================================================================
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Offering Amount of
Registered Registered Per Share* Price* Registration Fee
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value............. 3,606,877 shs. $ 11.125 $ 40,126,507 $ 12,160
==============================================================================================
</TABLE>
* Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. Theses securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
------------------------
Subject to Completion - Preliminary Prospectus dated January 20, 1998
------------------------
Prospectus
3,606,877 Shares
ROBOTIC VISION SYSTEMS, INC.
Common Stock
________________________
This Prospectus relates to 3,606,877 shares of common stock, par value
$0.01 per share (the "Common Stock"), of Robotic Vision Systems, Inc. (the
"Company"), which shares are being offered for sale by the persons named herein
under the caption "Selling Stockholders" (the "Selling Stockholders"). The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. See "Selling Stockholders."
The Common Stock is quoted on The Nasdaq National Market (the "NASDAQ-NM")
under the symbol "ROBV." On January 16, 1998, the closing last sale price of
the Common Stock as reported by the NASDAQ-NM was $ per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Selling Stockholders, or their pledgees, donees, transferees or other
successors, may sell the Common Stock in any of three ways: (i) through broker-
dealers; (ii) through agents or (iii) directly to one or more
<PAGE>
purchasers. The distribution of the Common Stock may be effected from time to
time in one or more transactions (which may involve crosses or block
transactions) (A) in the over-the-counter market, or (B) in transactions
otherwise than in the over-the-counter market. Any of such transactions may be
effected at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, at negotiated prices or at fixed prices. The
Selling Stockholders may effect such transactions by selling the Common Stock to
or through broker-dealers, and such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling Stockholders
and/or commissions from purchasers of the Common Stock for whom they may act as
agent (which discounts, concessions or commissions will not exceed those
customary in the types of transactions involved). The Selling Stockholders and
any broker-dealers or agents that participate in the distribution of the Common
Stock might be deemed to be underwriters, and any profit on the sale of the
Common Stock by them and any discounts, commissions or concessions received by
any such broker-dealers or agents might be deemed to be underwriting discounts
and commissions under the Securities Act of 1933, as amended (the "Securities
Act").
The Company has agreed to bear all expenses (other than selling discounts,
concessions and commissions) in connection with the registration and sale of the
Common Stock being offered by the Selling Stockholders. The Company has agreed
to indemnify the Selling Stockholders against certain liabilities, including
liabilities under the Securities Act.
The Common Stock being offered hereby by the Selling Stockholders has not
been registered for sale under the securities laws of any state or jurisdiction
as of the date of this Prospectus. Brokers or dealers effecting transactions in
the Common Stock should confirm the registration thereof under the securities
law of the state in which such transactions occur, or the existence of any
exemption from registration.
The date of this Prospectus is , 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
The Company.............................................. 1
Available Information.................................... 2
Incorporation of Certain Documents by Reference.......... 2
Selling Stockholders..................................... 3
Legal Opinion............................................ 6
Experts.................................................. 7
Index to Supplemental Consolidated Financial Statements.. F-1
</TABLE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the securities offered hereby in any
jurisdiction to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. The delivery of this Prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
<PAGE>
THE COMPANY
General
Robotic Vision Systems, Inc. ("RVSI" or the "Company"), directly and
through wholly owned subsidiaries grouped into three operating units, designs,
manufacturers, markets and sells automated 1-dimensional ("1-D"), 2-dimensional
and 3-dimensional machine vision-based products and systems for inspection,
measurement and identification, and is a leader in advanced electro-optical
sensor technology. RVSI's aircraft safety division has developed and is
marketing an ice detection product for the aviation industry.
RVSI's Semiconductor Equipment Group is comprised of RVSI's Electronics
Division, as well as its wholly owned subsidiaries, Systemation Engineered
Products, Inc. ("Systemation") and Vanguard Automation, Inc. ("Vanguard").
. The Electronics Division supplies inspection equipment to the
semiconductor industry. The Electronics Division's LS, GS and CS Series
lead scanning systems offer automated, high-speed, 3-D semiconductor
package lead inspection with the added feature of non-contact scanning of
the packages in their shipping trays ("in-tray scanning"). The systems use
a laser-based, non-contact, 3-D measurement technique to inspect and sort
quad flat packs, thin quad flat packs, chip scale packages ("CSP"), ball
grid arrays ("BGA") and thin small outline packs in their carrying trays.
The system measurements include coplanarity, total package height, true
position spread and span, as well as lead angle, width, pitch and gap.
. Systemation offers tape-and-reel component processing systems designed to
handle CSP and BGA. RVSI also believes that Systemation's expertise in
designing and manufacturing systems that handle components in tubes
provides RVSI with the means to further expand the breadth of its product
offerings to the semiconductor market.
. Vanguard is the leading supplier of BGA and CSP equipment for the
semiconductor and connection industries. Customers for Vanguard's
proprietary BGA and CSP equipment include over a dozen of the top
semiconductor manufactures in the world.
RVSI's Acuity Imaging Division is comprised of Acuity Imaging LLC
("Acuity") and Northeast Robotics LLC ("Northeast Robotics"), Acuity's wholly
owned subsidiary.
. Acuity designs, manufactures and markets 2-D machine vision products and
systems and, through Northeast Robotics, lighting systems for use in
industrial automation. The Division's products, which utilize a
combination of software, an image processing computer and electronic
<PAGE>
cameras, perform such functions as measurement, flaw detection,
verification of the presence and correctness of parts and subassemblies,
and inspection of manufactured products. Typically, they are utilized in
hot, dusty, dirty or other harsh industrial environments in applications
where human inspection is not practical or where the use of machine vision
systems is faster, more reliable and more economical than human inspection.
Such applications include assembly verification, date and lot code reading,
flaw detection, gauging and measurement, label verification and product
identification.
RVSI's CiMatrix Division includes the respective operations of
International Data Matrix, Inc. and Computer Identics Corporation, each formerly
a wholly owned subsidiary of RVSI which, as of October 1, 1997, were combined
within CiMatrix LLC ("CiMatrix"), a wholly owned subsidiary of RVSI.
. The CiMatrix Division manufactures data collection products, networks, and
linear and 2-D bar code reading systems. Its customers encompass a wide
cross-section of businesses and institutions, including postal services,
freight companies and manufacturers of electronics, pharmaceutical,
consumer goods, textiles and automobiles.
. The Data Matrix code, a 2-D code which resembles a scrambled checkerboard,
was developed by one of the Division's predecessors. The small size of the
Data Matrix code allows its use in industries and in applications that were
previously impossible to satisfy with machine readable codes because of its
ability to be printed or marked directly on parts and components, thereby
eliminating the need for paper labels and the high cost of labeling
equipment. Serialization and therefore traceability is now possible in
industries such as semiconductors, which have seen a surge in the theft of
memory chips and other high priced computer components.
RVSI's Aircraft Safety Division's sole current product is the ID-1 aircraft
detection system, a full-wing electro-optical ice detection system that is
designed to provide a quick, clear and reliable indication of the presence or
absence of ice, snow or frost. This proprietary system can be mounted on the
bucket of a de-icing truck or other vehicle and is designed to operate under
conditions where visual inspection can be ineffective or tactile inspection
difficult. Its compact size and high degree of mobility are also designed to
allow the ID-1 to detect ice on aircraft surfaces at any point between the gate
and runway. Preliminary design and testing is under way, funded in part by a
Federal Aviation Administration ("FAA") research grant in 1997, to adapt the
technology to an on-aircraft product which would provide both ground and
airborne ice detection capability.
The commercial viability of the ID-1 has not as yet been proven or can it
be assured. Consequently, there can be no assurance that the ID-1 can be
commercially marketed at a profit at any time in the proximate future, if ever.
The Company was incorporated in New York in 1976 and reincorporated in
Delaware in 1977. Its executive offices are located at 425 Rabro Drive East,
Hauppauge, New York 11788; its telephone number is (516) 273-9700.
2
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Recent Development
On December 9, 1997, RVSI consummated a merger with Vanguard, a privately
owned company located in Tucson, Arizona, pursuant to which Vanguard became a
wholly owned subsidiary of RVSI ("Vanguard Merger"). Vanguard is the leading
supplier of ball grid array and chip scale packaging equipment for the
semiconductor and connector industries. The Vanguard Merger was structured as a
tax free reorganization and accounted for as a pooling of interests. As a
consequence of the Vanguard Merger, RVSI issued 3,390,780 shares of its Common
Stock in exchange for all the outstanding capital shares of Vanguard.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In accordance therewith,
the Company files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Regional Offices of the Commission at 7 World
Trade Center, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60621. Copies of such material may be
obtained from the Public Reference Section of the Commission at prescribed rates
by writing to the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, all reports filed by the Company u/a the Commission's Electronic
Data Gathering and Retrieval System (EDGAR) can be obtained from the
Commission's Internet website located at www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which can be obtained from the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by the
Company with the Commission (File No. 0-8623) under the Exchange Act:
(a) The Company's Annual Report on Form 10-K for its fiscal year ended
September 30, 1997 (the "Annual Report");
3
<PAGE>
(b) The Company's Current Report on Form 8-K dated December 18, 1997, as
amended on Form 8-K/A on January 16, 1998, relating to the Company's
acquisition by merger of Vanguard; and
(c) The Company's Registration Statement on Form 8-A for a description of
the Common Stock.
All documents filed by the Company with the Commission pursuant to Sections
13, 14 and 15(d) of the Exchange Act subsequent hereto, but prior to the
termination of this offering, shall be deemed to be incorporated herein by
reference and to be a part hereof from their respective dates of filing.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents referred to above which have been
incorporated into this Prospectus by reference (other than the exhibits to such
documents). Requests or such copies should be directed to Robert H. Walker,
Secretary, Robotic Vision Systems, Inc., 425 Rabro Drive East, Hauppauge, New
York 11788; telephone number: (516) 273-9700.
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
Selling Stockholders named below, all but three of whom acquired their
respective shares of RVSI Common Stock pursuant to the terms of that certain
Agreement and Plan of Merger and Reorganization dated October 30, 1997 by and
between RVSI and Vanguard by which Vanguard became a wholly owned subsidiary of
RVSI. The three remaining stockholders are holders of options or warrants to
acquire shares of RVSI common Stock. The Selling Stockholders acquired their
shares of RVSI Common Stock absent registration under the Securities Act by
reason of the exemption from such registration afforded by the provisions of
Section 4(2) thereof. The Company will receive no proceeds from the sale of the
shares by the Selling Stockholders.
<TABLE>
<CAPTION>
Beneficial
Beneficial Number of Ownership
Ownership Shares of Shares Percentage
of Shares of of of of
Name of Selling Common Stock at Common Stock Common Common
Stockholder December 31, 1997 Offered Stock After Stock After
for Sale the Offering the Offering
<S> <C> <C> <C> <C>
Kenneth W. LeCureux 12,967 12,967 - -
Inter-vivos Trust U/A/D
3/6/87
Deward F. Manzer(1) 252,905 252,905 - -
Robert A. Manzer 5,446 5,446 - -
Rebecca Manzer 5,446 5,446 - -
Myrtle F. Manzer 1,815 1,815 - -
Michael R. Manzer 1,815 1,815 - -
William B. Manzer 1,815 1,815 - -
Scott McGill 3,067 3,067 - -
Cynthia Gomez 6,133 6,133 - -
William G. Orinski(1) 194,714 194,714 - -
</TABLE>
4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Christina Anderson 1,815 1,815 - -
Mark D. Bierlein 3,242 3,242 - -
Ryan Bierlein 3,242 3,242 - -
Kathleen A. Bierlein 45,385 45,385 - -
Inter-vivos Trust
Sherralyn Bludau 1,815 1,815 - -
Richard O. Bruce 4,539 4,539 - -
Edward A. Orinski 3,631 3,631 - -
Convergent Equity, LLC 20,629 20,629 - -
D&W III International 19,180 19,180 - -
Investors Partnership
Victoria Manzer Davis 5,446 5,446 - -
Paul S. Davis(1) 14,524 14,524 - -
Dougery & Wilder(1) 523,305 523,305 - -
Dougery & Wilder III 1,490 1,490 - -
International Investors
Partnership(1)
Joseph Engle 6,133 6,133 - -
Billy R. Finley 4,907 4,907 - -
General Electric 1,133,812 1,133,812 - -
Capital-Equity Capital
Group(1)
GRQ, LLC(1) 667,526 667,526 - -
Arnold Holmes 1,815 1,815 - -
John Horner 38,901 38,901 - -
J Tech, Ltd. 94,318 94,318 - -
Karl Kolpin 1,815 1,815 - -
Barbara Leaver 6,484 6,484 - -
Southwestern Automation 15,950 15,950 - -
Systems, Inc.(1)
E. Michael Plattner 15,532 15,532 - -
Sven Sedleniek 15,481 15,481 - -
U.H. Capital Partners 32,699 32,699 - -
International, L.D.C.(1)
Unterberg Harris Capital 49,050 49,050 - -
Partners, I., L.P.(1)
Unterberg Harris Private 28,776 28,776 - -
Equity Partners, C.V.(1)
Unterberg Harris Private 134,722 134,722 - -
Equity Partners, I.P.(1)
Clarence Wehner 5,446 5,446 - -
Gregory L. Wertheimer 4,539 4,539 - -
Kenneth L. Beavers 658 658 - -
David E. Stuursma 204 204 - -
Philip H. Delaney 204 204 - -
Harold C. Baldauf 181,540(2) 181,540(2) - -
Steven Bilodeau(3) 43,250(4) 25,000(2) 18,250 -
Maxwell Morton 5,000(2) 5,000(2) - -
</TABLE>
- ---------------
5
<PAGE>
(1) Designates either an executive officer or director of Vanguard prior to the
Vanguard Merger or an affiliate of such executive officer of director.
(2) Represents shares issuable upon exercise of outstanding options or
warrants.
(3) Designates an executive officer and director of RVSI.
(4) Includes 25,000 currently non-vested shares issuable upon exercise of
outstanding options.
The Selling Stockholders, or their pledgees, donees, transferees or other
successors, may sell the Common Stock in any of three ways: (i) through broker-
dealers; (ii) through agents or (iii) directly to one or more purchasers. The
distribution of the Common Stock may be effected from time to time in one or
more transactions (which may involve crosses or block transactions) (A) in the
over-the-counter market, or (B) in transactions otherwise than in the over-the-
counter market. Any of such transactions may be effected at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The Selling Stockholders may
effect such transactions by selling the Common Stock to or through broker-
dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders and/or
commissions from purchasers of the Common Stock for whom they may act as agent
(which discounts, concessions or commissions will not exceed those customary in
the types of transactions involved). The Selling Stockholders and any broker-
dealers or agents that participate in the distribution of the Common Stock might
be deemed to be underwriters, and any profit on the sale of the Common Stock by
them and any discounts, commissions or concessions received by any such broker-
dealers or agents might be deemed to be underwriting discounts and commissions
under the Securities Act.
LEGAL OPINION
The legality of the Common Stock offered hereby will be passed upon for the
Company by Cooperman Levitt Winikoff Lester & Newman, P.C., 800 Third Avenue,
New York, New York 10022. Members of such Firm own shares of Common Stock of
the Company.
EXPERTS
The financial statements of the Company and its consolidated subsidiaries
incorporated in this Prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended September 30, 1997 and the supplemental financial
statements of the Company and its consolidated subsidiaries included in this
Prospectus as of September 30, 1997 and 1996 and for each of the three years in
the period ended September 30, 1997 except Acuity Imaging, Inc. and subsidiaries
for the year ended September 30, 1995, except Computer Identics Corporation and
subsidiaries for the year ended December 31, 1995 and except Vanguard
Automation, Inc. for the year ended December 31, 1995, have been audited by
Deloitte & Touche LLP as stated in their reports which are incorporated by
reference in the Registration Statement. The financial statements of Acuity
Imaging, Inc. and subsidiaries for the period indicated above (consolidated with
those of the Company) have
6
<PAGE>
been audited by Arthur Andersen LLP, the financial statements of Computer
Identics Corporation and subsidiaries for the period indicated above
(consolidated with those of the Company) have been audited by Ernst & Young LLP,
and the statements of operations, changes in stockholders' deficiency and cash
flows of Vanguard Automation, Inc. for the period indicated above (consolidated
with those of the Company) have been audited by KPMG Peat Marwick LLP, as stated
in their respective reports which are incorporated by reference and/or included
herein. Such financial statements and supplemental financial statements of the
Company and its consolidated subsidiaries are incorporated by reference and
included herein, respectively, in reliance upon the respective reports of such
firms given upon their authority as experts in accounting and auditing. All of
the foregoing firms are independent auditors.
The financial statements of Vanguard Automation, Inc. as of September 30,
1997 and December 31, 1996 and for the year ended September 30, 1997 and the
year ended December 31, 1996 incorporated in this Prospectus by reference from
the Company's Current Report on Form 8-K/A dated January 16, 1998 have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, which are incorporated herein by reference
and has been so incorporated in reliance upon the authority of said firm as
experts in accounting and auditing.
7
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
INDEX TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
AND SUPPLEMENTAL FINANCIAL STATEMENT SCHEDULE
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Independent Auditors' Report of Deloitte & Touche LLP F-2 to F-3
Report of Arthur Andersen LLP, Independent Public Accountants F-4
Report of Ernst & Young LLP, Independent Auditors F-5
Report of KPMG Peat Marwick LLP, Independent Auditors F-6
Supplemental Consolidated Balance Sheets as of September 30, 1997 and 1996 F-7
Supplemental Consolidated Statements of Income for the Years Ended
September 30, 1997, 1996 and 1995 F-8
Supplemental Consolidated Statements of Stockholders' Equity
for the Years Ended September 30, 1997, 1996 and 1995 F-9
Supplemental Consolidated Statements of Cash Flows
for the Years Ended September 30, 1997, 1996 and 1995 F-10 to F-11
Notes to Supplemental Consolidated Financial Statements
for the Years Ended September 30, 1997, 1996 and 1995 F-12 to F-28
Supplemental Schedule II: Valuation and Qualifying Accounts F-29
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Robotic Vision Systems, Inc. and subsidiaries:
We have audited the accompanying supplemental consolidated balance sheets of
Robotic Vision Systems, Inc. and subsidiaries (the "Company") as of September
30, 1997 and 1996, and the related supplemental consolidated statements of
income, stockholders' equity, and cash flows for each of the three years in the
period ended September 30, 1997. Our audits included the supplemental financial
statement schedule listed in the index on page F-1. These supplemental
financial statements and supplemental financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these supplemental financial statements and supplemental financial
statement schedule based on our audits. We did not audit the consolidated
financial statements of Acuity Imaging, Inc. and subsidiaries ("Acuity"), a
wholly-owned subsidiary, for the year ended September 30, 1995, which statements
reflect total revenues constituting 13% of consolidated total revenues for the
year ended September 30, 1995. We also did not audit the consolidated financial
statements of Computer Identics Corporation and subsidiaries ("CI"), a wholly-
owned subsidiary, for the year ended December 31, 1995, which statements reflect
total revenues constituting 19% of consolidated total revenues for the year
ended September 30, 1995. We also did not audit the financial statements of
Vanguard Automation, Inc. ("Vanguard"), a wholly-owned subsidiary, for the year
ended December 31, 1995, which statements reflect total revenues constituting
16% of consolidated total revenues for the year ended September 30, 1995. Those
financial statements were audited by other auditors whose reports have been
furnished to us, and our opinion, insofar as it relates to the amounts included
for Acuity, CI and Vanguard for the year ended September 30, 1995, is based
solely on the reports of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
The supplemental consolidated financial statements give retroactive effect to
the merger of Robotic Vision Systems, Inc. and subsidiaries and Vanguard
Automation, Inc. as of December 9, 1997, which has been accounted for as a
pooling of interests as described in Note 2 to the supplemental consolidated
financial statements. Generally accepted accounting principles proscribe giving
retroactive effect to a consummated business combination accounted for by the
pooling of interests method in the financial statements that do not cover the
date of consummation. These supplemental consolidated financial statements do
not extend through the date of consummation, however, they will become the
historical consolidated financial statements of the Company after financial
statements covering the date of consummation of the business combination are
issued.
F-2
<PAGE>
In our opinion, based on our audits and the reports of the other auditors, such
supplemental consolidated financial statements present fairly, in all material
respects, the financial position of the Company at September 30, 1997 and 1996,
and the results of their operations and their cash flows for each of the three
years in the period ended September 30, 1997 in conformity with generally
accepted accounting principles after financial statements are issued for a
period which includes the date of consummation of the merger described above.
Also, in our opinion, such supplemental financial statement schedule, when
considered in relation to the basic supplemental consolidated financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/S/ DELOITTE & TOUCHE LLP
Jericho, New York
December 9, 1997
F-3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Acuity Imaging, Inc.
We have audited the consolidated balance sheet of Acuity Imaging, Inc. (a
Delaware corporation and a wholly owned subsidiary of Robotic Vision Systems,
Inc.) and subsidiaries as of September 30, 1995, and the related consolidated
statements of operations and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Acuity Imaging, Inc.
and subsidiaries at September 30, 1995, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.
On September 20, 1995, Robotic Vision Systems, Inc. acquired Acuity Imaging,
Inc.
/S/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
November 6, 1995
F-4
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
To the Board of Directors
and Stockholders of Computer Identics Corporation
We have audited the accompanying consolidated balance sheet or Computer Identics
Corporation and subsidiaries as of December 31, 1995, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the year then ended (not presented separately herein). Our audits also included
the related financial statement schedule. Valuation and Qualifying Accounts, for
the year ended December 31, 1995 (not presented separately herein). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
we believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Computer Identics
Corporation and subsidiaries at December 31, 1995 and the consolidated results
of their operations, and their cash flows for the year ended, in conformity
with generally accepted accounting principles. Also, in our opinion the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
February 8, 1996
F-5
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Vanguard Automation, Inc.;
We have audited the statements of operations, changes in stockholders'
deficiency, and cash flows of Vanguard Automation, Inc. for the year ended
December 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Vanguard
Automation, Inc. for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
Phoenix, Arizona
February 23, 1996
F-6
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1997 AND 1996
(in thousands, except share and per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTES 1997 1996
----- --------- ---------
Restated Restated
(NOTE 2) (NOTE 2)
<S> <C> <C> <C>
ASSETS (Note 9)
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 8,811 $ 19,780
Investments - 1,500
Accounts receivable, net 3 50,563 30,941
Inventories 4 39,095 26,570
Deferred income taxes 5 10,643 8,116
Prepaid expenses and other 1,429 1,463
-------- --------
Total current assets 110,541 88,370
PLANT AND EQUIPMENT, net 6 14,507 11,431
INVESTMENTS - 665
GOODWILL, net of accumulated amortization of $290
and $61 in 1997 and 1996, respectively 2 6,207 2,627
OTHER ASSETS 5,7 8,668 4,378
-------- --------
$139,923 $107,471
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Note payable and current portion of long-term debt 9 $ 10,623 $ 10,558
Accounts payable 23,320 16,063
Accrued expenses and other current liabilities 8 19,623 14,130
Advance contract payments received 1,816 1,868
-------- --------
Total current liabilities 55,382 42,619
LONG-TERM DEBT 9 6,414 492
DEFERRED INCOME TAXES 5 1,823 -
OTHER LIABILITIES 727 747
-------- --------
TOTAL LIABILITIES 64,346 43,858
-------- --------
COMMITMENTS AND CONTINGENCIES 11
STOCKHOLDERS' EQUITY: 12
Common stock, $.01 par value; shares authorized,
30,000,000; shares issued and outstanding,
1997 - 24,438,000 and 1996 - 23,332,000 244 233
Additional paid-in capital 166,623 157,607
Accumulated deficit (91,457) (94,549)
Unrealized gain on investments available for sale - 147
Cumulative translation adjustment 167 175
-------- --------
Total stockholders' equity 75,577 63,613
-------- --------
$139,923 $107,471
======== ========
</TABLE>
See notes to supplemental consolidated financial statements.
F-7
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(in thousands, except per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NOTES 1997 1996 1995
------ --------- --------- ---------
Restated Restated Restated
(Note 2) (Note 2) (Note 2)
<S> <C> <C> <C> <C>
REVENUES 14, 15 $169,342 $153,975 $145,415
COST OF REVENUES 93,847 85,160 77,267
-------- -------- --------
GROSS PROFIT 75,495 68,815 68,148
-------- -------- --------
OPERATING COSTS AND EXPENSES:
Research and development costs 25,465 21,834 16,164
Selling, general and administrative expenses 48,259 44,861 38,528
Merger expenses 2 69 2,661 1,305
Interest income (767) (1,148) (555)
Interest expense 1,076 926 614
-------- -------- --------
74,102 69,134 56,056
-------- -------- --------
INCOME BEFORE INCOME TAXES 1,393 (319) 12,092
INCOME TAX PROVISION (BENEFIT) 5 745 (1,154) (56)
-------- -------- --------
NET INCOME $ 648 $ 835 $ 12,148
======== ======== ========
NET INCOME PER SHARE $ 0.03 $ 0.04 $ 0.58
======== ======== ========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 23,967 23,385 21,030
======== ======== ========
</TABLE>
See notes to supplemental consolidated financial statements.
F-8
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 AND 1995
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
------------------------ ADDITIONAL UNREALIZED
NUMBER PAID-IN ACCUMULATED DEFERRED GAIN ON
NOTES OF SHARES AMOUNT CAPITAL DEFICIT COMPENSATION INVESTMENTS
------ ----------- ----------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1994
(as previously reported) 17,023 $170 $121,521 $(101,397) $(54) $ -
Changes resulting from
acquisition accounted
for as pooling of
interests 2 1,120 11 1,998 (5,416) - -
------ ---- -------- ----------- ------------ -----
Balance October 1, 1994
(Restated) 18,143 181 123,519 (106,813) (54) -
Shares and warrants issued
in connection with
private equity
placement, net of
offering costs 12 1,110 11 9,375 - - -
Shares issued in
connection with private
placement
of subsidiary, net of
offering costs 12 401 5 3,992 - - -
Warrants issued for
professional services 12 - - 92 - - -
Shares issued in
connection with the
exercise
of stock options and
warrants 12 746 7 1,476 - - -
Other stock transactions 40 - 309 - (6) -
Change in year end of
pooled companies 2 - - - (101) - -
Translation adjustment - - - - - -
Net income - - - 12,148 - -
------ ---- -------- ----------- ------------ -----
Balance, September 30,
1995 (Restated) 20,440 204 138,763 (94,766) (60) -
Shares issued in
connection with the
exercise of
stock options and
warrants 12 1,511 15 5,821 - - -
Shares issued in
connection with private
placement
of subsidiary, net of
offering costs 12 1,233 12 10,116 - - -
Shares issued in
connection with the
acquisition
of Northeast Robotics,
Inc. accounted for as
a purchase 2 139 1 2,675 - - -
Warrants issued for
professional services 12 - - 74 - - -
Other stock transactions 9 1 158 - 60 -
Change in year end of
pooled companies 2 - - - (618) - -
Change in net unrealized
holding gains 1 - - - - - 147
Translation adjustment - - - - - -
Net income - - - 835 - -
------ ---- -------- ----------- ------------ -----
Balance, September 30,
1996 (Restated) 23,332 233 157,607 (94,549) - 147
Shares issued in
connection with the
exercise of
stock options and
warrants 12 384 4 1,839 - - -
Other stock transactions (104) (1) (488) - - -
Shares issued in
connection with private
placement
of subsidiary, net of
offering costs 12 826 8 7,665 - - -
Change in year end of
pooled companies 2 - - - 2,444 - -
Change in net unrealized
holding gains 1 - - - - - (147)
Translation adjustment - - - - - -
Net income - - - 648 - -
------ ---- -------- ----------- ------------ -----
Balance, September 30,
1997 (Restated) 24,438 $244 $166,623 $ (91,457) $ - $ -
====== ==== ======== =========== ============ =====
</TABLE>
CUMULATIVE TOTAL
TRANSLATION STOCKHOLDERS'
ADJUSTMENT EQUITY
------------ --------------
Balance, October 1, 1994
(as previously reported) $118 $20,358
Changes resulting from
acquisition accounted
for as pooling of
interests - (3,407)
---- -------
Balance October 1, 1994
(Restated) 118 16,951
Shares and warrants issued
in connection with
private equity
placement, net of
offering costs - 9,386
Shares issued in
connection with private
placement
of subsidiary, net of
offering costs - 3,997
Warrants issued for
professional services - 92
Shares issued in
connection with the
exercise
of stock options and
warrants - 1,483
Other stock transactions - 303
Change in year end of
pooled companies - (101)
Translation adjustment 90 90
Net income - 12,148
---- -------
Balance, September 30,
1995 (Restated) 208 44,349
Shares issued in
connection with the
exercise of
stock options and
warrants - 5,836
Shares issued in
connection with private
placement
of subsidiary, net of
offering costs - 10,128
Shares issued in
connection with the
acquisition
of Northeast Robotics,
Inc. accounted for as
a purchase - 2,676
Warrants issued for
professional services - 74
Other stock transactions - 219
Change in year end of
pooled companies - (618)
Change in net unrealized
holding gains - 147
Translation adjustment (33) (33)
Net income - 835
---- -------
Balance, September 30,
1996 (Restated) 175 63,613
Shares issued in
connection with the
exercise of
stock options and
warrants - 1,843
Other stock transactions - (489)
Shares issued in
connection with private
placement
of subsidiary, net of
offering costs - 7,673
Change in year end of
pooled companies - 2,444
Change in net unrealized
holding gains - (147)
Translation adjustment (8) (8)
Net income - 648
---- -------
Balance, September 30,
1997 (Restated) $167 $75,577
==== =======
See notes to supplemental consolidated financial statements.
F-9
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 and 1995
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
Restated Restated Restated
(NOTE 2) (NOTE 2) (NOTE 2)
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 648 $ 835 $12,148
Adjustments to reconcile net income
to net cash (used in) provided by operating activities:
Deferred income taxes (93) (2,881) (1,729)
Depreciation and amortization 5,895 3,938 2,723
Gain on disposal of business (812) - -
Other (218) 1,318 907
Changes in operating assets and liabilities (net of
effects of business acquired):
Accounts receivable (20,084) (7,304) (4,719)
Inventories (14,093) (6,781) (9,297)
Prepaid expenses and other current assets (514) (873) (75)
Other assets (4,811) (2,845) (861)
Accounts payable 10,709 2,433 5,622
Accrued expenses and other current liabilities 4,732 3,297 4,118
Advance contract payments received (10) (674) (6,596)
Other liabilities (82) (164) (136)
-------- ------- -------
Net cash (used in) provided by operating activities (18,733) (9,701) 2,105
-------- ------- -------
INVESTING ACTIVITIES:
Proceeds from maturity of investments 2,319 1,000 1,500
Additions to plant and equipment, net (7,915) (6,972) (3,646)
Purchase of investments - - (1,484)
Proceeds from sale of business 952 - -
Payment for purchase of business (3,144) (77) -
-------- ------- -------
Net cash used in investing activities (7,788) (6,049) (3,630)
-------- ------- -------
FINANCING ACTIVITIES:
Proceeds from the issuance of common stock and warrants - private
equity placement (less offering costs) 7,673 10,093 12,246
Proceeds from the exercise of stock options and warrants 1,271 2,428 1,357
Purchase of treasury stock (650) - -
Net proceeds (repayments) from short-term borrowings (2,833) 9,752 6,400
Proceeds from long-term borrowings 8,000 245 100
Repayment of long-term borrowings (1,864) (5,918) (2,250)
-------- ------- -------
Net cash provided by financing activities 11,597 16,600 17,853
-------- ------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 189 71 44
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (14,735) 921 16,372
CASH AND CASH EQUIVALENTS:
Beginning of year 23,546 18,859 2,818
-------- ------- -------
End of year $ 8,811 $19,780 $19,190
======== ======= =======
</TABLE>
See notes to supplemental consolidated financial statements.
F-10
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 and 1995 (continued)
- -----------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
Restated Restated Restated
(NOTE 2) (NOTE 2) (NOTE 2)
<S> <C> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 1,027 $ 841 $ 604
======== ======== ========
Taxes paid $ 218 $ 1,415 $ 1,056
======== ======== ========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Income tax benefit relating to the
exercise of stock options $ 572 $ 3,408 $ 126
======== ======== ========
Liabilities incurred in connection with
acquisition of business $ 902 $ - $ -
======== ======== ========
Property and equipment acquired under
capital leases $ 22 $ 99 $ 354
======== ======== ========
Issuance of common stock to acquire
Northeast Robotics, Inc. $ - $ 2,676 $ -
======== ======== ========
Liabilities satisfied by private offering
of common stock of subsidiary $ - $ - $ 1,137
======== ======== ========
Unrealized gain from disposal of capital
lease $ - $ - $ 351
======== ======== ========
Capital lease obligation removed from
disposal of capital lease $ - $ - $ 715
======== ======== ========
</TABLE>
See notes to supplemental consolidated financial statements.
F-11
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
NOTES TO SUPPLEMENTAL CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996 and 1995
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
A. DESCRIPTION OF BUSINESS - Robotic Vision Systems, Inc. ("RVSI") and
-----------------------
subsidiaries (the "Company") designs, manufactures, markets and sells
automated two dimensional and three dimensional machine vision based
products and systems for inspection, measurement and identification, and
is a leader in advanced electro-optical sensor technology. The Company is
also developing an ice detection product for the aviation industry.
B. PRINCIPLES OF CONSOLIDATION - The supplemental consolidated
---------------------------
financial statements include the financial statements of Robotic Vision
Systems, Inc. and its subsidiaries, all of which are wholly-owned. All
significant intercompany transactions and balances have been eliminated in
consolidation.
The supplemental consolidated financial statements of the Company have
been prepared to give retroactive effect to the business combination with
Vanguard Automation, Inc. ("Vanguard") (Note 2) which occurred on December
9, 1997 and has been accounted for as a pooling of interests. Generally
accepted accounting principles proscribe giving retroactive effect to a
consummated business combination accounted for by the pooling of interests
method in the financial statements that do not cover the date of
consummation. These supplemental consolidated financial statements do not
extend through the date of consummation, however, they will become the
historical consolidated financial statements of the Company after
financial statements covering the date of consummation of the business
combination are issued.
C. REVENUES AND COST OF REVENUES - The Company recognizes revenue on
-----------------------------
its standard electronic inspection and measurement products upon shipment.
Revenue from the licensing of software is recognized when the software is
delivered if collectibility is probable and there are no significant
vendor obligations. Engineering service and support revenue is recognized
when such services are rendered. Warranty costs associated with products
sold with warranty protection, as well as other post-contract support
obligations, are estimated based on the Company's historical experience
and recorded in the period the product is sold.
D. CASH AND CASH EQUIVALENTS - Cash and cash equivalents includes money
-------------------------
market accounts and certain debt securities issued by the United States
government with an original maturity of three months or less.
E. INVESTMENTS - At September 30, 1996, investments consisted primarily
-----------
of certain debt securities issued by the United States government. The
Company's intention was to hold such investments until their maturity,
therefore, such investments were recorded at their amortized cost which
was $1,998,000. The carrying value of these investments approximated
market value. In addition, at September 30, 1996, the Company had
marketable equity securities classified as available-for-sale which were
recorded at their fair market value of $167,000, with unrealized gains of
$147,000 included as a separate component of stockholders' equity.
F. INVENTORIES - Inventories are stated at the lower of cost (using the
-----------
first-in, first-out cost flow assumption) or market.
F-12
<PAGE>
G. PLANT AND EQUIPMENT - Plant and equipment is recorded at cost less
-------------------
accumulated depreciation and amortization and includes the costs
associated with demonstration equipment and other equipment internally
developed by the Company. The cost of internally developed assets
includes direct material and labor costs and applicable factory overhead.
Depreciation is computed by the straight-line method over estimated lives
ranging from two to eight years. Leasehold improvements are amortized
over the lesser of their respective estimated useful lives or lease terms.
H. IMPAIRMENT OF LONG-LIVED ASSETS - In March 1995, the Financial Accounting
-------------------------------
Standards Board issued Statements of Financial Accounting Standards
("SFAS") No. 121, "Accounting For the Impairment of Long-Lived Assets and
For Long-Lived Assets To Be Disposed Of". SFAS No. 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held
and used, and for long-lived assets and certain identifiable intangibles
to be disposed of.
In accordance with SFAS No. 121, the Company reviews its long-lived
assets, including property and equipment, goodwill and other identifiable
intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully
recoverable. To determine recoverability of its long-lived assets, the
Company evaluates the probability that future undiscounted net cash flows,
without interest charges, will be less than the carrying amount of the
assets. Impairment is measured at fair value. The adoption of SFAS No. 121
had no effect on the Company's consolidated financial statements.
I. SOFTWARE DEVELOPMENT COSTS - Software development costs are
--------------------------
capitalized in accordance with SFAS No. 86. Capitalized software
development costs are amortized primarily over a five-year period, which
is the estimated useful life of the software. Amortization begins in the
period in which the related product is available for general release to
customers.
J. RESEARCH AND DEVELOPMENT COSTS - The Company charges research and
------------------------------
development costs for Company-funded projects to operations as incurred.
Research and development costs which are reimbursable under customer-
funded contracts are treated as contract costs.
K. INCOME TAXES - The Company accounts for income taxes under the
------------
provisions of SFAS No. 109, "Accounting for Income Taxes," which requires
recognition of deferred tax assets and liabilities for the expected future
tax consequences of events that have been included in the Company's
consolidated financial statements or tax returns. Under this method,
deferred tax assets and liabilities are determined based on the
differences between the financial accounting and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
L. FOREIGN CURRENCY TRANSLATION - Assets and liabilities of the
----------------------------
Company's European subsidiaries are translated at the exchange rate in
effect at the balance sheet date. Income statement accounts are
translated at the average exchange rate for the year. The resulting
translation adjustments are excluded from operations and accumulated as a
separate component of stockholders' equity. Transaction gains (losses)
are included in net income and totaled $(267,000), $(52,000) and $167,000
in 1997, 1996 and 1995, respectively.
M. NET INCOME PER SHARE - Net income per common share is computed by
--------------------
dividing each year's net income by the respective weighted average number
of shares of common stock outstanding during the period, after giving
effect to dilutive options and warrants.
F-13
<PAGE>
N. FAIR VALUE OF FINANCIAL INSTRUMENTS - The following methods and
-----------------------------------
assumptions were used to estimate the fair value of each class of
financial instruments:
A) Cash and Cash Equivalents - The carrying amounts approximate fair
-------------------------
value because of the short maturity of these instruments.
B) Investments - The carrying amounts approximate fair value as
-----------
determined by quoted market prices.
C) Receivables - The carrying amount approximates fair value because of
-----------
the short maturity of these instruments.
D) Debt - The carrying amounts approximate fair value based on borrowing
----
rates currently available to the Company for loans with similar terms.
O. USE OF ESTIMATES - The preparation of financial statements in conformity
----------------
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
The Company's most significant estimates relate to the deferred income tax
valuation allowance, allowance for doubtful accounts receivable, reserve
for excess and obsolete inventory, and warranty reserve.
P. RECLASSIFICATIONS - Certain amounts in the 1995 and 1996 financial
-----------------
statements have been reclassified to conform with the 1997 presentation.
2. ACQUISITIONS
A. VANGUARD AUTOMATION, INC.
-------------------------
On December 9, 1997, the Company acquired the outstanding shares of
Vanguard for approximately 3,391,000 shares of the Company's common stock,
having a market value of $45,776,000 . Outstanding Vanguard stock options
were converted into stock options to purchase approximately 152,000 shares
of the Company's common stock. Outstanding Vanguard warrants were
converted into warrants to purchase approximately 182,000 shares of the
Company's common stock. Vanguard produces and markets automated
manufacturing equipment used in the assembly of certain types of
semiconductor packaging processes, commonly referred to as Ball Grid
Array. This acquisition will be accounted for as a pooling of interests
and accordingly, the supplemental consolidated financial statements have
been restated to include the accounts of Vanguard for all periods
presented. The accompanying September 30, 1996 and 1995 supplemental
consolidated financial statements include Vanguard's amounts for the years
ended December 31, 1996 and 1995. The accompanying supplemental
consolidated financial statements for the year ended September 30, 1997
include the operations of Vanguard on a common fiscal year. Vanguard's
net loss for the period October 1, 1996 through December 31, 1996 of
$2,444,000, included twice in the accompanying supplemental consolidated
statements of income for the fiscal years ended September 30, 1997 and
1996 as a result of conforming fiscal years, has been included as an
adjustment to consolidated accumulated deficit in fiscal 1997.
F-14
<PAGE>
The following is a reconciliation of certain restated amounts with
amounts previously reported:
(IN THOUSANDS)
1997 1996 1995
---------- --------- --------
Revenues:
As previously reported $152,103 $143,540 $122,125
Effect of Vanguard pooling of interests 17,239 10,435 23,290
-------- -------- --------
As restated $169,342 $153,975 $145,415
======== ======== ========
Net income (loss):
As previously reported $ 8,245 $ 9,726 $ 10,995
Effect of Vanguard pooling of interests (7,597) (8,891) 1,153
-------- -------- --------
As restated $ 648 $ 835 $ 12,148
======== ======== ========
Net income (loss) per share:
As previously reported $ 0.38 $ 0.45 $ 0.55
Effect of Vanguard pooling of interests (0.35) (0.41) 0.03
-------- -------- --------
As restated $ 0.03 $ 0.04 $ 0.58
======== ======== ========
B. TRIGON
------
On June 30, 1997, the Company acquired Trigon Technologies, Inc.
("Trigon"), a privately owned company located in Farmington Hills,
Michigan. Trigon markets a line of 2-D machine vision products for the
semiconductor industry. The purchase price was $3,000,000 in cash plus
contingent consideration based upon the sales level of certain products
sold by Trigon, over a five-year period.
This acquisition has been accounted for as a purchase and, accordingly,
the results of Trigon are included in the consolidated statements of
income of the Company since the date of acquisition and the purchase price
(including acquisition costs) has been allocated to net assets acquired
based upon their fair values. Goodwill relating to the acquisition of
$2,997,000 is being amortized over 15 years. The historical results of
operations of Trigon were not material to the operations of the Company.
C. SYSTEMATION ENGINEERED PRODUCTS, INC.
-------------------------------------
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 principle product lines include tape and reel packaging
equipment and automatic optical inspection systems. This acquisition has
been accounted for as a pooling of interests and, accordingly, the
consolidated financial statements have been restated to include the
accounts of SEP for all periods presented. The accompanying September 30,
1995 consolidated financial statements include SEP's amounts for the year
ended March 31, 1996. The accompanying consolidated financial statements
for the years ended September 30, 1997 and 1996 include the operations of
SEP on a common fiscal year. SEP's net income for the period October 1,
1995 through March 31, 1996 of $558,000, included twice in the
accompanying consolidated statements of income for the fiscal years ended
September 1996 and 1995 as a result of conforming fiscal years, has been
included as an adjustment to consolidated accumulated deficit. Expenses
of $904,000 have been incurred related to this merger.
F-15
<PAGE>
D. COMPUTER IDENTICS CORPORATION
-----------------------------
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. This acquisition has been accounted
for as a pooling of interests and accordingly, the consolidated financial
statements have been restated to include the accounts of CI for all
periods presented. The accompanying September 30, 1995 consolidated
financial statement include CI's amounts for the year ended December 31,
1995. The accompanying consolidated financial statements for the years
ended September 30, 1997 and 1996 include the operations of CI on a common
fiscal year. CI's net income for the period October 1, 1995 through
December 31, 1995 of $60,000 included twice in the accompanying
consolidated statements of income for the fiscal years ended September
1996 and 1995 as a result of conforming fiscal years, has been included as
an adjustment to consolidated accumulated deficit in fiscal 1996.
Included in the operating results of the Company for the year ended
September 30, 1996 are approximately $24,661,000 of revenues and
approximately $793,000 of net loss of CI prior to the date of acquisition
(August 30, 1996). Expenses of $1,547,000 have been incurred related to
this merger.
E. NORTHEAST ROBOTICS, INC.
------------------------
On May 30, 1996, the Company consummated a merger with Northeast Robotics,
Inc. ("NER"), a privately owned company located in New Boston, New
Hampshire, pursuant to which NER became a wholly owned subsidiary of the
Company (the "NER Merger"). NER markets a line of patented illumination
products to perform reliably in difficult imaging applications involving
highly reflective or uneven surfaces. As a consequence of the NER Merger,
the Company issued approximately 139,000 shares of its common stock (which
had a market value of approximately $2,676,000 on the date the NER Merger
was consummated) to the shareholders of NER in exchange for all of the
outstanding shares of NER common stock.
This acquisition has been accounted for as a purchase and, accordingly,
the results of NER are included in the consolidated statements of income
of the Company since the date of acquisition and the purchase price
(including acquisition costs) has been allocated to net assets acquired
based upon their fair values. Goodwill relating to the acquisition of
$2,688,000 is being amortized over 15 years. The historical results of
operations of NER were not material to the operations of the Company.
F. INTERNATIONAL DATA MATRIX, INC.
-------------------------------
On October 23, 1995, the Company acquired the outstanding shares of
International Data Matrix, Inc. ("IDM") for approximately 370,000 shares
of the Company's common stock, having a market value at the date of the
merger of approximately $8,183,000. IDM is a manufacturer and supplier of
two dimensional bar code reading systems. This acquisition has been
accounted for as a pooling of interests and accordingly, the consolidated
financial statements have been restated to include the accounts of IDM for
all periods presented. IDM's net loss for the period October 1, 1994
through December 31, 1994 of $154,000, included twice in the consolidated
statements of income for the fiscal years ended September 30, 1995 and
1994 as a result of conforming fiscal years, has been included as an
adjustment to the consolidated accumulated deficit in fiscal 1995.
F-16
<PAGE>
Included in the operating results of the Company for the years ended
September 30, 1996 are approximately $77,000 of revenues and $135,000 of
net loss of IDM prior to the date of acquisition (October 23, 1995).
Expenses of $445,000 have been incurred related to this merger.
G. ACUITY IMAGING, INC. AND SUBSIDIARIES
-------------------------------------
On September 20, 1995, the Company acquired the outstanding shares of
Acuity Imaging, Inc. ("Acuity") for approximately 1,448,000 shares of the
Company's common stock, having a market value at the date of the merger of
approximately $31,141,000. Acuity designs, manufactures and markets two
dimensional machine vision systems for use in industrial automation.
Outstanding Acuity stock options were converted into options to purchase
approximately 114,000 shares of the Company's common stock. This
acquisition has been accounted for as a pooling of interests. Acuity's net
income for the period October 1, 1994 through December 31, 1994 of
$255,000, included twice in the consolidated statements of income for the
fiscal years ended September 30, 1995 and 1994 as a result of conforming
fiscal years, has been included as an adjustment to the consolidated
accumulated deficit in fiscal 1995. Included in the operating results of
the Company for the year ended September 30, 1995 are approximately
$19,153,000 of revenues and $1,188,000 of net loss of Acuity prior to the
date of acquisition (September 20, 1995). Expenses of $1,160,000 have been
incurred related to this merger.
3. ACCOUNTS RECEIVABLE
Accounts receivable at September 1997 and 1996 consisted of the following:
(IN THOUSANDS)
1997 1996
------- -------
Billed accounts receivable $47,638 $29,505
Unbilled accounts receivable 5,641 2,836
------- -------
Total 53,279 32,341
Less allowance for doubtful accounts receivable 2,716 1,400
------- -------
Accounts receivables, net $50,563 $30,941
======= =======
Unbilled receivables primarily relate to sales recorded on standard products
which have been shipped, but have not yet been finally accepted by the
customer. The Company has no significant remaining obligations relating to
these unbilled receivables and collectibility is probable. The Company
estimates that all of its unbilled receivables at September 30, 1997 will
become billable during the ensuing twelve months.
4. INVENTORIES
Inventories at September 1997 and 1996 consisted of the following:
(IN THOUSANDS)
1997 1996
------- -------
Raw materials $20,638 $10,980
Work-in-process 13,158 12,915
Finished goods 5,299 2,675
------- -------
Total $39,095 $26,570
======= =======
F-17
<PAGE>
5. INCOME TAXES
The components of income (loss) before income tax provision (benefit) are as
follows:
(IN THOUSANDS)
1997 1996 1995
------- ------ -------
Domestic $ 2,114 $(118) $12,027
Foreign (721) (201) 65
------- ------ -------
Total $ 1,393 $(319) $12,092
======= ====== =======
The income tax provision (benefit) for the fiscal years ended September 30,
1997, 1996 and 1995 consisted of the following:
(IN THOUSANDS)
1997 1996 1995
------- ------- -------
Current:
Federal $ 737 $ 4,279 $ 4,993
State 110 1,024 747
Foreign (9) 38 42
Utilization of net operating
loss carryforwards - (3,614) (4,109)
------- ------- -------
838 1,727 1,673
------- ------- -------
Deferred:
Federal 1,187 (3,802) 1,539
State 246 (465) 376
Adjustment of valuation allowance (1,526) 1,386 (3,644)
------- ------- -------
(93) (2,881) (1,729)
------- ------- -------
Total $ 745 $(1,154) $ (56)
======= ======= =======
The adjustment of the valuation allowance during fiscal 1997 emanated
from a change in the legal structure of certain subsidiaries which eliminated
certain limitations on the Company's utilization of net operating losses of
acquired subsidiaries. The adjustments of the valuation allowance during
fiscal 1996 and 1995 emanated from the Company's profitable operations during
those years and the extent to which the Company substantiated projected
future earnings. The valuation allowance as of September 30, 1997 relates
primarily to net operating loss carryforwards and tax credit carryforwards of
Acuity, IDM and CI which are subject to annual limitations as a result of the
changes in ownership and the net deferred tax assets of Vanguard.
The income tax benefits related to the exercise of stock options reduces
taxes currently payable or increases net deferred tax assets, and is credited
to additional paid-in capital. Such amounts approximate $572,000, $3,408,000
and $126,000 during the fiscal years ended September 1997, 1996 and 1995,
respectively.
F-18
<PAGE>
A reconciliation between the statutory U.S. Federal income tax rate and
the Company's effective tax rate for the years ended September 30, 1997, 1996
and 1995 is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- -------------- ---------
<S> <C> <C> <C>
U.S. Federal statutory rate 34.0% (34.0)% 34.0%
Increases (reductions) due to:
State taxes - net of Federal tax benefit 13.7 223.5 4.2
Utilization of net operating loss carryforwards - (1,132.9) (35.1)
Anticipated future utilization of net operating
loss carryforwards (88.9) (457.1) (10.0)
Net operating loss not producing current tax benefits 203.5 985.3 6.4
Exempt income of foreign sales corporation (55.1) (6.9) (1.4)
Worthless stock deduction relating to liquidation
of foreign subsidiaries (55.1) - -
Other - net 1.4 60.3 1.4
--------- --------
Total 53.5% (361.8)% (0.5)%
======== ========= ========
The net deferred tax asset at September 30, 1997, 1996 and 1995 is comprised of the
following:
(IN THOUSANDS)
Deferred Tax Assets (Liabilities) 1997 1996 1995
--------------------------------- -------- --------- --------
Net operating loss carryforwards $ 17,021 $ 16,941 $ 14,384
Tax credit carryforwards 2,655 2,853 2,651
Accrued liabilities 2,277 1,881 2,006
Inventories 2,427 2,712 1,206
Receivables 1,078 486 183
Property and equipment (129) (367) (100)
Merger expenses 271 706 288
Software development costs (2,043) (543) -
Other 176 (75) (120)
-------- --------- --------
23,733 24,594 20,498
Less valuation allowance (14,913) (16,439) (17,275)
-------- --------- --------
Total $ 8,820 $ 8,155 $ 3,223
======== ========= ========
</TABLE>
At September 30, 1996, other assets included noncurrent net deferred tax
assets of $39,000.
As of September 30, 1997, the Company had Federal net operating loss
carryforwards of approximately $42,706,000 of which $31,988,000 are subject
to annual limitations because of the changes in ownership, as defined in the
Internal Revenue Code. Such loss carryforwards expire in the fiscal years
1998 through 2012. The utilization of the carryforwards to offset future tax
liabilities is dependent upon the Company's ability to generate sufficient
taxable income during the carryforward periods.
F-19
<PAGE>
6. PLANT AND EQUIPMENT
Plant and equipment at September 1997 and 1996 consisted of the
following:
(IN THOUSANDS)
1997 1996
------- -------
Land $ 490 $ 490
Machinery and equipment 7,711 6,312
Furniture, fixtures and other equipment 10,068 7,345
Demonstration equipment 7,334 5,725
Leasehold improvements 1,940 1,581
------- -------
Total 27,543 21,453
Less accumulated depreciation and amortization 13,036 10,022
------- -------
Plant and equipment - net $14,507 $11,431
======= =======
7. OTHER ASSETS
Other assets at September 1997 and 1996 consisted of the following:
<TABLE>
<S> <C> <C>
(IN THOUSANDS)
1997 1996
------ ------
Software development costs, net of accumulated
amortization of $2,251,000 and $1,289,000,
respectively $7,233 $3,353
Other 1,435 1,025
------ ------
Total $8,668 $4,378
====== ======
</TABLE>
Certain software development costs totaling $4,842,000 and $2,630,000
have been capitalized during the fiscal years ended September 1997 and 1996,
respectively. Capitalized software development costs for the fiscal year
ended September 30, 1997 and 1996 include $848,000 and $1,534,000,
respectively, of costs related to certain acquired subsidiaries. These
subsidiaries had not capitalized any software development costs in prior
years because, prior to their respective acquisitions by the Company, they
had not utilized detailed program designs in the software development
process. In general, the software development costs incurred by these
subsidiaries between the time working models were available and the related
software projects were released to customers were not material.
Amortization expense relating to software development costs for 1997,
1996 and 1995 was $962,000, $551,000 and $325,000, respectively.
8. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities at September 1997 and 1996
consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996
------- -------
<S> <C> <C>
Accrued wages and related employee benefits $ 5,198 $ 4,852
Accrued sales commissions 4,028 3,742
Accrued warranty and other product related costs 2,666 2,484
Other 7,731 3,052
------- -------
Total $19,623 $14,130
======= =======
</TABLE>
F-20
<PAGE>
9. NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt at September 1997 and 1996 consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
1997 1996
------- -------
<S> <C> <C>
RVSI line of credit (a) $ 4,924 $ -
RVSI term loan (a) 7,600 -
CI line of credit (b) 1,665 759
Vanguard short-term debt (c) 2,000 2,000
SEP line of credits, repaid in October 1996 - 6,400
SEP installment note payable, repaid in October 1996 - 845
Other borrowings 848 1,046
------- -------
Total long-term debt 17,037 11,050
Less current portion of long-term debt 10,623 10,558
------- -------
Long-term debt, net of current portion $ 6,414 $ 492
======= =======
</TABLE>
A. On June 27, 1997, RVSI entered into a credit agreement with a bank which
consisted of an $8,000,000 term loan and a $6,000,000 revolving credit
facility. The revolving credit facility was subsequently increased to
$11,000,000 on December 3, 1997. The term loan is payable in 60 monthly
installments of $133,333 and bears interest at 8.05 percent through June
27, 1999. Effective June 27, 1999, the interest rate will adjust, at the
discretion of the Company, to either LIBOR plus 1.75 percent or a fixed
rate equal to the average yield on a five-year U.S. Treasury security plus
2 percent. The revolving credit facility expires on May 31, 2000 and
borrowings bear interest at LIBOR plus 1.5 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. Borrowings under the credit
agreement are secured by substantially all of the Company's assets and are
guaranteed by all domestic subsidiaries. The terms of the credit
agreement, among other matters, require the Company to maintain certain
tangible net worth, debt to equity, working capital, and debt service
coverage ratios and place restrictions on additional investments,
indebtedness and the payment of cash dividends.
B. CI has an unsecured line of credit with a domestic bank which provides for
maximum borrowings of $2,500,000. Borrowings under this line of credit
may be made in German Deutschmarks, French Francs, or British Pounds and
bear interest at various rates dependent upon the currency borrowed.
Borrowing under this line of credit are payable on demand. The interest
rate on borrowings outstanding at September 30, 1997 range from 6.5
percent to 8.5 percent.
C. In 1996, Vanguard entered into an agreement with a significant stockholder
which provided Vanguard with a $2,000,000 credit line which matured in
July 1997. In connection with this credit line, Vanguard issued warrants
to purchase up to 2,000,000 shares of Vanguard's voting stock at an
exercise price of $1.00 per share. In June 1997, the credit line was
repaid with the proceeds of a private equity placement. In June 1997,
Vanguard entered into a debt agreement with a significant related party
supplier in the principal sum of $2,000,000, with interest at the prime
rate payable in monthly installments with the principal due upon maturity
in March 1998.
F-21
<PAGE>
Maturities of long-term debt as of September 30, 1997 are as follows:
YEAR ENDING
September 30,
-------------
1998 $10,623
1999 1,872
2000 1,641
2001 1,654
2002 1,247
-------
$17,037
=======
10. EMPLOYEE BENEFIT PLANS
Defined Benefit Plan - The Company has a noncontributory pension
--------------------
plan for employees who meet certain minimum eligibility requirements.
The level of retirement benefit is based on a formula which considers both
employee compensation and length of credited service.
Plan assets are invested in pooled bank investment accounts, and the fair
value of such assets is based on the quoted market prices of underlying
securities in such accounts. The Company funds pension plan costs based on
minimum and maximum funding criteria as determined by independent actuarial
consultants.
The components of net pension cost for the fiscal years ended
September 30, 1997, 1996 and 1995 are summarized as follows:
(IN THOUSANDS)
1997 1996 1995
------ ------ ------
Service cost - benefits earned during the period $ 272 $ 219 $ 158
Interest on projected benefit obligations 135 97 83
Estimated return on plan assets (117) (81) (56)
Other - amortization of actuarial gains and
net transition asset (15) (23) (20)
----- ----- -----
Net pension cost $ 275 $ 212 $ 165
===== ===== =====
The funded status of the plan compared with the accrued expense included
in the Company's consolidated balance sheet at September 1997 and 1996 is as
follows:
(IN THOUSANDS)
1997 1996
------ ------
Fair value of plan assets $1,664 $1,211
------ ------
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested
benefits of $318,000 and $965,000 in 1997 and
1996, respectively 1,647 1,246
Effect of projected compensation increases 554 350
------ ------
Projected benefit obligation for services
rendered to date 2,201 1,596
------ ------
Projected benefit obligation in excess of
plan assets (537) (385)
Unrecognized net loss 358 210
Remaining unrecognized net transition asset being
amortized over 11 years (14) (50)
Unrecognized prior service costs 23 28
------ ------
Accrued pension cost $ (170) $ (197)
====== ======
F-22
<PAGE>
Significant assumptions used in determining net periodic pension cost and
related pension obligations are as follows:
1997 1996
----- -----
Discount rate 7.50% 7.50%
Rate of compensation increase 4.00% 4.00%
Expected long-term rate of return on assets 8.25% 8.25%
Defined Contribution Plans - The Company has four defined contribution
--------------------------
plans (the "Plans") for all eligible employees, as defined by the Plans. The
Company made matching employer contributions at various percentages in
accordance with the respective plan documents. The Company incurred
$604,000, $338,000 and $218,000 for matching employer contributions to the
Plans in 1997, 1996 and 1995, respectively. In 1997, 1996 and 1995, the
Company issued 9,000, 4,000 and 12,000 shares, respectively, of its common
stock to one of the Plans related to its prior year contribution.
11. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES - The Company has entered into operating lease agreements
----------------
for equipment, and manufacturing and office facilities. The minimum
noncancelable scheduled rentals under these agreements are as follows (in
thousands of dollars):
Year Ending September 30: FACILITIES EQUIPMENT TOTAL
--------------------------- ---------- --------- -------
1998 $ 2,309 $167 $ 2,476
1999 1,944 282 2,226
2000 1,783 58 1,841
2001 1,401 14 1,415
2002 825 4 829
Thereafter 6,454 1 6,455
------- ---- -------
Total $14,716 $526 $15,242
======= ==== =======
Rent expense for 1997, 1996 and 1995 was $3,015,000, $2,283,000 and
$1,989,000, respectively.
On January 6, 1997, the lessor of SEP's manufacturing facility assigned the
lease to the former majority shareholder of SEP, in conjunction with the
sale of this facility to the former majority shareholder. In addition, the
lease was amended to include certain capital equipment owned by the former
majority shareholder. SEP began leasing this facility during fiscal 1996.
The base annual rental payable under the lease is $605,000. The lease
expires in October 2011.
LITIGATION - During fiscal 1992, the Company instituted an action against
----------
Cybo Systems, Inc. ("Cybo"), alleging that Cybo breached certain agreements
between the parties with respect to the sale by the Company to Cybo of all
of the assets of its welding and cutting systems business.
In response to the action brought by the Company, Cybo asserted claims
against the Company alleging, among other things, breach of contract and
warranties, fraud, bad faith, trespass and conversion. Cybo is seeking
aggregate damages in excess of $10,000,000. The Company believes that Cybo's
claims are without merit and plans to defend against them vigorously. The
Company's management, after discussion with legal counsel, believes that the
ultimate outcome of this matter will not have a material adverse impact on
the Company's consolidated financial statements.
The Company is also presently involved in other litigation matters in the
normal course of business. Based upon discussion with Company legal counsel,
management does not expect that these matters will have a material adverse
impact on the Company's consolidated financial statements.
F-23
<PAGE>
12. STOCKHOLDERS' EQUITY
PRIVATE EQUITY PLACEMENTS - During fiscal 1997, Vanguard entered into an
-------------------------
agreement with a group of investors. Under the agreement, Vanguard received
approximately $7,673,000, after expenses, in exchange for the issuance of
7,045,455 shares of Vanguard's voting stock (approximately 639,000
equivalent shares of RVSI common stock). In addition, Vanguard also issued
2,057,122 shares of Vanguard's voting stock (approximately 187,000
equivalent shares of RVSI common stock) in full satisfaction of all
contingent performance shares related to the prior private equity
placements. The proceeds of this offering were utilized for the repayment of
certain related party vendor payables, of approximately $1,700,000,
repayment of $2,000,000 related party credit line and other working capital
requirements.
During fiscal 1996, Vanguard entered into agreements with a group of
investors and creditors. Under these agreements, Vanguard received
approximately $10,060,000, after expenses, in exchange for the issuance of
13,586,487 shares of Vanguard's voting stock (approximately 1,233,000
equivalent shares of RVSI common stock). In addition, a $68,000 note
receivable was collected relating to an private placement offering in fiscal
1995. The proceeds of these offerings were utilized for the repayment of
certain vendor payables, repayment of a $1,400,000 related party credit
line, repayment of a $500,000 related party short-term note and other
working capital requirements.
During fiscal 1995, the Company entered into an agreement with a group of
investors. Under the agreement, the Company received approximately
$9,386,000, after expenses, in exchange for the issuance of 1,110,000 shares
of the Company's common stock. The Company also issued warrants exercisable
through June 2000 to purchase approximately 68,000 shares of the Company's
common stock at exercise prices ranging from $8.75 to $9.00 per share.
During fiscal 1995, IDM entered into an agreement with a group of investors
and certain then existing stockholders. Under the agreement, IDM received
approximately $1,765,000 after expenses, in exchange for 46,447 shares of
IDM's common stock (approximately 119,000 equivalent shares of RVSI common
stock). IDM used approximately $785,000 of the net proceeds to satisfy
certain notes payable and related accrued interest and $60,000 of the net
proceeds to satisfy certain accounts payable.
During fiscal 1995, Vanguard entered into agreements with a group of
investors and creditors. Under these agreements, Vanguard issued 2,621,623
shares of Vanguard's voting stock (approximately 238,000 equivalent shares
of RVSI common stock) for $1,940,000 in cash, issued 394,588 shares of
Vanguard's voting common stock (approximately 36,000 equivalent shares of
RVSI common stock) for repayment of liabilities of approximately $292,000
and issued 91,920 shares of Vanguard's voting stock (approximately 8,000
equivalent shares of RVSI common stock) for a $68,000 note receivable which
was paid in fiscal 1996.
TREASURY STOCK - In July 1997, Vanguard repurchased 1,000,000 shares of
--------------
its voting stock (approximately 91,000 equivalent shares of RVSI common
stock) from its former chief technology officer. Additionally, Vanguard
purchased a stock option to repurchase an additional 1,000,000 shares of
Vanguard's voting stock at an exercise price of $0.70 per share. These
shares and options were repurchased as part of a contract severance
agreement and were subsequently retired.
WARRANTS ISSUED FOR SERVICES RENDERED - During fiscal 1996, the Company
-------------------------------------
issued warrants under certain agreements granting the holders thereof the
right through September 2000 to purchase up to approximately 50,000 shares
of the Company's common stock at exercise prices ranging from $12.88
F-24
<PAGE>
to $25.00 per share as compensation for professional services rendered. The
Company recorded an expense of approximately $74,000 related to the issuance
of such warrants.
During fiscal 1996, Vanguard issued warrants to a related party granting
him the right to purchase up to 2,000,000 shares of Vanguard's voting stock
at an exercise price of $1.00 per share (approximately 182,000 equivalent
shares of RVSI common stock with an equivalent exercise price of $11.02) as
consideration for providing a $2,000,000 credit line (see Note 9). No
expense has been recorded in the accompanying statements of income related to
the granting of these options.
During fiscal 1995, the Company issued warrants under certain agreements
granting the holders thereof the right through July 1999 to purchase up to
approximately 82,000 shares of the Company's common stock at exercise prices
ranging from $5.81 to $23.38 per share as compensation for professional
services rendered. The Company recorded an expense of approximately $92,000
related to the issuance of such warrants.
WARRANTS EXERCISED - During fiscal 1997, the Company received
------------------
approximately $515,000 in connection with the issuance of approximately
91,000 shares of its common stock upon the exercise of warrants to purchase
such shares at prices ranging between $1.00 and $7.67 per share.
During fiscal 1996, the Company received approximately $1,358,000 in
connection with the issuance of approximately 1,014,000 shares of its common
stock upon the exercise of warrants to purchase such shares at prices ranging
between $1.00 and $9.00 per share.
During fiscal 1995, the Company received approximately $492,000 in
connection with the issuance of approximately 324,000 shares of its common
stock upon the exercise of warrants to purchase such shares at prices ranging
between $1.00 and $4.38 per share.
WARRANTS OUTSTANDING - As of September 30, 1997, there were warrants
--------------------
outstanding to purchase approximately 365,000 shares of the Company's common
stock with exercise prices ranging between $3.75 and $25.00 per share.
STOCK OPTION PLANS - The Company has several stock option plans which
------------------
provide for the granting of options to employees or directors at prices and
terms as determined by the Board of Directors' Stock Option Committee. Such
options vest over a period of three to five years. All options issued by the
Company to date have exercise prices which were equal to market value of the
Company's common stock at the date of grant.
Shares granted and canceled during 1997 include a stock option repricing
offered by the Company to existing stock option holders of unexercised
options of each of the Company's stock option plans. All options that were
granted prior to July 9, 1997 were eligible for replacement. Under the terms
of the stock options repricing, at the election of the stock option holder,
stock option holders could surrender their unexercised stock options for a
proportionately less amount of stock options, based upon a formula, at an
exercise of $14.13, the fair value of the Company common stock on July 22,
1997. A total of approximately 1,196,000 options with exercise prices
ranging from $14.52 to $26.75 were canceled, and approximately 930,000
options were reissued at an exercise price of $14.13 per share. Reissued
options vest 20 percent on the six-month anniversary of the replacement date;
20 percent on the one-year anniversary of the replacement date; and 20
percent annually thereafter until fully vested. The options expire on July
22, 2002. For directors and officers of the Company, the options will not
become exercisable until the earlier of seven years from the replacement date
or until the market value of the Company's common stock reaches the exercise
price of the originally replaced option.
F-25
<PAGE>
The following table sets forth summarized information concerning the
Company's stock options:
<TABLE>
<CAPTION>
NUMBER OF SHARES EXERCISE
(In Thousands) PRICE RANGE
-------------- -----------
<S> <C> <C> <C> <C>
Options outstanding for shares of common stock at October 1, 1994 2,019 0.53 - 38.72
Granted 315 4.25 - 22.50
Canceled or expired (77) 0.53 - 17.43
Exercised (416) 0.53 - 17.43
------- ------------------
Options outstanding for shares of common stock at September 30, 1995 1,841 0.53 - 38.72
Granted 1,843 7.71 - 26.75
Canceled or expired (225) 1.00 - 22.50
Exercised (498) 0.53 - 17.43
------- ------------------
Options outstanding for shares of common stock at September 30, 1996 2,961 0.53 - 38.72
Granted 2,660 7.71 - 19.00
Canceled or expired (1,636) 0.81 - 38.72
Exercised (293) 0.53 - 15.34
------- ------------------
Options outstanding for shares of common stock at September 30, 1997 3,692 0.75 - 34.42
======= ==================
Shares reserved for issuance at September 30, 1997 193
=======
</TABLE>
Weighted average option exercise price information for the years 1997 and 1996
was as follows:
1997 1996
---- ----
Outstanding at beginning of year $ 12.14 $ 4.27
Granted during the year 12.86 17.94
Exercised during the year 4.14 2.09
Canceled or expired during the year 16.51 16.06
Exercisable at year end 5.86 4.52
Significant option groups outstanding at September 30, 1997 and
related weighted average price and life information were as follows:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
RANGE OF NUMBER REMAINING EXERCISE NUMBER EXERCISE
EXERCISE PRICES OUTSTANDING CONTRACTUAL LIFE PRICE EXERCISABLE PRICE
--------------- ----------- ---------------- -------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
$ 0.75 - $ 7.44 767 3.11 $ 3.36 604 $ 2.81
$ 7.56 - $12.75 1,066 5.89 10.52 72 9.19
$12.88 - $13.88 595 5.54 13.18 22 13.20
$14.13 946 6.47 14.13 66 14.13
$14.19 - $34.42 318 5.36 18.08 66 19.31
----- ---- ------ --- --------
3,692 5.36 $11.04 830 $ 5.86
===== ==== ====== === ========
</TABLE>
The Company applies Accounting Principles Board Opinion No. 25,
"Accounting For Stock Issued To Employees", and selected interpretations in
accounting for its option plans. Accordingly, as all options have been
granted at exercise prices equal to fair market value on the date of grant,
no compensation expense has been recognized by the Company in connection with
its stock-based compensation plans. Had compensation cost for the Company's
stock option plans been determined based upon the fair value at the grant
date for awards under these plans consistent with the methodology prescribed
under Statement of Financial Accounting Standards No. 123, "Accounting For
Stock-Based Compensation", the Company's net income and earnings per share
would have been reduced by approximately $5,537,000 and $2,578,000 or $0.23
and $0.11 per share in 1997 and 1996, respectively. The weighted average
fair value of the options granted during 1997 and 1996 is estimated at $7.44
and $9.76 on the date of grant (using Black-Scholes option pricing model)
with the
F-26
<PAGE>
following weighted average assumptions for 1997 and 1996, respectively:
volatility of 64% and 56%, risk-free interest rate of 5.83% and 5.81%, and
an expected life of five years in 1997 and 1996. The weighted average fair
value of Vanguard options granted during both 1997 and 1996 is estimated at
$0.38 (approximately $4.19 restated for equivalent RVSI stock options) on
the date of grant using the minimum value method with the following weighted
average assumptions for both 1997 and 1996: volatility of zero, risk-free
interest rate of 6%, and an expected life of ten years.
13. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
1997
--------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
Revenues $38,734 $35,755 $41,789 $53,064
Gross profit $17,357 $15,192 $19,681 $23,265
Net income (loss) $ (294) $ (767) $ (762) $ 2,471
Net income (loss) per share $ (0.01) $ (0.03) $ (0.03) $ 0.10
1996
--------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
Revenues $37,392 $38,292 $39,914 $38,377
Gross profit $18,671 $18,473 $17,552 $14,119
Net income (loss) $ 2,118 $ 1,841 $ 1,067 $(4,191)
Net income (loss) per share $ 0.09 $ 0.08 $ 0.05 $ (0.18)
During the quarter ended September 30, 1996, the Company capitalized
approximately $590,000 of software development costs which should have been
capitalized during the first three quarters of the fiscal year ended
September 30, 1996.
During the quarter ended June 30, 1996, SEP became aware of a significant
problem with the performance of one of its products. The Company's
management believes it has resolved this problem and has implemented the
necessary design changes. As a result, SEP recorded inventory, warranty and
accounts receivable reserves of approximately $1.8 million and $1.1 million
in the third and fourth quarters of fiscal 1996, respectively, relating to
the correction of this problem.
The quarterly net income per share information is computed separately for
each period. Therefore, the sum of such quarterly per share amounts may
differ from the total for the year.
14. MAJOR CUSTOMERS AND CREDIT CONCENTRATIONS
The Company grants credit to customers who are primarily in the
semiconductor industry. During 1997 and 1996, revenues from a single
customer represented 16 percent and 13 percent of total revenues,
respectively. No other customer accounted for more than 10 percent of total
revenues for fiscal 1997, 1996 and 1995.
F-27
<PAGE>
15. GEOGRAPHIC OPERATIONS
For the purposes of segment reporting, management considers the Company
to operate in one industry, the machine vision industry. Operations in this
business segment by geographic area are summarized as follows (in thousands
of dollars):
<TABLE>
<CAPTION>
UNITED STATES EUROPE ELIMINATIONS CONSOLIDATED
------------- ------ ------------ ------------
YEAR ENDED SEPTEMBER 30, 1997:
-------------------------------
<S> <C> <C> <C> <C>
Revenues from unaffiliated customers $152,530 $16,812 $ - $169,342
Transfers between geographic areas 4,611 - (4,611) -
-------- ------- ------- --------
Total revenues $157,141 $16,812 $(4,611) $169,342
======== ======= ======= ========
Income (loss) before income tax benefit (provision) $ 2,120 $ (721) $ (6) $ 1,393
======== ======= ======= ========
Identifiable assets $132,515 $ 8,451 $(4,976) $135,990
======== ======= =======
Corporate assets 3,933
--------
Total assets at September 30, 1997 $139,923
========
YEAR ENDED SEPTEMBER 30, 1996:
------------------------------
Revenues from unaffiliated customers $137,749 $16,226 $ - $153,975
Transfers between geographic areas 4,128 240 (4,368) -
-------- ------- ------- --------
Total revenues $141,877 $16,466 $(4,368) $153,975
======== ======= ======= ========
Income (loss) before income tax benefit (provision) $ (187) $ (201) $ 69 $ (319)
======== ======= ======= ========
Identifiable assets $ 93,607 $ 7,085 $(8,143) $ 92,549
======== ======= =======
Corporate assets 14,922
--------
Total assets at September 30, 1996 $107,471
========
YEAR ENDED SEPTEMBER 30, 1995:
------------------------------
Revenues from unaffiliated customers $128,653 $16,762 $ - $145,415
Transfers between geographic areas 5,050 110 (5,160) -
-------- ------- ------- --------
Total revenues $133,703 $16,872 $(5,160) $145,415
======== ======= ======= ========
Income (loss) before income tax benefit (provision) $ 12,162 $ 65 $ (135) $ 12,092
======== ======= ======= ========
Identifiable assets $ 66,744 $ 7,465 $(6,985) $ 67,224
======== ======= =======
Corporate assets 16,296
--------
Total assets at September 30, 1995 $ 83,520
========
</TABLE>
Total revenues to customers outside the U.S. were $115,854,000, $97,483,000
and $79,334,000 for the years ended September 30, 1997, 1996 and 1995,
respectively.
Export sales from the Company's United States operations to unaffiliated
customers were as follows:
(IN THOUSANDS)
Year Ended September 30,
-------------------------
1997 1996 1995
------- ------- -------
Europe $16,413 $ 9,160 $ 8,665
Asia/Pacific Rim 80,714 70,924 53,609
Other 1,915 1,173 298
------- ------- -------
Total $99,042 $81,257 $62,572
======= ======= =======
* * * * * * *
F-28
<PAGE>
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
SUPPLEMENTAL SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
- -------------------------------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- -------- -------- -------- --------
Addition
----------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE
BEGINNING COST AND ACCOUNTS DEDUCTIONS AT END OF
Descriptions OF PERIOD EXPENSES - DESCRIBE - DESCRIBE PERIOD
------------ ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C>
YEAR ENDED SEPTEMBER 30, 1997:
Allowance for doubtful accounts $1,400 $1,924 $ - (1) $ 608 (2) $2,716
====== ====== ===== ====== ======
Reserve for excess and
obsolete inventory $3,960 $1,435 $1,559 (2) $3,836
====== ====== ===== ====== ======
YEAR ENDED SEPTEMBER 30, 1996:
Allowance for doubtful accounts $ 544 $ 957 $ 6 (1) $ 107 (2) $1,400
====== ====== ===== ====== ======
Reserve for excess and
obsolete inventory $1,057 $3,052 $ 149 (2) $3,960
====== ====== ===== ====== ======
YEAR ENDED SEPTEMBER 30, 1995:
Allowance for doubtful accounts $ 630 $ 113 $ 8 (1) $ 207 (2) $ 544
====== ====== ===== ====== ======
Reserve for excess and
obsolete inventory $1,134 $ 280 $ 357 (2) $1,057
====== ====== ===== ====== ======
</TABLE>
(1) Recoveries of accounts written off.
(2) Amounts written off.
F-29
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following table sets forth the estimated expenses in connection with the
offering described in the Registration Statement:
Registration Fee............................................ $ 12,160
Accounting Fees and Expenses................................ 5,000
Legal Fees and Expenses..................................... 5,000
Printing and Reproduction................................... 2,500
Miscellaneous............................................... 340
---------
Total Expenses $ 25,000
=========
Item 15. Indemnification of Directors and Officers
Article SEVENTH of the Certificate of Incorporation of Robotic Vision
Systems, Inc. (the "Registrant") provides with respect to the indemnification of
directors and officers that the Registrant shall indemnify to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, each person that such Section grants the Registrant power to
indemnify. Article TENTH of the Certificate of Incorporation of the Registrant
also provides that no director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2), acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transactions from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the ability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of Delaware General Corporation Law, as
amended from time to time.
Section 145 of Delaware Corporation Law provides, inter alia, that to the
extent a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative or in
defense of any claim, issue, or matter therein (hereinafter, a "Proceeding"), by
reason of the fact that he is or was a director, officer, employee or agent of a
corporation or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise (collectively an "Agent" of the
corporation), he shall be indemnified against expenses (including attorney's
fees) actually and reasonably incurred by him in connection therewith.
Section 145 also provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened
II-1
<PAGE>
Proceeding by reason of the fact that he is or was an Agent of the corporation,
against expenses (including attorney's fees) judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, that in
an action by or in the right of the corporation, the corporation may not
indemnify such person in respect of any claim, issue, or matter as to which he
is adjudged to be liable to the corporation unless, and only to the extent that,
the Court of Chancery or the court in which such proceeding was brought
determines that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is reasonably entitled to indemnity.
Item 16. Exhibits
5 Opinion of Cooperman Levitt Winikoff Lester & Newman P.C.
23(a) Consent of Deloitte & Touche LLP
23(b)(i) Consent of Arthur Andersen LLP
23(b)(ii) Consent of Arthur Andersen LLP
23(c) Consent of Ernst & Young LLP
23(d) Consent of KPMG Peat Marwick LLP
23(e) Consent of Cooperman Levitt Winikoff Lester & Newman P.C.
included in Exhibit 5 hereof)
24 Power of Attorney (included in the signature pages of Part II of
this Registration Statement)
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(3) That for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), each post-effective amendment
that contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(4) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement.
(5) To remove from registration any means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(6) That, for purposes of determining any liability under the
Securities Act, each filing of Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the
II-2
<PAGE>
"Exchange Act") that is incorporated by reference in the Registration Statement,
shall be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Registrant
pursuant to Item 15 of this Part II to the Registration Statement, or otherwise,
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Registrant
of expenses incurred or paid by a director, officer or controlling person of
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against the public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Village of Hauppauge, and State of New York, on the 16th day
of January, 1998.
ROBOTIC VISION SYSTEMS, INC.
By: /s/Pat V. Costa
--------------------------
Pat V. Costa
President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Pat V. Costa and Robert H. Walker, and each of
them, with full power to act without the other, his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution for him and
in his name, place and stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorneys-in-
fact and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
SIGNATURE TITLE DATE
Chairman of the
/s/Pat V. Costa Board, President and
- ----------------------- Director (Principal January 16, 1998
Pat V. Costa Executive Officer)
II-4
<PAGE>
Executive Vice
President,
Secretary/Treasurer
and Director
(Principal Financial
/s/ Robert H. Walker Officer and January 16, 1998
- ----------------------- Principal Accounting
Robert H. Walker Officer
/s/ Steven Bilodeau Executive Vice
- ----------------------- President and January 16, 1998
Steven Bilodeau Director
/s/ Howard Stern Senior Vice
- ----------------------- President and January 16, 1888
Howard Stern Director
/s/ Jay M. Haft Director January 16, 1998
- -----------------------
Jay M. Haft
- ----------------------- Director
Donald J. Kramer
- ----------------------- Director
Mark J. Lerner
- ----------------------- Director
Frank A. DiPietro
- ----------------------- Director
Tomas Kohn
II-5
<PAGE>
EXHIBIT 5
January 16, 1998
Robotic Vision Systems, Inc.
425 Rabro Drive East
Hauppauge, New York 11788
Re: Registration Statement on Form S-3
Under the Securities Act of 1933
Ladies and Gentlemen:
In our capacity as counsel to Robotic Vision Systems, Inc. a Delaware
corporation (the "Company"), we have been asked to render this opinion in
connection with a Registration Statement on Form S-3, being filed
contemporaneously herewith by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Registration
Statement"), covering an aggregate of (i) 3,395,337 issued and outstanding
shares of Common Stock, $.01 par value (the "Common Stock"), and (ii) an
aggregate of 211,540 additional shares of Common Stock issuable upon the
exercise of certain options and warrants (collectively, "Purchase Rights") to
acquire shares of Common Stock ("Rights Stock"), all of which have been included
in the Registration Statement for the respective accounts of the several persons
identified in the Registration Statement as Selling Stockholders.
In that connection, we have examined the Certificate of Incorporation and
the By-Laws of the Company, both as amended to date, the Registration Statement,
the several documents evidencing the Purchase Rights, corporate proceedings of
the Company relating to the issuance of the Common Stock and such other
instruments and documents as we have deemed relevant under the circumstances.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the
corporate records furnished to us by the Company include all corporate
proceedings taken by the Company to date.
Based upon the subject to the foregoing, we are of the opinion that:
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(2) The Common Stock has been duly and validly authorized and issued and
is fully paid and non-assessable.
(3) The Rights Stock has been duly and validly authorized and, when issued
and paid for in accordance with the terms of the respective Purchase
Rights, will be duly and validly issued and fully paid and non-
assessable.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Opinion" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
COOPERMAN LEVITT WINIKOFF
LESTER & NEWMAN, P.C.
By: /s/Ira Roxland
A Member of the Firm
<PAGE>
EXHIBIT 11
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
- ---------------------------------------------
COMPUTATION OF PER SHARE AMOUNTS
FOR THE YEARS ENDED SEPTEMBER 30, 1997, 1996, AND 1995
(in thousands, except share and per share amounts)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
RESTATED RESTATED RESTATED
(Note 2) (Note 2) (Note 2)
<S> <C> <C> <C>
PRIMARY:
Net income $ 648 $ 835 $12,148
======= ======= =======
Weighted average number of common shares 23,718 22,092 18,740
Assumed number of shares issued from common
share equivalents 249 1,293 2,290
------- ------- -------
Weighted average number of common and common
equivalent shares 23,967 23,385 21,030
------- ------- -------
Net income per share $ 0.03 $ 0.04 $ 0.58
======= ======= =======
FULLY DILUTED:
Net income $ 648 $ 835 $12,148
======= ======= =======
Weighted average number of common shares 23,718 22,092 18,740
Assumed number of shares issued from common
share equivalents 320 1,300 2,427
------- ------- -------
Weighted average number of common and common
equivalent shares 24,038 23,392 21,167
------- ------- -------
Net income per share $ 0.03 $ 0.04 $ 0.57
======= ======= =======
</TABLE>
<PAGE>
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Robotic Vision Systems,
Inc. on Form S-3 of our report dated December 9, 1997 on the supplemental
financial statements of Robotic Vision Systems, Inc. as of September 30, 1997
and 1996 and for each of the three years in the period ended September 30, 1997,
appearing in the Prospectus, which is part of the Registration Statement.
We also consent to the incorporation by reference in this Registration Statement
of Robotic Vision Systems, Inc. on Form S-3 of our report dated December 9, 1997
appearing in the Annual Report on Form 10-K of Robotic Vision Systems, Inc. for
the year ended September 30, 1997.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/S/ DELOITTE & TOUCHE LLP
Jericho, New York
January 15, 1998
<PAGE>
EXHIBIT 23(b)(i)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of our report dated
November 6, 1995, covering the audited financial statements of Acuity Imaging,
Inc. as of September 30, 1995 and for the year then ended, included in Robotic
Vision Systems, Inc.'s Form 10-K for the year ended September 30, 1997 and to
all references to our Firm included in this registration statement.
/S/ ARTHUR ANDERSEN LLP
Boston, Massachusetts
January 15, 1998
<PAGE>
EXHIBIT 23(b)(ii)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Form S-3 of our reports dated November 21, 1997, (except with
respect to the matter discussed in Note 15, as to which the date is December 9,
1997) and June 30, 1997, (except with respect to the matter discussed in Note
16, as to which the date is December 9, 1997) related to Vanguard Automation,
Inc. included in Robotic Vision Systems, Inc.'s Form 8-K/A dated January 16,
1998, and to all references to our firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Tucson, Arizona,
January 15, 1998.
<PAGE>
EXHIBIT 23(c)
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Robotic Vision Systems, Inc. on Form S-3 dated January 20, 1998, of our report
dated February 8, 1996, with respect to the 1995 consolidated financial
statements and schedule of Computer Identics Corporation and subsidiaries
included in the Annual Report (Form 10-K) of Robotic Vision Systems, Inc., for
the year ended September 30, 1997.
We also consent to the incorporation by reference of our report in this
Registration Statement on Form S-3 of our report dated February 8, 1996, with
respect to the 1995 consolidated financial statements and schedule of Computer
Identics Corporation and subsidiaries relating to the supplemental financial
statements of Robotic Vision Systems, Inc. appearing therein and the reference
therein to our firm as "Experts" in the Prospectus.
/S/ ERNST & YOUNG LLP
Boston, Massachusetts
January 15, 1998
<PAGE>
EXHIBIT 23(d)
Consent of KPMG Peat Marwick LLP
CONSENT OF INDEPENDENT AUDITORS
We consent to the use of our report dated February 23, 1996, included in Form
S-3 of Robotic Vision Systems, Inc. dated January 20, 1998, relating to the
statements of operations, changes in stockholders' deficiency, and cash flows of
Vanguard Automation, Inc. for the year ended December 31, 1995 and to the
reference to our firm under the caption "Experts" in the Registration Statement.
/s/ KPMG PEAT MARWICK LLP
Phoenix, Arizona
January 16, 1998
