<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1999 Commission File Number 0-8623
----------------- ------
ROBOTIC VISION SYSTEMS, INC.
----------------------------
(Exact name of Registrant as specified in charter)
DELAWARE 11-2400145
- ------------------------------- ---------------------
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
5 SHAWMUT ROAD, CANTON, MASSACHUSETTS 02021
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (781) 821-0830
--------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceeding twelve months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes _X_ No
Number of shares of Common Stock outstanding
as of January 26, 2000 27,585,047
No of Pages 12
--
<PAGE> 2
PART 1. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------ -------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ........................................ $ 2,367 $ 6,293
Accounts receivable, net ......................................... 45,258 37,502
Inventories ...................................................... 33,535 32,553
Prepaid expenses and other current assets ........................ 2,524 1,288
--------- ---------
Total current assets ........................................... 83,684 77,636
Plant and equipment, net ......................................... 11,693 12,281
Deferred income taxes ............................................ 8,820 8,820
Goodwill, net of accumulated amortization of $1,564 and $1,434 ... 5,120 5,250
Software development costs, net .................................. 14,158 13,965
Other assets ..................................................... 7,062 5,249
--------- ---------
$ 130,537 $ 123,201
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of long-term debt .............. $ 35,561 $ 35,627
Accounts payable ................................................. 24,819 21,093
Accrued expenses and other current liabilities ................... 16,573 16,531
--------- ---------
Total current liabilities ...................................... 76,953 73,251
Long-term debt ................................................... 4,755 2,855
--------- ---------
Total liabilities .............................................. 81,708 76,106
Commitments and contingencies .................................... -- --
Prepaid warrants ................................................. 9,298 9,105
Stockholders' Equity:
Common stock $0.01 par value; shares authorized 75,000; issued and
outstanding Dec 1999 - 27,438 and Sep 1999 - 27,354 ............. 274 274
Additional paid-in capital ....................................... 179,883 179,466
Accumulated deficit .............................................. (140,551) (141,683)
Accumulated other comprehensive income ........................... (75) (67)
--------- ---------
Total stockholders' equity ..................................... 39,531 37,990
--------- ---------
$ 130,537 $ 123,201
========= =========
</TABLE>
See notes to consolidated financial statements
1
<PAGE> 3
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Revenues .............................................. $ 47,080 $ 29,405
Cost of revenues ...................................... 26,256 16,834
-------- --------
Gross profit ........................................ 20,824 12,571
-------- --------
Operating costs and expenses:
Research and development expenses ..................... 5,863 5,590
Selling, general and administrative expenses .......... 12,537 11,216
-------- --------
Income (loss) from expenses ......................... 2,424 (4,235)
Gain on sale of assets ................................ -- (2,798)
Interest expense, net ................................. 1,071 835
-------- --------
Income (loss) before income taxes ................... 1,353 (2,272)
Provision (benefit) for income taxes .................. 27 --
-------- --------
Net income (loss) ................................... 1,326 (2,272)
Premium on prepaid warrants ........................... 193 --
-------- --------
Net income (loss) attributable to common stockholders $ 1,133 $ (2,272)
Net income (loss) per share
Basic ............................................... $ 0.04 $ (0.09)
Diluted ............................................. $ 0.04 $ (0.09)
Weighted Average shares
Basic ............................................... 27,373 24,876
Diluted ............................................. 30,492 24,876
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 and 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ....................................................... $ 1,326 $(2,272)
Adjustments to reconcile net income (loss) to net cash
used in operating activities
Depreciation and amortization ......................................... 2,396 2,632
Gain on sale of assets ................................................ -- (2,798)
Changes in operating assets and liabilities (net of effects of business
acquired)
Accounts receivable ................................................. (7,756) 1,830
Inventories ......................................................... (982) 4,432
Prepaid expense and other current assets ............................ (1,236) (241)
Other assets ........................................................ 63 (247)
Accounts payable .................................................... 3,726 (1,952)
Accrued expenses and other current liabilities ...................... 42 (1,526)
------- -------
Net cash (used in) operating activities ............................. (2,421) (142)
------- -------
INVESTING ACTIVITIES:
Additions to plant and equipment, net ................................... (739) (46)
Additions to software development costs ................................. (1,009) (1,501)
Proceeds from sale of assets ............................................ -- 4,050
------- -------
Net cash (used in) provided by investing activities ................... (1,748) 2,503
------- -------
FINANCING ACTIVITIES:
Proceeds from the exercise of stock options and warrants ................ 416 --
Net payments of short-term borrowings ................................... (66) (2,025)
Repayment of long-term borrowings ....................................... (100) (104)
------- -------
Net cash provided by (used in) financing activities ................... 250 (2,129)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS ............ (7) --
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS .................... (3,926) 232
CASH AND CASH EQUIVALENTS:
Beginning of year ..................................................... 6,293 2,421
------- -------
End of period ......................................................... $ 2,367 $ 2,653
------- -------
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid ........................................................... $ 1,985 $ 835
------- -------
Taxes paid .............................................................. $ -- $ --
------- -------
NONCASH INVESTING AND FINANCING ACTIVITIES:
Issuance of subordinated note payable in connection with asset purchase
agreement ............................................................... $ 2,000 $ --
------- -------
</TABLE>
See notes to consolidated financial statements
3
<PAGE> 5
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except per share amounts)
1. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Balance Sheet of Robotic Vision Systems, Inc., and
Subsidiaries (The "Company") as of December 31, 1999, the Consolidated
Statements of Operations for the three month periods ended December 31, 1999 and
1998 and the Consolidated Statements of Cash Flows for the three month periods
ended December 31, 1999 and 1998 have been prepared by the Company, without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial condition,
results of operations and cash flows at December 31, 1999 and for all periods
presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Form 10-K for
the year ended September 31, 1999 are not necessarily indicative of the
operating results for the full year.
2. INVENTORIES
Inventories at December 31, 1999 and September 30, 1999 consisted of the
following:
<TABLE>
<CAPTION>
December 31, 1999 September 30, 1999
----------------- ------------------
<S> <C> <C>
Raw Materials $17,978 $16,817
Work-in-Process 7,322 7,360
Finished Goods 8,235 8,376
------- -------
Total $33,535 $32,553
======= =======
</TABLE>
3. NOTES PAYABLE
The Company has a revolving credit agreement with three domestic banks
which is collateralized by substantially all of the domestic tangible and
intangible assets of the Company. The agreement expires on March 17, 2000. At
December 31, 1999, the Company had borrowings of $35,325 outstanding, which
reflect the maximum commitment under the agreement and currently bears interest
at the prime rate plus 2% or 10.5%. The agreement contains certain financial
covenants, including minimum levels of profitability, liquidity and net worth.
In the third quarter of fiscal 1999, the agreement was amended to establish new
financial covenants, with which the Company is currently in compliance. The
Company is working to replace the revolving credit agreement.
4
<PAGE> 6
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except per share amounts)
4. SALE OF PRODUCT LINE
In December 1998, the Company sold its Aircraft Safety product line to a
subsidiary of B.F. Goodrich for $4,050 in cash. The Company no longer considered
this technology a key component of its product portfolio or future strategic
direction. The Company sold certain inventory, equipment and intellectual
property in the transaction, resulting in a gain of $2,798. Proceeds from the
sale were used for working capital requirements and to repay $2,025 of
outstanding bank debt.
5. EARNINGS PER SHARE
Basic net income (loss) per share is computed using the weighted average
number of shares outstanding during each period. Diluted net income per share
reflects the effect of the Company's outstanding stock options and warrants
(using the treasury stock method), except where such options and warrants would
be anti-dilutive. The calculations for earnings per share for the three months
ended December 31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net income (loss) .............................................................. $ 1,133 $ (2,272)
-------- --------
Weighted average number of common shares - basic ............................... 27,373 24,876
Assumed number of shares issued from common share equivalents .................. 3,119 --
-------- --------
Weighted average number of common and common equivalent shares - diluted........ 30,492 24,876
-------- --------
Net income (loss) per share - basic ............................................ $ 0.04 $ (0.09)
-------- --------
Net income (loss) per share - diluted .......................................... $ 0.04 $ (0.09)
-------- --------
</TABLE>
For the three months ended December 31, 1998, any such common stock equivalents
were anti-dilutive due to the loss for the period. For the three months ended
December 31, 1999 and 1998, the Company had potential common shares equivalents
excluded from the earnings per share calculations of 4,161 and 3,688
respectively, as they were considered anti-dilutive.
6. COMPREHENSIVE INCOME (LOSS)
Effective October 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income".
Currently, in addition to net income or loss, the only item that the Company
currently records as other comprehensive income or loss is the change in the
cumulative translation adjustment resulting from the changes in exchange rates
and the effect of those changes upon translation of the financial statements of
the Company's foreign operations. For the three months ended December 31, 1999
and 1998, total comprehensive income (loss) of $1,125 and $(2,272),
respectively, included net income (loss) of $1,133 and $(2,272), respectively,
and foreign currency translation adjustments of $(8) and $0, respectively.
5
<PAGE> 7
7. SEGMENT INFORMATION
The Company operates in two reporting segments servicing the machine
visions industry. Intersegment sales by the Acuity CiMatrix division were $378
and $467 for the first quarter of fiscal 1999 and 1998, respectively. Other
income (loss) is comprised of corporate general and administrative expenses.
Although certain research activities are conducted by the Acuity CiMatrix
division for the Semiconductor Equipment Group, research and development
expenses are reported in the segment where the costs are incurred. The Company's
strategy is to maximize the synergies between the segments. As such, the Company
generally manages its resources on an enterprise-wide basis, taking into account
segment information along with information about resources shared in cooperative
programs among the segments. The following table presents information about the
Company's reportable segments for the quarters ended December 31:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
REVENUES:
Semiconductor Equipment ......................... $ 35,272 $ 17,722
Acuity CiMatrix ................................. 11,808 11,683
-------- --------
Total Revenues .................................. $ 47,080 $ 29,405
-------- --------
INCOME (LOSS) FROM OPERATIONS
Semiconductor Equipment ......................... $ 3,826 $ (2,084)
Acuity CiMatrix ................................. (121) (1,062)
Other ........................................... (1,280) (1,089)
-------- --------
Total income (loss) from operations.............. $ 2,424 $ (4,235)
-------- --------
DEPRECIATION AND AMORTIZATION
Semiconductor Equipment ......................... $ 1,777 $ 1,998
Acuity CiMatrix ................................. 619 634
-------- --------
Total depreciation and amortization.............. $ 2,396 $ 2,632
-------- --------
</TABLE>
8. ACQUISITION OF INTELLECTUAL PROPERTY RIGHTS
In December 1998, Acuity CiMatrix introduced the MXi, the first hand-held
imager for reading direct part marks, 1-D barcodes and new digital 2-D
symbologies, such as the Data Matrix code. The MXi is a result of a joint
development and marketing arrangement with Polaroid. In November 1999, the
Company acquired Polaroid's interest in the MXi, including all relevant
intellectual property rights, for $2.0 million and the Company's agreement to
pay Polaroid a 10-year royalty upon net sales of the MXi. The Company's $2.0
million obligation to Polaroid is evidenced by a five-year subordinated note,
which bears interest at 11% and is payable at maturity. The note is convertible
into shares of the Company's common stock at $8.00 per share if conversion were
to occur on or before November 10, 2004 and, thereafter, the higher of $4.25 or
the then fair market value per share. The Company concurrently entered into an
agreement with Polaroid calling for it to manufacture this product on the
Company's behalf.
6
<PAGE> 8
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Three Months Ended December 31, 1999 Compared to
Three Months Ended December 31, 1998
RESULTS OF OPERATIONS
Revenues were $47.1 million in the three months ended December 31, 1999
compared to $29.4 million in the three months ended December 31, 1998, an
increase of 60.1%. The increase in revenues year-to-year was associated with the
increased levels of revenues for semiconductor inspection and handling
equipment. In the three months ended December 31, 1999, revenues for the
Company's Semiconductor Equipment Group represented 74.9% of total revenues,
compared to 60.3% of total revenues in the three months ended December 31, 1998.
Revenues of $47.1 million in the three months ended December 31, 1999 were
17% higher than revenues of $40.3 million in the three months ended September
30, 1999. The increase in revenues sequentially was primarily related to the
increased levels of orders and revenues for semiconductor inspection and
handling equipment.
The Company's orders were $55.9 million, 17.4% higher than the fourth
quarter of fiscal 1999 and were approximately 77.3% higher that the three months
ended December 31, 1998. The orders increase was related to the same factors
that affected revenues.
The gross profit margin was 44.2% of revenues in the three months ended
December 31, 1999 compared to 42.8% of revenues in the three months ended
December 31, 1998. The higher gross profit margin year-to-year primarily
reflects the impact of lower fixed costs as a percentage of the higher level of
sales attributable to the Semiconductor Equipment Group.
Research and development expenses were $5.9 million, or 12.5% of revenues,
in the three months ended December 31, 1999, compared to $5.6 million, or 19.0%
of revenues, in the three months ended December 31, 1998. The Company has
continued to invest in new product development, including new semiconductor
inspection and component handling systems, as well as enhancing its 1-D barcode
reading products and expanding its new matching vision platform, Visionscape. In
the three months ended December 31, 1999, the Company capitalized $1.0 million
in software development costs under Statement of Financial Accounting Standards
No. 86, compared to $1.4 million in the three months ended December 31, 1998.
7
<PAGE> 9
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Selling, general and administrative expenses were $12.5 million, or 26.6%
of revenues, in the three months ended December 31, 1999, compared to $11.2
million, or 38.1% of revenues, in the three months ended December 31, 1998. The
higher level of expenses reflects a combination of the higher level of
litigation costs and a higher level of variable selling expenses associated with
the increase in revenues.
In fiscal 1999, the Company sold its Aircraft Safety division to a
subsidiary of B.F. Goodrich for $4.05 million in cash. The Company no longer
considered this technology a key component of its product portfolio or future
strategic direction. The Company sold certain inventory, equipment and
intellectual property in the transaction, resulting in a gain of $2.8 million.
Proceeds from the sale were used for working capital requirements and to repay
$2.0 million of outstanding bank debt.
Net interest expense was $1.1 million in the three months ended December
31, 1999, compared to $0.8 million in the three months ended December 31, 1998.
The increase in interest expense primarily reflects a higher interest rate
charged on bank borrowings.
The tax provision for the three months ended December 31, 1999 reflected
minimum federal income taxes. There was no tax provision in the three months
ended December 31, 1998, due to the loss in that fiscal quarter.
Net income attributable to common stockholders was $1.1 million, or $0.04
per share, compared with a net loss of $2.3 million, or $0.09 per share, for the
three months ended December 31, 1998. Excluding the $2.8 million gain from the
sale of the Company's Aircraft Safety division, the net loss for the three
months ended December 31, 1998 was $5.1 million, or $0.20 per share.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance decreased $3.9 million, to $2.4 million, in the
three months ended December 31, 1999, as a result of $2.4 million of net cash
used in operating activities, $1.7 million of net cash used in investing
activities and $0.3 million of net cash provided by financing activities.
The $2.4 million of net cash used in operating activities was primarily a
result of an increase in accounts receivable of $7.8 million and a $1.0 million
increase in inventories, which was partially offset by the current quarter's net
income $1.3 million, depreciation and amortization of $2.4 million and a $3.7
million increase in accounts payable.
8
<PAGE> 10
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Continued
Additions to plant and equipment were $0.7 million in the three months
ended December 31, 1999, as compared to $0.05 million the three months ended
December 31, 1998. The capitalized software development costs in the three
months ended December 31, 1999 were $1.0 million, which were slightly above the
amortization charge of $0.8 million.
At December 31, 1999, the Company had borrowings of $35.5 million
outstanding under its revolving credit agreement with its domestic tangible and
intangible assets. Borrowings under the agreement currently bear interest at the
prime rate, plus two percent. During the third quarter of fiscal 1999, we
amended our credit agreement with our banks to waive compliance with certain
financial covenants through March 31, 1999 and to establish new financial
covenants for the balance of the term of the loan. The Company must either repay
its total bank indebtedness prior to March 17, 2000, negotiate an extension of
its bank credit facility or obtain replacement financing. Management cannot
assure investors that it will be able to do so. In conjunction with the
amendment to the credit agreement, the Company issued warrants to is lending
banks covering 750,000 shares, at an exercise price of $3.96 per share, of which
250,000 warrants were immediately exercisable. All, or a portion, of the
remaining 500,000 warrants are only exercisable if the loading banks extend the
credit agreement beyond the original maturity date for pre-determined periods.
The Company is currently working to replace this revolving credit facility.
Management believes that through a combination of obtaining additional
external capital and improvements in working capital and either the
renegotiation of the Company's bank credit facility or its replacement with
alternative bank financing, the Company will have sufficient liquidity to fun
its cash requirements for at leas the next 12 months. Given the significant
upturn in both revenues and bookings experienced by the Company's Semiconductor
Equipment Group in the latter months of fiscal 1999 and the continuation of the
trend into the first quarter of fiscal 2000, management believes that the
Company's banks will forebear from initiating any default declaration for a
reasonable period of time if the Company is unable to either renegotiate or
replace its current bank credit facility prior to its expiration on March 17,
2000. However, in the absence of such forbearance and if a default is declared
by the Company's banks, it is likely that the Company's cash resources would be
severely constrained. On January 19, 2000, the Company filed a registration
statement to sell 5.0 million shares of the Company's common stock. Management
believes that the completion of that offering would enable the Company to repay
remaining outstanding indebtedness under the bank credit facility and facilitate
in the renegotiation of replacement of the facility.
EFFECT OF INFLATION
Management believes that during the three months ended December 31, 1999
the effect of inflation was not material.
9
<PAGE> 11
ROBOTIC VISION SYSTEMS, INC. AND SUBSIDIARIES
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1999, the FASB issued Statement of Accounting Standards No. 137,
"Accounting for Derivative Instruments and Hedging Activities -- Deferral of
the Effective Date of FASB Statement No. 133." SFAS No. 137 delays the
implementation of SFAS No. 133 until our fiscal year ending September 30, 2001.
We have not completed our evaluation of the effects of SFAS No. 133.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 summarizes certain of the SEC's views in applying
revenue recognition in financial statements. The provisions of SAB No. 101 are
effective for fiscal years beginning October 1, 2000. The Company has not
completed its evaluation of the effects of SAB No. 101.
YEAR 2000 STATUS
To date, the Company has experienced no failures or disruptions in its
internal operating systems, in its products or its third party vendors and
suppliers either on or after January 1, 2000. It is possible that future
failures or disruptions stemming from Year 2000 issues may yet result and hamper
the Company's ability to process transactions, send invoices, accept customer
orders or timely provide customers with product services.
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This report contains forward-looking statements including statements
regarding, among other items, financing activities and anticipated trends in the
COmpany's business, which are made pursuant to the "safe harbor" provisions of
the Private Securities Litigation Reform Act of 1995. These statements are based
largely on the Company's expectations and are subject to a number risks and
uncertainties, some of which cannot be predicted or quantified and are beyond
the Company's control, including the following: its principal market is the
highly cyclical semiconductor industry which causes a cyclical impact on its
financial results; the Company will be in default if it does not repay or
replace its banks by March 17, 2000; inadequate cash flows and restrictions in
the Company's banking arrangements may impede its production and prevent it from
investing sufficient funds in research and development; the Company's return to
sustained profitability cannot be assured; the market for semiconductor capital
equipment is highly concentrated; economic difficulties encountered by certain
of the Company's foreign customers have resulted in order cancellations and
reduced collections of outstanding accounts receivable; development of the
Company's products requires significant lead time and it may fail to correctly
anticipate the technical needs of its markets; the Company's success is
dependent on its ability to hire and retain qualified personnel; the large
number of shares available for future sale could adversely affect the price of
the Company's common stock; The Company's stock price is volatile; and systems
failures or miscalculations attributable to the Year 2000 issue could disrupt
its future operations.
Future events and actual results could differ materially from those set
forth in, contemplated by, or underlying the forward-looking statements.
Statements in this report, including those set forth above, describe factors,
among others, that could contribute to or cause such differences.
This 10-Q should be read in conjunction with detailed risk factors in the
Company's most recent registration statement, and other risk factors in the
Company's annual report on Form 10-K, and other filings with the Securities and
Exchange Commission.
10
<PAGE> 12
ROBOTIC VISION SYSTEMS, INC., AND SUBSIDIARIES
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Financial instruments that potentially subject the Company to
concentrations of credit-risk consist principally of cash equivalents and trade
receivables. It places its cash equivalents with high-quality financial
institutions, limits the amount of credit exposure to any on institution and has
established investment guidelines relative to diversification and maturities
designed to be maintain safety and liquidity. The Company's trade receivables
result primarily from sales to semiconductors manufacturers located in North
America, Japan, the Pacific Rim and Europe. Receivables are mostly from major
corporations, distributors or are supported by letters of credit. The Company
maintains reserves for potential credit losses and such losses have been
immaterial.
The Company is exposed to the impact of fluctuation in interest rates,
primarily through its borrowing activities. Its policy has been to use U.S.
dollar denominated borrowings to fund its working capital requirements. The
interest rates on the Company's current borrowings fluctuate with current market
rates. The extent of risk associated with an increase in the interest rate on
its borrowings is not quantifiable or predictable because of the variability
future interest rates and its future financing requirements. At December 31,
1999, the Company had bank borrowings outstanding of $35.3 million, which had a
variable interest rate and long-term note payables of $4.8 million with fixed
interest rates. Using a yield to maturity analysis and assuming an increase in
the interest rate on these borrowings of 105 basis points (10% fluctuation in
the rate), interest rate variability on these borrowings would not have a
material effect on the Company's financial results.
The Company is also exposed to the impact of foreign currency fluctuations.
During fiscal 1999, most local currencies of its international subsidiaries
weakened against the U.S. dollar. Since the Company translates foreign
currencies into U.S. dollars for reporting purposes, these weakened currencies
have a negative, though immaterial, impact on its results. The Company believes
that its exposure to currency exchange fluctuation is insignificant because its
international subsidiaries sell to customers, and satisfy their financial
obligations, almost exclusively in their local currencies. During the fiscal
1999, it did not engage in foreign currency hedging activities. Based on a
hypothetical ten percent adverse movement in foreign currency exchange rates,
the potential losses in future earnings, the fair value of risk-sensitive
instruments, and cash flow are immaterial, although the actual effects may
differ materially from this hypothetical analysis.
The Company estimates the fair value of its notes payable and long-term
liabilities based on quoted market prices for the same or similar issues or on
current rates offered to it for debt of the same remaining maturities. For all
other balance sheet financial instruments, the carrying amount approximates fair
value.
PART II. OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
11
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ROBOTIC VISION SYSTEMS, INC.
----------------------------
Registrant
Dated: February 1, 2000 /s/ PAT V. COSTA
----------------------------
PAT V. COSTA
President and CEO
(Principal Executive Officer)
Dated: February 1, 2000 /s/ FRANK D. EDWARDS
----------------------------
FRANK D. EDWARDS
Chief Financial Officer
(Principal Financial and
Accounting Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
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0
0
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