SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
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QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 31, 1995
Commission File Number 0-11518
PPT VISION, INC.
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(Exact name of registrant as specified in its charter)
MINNESOTA 41-1413345
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10321 West 70th Street Eden Prairie, Minnesota 55344
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(Address of principal executive offices) (Zip Code)
(612) 942-5747
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(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 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 last 90 days. Yes X No
Shares of $0.10 par value common stock outstanding at August 28, 1995:
2,347,325
Total pages this report: 12
Page: 1
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INDEX
PPT VISION, INC.
Page
Part I. Financial Information
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<S> <C>
Item 1. Financial Statements
Balance Sheets--as of July 31, 1995 and 3
October 31, 1994
Statement of Operations for the Three-Month and 4
Nine-Month Periods ended July 31, 1995 and
July 31, 1994
Statement of Cash Flows--Nine-Month Periods 5
ended July 31, 1995 and July 31, 1994
Notes to Financial Statements--July 31, 1995 6
Item 2. Management's Discussion and Analysis of 7
Financial Condition and Results of Operations
Part II. Other Information 10
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Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures 11
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PPT VISION, INC.
BALANCE SHEET
07/31/95 10/31/94
(Unaudited) (Note A)
-------------------------------------------- ------------- -------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $1,221,863 $1,092,186
Accounts receivable (net) 2,269,015 1,937,657
Inventories:
Manufactured and purchased parts 418,211 493,567
Work-in-process 130,662 230,924
Finished goods 123,076 60,113
Other current assets 17,964 40,177
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Total current assets 4,180,791 3,854,624
Restricted cash 212,792 212,792
Property, plant and equipment (net) 491,605 315,933
Other assets (net) 64,511 65,429
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Total assets $4,949,699 $4,448,778
============================================ ============= =============
LIABILITIES AND EQUITY
Current liabilities $ 594,053 $ 601,886
Deferred rent 166,348 128,350
Preferred stock 255,952 255,952
Common stock 234,334 229,371
Capital in excess of par value 11,522,749 11,461,135
Accumulated (deficit) (7,823,737) (8,227,916)
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Total shareholders' equity 4,189,298 3,718,542
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Total liabilities and shareholders' equity $4,949,699 $4,448,778
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PPT VISION, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
July 31, July 31,
Statement of Operations 1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Gross revenues $2,682,391 $1,540,107 $6,534,569 $4,323,244
Other revenues 68,210 91,418 211,468 259,743
------------------------- ---------- ---------- ---------- ----------
Total revenues 2,750,601 1,631,525 6,746,037 4,582,987
Cost of sales 1,244,373 814,590 3,131,900 2,098,617
------------------------- ---------- ---------- ---------- ----------
Gross margin: 1,506,228 816,935 3,614,137 2,484,370
Operating expenses:
Sales and marketing 643,081 502,195 1,717,674 1,443,413
General and administrative 255,598 169,301 614,762 486,372
Research and development 311,875 293,642 919,535 838,676
-------------------------- ---------- ---------- ---------- ----------
Total operating expenses 1,210,554 965,138 3,251,971 2,768,461
-------------------------- ---------- ---------- ---------- ----------
Profit/(Loss)
from operations 295,674 (148,203) 362,166 (284,091)
Interest income 17,862 10,007 41,950 26,753
Interest expense (287) 0 (1,436) 0
Other income/(expense) 1,500 1,506 1,500 1,506
-------------------------- ---------- ---------- ---------- ---------
Net profit/(loss) $314,749 ($136,690) $404,180 ($255,832)
========================== ========== ========== ========== =========
Earnings/(loss) per share $0.13 ($0.06) $0.17 ($0.11)
Common and common
equivalent shares 2,451,717 2,267,980 2,337,835 2,225,950
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PPT VISION, INC.
STATEMENT OF CASH FLOWS
Increase/(Decrease) in Cash and Cash Equivalents
Nine Months Nine Months
Ended Ended
July 31, 1995 July 31, 1994
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<S> <C> <C>
Cash flows from operating activities:
Net income/(loss) $404,180 ($255,832)
Adjustments to reconcile net
income/(loss) to net cash provided
by operating activities
Depreciation and amortization 105,318 95,394
Transfer of long-term assets to inventory 27,080 14,966
Deferred rent 37,998 0
Change in assets and liabilities
Accounts receivable (331,358) (36,998)
Inventories 112,656 (42,538)
Other assets 22,212 38,875
Accounts payables and accrued expenses (7,833) 87,998
------------------------------------- ------------ ------------
Total adjustments (33,927) 157,697
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Net cash provided by
operating activities 370,253 (98,135)
Cash flows from investing activities:
Capital acquisitions (307,152) (172,099)
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Net cash used in investing activities (307,152) (172,099)
Cash flows from financing activities
Proceeds from issuance of common stock 66,576 540,058
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Net cash provided by
financing activities 66,576 540,058
Net increase in cash and cash equivalents 129,677 269,824
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Cash and cash equivalents at
beginning of year 1,092,186 982,250
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Cash and cash equivalents
at end of period $1,221,863 $1,252,074
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PPT VISION, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
July 31, 1995
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on Form 10-K for the
year ended October 31, 1994.
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Item 2
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
---------------------
Revenues for the three months ended July 31, 1995 were $2,750,601, an increase
of 68.6 percent from $1,631,525 for the three months ended July 31, 1994.
During the third quarter of fiscal 1995, 89 vision systems were shipped
compared to 53 units during the same period in fiscal 1994, an increase of 67.9
percent. Of the 89 visions systems sold in the third quarter of fiscal 1995, 40
were to customers outside North America, compared to 11 of 53 in the third
quarter of fiscal 1994. Revenues for the nine months ended July 31, 1995 were
$6,746,037, an increase of 47.2 percent from $4,582,987 for the nine months
ended July 31, 1994. For the first nine months of fiscal 1995, the Company
shipped 231 systems, compared to 160 for the first nine months of fiscal 1994.
This represents a unit growth rate of 44.4 percent. For the nine months ended
July 31, 1995, other revenues (i.e. consulting, training classes, equipment
upgrades and repairs) decreased to $211,468 from $259,743 for the nine months
ended July 31, 1994. This decline is attributable to decreased consulting
revenue brought about by increased requirements in application engineering to
support unit sales growth.
The Company's gross margin for the third quarter of fiscal 1995 was 54.8
percent, compared to 50.1 percent for the same period in fiscal 1994. This
increase is due to efficiencies associated with higher volume levels as well
the fact that the gross margin for third quarter of the prior year was
unusually low. The gross margin for the nine months ended July 31, 1995 was
53.6 percent, compared to 54.2 percent for the nine months ended
July 31, 1994. The Company has seen an improving trend in gross margins,
with current performance up from the second quarter 1995 level of
53.0 percent.
Sales and marketing expenses in the third quarter of fiscal 1995 increased 28.1
percent to $643,081 from $502,195 for the third quarter of fiscal 1994. For
the nine months ended July 31, 1995, sales and marketing expenses increased
19.0 percent to $1,717,674 from $1,443,413 for the first nine months of fiscal
1994. This increase is in part a direct result of the growth in sales as well
as investment in customer support personnel and an increase in lease expense
related to the Company's new facility. Sales and marketing expenses as a
percentage of net revenues for the first nine months of fiscal 1995 decreased to
25.5 percent compared to 31.5 percent in 1994. This decrease is a result of the
growth in revenues.
General and administrative expenses for the three months ended July 31, 1995
were $255,598, a 51.0 percent increase compared to $169,301 for the third
quarter of fiscal 1994. This increase was primarily the result of fully
reserving for one potentially uncollectable receivable. For the first nine
months of fiscal 1995, general and administrative expenses
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increased 26.4 percent to $614,762, from $486,372 for the first nine months of
fiscal 1994. As a percent of sales, general and administrative expenses
decreased to 9.1 percent for the nine months ended July 31, 1995, down from
10.6 percent for the first nine months of fiscal 1994. This decrease is due
to the growth in revenues.
Research and development expenses for the three months ended July 31, 1995 were
$311,875, a 6.2 percent increase compared to $293,642 for the third quarter of
fiscal 1994. For the nine months ended July 31, 1995, research and development
expenses rose 9.6% to $919,535 from $838,676 for the first nine months of fiscal
1994. As a percentage of net revenues, research and development expenses
decreased during the first nine months of fiscal 1995 to 13.6 percent from 18.3
percent for the first nine months of fiscal 1994. This decrease is a result of
the growth in revenues.
The Company had interest income of $17,862 for the three month period ended
July 31, 1995, and $10,007 for the three month period ended July 31, 1994.
Interest income for the first nine months of fiscal 1995 was $41,950, compared
to $26,753 for the first nine months of fiscal 1994. Interest income grew
primarily as a result of the Company's profitablity and resulting higer levels
of cash for investment.
The Company had a net profit of $314,749 for the third quarter of fiscal 1995
compared to a net loss of $136,690 for the third quarter of fiscal 1994. For
the first nine months of fiscal 1995, the Company earned a net profit of
$404,180, compared to a net loss of $255,832 for the first nine months of
fiscal 1994. This increase in net profit is a result of the growth in
revenues along with management of operating expenses to a lower rate of
growth than sales.
Liquidity and Capital Resources
-------------------------------
Working capital increased to $3,586,738 at July 31, 1995 from $3,252,738 at
October 31, 1994. The Company's current assets increased to $4,180,791 at July
31, 1995 from $3,854,624 at October 31, 1994. This is primarily attributable to
an increase in accounts receivable due to the increased sales volume. The
Company's cash and cash equivalents increased to $1,221,863 at July 31, 1995
from $1,092,186 at October 31, 1994, primarily as a result of improvement in
the days outstanding of accounts receivable and reduction in inventory
levels. This decrease in inventory is the result of efforts to source
components from turn-key suppliers.
The Company's current liabilities decreased to $594,053 at July 31, 1995 from
$601,886 at October 31, 1994.
During the nine months ended July 31, 1995, net revenues were $6,746,037, an
increase of $2,163,050 over net revenues of $4,582,987 during the first nine
months of fiscal 1994. The Company financed this growth through internally
generated cash flow. For the first nine months of fiscal 1995, net cash
provided by operating activities was $370,253, which is attributable to net
profit as well as reduction in inventory levels. The Company used $307,152
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in investing activities for the purchase of fixed assets. This expenditure of
funds for investing activities was partially offset by cash of $66,576
generated by financing activities from issuance of common stock upon the
exercise of stock options.
The Company believes that it will be able to meet its working capital and
capital spending needs through cash flow from operations plus its existing cash
reserves during the next twelve months if revenues remain at their present
level. However, Company management will continue to monitor its cash resources
and liquidity needs and will decide upon an appropriate strategy to raise
additional funds if funds are needed by the Company.
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PART II. Other Information
Item 1: LEGAL PROCEEDINGS
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None
Item 2. CHANGES IN SECURITIES
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None
Item 3. DEFAULTS UPON SENIOR SECURITIES
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None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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None
Item 5. OTHER INFORMATION
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In 1985, the Company issued a total of 166,666 shares of Series 1985
Covertible Preferred Shares ("Series 1985 Shares"). Prior to
September 1995, holders of 79,167 Series 1985 Shares had converted
their shares to common stock and at September 1, 1995, the Company
had 87,499 Series 1985 Shares outstanding.
The Company called the remaining outstanding Series 1985 Shares for
redemption effective September 11, 1995, subject to the holders'
rights to convert their Shares to common stock prior to the
effective time of redemption.
Each of the holders of the remaining Series 1985 Shares outstanding
converted the Shares prior to the effective time of the redemption
and the Company issued a total of 37,504 shares of common stock
upon the conversion. Accordingly, effective as of September 11,
1995, all the Company's Series 1985 Shares have been converted to
common stock and any future obligations of the Company to redeem
the Series of 1985 Shares or to pay dividends with respect to the
Series 1985 Shares have been eliminated.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
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a. Exhibits:
1. Exhibit 11 - Calculation of Earnings/(Loss) per Share
b. Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
duly authorized.
PPT VISION, INC.
Date: September 1, 1995
/s/Thomas R. Northenscold
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Thomas R. Northenscold
Chief Financial Officer
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Exhibit 11
PPT VISION, INC.
Calculation of Earnings/(Loss) Per Share
Three Months Ended Nine Months Ended
July 31, July 31,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
Primary earnings per share
Net income/(loss) $314,749 ($136,690) $404,180 ($255,832)
Common and common
equivalent shares:
Weighted average number
of common shares outstanding 2,338,325 2,267,980 2,322,412 2,225,950
Dilutive effect of stock
options outstanding after
application of treasury
stock method 113,392 0 15,423 0
---------------------------- --------- --------- --------- ---------
2,451,717 2,267,980 2,337,835 2,225,950
============================ ========= ========= ========= =========
Primary net income/(loss)
per common and common
equivalent shares: $0.13 ($0.06) $0.17 ($0.11)
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[ARTICLE] 5
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<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] OCT-31-1995
[PERIOD-END] JUL-31-1995
[CASH] 1,434,656
[SECURITIES] 0
[RECEIVABLES] 2,204,587
[ALLOWANCES] (64,428)
[INVENTORY] 671,949
[CURRENT-ASSETS] 4,393,583
[PP&E] 2,034,984
[DEPRECIATION] 1,478,867
[TOTAL-ASSETS] 4,949,700
[CURRENT-LIABILITIES] 760,401
[BONDS] 0
[COMMON] 234,334
[PREFERRED-MANDATORY] 0
[PREFERRED] 255,952
[OTHER-SE] 0
[TOTAL-LIABILITY-AND-EQUITY] 4,949,700
[SALES] 6,746,037
[TOTAL-REVENUES] 6,746,037
[CGS] 3,131,900
[TOTAL-COSTS] 3,131,900
[OTHER-EXPENSES] 3,251,971
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 1,436
[INCOME-PRETAX] 404,180
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 404,180
[EPS-PRIMARY] .13
[EPS-DILUTED] .13
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