<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- ------------
Commission File Number
0-12728
MEDAR, INC.
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(Exact name of registrant as specified in its charter)
Michigan 38-2191935
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
38700 Grand River Ave., Farmington Hills, Michigan 48335
- -------------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
(810) 471-2660
----------------------------------------------------
(Registrant's telephone number, including area code)
(not applicable)
----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 past 90 days.
Yes [ X ] No [ ]
The number of shares outstanding of the registrant's Common Stock, no par
value, stated value $.20 per share, as of October 31, 1996 was 8,852,401.
Page 1
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS - Note D
Cash $ 904 $ 1,556
Accounts receivable, less allowance of $480,000 at
September 30, 1996 and $355,000 at December 31, 1995 11,382 8,618
Inventories - Note B 16,502 13,167
Costs and estimated earnings in excess of billings
on incomplete contracts - Note C 2,771 681
Other current assets 1,369 849
------------ -----------
TOTAL CURRENT ASSETS 32,928 24,871
PROPERTY, PLANT AND EQUIPMENT - Note D
Land and land improvements 329 329
Building and building improvements 6,128 6,109
Production and engineering equipment 3,216 2,733
Furniture and fixtures 969 891
Vehicles 872 660
Computer equipment 4,631 3,907
------------ -----------
16,145 14,629
Less accumulated depreciation 6,205 4,965
------------ -----------
9,940 9,664
OTHER ASSETS
Capitalized computer software development costs, net
of amortization 7,626 6,761
Patents 2,375 2,507
Other 982 920
------------ -----------
10,983 10,188
------------ -----------
$ 53,851 $ 44,723
============ ===========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS - CONTINUED
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
(Unaudited)
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,185 $ 3,202
Employee compensation 1,108 674
Accrued and other liabilities 1,054 1,567
Current maturities of long term debt - Note D 627 752
------------ -----------
TOTAL CURRENT LIABILITIES 7,974 6,195
LONG-TERM DEBT, less current maturities - Note D 20,930 15,685
DEFERRED INCOME TAXES 76
STOCKHOLDERS' EQUITY - Note F
Common stock, without par value, stated value $.20
per share; 10,000,000 shares authorized; 8,852,401 shares
issued and outstanding (8,711,589 shares at December 31, 1995) 1,771 1,742
Additional paid-in capital 29,767 29,438
Retained-earnings deficit (6,501) (8,321)
Accumulated translation adjustment (90) (92)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY 24,947 22,767
------------ -----------
$ 53,851 $ 44,723
============ ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1996 1995
--------- -----------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $13,721 $9,777
Cost of sales 9,881 7,655
------- ------
GROSS MARGIN 3,840 2,122
Costs and expenses:
Marketing 1,122 1,181
General and administrative 866 969
Research and development 828 496
Patent litigation costs 86
Excessive product quality, warranty and other costs 248
------- ------
2,816 2,980
------- ------
EARNINGS (LOSS) FROM OPERATIONS 1,024 (858)
Interest:
Expense 429 132
Income (32) (7)
------- ------
397 125
------- ------
EARNINGS (LOSS) BEFORE INCOME TAXES 627 (983)
Provision (credit) for income taxes 20 (334)
------- ------
NET EARNINGS (LOSS) $ 607 $ (649)
======= ======
Net earnings (loss) per share $ .07 $ (.07)
======= ======
Weighted average number of shares of common stock and
common stock equivalents where applicable 9,014 8,709
======= ======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1996 1995
------- -------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $36,159 $32,329
Cost of sales 24,939 22,619
------- -------
GROSS MARGIN 11,220 9,710
Costs and expenses:
Marketing 3,268 3,405
General and administrative 2,404 2,542
Research and development 2,740 1,177
Patent litigation costs 5,461
Excessive product quality, warranty and other costs 1,049
------- -------
8,412 13,634
------- -------
EARNINGS (LOSS) FROM OPERATIONS 2,808 (3,924)
Interest:
Expense 1,065 282
Income (61) (64)
------- -------
1,004 218
------- -------
EARNINGS (LOSS) BEFORE INCOME TAXES 1,804 (4,142)
Credit for income taxes - Note E (17) (1,346)
------- -------
NET EARNINGS (LOSS) $ 1,821 $(2,796)
======= =======
Net earnings (loss) per share $ .20 $ (.32)
======= =======
Weighted average number of shares of common stock and
common stock equivalents where applicable 9,030 8,685
======= =======
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1996 1995
--------- ------------
(Unaudited)
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) $ 1,821 $(2,796)
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,276 2,400
Provision for deferred income taxes (74) (1,346)
Changes in operating assets and liabilities (7,312) (6,686)
Increase in patent litigation accrual 3,577
---------- -----------
NET CASH USED IN OPERATING ACTIVITIES (2,289) (4,851)
INVESTING ACTIVITIES
Sale of short-term investments 4,018
Purchase of property and equipment (1,117) (1,912)
Investment in capitalized software (2,633) (2,413)
--------- ------------
NET CASH USED IN INVESTING ACTIVITIES (3,750) (307)
FINANCING ACTIVITIES
Net decrease in borrowings under line of credit (76)
Debt repayments on long-term debt and capital lease
obligations (14,972) (6,470)
Proceeds from long-term borrowings 20,095 11,400
Proceeds from exercise of stock options 296 378
--------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,419 5,232
--------- ------------
Effect of exchange rate changes on cash (32) 11
--------- ------------
INCREASE (DECREASE) IN CASH (652) 85
Cash at beginning of period 1,556 586
--------- ------------
CASH AT END OF PERIOD $ 904 $ 671
========= ============
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MEDAR, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1996
Note A - Basis of Presentation
The accompanying unaudited condensed consolidated 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
Article 10 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. Operating results for the three month
period ended September 30, 1996 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Registrant Company and Subsidiaries' annual report on
Form 10-K for the year ended December 31, 1995.
Certain items in the 1995 financial statements have been reclassified to
conform with the corresponding 1996 presentation.
Note B - Inventories
Inventories are stated at the lower of first-in, first-out cost or market, and
the major classes of inventories at the dates indicated were as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
(In thousands)
<S> <C> <C>
Raw materials $ 7,211 $ 7,095
Work-in-process 7,052 3,305
Finished goods 2,239 2,767
------- -------
$16,502 $13,167
======= =======
</TABLE>
Note C - Costs and Estimated Earnings in Excess of Billings on Incomplete
Contracts
Revenues on long-term contracts are recognized using the percentage of
completion method. The effects of changes to estimated total contract costs
are recognized in the period determined and losses, if any, are recognized
fully when identified. Costs incurred and earnings recognized in excess of
amounts billed are classified under current assets as costs and estimated
earnings in excess of billings on incomplete contracts. Long-term contracts
include a relatively high percentage of engineering costs and are generally
less than one year in duration.
7
<PAGE> 8
Note C - Costs and Estimated Earnings in Excess of Billings on Incomplete
Contracts (cont)
Activity on long-term contracts is summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
----------- ----------
(In thousands)
<S> <C> <C>
Contract costs to date $ 4,949 $ 4,278
Estimated contract earnings 6,141 1,985
------- -------
11,090 6,263
Less billings to date (8,319) (5,582)
------- -------
Costs and estimated earnings in excess of billings
on incomplete contracts $ 2,771 $ 681
======= =======
Note D - Long Term Debt and Other Financing Arrangements
Long-term debt consisted of the following:
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
------------ -----------
(In thousands)
<S> <C> <C>
Revolving note payable to bank $15,273 $ 9,818
Term notes payable to bank 4,072 4,463
Patent license payable 2,000 2,000
Other 212 156
------- -------
21,557 16,437
Less current maturities 627 752
------- -------
$20,930 $15,685
======= =======
</TABLE>
The revolving notes payable to bank has a maximum balance of $16,000,000
($727,000 available at September 30, 1996) based on eligible accounts
receivable and inventory as defined. This note expires August 31, 1998 and has
advances which bear interest at the bank's prime rate (8.25% at September 30,
1996 and 8.5% at December 31, 1995). In connection with this note, as amended,
the Company has agreed, among other covenants, to maintain net worth and debt
to equity, as defined, at specified levels.
The Company has two term notes payable to bank. One is payable in quarterly
installments of $62,500 plus interest at the bank's prime rate, with the
balance becoming due June 29, 1998. The second note is payable in monthly
installments of $14,111 plus interest at the bank's prime rate or other rates
made available under the terms of the agreement, with the balance becoming due
September 30, 2000. The notes are collateralized by the Medar office and
production facilities in Farmington Hills, Michigan, and machinery and
equipment, inventory and accounts receivable at all North American locations.
The patent license payable relates to future payments to be made to Square D
Company related to the settlement of patent litigation. The payments are due
in ten equal installments and have been discounted at 8%.
The fair values of these financial instruments approximates their carrying
amounts at September 30, 1996.
8
<PAGE> 9
Note D - Long Term Debt and Other Financing Arrangements (cont)
Maturities of long-term debt, excluding those payable within twelve months from
September 30, 1996 (which are stated as current maturities of long-term debt),
are $264,000 in 1997; $17,024,000 in 1998; $393,000 in 1999; $2,054,000 in
2000; and $1,195,000 thereafter.
Note E - Income Taxes
Significant components of the provision for income taxes for the nine months
ended September 30 are as follows:
<TABLE>
<CAPTION>
1996 1995
-----------------
(In thousands)
<S> <C> <C>
Current:
Federal $ 55
Foreign 3
State -------------------
58
-------------------
Federal $ (1,358)
Foreign (75) 12
-------------------
(75) (1,346)
-------------------
$ (17) $ (1,346)
===================
</TABLE>
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1996 1995
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Deductible software development costs, net of
amortization $ 2,892 $ 2,224
Tax over book depreciation 276 346
Percentage of completion 184 184
------- -------
Total deferred tax liabilities 3,352 2,754
Deferred tax assets:
Net operating loss carry forwards 4,129 4,840
Credit carry forwards 1,363 987
Reserve for warranty 237 237
Other 968 510
------- -------
Total deferred tax assets 6,697 6,574
Valuation allowance for deferred tax assets 3,345 3,896
------- -------
Net deferred tax assets 3,352 2,678
------- -------
Net deferred tax liabilities $ 0 $ 76
======= =======
</TABLE>
9
<PAGE> 10
Note E - Income Taxes (cont)
The reconciliation of income taxes computed at the U.S. federal statutory rates
to income tax expense for the nine months ended September 30 is as follows:
<TABLE>
<CAPTION>
1996 1995
------- ---------
(In thousands)
<S> <C> <C>
Tax at U.S. statutory rates $ 613 $ (1,408)
Utilization of net operating loss carryforward (735)
Other 105 62
--------------------
$ (17) $ (1,346)
====================
</TABLE>
Note F - Stock Options
At September 30, 1996, there were options outstanding to purchase 726,900
shares at prices ranging from $2.25 to $9.25.
10
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months Ended September 30, 1996 Compared to September 30, 1995.
Net sales increased to $13.7 million from $9.8 million (40%). The increase was
the result of a 57% increase in revenues from welding control products and a
7% increase in revenues from vision systems. The increase in welding control
revenues was related to the fulfillment of a large order received from one of
the Company's major customers combined with strong demand in general for the
Company's welding control products. Although vision systems revenues increased
modestly, the market for the Company's products is believed to have been
negatively effected by the delay in the introduction of DVD technology and by a
flatening of the upward sales growth curve of audio discs.
Cost of sales increased to $9.9 million from $7.7 million; however, as a
percentage of net sales decreased to 72.0% from 78%. The decrease in costs of
sales as a percentage of sales principally resulted from higher overhead
absorption related to greater production activity during the quarter.
Sales backlog for the Company at September 30, 1996 was $7.2 million, compared
to $13.7 million at September 30, 1995. The level of backlog has decreased
during 1996 as revenues were recognized on the fulfillment of the large welding
control order discussed in the first paragraph.
Marketing expenses decreased to $1.1 million from $1.2 million and as a
percentage of sales decreased to 8.2% from 12.1%. The dollar decrease reflects
a combination of a decrease in marketing expenses for existing products offset
by increases in expenditures related to the introduction of VisionBlox. The
percentage decrease reflects the high level of revenue recognized during the
period.
General and administrative expenses decreased to $0.9 million from $1.0 million
and as a percentage of sales to 6.3% from 9.9%. The dollar decrease reflects
better control of these expenditures. The percentage decrease reflects the
relatively fixed nature of these expenses.
Research and development expenses increased to $0.8 million from $0.5 million
and as a percentage of sales increased to 6% from 5.1%. Expenditures in 1996
are primarily related to development of new disc inspection systems (including
DVD and recordable) and a new midfrequency welding control.
Net interest expense increased to $0.4 million from $0.1 million and as a
percentage of net sales to 2.9% from 1.2%. The increase was the result of
increased debt in 1996. There was more activity on the revolving note with the
bank, and one of the term notes and patent license payable were not added until
the fourth quarter of 1995.
The tax credit in 1995 is related to the operating loss reported in that
period. The tax expense in 1996 is alternative minimum tax.
Nine Months Ended September 30, 1996 Compared to September 30, 1995.
Net sales increased to $36.2 million from $32.3 million (12%). The increase
was the result of a 25% increase in revenues from welding control products and
a 6% decrease in revenues from vision systems. The increase in welding control
revenues was related to the fulfillment of a large order from one of the
Company's major customers combined with strong demand in general for the
Company's welding control products. The decrease in revenues from vision
systems is believed to related to the delay of introduction of DVD technology
and by the flatening of the upward sales growth curve of audio discs.
Cost of sales increased to $24.9 million from $22.6 million; however, as a
percentage of net sales decreased to 69% from 70%. The decrease in costs of
sales as a percentage of sales principally resulted from higher overhead
absorption related to greater production activity.
Marketing expenses decreased to $3.3 million from $3.4 million and as a
percentage of sales to 9% from 10.5%. The increase reflects a combination of a
decrease in marketing expenses for existing products offset by increases in
expenditures related to the introduction of VisionBlox. The percentage
decrease reflects the high level of revenue recognized during the period.
11
<PAGE> 12
General and administrative expenses decreased to $2.4 million from $2.5 million
and as a percentage of sales to 6.6% from 7.9%. The dollar decrease reflects
little change in expenditures. The percentage decrease reflects the relatively
fixed nature of these expenses.
Research and development expenditures increased to $2.7 million from $1.2
million and as a percentage of net sales to 7.6% from 3.6%. Expenditures in
1996 are primarily related to development of new disc inspection systems and a
new midfrequency welding control.
Net interest expense increased to $1.0 million from $0.2 million and as a
percentage of net sales to 2.7% from 0.7%. The increase was the result of
increased debt in 1996. There was more activity on the revolving note with the
bank, and one of the term notes and patent license payable were not added until
the fourth quarter of 1995.
The tax credit in 1995 is related to the operating loss reporting in that
period. The tax expense in 1996 is alternative minimum tax.
Liquidity and Capital Resources
The Company has a revolving note payable to its bank with a maximum balance of
$16,000,000 ($727,000 available at September 30, 1996) based on eligible
accounts receivable and inventory, as defined. This note expires August 31,
1998 and has advances which bear interest at the bank's prime rate.
During the nine months ended September 30, 1996, the Company utilized cash
generated from operations, the increase in accounts payable and the revolving
note payable to bank, and cash on hand at December 31, 1995 to fund increases
in accounts receivable, inventories, and costs and estimated earnings in excess
of billings on incomplete contracts, the purchase of property and equipment,
and investments in capitalized software.
The Company believes that current financial resources (working capital and its
ability to obtain additional financing, if needed), together with cash
generated from operations, will be adequate to meet known cash requirements.
No significant commitments for capital expenditures existed as of September
30, 1996. The company expects to capitalize approximately $3,600,000 of
software development costs in 1996 and has no other plans for any significant
capital expenditures.
12
<PAGE> 13
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
Exhibit
Number Description of Document
- ------- -----------------------
2.1 Stock Purchase Agreement of Integral Vision effective January 1, 1995
(filed as Exhibit 2.1 to the registrant's Form 8-K dated March 2, 1995,
SEC file 0-12728, and incorporated herein by reference).
2.2 Stock Purchase Agreement for Preference Shares of Integral Vision
effective January 1, 1995 (filed as Exhibit 2.2 to the registrant's Form
8-K dated March 2, 1995, SEC file 0-12728, and incorporated herein by
reference).
3.1 Articles of Incorporation, as amended (filed as Exhibit 3.1 to the
registrant's Form 10-K for the year ended December 31, 1995, SEC file
0-12728, and incorporated herein by reference).
3.2 Bylaws of the Registrant, as amended (filed as Exhibit 3.1 to the
registrant's Form 10-K for the year ended December 31, 1994, SEC file
0-12728, and incorporated herein by reference).
10.1 Incentive Stock Option Plan of the Registrant as amended (filed as
Exhibit 10.4 to the registrant's Form S-1 Registration Statement effective
July 2, 1985, SEC File 2-98085, and incorporated herein by reference).
10.2 Second Incentive Stock Option Plan (filed as Exhibit 10.2 to the
registrant's Form 10-K for the year ended December 31, 1992, SEC File
0-12728, and incorporated herein by reference).
10.3 Amendment to Medar, Inc. Incentive Stock Option Plan dated May 10, 1993
(filed as Exhibit 10.3 to the registrant's Form 10-K for the year ended
December 31, 1993, SEC File 0-12728, and incorporated herein by
reference).
10.4 Non-qualified Stock Option Plan (filed as Exhibit 10.3 to the
registrant's Form 10-K for the year ended December 31, 1992, SEC File
0-12728, and incorporated herein by reference).
10.5 Medar, Inc. Employee Stock Option Plan (filed as Exhibit 10.5 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC file
0-12728, and incorporated herein by reference).
10.6 Form of Confidentiality and Non-Compete Agreement Between the Registrant
and its Employees (filed as Exhibit 10.4 to the registrant's Form 10-K for
the year ended December 31, 1992, SEC File 0-12728, and incorporated
herein by reference).
10.7 Contract between Shanghai Electric Welding Machine Works, Medar, Inc. and
Lida U.S.A. dated August 30, 1993, related to joint venture agreement
(both the original Chinese version and the English translation) (filed as
Exhibit 10.7 to the registrant's Form 10-K for the year ended December 31,
1993, SEC File 0-12728, and incorporated herein by reference).
10.8 Asset Purchase Agreement between Medar, Inc. and Air Gage Company dated
February 28, 1994 (filed as Exhibit 10.8 to the registrant's Form 10-K for
the year ended December 31, 1993, SEC File 0-12728, and incorporated
herein by reference).
10.9* License Agreement number 9303-004 between Medar, Inc. and Allen-Bradley
Company, Inc. dated April 12, 1993 (filed as Exhibit 10.9 to the
registrant's Form 10-K for the year ended December 31, 1993, SEC File
0-12728, and incorporated herein by reference).
13
<PAGE> 14
10.10* License Agreement number 9304-009 between Medar, Inc. and Allen-Bradley
Company, Inc. dated May 10, 1993 (filed as Exhibit 10.10 to the
registrant's Form 10-K for the year ended December 31, 1993, SEC File
0-12728, and incorporated herein by reference).
10.11 Agreement by and between Medar, Inc. and ABB Robotics, Inc. dated
December 1992 regarding joint development to integrate a weld controller
into the S3 robot control (filed as Exhibit 10.11 to the registrant's
Form 10-K for the year ended December 31, 1993, SEC File 0-12728, and
incorporated herein by reference).
10.12 1993 Incentive Program (filed as Exhibit 10.14 to the registrant's Form
10-K for the year ended December 31, 1993, SEC File 0-12728, and
incorporated herein by reference).
10.13 1994 Incentive Program (filed as Exhibit 10.12 to the registrant's Form
10-K for the year ended December 31, 1994, SEC file 0-12728, and
incorporated herein by reference).
10.14 Term Note dated June 29, 1993 by and between Medar, Inc. and NBD Bank,
N.A. (filed as Exhibit 4.2 to the Registrant's Form 10-Q for the
quarter ended June 30, 1993, SEC File 0-12728, and incorporated herein
by reference).
10.15 Amended and Restated Mortgage and Security Agreement dated June 29, 1993
by and between Medar, Inc. and NBD Bank, N.A. (filed as Exhibit 4.5 to
the registrant's Form 10-K for the year ended December 31, 1993, SEC
File 0-12728, and incorporated herein by reference).
10.16 Revolving Credit and Loan Agreement dated August 10, 1995 by and between
Medar, Inc., Automatic Inspection Devices, Inc. and Integral Vision,
Ltd. and NBD Bank (filed as Exhibit 10.1 to the registrant's Form 10-Q
for the quarter ended June 30, 1995, SEC File 0-12728, and incorporated
herein by reference).
10.17 Amendment No. 2 to Loan and Credit Agreement and Term Note dated August
10, 1995 by and between Medar, Inc., Automatic Inspection Devices, Inc.
and NBD Bank (filed as Exhibit 10.2 to the registrant's Form 10-Q for
the quarter ended June 30, 1995, SEC File 0-12728, and incorporated
herein by reference).
10.18 First Amendment to Revolving Credit and Loan Agreement dated October 12,
1995, by and between Medar, Inc., Automatic Inspection Devices, Inc.
and Integral Vision, Ltd. and NBD Bank (filed as Exhibit 10.18 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC
File 0-12728, and incorporated herein by reference).
10.19 Second Amendment to Revolving Credit and Loan Agreement dated October
31, 1995, by and between Medar ,Inc., Automatic Inspection Devices,
Inc. and Integral Vision, Ltd. and NBD Bank (filed as Exhibit 10.20 to
the registrant's Form 10-Q for the quarter ended September 30, 1995, SEC
File 0-12728, and incorporated herein by reference).
10.20 Mortgage dated October 31, 1995 by and between Medar, Inc. and NBD Bank
(filed as Exhibit 10.21 to the registrant's Form 10-Q for the quarter
ended September 30, 1995, SEC File 0-12728, and incorporated herein by
reference).
10.21 Installment Business Loan Note dated October 31, 1995, by and between
Medar, Inc. and NBD Bank (filed as Exhibit 10.22 to the registrant's
Form 10-Q for the quarter ended September 30, 1995, SEC File 0-12728,
and incorporated herein by reference).
10.22 Guarantee and Postponement of Claim dated August 10, 1995 between
Medar Canada, Ltd. and NBD Bank (filed as Exhibit 10.23 to the
registrant's Form 10-Q for the quarter ended September 30, 1995, SEC
File 0-12728, and incorporated herein by reference).
14
<PAGE> 15
10.23* Patent License Agreement dated October 4, 1995 by and between Medar,
Inc. and Square D Company (filed as Exhibit 10.24 to the registrant's
Form 10-Q for the quarter ended September 30, 1995, SEC File
0-12728, and incorporated herein by reference).
10.24 Third Amendment to Revolving Credit and Loan Agreement dated March 29,
1996 by and between Medar, Inc., Integral Vision-AID, Inc., Integral
Vision Ltd. and NBD Bank (filed as Exhibit 10.24 to the registrant's
Form 10-Q for the quarter ended March 31, 1996, SEC file 0-12728, and
incorporated herein by reference).
10.25 Third Amended and Restated Revolving Note dated March 29, 1996 by and
between Medar, Inc., Integral Vision-AID, Inc., Integral Vision Ltd. and
NBD Bank (filed as Exhibit 10.25 to the registrant's Form 10-Q for
the quarter ended March 31, 1996, SEC file 0-12728, and incorporated
herein by reference).
10.26 General Security Agreement dated March 29, 1996 by and between Medar,
Inc. and NBD Bank (filed as Exhibit 10.26 to the registrant's Form
10-Q for the quarter ended March 31, 1996, SEC file 0-12728, and
incorporated herein by reference).
10.27 General Security Agreement dated March 29, 1996 by and between Integral
Vision-AID, Inc. and NBD Bank (filed as Exhibit 10.27 to the
registrant's Form 10-Q for the quarter ended March 31, 1996, SEC
file 0-12728, and incorporated herein by reference).
10.28 General Security Agreement dated May 1, 1996 by and between Medar
Canada Ltd. and NBD Bank (filed as Exhibit 10.28 to the registrant's
Form 10-Q for the quarter ended June 30, 1996, SEC file 0-12728, and
incorporated herein by reference).
10.29 Composite Guarantee and Debenture dated May 29, 1996 by and between
Integral Vision Ltd. and NBD Bank (filed as Exhibit 10.29 to the
registrant's Form 10-Q for the quarter ended June 30, 1996, SEC file
0-12728, and incorporated herein by reference).
10.30 Fourth Amendment to Revolving Credit and Loan Agreement dated March 29,
1996 by and between Medar, Inc., Integral Vision-AID, Inc.,
Integral Vision Ltd. and NBD Bank.
11 Calculation of Earnings per Share.
(b) There were no reports on Form 8-K filed in the quarter ended
September 30, 1996.
* The Company has been granted confidential treatment with respect to
certain portions of this exhibit pursuant to Rule 24b-2 under the
Securities Exchange Act of 1934, as amended.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
//CHARLES J. DRAKE// 11/12/96
- -------------------------
Charles J. Drake
President & Chairman of the Board
Medar, Inc.
(Principal Executive Officer)
//RICHARD R. CURRENT// 11/12/96
- -------------------------
Richard R. Current
Executive Vice President, Finance & Operations
Medar, Inc.
(Principal Financial & Accounting Officer)
16
<PAGE> 17
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
10.30 Revolving Credit & Loan Agreement
11 Calculation of Earnings Per Share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 10.30
FOURTH AMENDMENT TO
REVOLVING CREDIT AND LOAN AGREEMENT
This FOURTH AMENDMENT TO REVOLVING CREDIT AND LOAN AGREEMENT ("Fourth
Amendment") is dated as of August 11, 1996, and is among MEDAR, INC., a
Michigan corporation (the "Company"), INTEGRAL VISION-AID, INC., a Michigan
corporation ("AID"), (successor by merger to Integral Vision-Aid, Inc., an Ohio
corporation, formerly known as Automatic Inspection Devices, Inc.), and
INTEGRAL VISION LTD., a corporation established under the laws of the United
Kingdom ("Integral"), as Borrowers, and NBD BANK, a Michigan banking
corporation ("NBD"). This Fourth Amendment amends the Revolving Credit and
Loan Agreement dated as of August 10, 1995 (as amended, the "Loan Agreement"),
as amended by the First Amendment to Revolving Credit and Loan Agreement dated
October 12, 1995 (the "First Amendment"), the Second Amendment to Revolving
Credit and Loan Agreement dated October 31, 1995 (the "Second Amendment"), and
the Third Amendment to Revolving Credit and Loan Agreement dated as of March
29, 1996 ("Third Amendment"), among the Company, AID, Integral and NBD. The
Company, AID and Integral are collectively referred to as the "Borrowers" and
individually as a "Borrower". Capitalized terms not otherwise defined in this
Fourth Amendment shall have the meanings given to them in the Loan Agreement.
WHEREAS, the Borrowers have requested that NBD advance sums in excess of
the current Borrowing Base in order to build inventory for new orders and that
the authorization for equipment loans be increased, and NBD has agreed that it
will make such changes pursuant to the terms and conditions of this Fourth
Amendment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of
which is hereby acknowledged, the parties agree as follows:
1. Revised Definition.
The following definition contained in Section 1.1 of the Loan
Agreement, as amended, is hereby amended effective August 11, 1996 to read as
follows:
"Borrowing Base" means the sum of the following:
(a) 80% of the book value of Eligible Accounts Receivables of the
Borrowers and Guarantor; plus
(b) 40% of the lower of costs or market value of Eligible Inventory
of the Borrowers and Guarantor for calculations on or prior to December
30, 1996 and decreasing to 25% of the lower of costs or market value of
Eligible Inventory of the Borrowers and Guarantor for calculations on and
after December 31, 1996. Notwithstanding the foregoing, in no event will
the amount advanced against Eligible Inventory exceed $7,000,000 for
calculations on or prior to December 30, 1996 and $5,000,000 for
calculations on or after December 31, 1996, plus
17
<PAGE> 2
(c) $3,000,000 for calculations on or after August 11, 1996, but
prior to January 31, 1997, $2,000,000 for calculations on or after
January 31, 1997, but prior to July 31, 1997, and $0 for calculations on
and after July 31, 1997.
2. Equipment Loans. Section 2.4(a) of the Loan Agreement is hereby
amended effective August 11, 1996, to read in its entirety as follows:
(a) Request for Loans. Subject to the terms and conditions of this
Agreement and at the sole discretion of NBD before July 31, 1997, NBD may
extend term loans to, or enter into leases or conditional sales contracts
with, either the Company or AID in a total amount not to exceed $750,000
to be used for the acquisition of equipment. All requests under this
Section 2.4 must be submitted in writing to NBD, together with all
information reasonably requested by NBD with respect to the equipment to
be acquired.
3. Conditions. Notwithstanding any other term of this Fourth Amendment or
the Loan Agreement, NBD will not be required to give effect to this Fourth
Amendment unless the following conditions have been met:
(a) NBD shall have received an amendment fee of $60,000 from the
Borrowers prior to or simultaneously with the execution and delivery of
this Fourth Amendment. The amendment fee is in addition to all interest and
fees otherwise payable to NBD and will be deemed to be fully earned upon
execution and delivery of this Fourth Amendment.
(b) NBD shall have received a fully executed copy of this Fourth
Amendment.
(c) All of the terms and conditions in Section 3.7 of the Loan
Agreement continue to be met.
4. Reaffirmation of Loan Agreement; Conflicts. The parties hereto
acknowledge and agree that the terms and provisions of this Fourth Amendment,
amend, add to and constitute a part of the Loan Agreement. Except as expressly
modified and amended by the terms of this Fourth Amendment, all of the other
terms and conditions of the Loan Agreement and all of the documents executed in
connection therewith or referred to or incorporated therein, remain in full
force and effect and are hereby ratified, confirmed and approved. AID
specifically acknowledges and agrees that as successor by merger to Integral
Vision-AID, Inc., an Ohio corporation ("Ohio AID"), it has assumed all the
liabilities and obligations of Ohio AID to NBD, and that it is a party to, and
is liable and obligated under, the Loan Agreement and all of the documents and
instruments executed by Ohio AID in favor of NBD to the same extent as Ohio
AID. If there is an express conflict between the terms of this Fourth
Amendment and the terms of the Loan Agreement, or any of the other agreements
or documents executed in connection therewith or referred to or incorporated
therein, the terms of this Fourth Amendment shall govern and control. Any
reference in any other document or agreement to the Loan Agreement shall
hereafter refer to the Loan Agreement as amended by this Fourth Amendment.
18
<PAGE> 3
5. Representations True. The representations and warranties of the
Borrowers contained in the Loan Agreement are true on the date hereof and
there does not exist any Default or Event of Default under the Loan Agreement.
6. Expenses. Borrowers acknowledge and agree that the Borrowers will pay
all attorneys' fees and out-of-pocket costs of NBD in connection with or with
respect to this Fourth Amendment and the conditions set forth herein.
IN WITNESS WHEREOF, the Borrowers and NBD have executed the foregoing
document by their duly authorized officers as of the day and year first written
above.
NBD BANK
By:___________________________
Richard P. Haslinger
Its: First Vice President
and
By:___________________________
Glenn Ansiel
Its: Assistant Vice President
MEDAR, INC.
By:___________________________
Charles Drake
Its: President
INTEGRAL VISION-AID, INC.
By:___________________________
Charles Drake
Its: President
INTEGRAL VISION LTD.
By:___________________________
Richard Current
Its: Company Secretary
19
<PAGE> 4
REAFFIRMATION OF GUARANTY
The undersigned, Medar Canada Ltd., hereby acknowledges the terms of this
Fourth Amendment to Revolving Credit and Loan Agreement and hereby reaffirms
each and every term of its (i) Guarantee and Postponement of Claim dated August
10, 1995, given in favor of NBD Bank with respect to the obligations of Medar,
Inc., Automatic Inspection Devices, Inc. (now known as Integral Vision-AID,
Inc.) and Integral Vision Ltd., and (ii) General Security Agreement dated as of
May 1, 1996, given in favor of NBD Bank.
MEDAR CANADA LTD.
By:____________________________
Charles Drake
Its: President
20
<PAGE> 1
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1996 1995
------ ----
<S> <C> <C>
Per common share and common share equivalents:
Outstanding shares - beginning of period 8,802 8,706
Weighted average of:
Exercise of stock options 33 3
Net effect of dilutions based on treasury
stock method using average market price 179
------ ------
TOTAL SHARES 9,014 8,709
====== ======
Net earnings (loss) $ 607 $ (649)
====== ======
Net earnings (loss) per share $ .07 $ (.07)
====== ======
Per common share assuming full dilution:
Outstanding shares - beginning of period 8,802 8,706
Weighted average of:
Exercise of stock options 33 3
Net effect of dilutive stock options based on
treasury stock method using quarter-end market
price if higher than average market price 179
------ ------
TOTAL SHARES 9,014 8,709
====== ======
Net earnings (loss) $ 607 $ (649)
====== ======
Net earnings (loss) per share $ .07 $ (.07)
====== ======
</TABLE>
21
<PAGE> 2
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1996 1995
--------------------------------
<S> <C> <C>
Per common share and common share equivalents:
Total shares for quarter ended:
March 31 8,995 8,649
June 30 9,081 8,697
September 30 9,014 8,709
------- -------
22,090 26,055
======= =======
Weighted average number of shares of common
stock and common stock equivalents where
applicable 9,030 8,685
======= =======
Net earnings (loss) $ 1,821 $(2,796)
======= =======
Net earnings (loss) per share $ .20 $ (.32)
======= =======
Per common share and common share equivalents
assuming full dilution:
Total shares for quarter ended:
March 31 9,020 8,649
June 30 9,085 8,697
September 30 9,014 8,709
------- -------
27,119 26,055
======= =======
Weighted average number of shares of common
stock and common stock equivalents where
applicable 9,040 8,685
======= =======
Net earnings (loss) $ 1,821 $(2,796)
======= =======
Net earnings (loss) per share $ .20 $ (.32)
======= =======
</TABLE>
22
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 904
<SECURITIES> 0
<RECEIVABLES> 11,862
<ALLOWANCES> 480
<INVENTORY> 16,502
<CURRENT-ASSETS> 32,928
<PP&E> 16,145
<DEPRECIATION> 6,205
<TOTAL-ASSETS> 53,851
<CURRENT-LIABILITIES> 7,974
<BONDS> 21,557
0
0
<COMMON> 1,771
<OTHER-SE> 23,176
<TOTAL-LIABILITY-AND-EQUITY> 53,851
<SALES> 13,721
<TOTAL-REVENUES> 13,753
<CGS> 9,881
<TOTAL-COSTS> 9,881
<OTHER-EXPENSES> 2,816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 429
<INCOME-PRETAX> 627
<INCOME-TAX> 20
<INCOME-CONTINUING> 607
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 607
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
