<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, 1997
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.
-----------------------------------------------------
(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)
(248) 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, 1997 was 9,024,901.
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEETS
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1997 1996
--------------------------
(Unaudited)
(In thousands)
<S> <C> <C>
ASSETS
CURRENT ASSETS - Note D
Cash $ 485 $ 215
Accounts receivable, less allowance of $400,000 7,114 9,415
Inventories - Note B 15,568 15,991
Costs and estimated earnings in excess of billings on incomplete
contracts - Note C 4,292 1,841
Other current assets 959 543
------- -------
TOTAL CURRENT ASSETS 28,418 28,005
PROPERTY, PLANT AND EQUIPMENT - Note D
Land and land improvements 377 368
Building and building improvements 6,304 6,147
Production and engineering equipment 3,539 3,303
Furniture and fixtures 1,024 990
Vehicles 890 878
Computer equipment 5,065 5,058
------- -------
17,199 16,744
Less accumulated depreciation 7,721 6,625
------- -------
9,478 10,119
OTHER ASSETS
Capitalized computer software development costs, net of
amortization 9,421 8,908
Patents 2,137 2,328
Other 1,491 916
------- -------
13,049 12,152
------- -------
$50,945 $50,276
======= =======
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 3
CONSOLIDATED BALANCE SHEETS - CONTINUED
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1997 1996
---------------------------------
(Unaudited)
(In thousands)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,819 $ 5,218
Employee compensation 967 1,001
Accrued and other liabilities 1,011 1,108
Current maturities of long term debt - Note D 675 3,637
---------------------------------
TOTAL CURRENT LIABILITIES 6,472 10,964
LONG-TERM DEBT, less current maturities - Note D 20,949 18,010
STOCKHOLDERS' EQUITY - Note F
Common stock, without par value, stated value $.20 per share;
15,000,000 shares authorized; 9,024,901 shares issued and
outstanding 1,805 1,771
Additional paid-in capital 31,188 29,767
Retained-earnings deficit (9,453) (10,300)
Accumulated translation adjustment (16) 64
---------------------------------
TOTAL STOCKHOLDERS' EQUITY 23,524 21,302
---------------------------------
$ 50,945 $ 50,276
=================================
</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
1997 1996
-----------------------------------
(Unaudited)
(In thousands, except per share data)
<S> <C> <C>
Net sales $10,970 $13,721
Cost of sales 7,298 9,881
-----------------------------------
GROSS MARGIN 3,672 3,840
Costs and expenses:
Marketing 1,006 1,122
General and administrative 678 866
Research and development 861 828
-----------------------------------
2,545 2,816
-----------------------------------
EARNINGS FROM OPERATIONS 1,127 1,024
Interest:
Expense 669 429
Income (12) (32)
-----------------------------------
657 397
-----------------------------------
EARNINGS BEFORE INCOME TAXES 470 627
Provision for income taxes - Note E 50 20
-----------------------------------
NET EARNINGS $ 420 $ 607
===================================
Net earnings per share $ .05 $ .07
===================================
Weighted average number of shares of common stock and common
stock equivalents, where applicable 9,123 9,014
===================================
</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
1997 1996
---------------------------------------
(Unaudited)
(In thousands, except for per share data)
<S> <C> <C>
Net sales $ 32,167 $ 36,159
Cost of sales 22,386 24,939
--------------------------------------
GROSS MARGIN 9,781 11,220
Costs and expenses:
Marketing 3,089 3,268
General and administrative 1,936 2,404
Research and development 2,229 2,740
--------------------------------------
7,254 8,412
--------------------------------------
EARNINGS FROM OPERATIONS 2,527 2,808
Interest:
Expense 1,665 1,065
Income (35) (61)
--------------------------------------
1,630 1,004
--------------------------------------
EARNINGS BEFORE INCOME TAXES 897 1,804
Provision (Credit) for income taxes - Note E 50 (17)
--------------------------------------
NET EARNINGS $ 847 $ 1,821
======================================
Net earnings per share $ .09 $ .20
======================================
Weighted average number of shares of common stock and common
stock equivalents, where applicable 8,973 9,030
======================================
</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
1997 1996
------------------------------------
(Unaudited)
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings $ 847 $ 1,821
Adjustments to reconcile net earnings to net cash provided by (used
in) operating activities:
Depreciation and amortization 4,006 3,276
Provision for deferred income taxes (74)
Changes in operating assets and liabilities (2,248) (7,312)
-----------------------------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 2,605 (2,289)
INVESTING ACTIVITIES
Purchase of property and equipment (455) (1,117)
Investment in capitalized software and patents (3,232) (2,633)
-----------------------------------
NET CASH USED IN INVESTING ACTIVITIES (3,687) (3,750)
FINANCING ACTIVITIES
Proceeds from issuance of subordinated debentures 6,444
Proceeds from issuance of stock warrants 602
Increase (decrease) in other long term debt (6,467) 5,123
Proceeds from issuance of common stock 750
Proceeds from exercise of stock options 103 296
-----------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,432 5,419
-----------------------------------
Effect of exchange rate changes on cash (80) (32)
-----------------------------------
INCREASE (DECREASE) IN CASH 270 (652)
Cash at beginning of period 215 1,556
-----------------------------------
CASH AT END OF PERIOD $ 485 $ 904
===================================
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MEDAR, INC. AND SUBSIDIARIES
SEPTEMBER 30, 1997
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 nine month
period ended September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997. 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, 1996.
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
1997 1996
----------------------------
(In thousands)
<S> <C> <C>
Raw materials $ 7,276 $ 7,677
Work-in-process 6,219 3,106
Finished goods 2,073 5,208
----------------------------
$15,568 $15,991
============================
</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
1997 1996
--------------------------
(In thousands)
<S> <C> <C>
Contract costs to date $ 6,472 $ 4,567
Estimated contract earnings 5,722 3,040
--------------------------
12,194 7,607
Less billings to date (7,902) (5,766)
--------------------------
Costs and estimated Earnings in excess of
billings on incomplete contracts $ 4,292 $ 1,841
==========================
</TABLE>
Note D - Long Term Debt and Other Financing Arrangements
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
1997 1996
-------------------------------------
(In thousands)
<S> <C> <C>
Revolving note payable to bank $ 7,826 $12,604
Subordinated debentures, interest at 12.95%, principal due June
2000 through 2004 6,444
Notes payable to bank 1,500 3,000
Term notes to bank, payable in varying amounts to 2003 3,771 3,967
Patent license to corporation, payable $300,000 yearly including
interest 1,863 1,863
Other 220 213
-------------------------------------
21,624 21,647
Less current maturities 675 3,637
-------------------------------------
$20,949 $18,010
=====================================
</TABLE>
At September 30, 1997, the revolving note payable to bank has a maximum balance
of $15,000,000 (including notes payable to bank) based upon levels of eligible
accounts receivable and inventories. The note is due July 31, 1999, with
interest at the banks prime rate plus 1/4%.
Substantially all of the Company's assets are pledged in connection with the
various notes with the bank and the subordinated debentures. In addition the
company has agreed to maintain levels of net worth, as defined.
As a part of the agreement with the debenture holders, the company issued 1.4
million warrants for the purchase of the company's common stock at $6.86 per
share through June 30, 2004.
The fair values of these financial instruments approximate their carrying
amounts at September 30, 1997.
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, 1997 (which are stated as current maturities of long-term debt),
are $288,000 in 1998; $10,011,000 in 1999; $3,048,000 in 2000; $1,186,000 in
2001; and $6,416,000 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>
1997 1996
---------------------
(In thousands)
<S> <C> <C>
Current:
Federal $ 0 $ 55
Foreign 50 3
Deferred (credit):
Foreign (75)
--------------------
(75)
--------------------
$ 50 $ (17)
--------------------
</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
1997 1996
------------------------------
(In thousands)
<S> <C> <C>
Deferred tax liabilities:
Deductible software development costs, net of amortization $ 3,106 $ 2,931
Tax over book depreciation 340 344
Percentage of completion 1,324 491
-----------------------------
Total deferred tax liabilities 4,770 3,766
Deferred tax assets:
Net operating loss carry forwards 6,604 6,836
Credit carry forwards 1,001 987
Reserve for warranty 68 68
Other 269 219
------------------------------
Total deferred tax assets 7,942 8,110
Valuation allowance for deferred tax assets 3,172 4,344
------------------------------
Net deferred tax assets 4,770 3,766
------------------------------
Net deferred tax liabilities $ -0- $ -0-
==============================
</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>
1997 1996
----------------------------
(In thousands)
<S> <C> <C>
Tax at U.S. statutory rates $ 305 $ 613
Utilization of net operating loss carry forward (305) (735)
Other 50 105
----------------------------
$ 50 $ (17)
============================
</TABLE>
Note F - Stock Options and Warrants
At September 30, 1997, there were options outstanding to purchase 659,300
shares at prices ranging from $1.75 to $9.25 per share and warrants outstanding
to purchase 1,400,000 shares at $6.86 per share.
Note G - Segment Data
Quarter Ended September 30, 1997
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- -------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $4,448 $6,522 $10,970
Amortization of software development cost 594 233 827
Research and development expense 526 335 861
Earnings (loss) from operations (254) 1,381 1,127
Net interest expense 657
- ------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 470
============================================================================================================
</TABLE>
Quarter Ended September 30, 1996
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- --------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 3,469 $ 10,252 $ 13,721
Amortization of software development cost 455 242 697
Research and development expense 227 601 828
Earnings (loss) from operations (1,692) 2,716 1,024
Net interest expense 397
- --------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 627
==============================================================================================================
</TABLE>
10
<PAGE> 11
Note G - Segment Data (cont)
Nine Months Ended September 30, 1997
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- --------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 12,939 $ 19,228 $ 32,167
Amortization of software development cost 1,834 697 2,531
Research and development expense 1,362 867 2,229
Earnings (loss) from operations (977) 3,504 2,527
Net interest expense 1,630
- --------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 897
==============================================================================================================
</TABLE>
Nine Months Ended September 30, 1996
<TABLE>
<CAPTION>
Vision-based Resistance Welding
Inspection Systems Controls Consolidated
- --------------------------------------------------------------------------------------------------------------
(In thousands)
<S> <C> <C> <C>
Net sales $ 12,692 $ 23,467 $ 36,159
Amortization of software development cost 1,079 727 1,806
Research and development expense 1,598 1,142 2,740
Earnings (loss) from operations (2,889) 5,697 2,808
Net interest expense 1,004
- --------------------------------------------------------------------------------------------------------------
Earnings before income taxes $ 1,804
- --------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Three Months Ended September 30, 1997 Compared to September 30, 1996.
Net sales in the third quarter of 1997 decreased 19.7% to $11.0 million from
$13.7 million. Increased vision division sales (28.2%) were offset by a
decrease in welding division sales (36.4%). Increases in vision divsion sales
resulted from the Company's success in marketing products based on VisionBlox
technology and increases in CD vision inspection system sales offset in part by
decreases in sales of non-CD systems. Welding division sales decreased as
fewer large automotive programs were scheduled in the third quarter of 1997 as
compared to the third quarter of 1996.
Cost of sales decreased to $7.3 million from $9.8 million and as a percentage
of net sales decreased to 66.5% from 72%. Cost of sales as percentage of net
sales decreased principally from the effects of sales of higher margin product
lines. Additionally, many of the high volumn automotive programs produced in
the third quarter of 1996 were at thin margins.
Sales backlog for the Company at September 30, 1997 was $9.2 million compared
to $7.2 million at September 30, 1996. The increase is due to orders received
for several new welding programs during the third quarter of 1997.
Marketing expense decreased to $1.0 million from $1.1million and increased as a
percentage of net sales to 9.1% from 8.2% due primarily to lower sales volumes
and the costs being essentially fixed.
General and administrative expense decreased to $.7 million from $.9 million
and as a percentage of net sales to 6.2% from 6.3%, principally as the result
of continued cost saving measures.
Research and development expense was relatively unchanged and increased as a
percentage of net sales to 7.8% from 6.3% due primarily to lower sales volumes.
Net interest expense increased to $.7 million from $.4 million and as a
percentage of sales to 6% from 3%, as the quarter had increased average debt
and debt at higher interest rates.
Nine Months Ended September 30, 1997 Compared to September 30, 1996.
Net sales decreased 11% to $32.1 million from $36.1 million in 1996 with vision
division sales up 2% and welding division sales down 18%. The vision division
had decreases in sales of CD audio inspection systems which were offset by
increases in sales of VisionBlox based systems and other non-CD systems.
Welding division sales were down principally as the result of fewer large
automotive programs scheduled in 1997 as compared to 1996.
Cost of sales decreased to $22.3 million from $24.9 million and as a percentage
of net sales increased to 69.6% from 68.9%.
Marketing expense decreased to $3.0 million from $3.3million and as a
percentage of net sales increased to 9.6% from 9%. These costs are essentially
fixed through a wide range of sales.
General and administration expense decreased to $1.9 million from $2.4 million
and as a percentage of net sales to 6% from 6.6%, principally as the result of
continued cost saving measures.
Research and development expense decreased to $2.2 million from $2.7 million
and as a percentage of net sales to 6.9% from 7.6%. Fewer research and
development projects were scheduled in early 1997 compared to 1996 with
personnel terminated or re-assigned.
Net interest expense increased to $1.6 million from $1 million and as a
percentage of net sales to 5% from 2.8%, as 1997 had increased average debt and
debt at higher interest rates.
12
<PAGE> 13
Liquidity and Capital Resources
During July of 1997 the Company issued $7,000,000 of subordinated debentures,
sold $750,000 of common stock and refinanced its revolving note payable to
bank. Proceeds totaling $7,400,000 (net of expenses) were used to pay down the
revolving note payable to the bank and other bank indebtedness. The revolving
note payable has a maximum balance of $15,000,000 (including notes to the
bank). At September 30,1997 the company had approximately $3,200,000 avaliable
on this note.
During the three months ended September 30, 1997 the company used cash provided
by operating and financing activities principally to fund investments in
capitalized software.
The Company believes that current financial resources, together with cash
provided by operations, are adequate to meet cash needs for the next 12 months.
No significant commitments for capital expenditures exist as of September 30,
1997. The Company does not expect that software development costs capitalized
during the next twelve months will exceed amortization of software development
costs. The Company has no other plans for significant capital expenditures.
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Effective July 15, 1997, the Company closed the private placement of $7.0
million of subordinated debentures to seven purchasers, including Maxco, Inc.,
a currnt 21% shareholder of the Company. The debentures were sold without
registration pursuant to the exemption of Section 4(2) of the Securities Act of
1933. Based on the information and warranties provided to it, the Company
believes that each of the purchasers is an "accredited investor" as defined in
Rule 501(a) under the Securities Act.
The debenture notes have maturities up to eight years and bear interest at
12.95%. Additionally, the note holders received warrants for the purchase of
up to 1.4 million Medar common shares at $6.86. Subject to certain limitations
on common shareholder dilution in the first year in the event of significant
market increases in the Company's stock, warrant holders may exercise their
warrant, in whole or in part, at any time by surrender of their warrant and
payment of the exercise price. In addition, warrant holders may convert their
warrants into the Company's common shares without the payment of the exercise
price to the extent the then current market price of such common shares exceeds
the exercise price.
As part of the same transaction, Maxco, Inc. agreed to purchase 150,000 newly
issued unregistered shares of Medar common stock at $5 per share. Medar
received $7,400,000 from the sale of the debentures and other other securities
(net of commission of $150,000 and other expenses).
13
<PAGE> 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Document
- --------------------------------------------------------------------------------
<S> <C>
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).
4.1 Note and Warrant Purchase Agreement (filed as Exhibit 4.1 to the
registrants Form 8-K dated July 15, 1997, SEC file 0-12728, and
incorporated herein by reference).
4.2 Form of 12.95% Senior Subordinated Secured Note (filed as Exhibit 4.2 to
the registrants Form 8-K dated July 15, 1997, SEC file 0-12728, and
incorporated herein by reference).
4.3 Form of Medar, Inc. Common Stock Purchase Warrant Certificate (filed as
Exhibit 4.3 to registrants Form 8-K dated July 15, 1997, 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).
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C>
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).
10.15 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).
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
</TABLE>
15
<PAGE> 16
<TABLE>
<S> <C>
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 August 11,
1996 by and between Medar, Inc., Integral Vision-AID, Inc., Integral
Vision Ltd. and NBD Bank (filed as Exhibit 10.30 to the registrant's Form
10-Q for the quarter ended September 30, 1996, SEC file 0-12728, and
incorporated herein by reference).
10.31 Fifth Amendment to Revolving Credit and Loan Agreement dated February 27,
1997 by and between Medar, Inc. and Integral Vision, Ltd. and NBD Bank
(filed as Exhibit 10.31 to the registrant's Form 10-K for the year ended
December 31, 1996, SEC file 0-12728, and incorporated herein by
reference).
10.32 Over Formula Loan Note dated February 27, 1997 by and between Medar,
Inc., Integral Vision, Ltd., and NBD Bank (filed as Exhibit 10.32 to the
registrant's Form 10-K for the year ended December 31, 1996, SEC file
0-12728, and incorporated herein by reference).
10.33 Bridge Loan Note dated February 27, 1997 by and between Medar, Inc.,
Integral Vision, Ltd., and NBD Bank (filed as Exhibit 10.33 to the
registrant's Form 10-K for the year ended December 31, 1996, SEC file
0-12728, and incorporated herein by reference).
10.34 Sixth Amendment to Revolving Credit and Loan Agreement dated March 28,
1997 by and between Medar, Inc. and Integral Vision, Ltd. and NBD bank
(filed as Exhibit 10.34 to the registrant's Form 10-Q for the quarter
ended June 30, 1997, SEC file 0-12728, and incorporated herein by
reference).
10.35 Seventh Amendment to Revolving Credit and Loan Agreement dated June 27,
1997 by and between Medar, Inc. and Integral Vision, Ltd. and NBD bank
(filed as Exhibit 10.35 to the registrant's Form 10-Q for the quarter
ended June 30, 1997, SEC file 0-12728, and incorporated herein by
reference).
10.36 Eighth Amendment to Revolving Credit and Loan Agreement dated July 15,
1997 by and between Medar, Inc. and Integral Vision, Ltd. and NBD bank
(filed as Exhibit 10.36 to the registrant's Form 10-Q for the quarter
ended June 30, 1997, SEC file 0-12728, and incorporated herein by
reference).
10.37 Amended and Restated Term Note dated July 15, 1997 by and between Medar,
Inc. and NBD bank (filed as Exhibit 10.37 to the registrant's Form 10-Q
for the quarter ended June 30, 1997, SEC file 0-12728, and incorporated
herein by reference).
</TABLE>
16
<PAGE> 17
<TABLE>
<S> <C>
10.38 Collateral Assignment of Property Rights and Security Agreement dated
July 15, 1997 by and between Medar, Inc. and NBD bank (filed as Exhibit
10.38 to the registrant's Form 10-Q for the quarter ended June 30, 1997,
SEC file 0-12728, and incorporated herein by reference).
10.39 Stock Purchase Agreement between Maxco, Inc. and Medar, Inc. dated July
23, 1997 (filed as Exhibit 10.39 to the registrant's Form 10-Q for the
quarter ended June 30, 1997, SEC file 0-12728, and incorporated herein by
reference).
11 Calculation of Earnings per Share.
27 Financial Data Schedule
* 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.
</TABLE>
(b) Reports on Form 8-K
On July 15, 1997 a report on Form 8-K was filed reporting, under Item 5, "Other
Events" the private placement of $7.0 million of subordinated debentures. No
financial statements were required to be included as part of the filing.
17
<PAGE> 18
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.
/s/ CHARLES J. DRAKE 11/14/97
- ----------------------------------
Charles J. Drake
President & Chairman of the Board
Medar, Inc.
(Principal Executive Officer)
/s/ RICHARD R. CURRENT 11/14/97
- ----------------------------------
Richard R. Current
Executive Vice President, Finance & Operations
Medar, Inc.
(Principal Financial & Accounting Officer)
18
<PAGE> 19
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION
- ----------- -----------
11 Calculation of Earnings per Share
27 Financial Data Schedule
19
<PAGE> 1
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30
1997 1996
--------------------------------------
(In thousands,except per share data)
<S> <C> <C>
Per common share and common share equivalents:
Outstanding shares - beginning of period 8,852 8,802
Weighted average of:
Issuance of common stock 118
Exercise of stock options 16 33
Net effect of dilutive stock options and warrants based on
treasury stock method using average market price 137 179
------------------------------
Weighted average of common shares and common share equivalents 9,123 9,014
==============================
Net earnings $ 420 $ 607
==============================
Net earnings per share $ .05 $ .07
==============================
Per common share and common share equivalents, assuming full
dilution:
Outstanding shares - beginning of period 8,852 8,802
Weighted average of:
Issuance of common stock 118
Exercise of stock options 16 33
Net effect of dilutive stock options and warrants based on
treasury stock method using quarter-end market price if
higher than average market price 284 179
------------------------------
Weighted average of common shares, assuming full dilutions 9,270 9,014
==============================
Net earnings $ 420 $607
==============================
Net earnings per share $ .05 $ .07
==============================
</TABLE>
20
<PAGE> 2
EXHIBIT 11
CALCULATION OF EARNINGS PER SHARE
MEDAR, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30
1997 1996
--------------------------------------------
(In thousands, except for per share data)
<S> <C> <C>
Per common share and common share equivalents:
Weighted average of common shares and common share equivalents
for quarter ended:
March 31 8,893 8,995
June 30 8,902 9,081
September 30 9,123 9,014
============================================
26,918 27,090
============================================
Weighted average number of shares of common stock and common
stock equivalents, where applicable, for the nine months ended
September 30. 8,973 9,030
============================================
Net earnings $ 847 $ 1,821
============================================
Net earnings per share $ .09 $.20
============================================
Per common share and common share equivalents assuming full
dilution:
Weighted average of common shares, assuming full dilution
March 31 8,897 9,020
June 30 8,910 9,085
September 30 9,270 9,014
============================================
27,077 27,119
============================================
Weighted average of shares of common stock and common stock
equivalents, where applicable, for the nine months ended September
30. 9,025 9,040
============================================
Net earnings $ 847 $ 1,821
============================================
Net earnings per share $ .09 $ .20
============================================
</TABLE>
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 485
<SECURITIES> 0
<RECEIVABLES> 7,114
<ALLOWANCES> 400
<INVENTORY> 15,568
<CURRENT-ASSETS> 28,418
<PP&E> 17,199
<DEPRECIATION> 7,721
<TOTAL-ASSETS> 50,945
<CURRENT-LIABILITIES> 6,472
<BONDS> 20,949
0
0
<COMMON> 1,805
<OTHER-SE> 21,719
<TOTAL-LIABILITY-AND-EQUITY> 50,945
<SALES> 10,970
<TOTAL-REVENUES> 10,982
<CGS> 7,298
<TOTAL-COSTS> 7,298
<OTHER-EXPENSES> 2,545
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 669
<INCOME-PRETAX> 470
<INCOME-TAX> 50
<INCOME-CONTINUING> 420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 420
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
