SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Check One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ________________ to ________________
Commission file number 0-16577
CYBEROPTICS CORPORATION
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1472057
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2505 Kennedy Street N.E. Minneapolis, Minnesota 55413
(Address of principal executive offices)
(612) 331-5702
(Issuer's telephone number)
Indicate by check mark whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or 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__
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
At June 30, 1995, 4,315,321 shares of the issuer's Common Stock, no par value,
were outstanding.
Transitional small business disclosure format (check one):
Yes __ No X
PART 1. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
CYBEROPTICS CORPORATION
BALANCE SHEETS
(In thousands, except share amounts)
June 30, 1995 Dec. 31, 1994
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 451 $ 1,428
Short-term investments 930 1,180
Accounts receivable, net 5,497 2,964
Inventories 4,341 2,335
Other current assets 403 340
Total current assets 11,622 8,247
Equipment and furnishings, net 685 478
Capitalized patent cost, net 77 98
Total assets $12,384 $ 8,823
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,459 $ 572
Income taxes payable 721 212
Accrued expenses 1,004 561
Total current liabilities 3,184 1,345
Committments:
Stockholders' equity:
Common stock, no par value, 10,000,000 shares
authorized, 4,315,321 and 4,235,141 shares issued
and outstanding, respectively 4,354 4,230
Retained earnings 4,846 3,248
Total stockholders' equity 9,200 7,478
Total liabilities and stockholders' equity $12,384 $ 8,823
</TABLE>
See the accompanying notes to interim financial statements.
CYBEROPTICS CORPORATION
STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
Three Months Ended June 30,
1995 1994
Revenues $7,240 $3,245
Cost of revenues 3,386 1,296
Gross Margin 3,854 1,949
Research and development expenses 1,045 730
Selling, general and administrative expenses 1,242 927
Income from operations 1,567 292
Interest income 29 16
Income before income taxes 1,596 308
Provision for income taxes 495 70
Net income $1,101 $238
Net income per share (fully diluted) $0.24 $0.06
Weighted average common and
common equivalent shares 4,678 4,299
Six Months Ended June 30,
1995 1994
Revenues $11,796 $6,377
Cost of revenues 5,435 2,521
Gross margin 6,361 3,856
Research and development expenses 1,770 1,382
Selling, general and administrative expenses 2,343 1,798
Income from operations 2,248 676
Interest income 59 34
Income before income taxes 2,307 710
Provision for income taxes 709 200
Net income $1,598 $510
Net income per share (fully diluted) $0.34 $0.12
Weighted average common and
common equivalent shares 4,676 4,308
See the accompanying notes to interim financial statements.
<TABLE>
<CAPTION>
CYBEROPTICS CORPORATION
STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
Six Months ended June 30, 1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,598 $510
Adjustments to reconcile net income to
net cash (used) provided by operating activities:
Depreciation and amortization 183 135
Provision for losses on accounts receivable 20
Provision for losses on inventories 161 27
Changes in operating assets and liabilities:
Accounts receivable (2,553) (77)
Inventories (2,167) (426)
Other current assets (63) (25)
Accounts payable 887 389
Income taxes payable 509 55
Accrued expenses 443 65
Net cash (used) provided by operating acitivies (982) 653
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of short-term investments 1,057 0
Purchase of short-term investments (807) (756)
Additions to equipment and furnishings (357) (178)
Additions to patents (12) (34)
Net cash used by investing activities (119) (968)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock (140)
Proceeds from exercise of stock options 124 8
Net cash provided (used) by financing activities 124 (132)
Decrease in cash and cash equivalents (977) (447)
Cash and cash equivalents -- beginning of period 1,428 1,778
Cash and cash equivalents -- end of period $451 $1,331
</TABLE>
See the accompanying notes to interim financial statements.
CYBEROPTICS CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 1995
1. INTERIM REPORTING:
The interim financial statements are unaudited; however, in the opinion of
the Company, the interim statements include all adjustments, consisting
only of normal recurring adjustments, necessary for the fair statement of
the results and balances for the interim periods.
The results of operations for the six-month period ended June 30, 1995 do
not necessarily indicate the results to be expected for the full year.
These statements should be read in conjunction with the Company's financial
statements and notes thereto, contained in the Company's Annual Report to
Stockholders for the year ended December 31, 1994.
The year-end condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
2. INVENTORIES:
June 30, Dec. 31,
1995 1994
Raw materials and purchased parts $2,876 $1,902
Work in process 1,417 406
Finished goods 48 27
Total inventories $4,341 $2,335
3. BANK LINE OF CREDIT
On May 26, 1995, the Company entered into an unsecured revolving line of
credit which provides for borrowings up to $2,000,000. Amounts outstanding
under this agreement would bear interest, payable monthly, at prime or
LIBOR plus 2.25%. As of June 30, 1995, the Company has not borrowed against
this line of credit. The line of credit expires May 31, 1996 and contains
covenants including not incurring other forms of debt or liens other than
for this line or other credit facilities of the lender.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors that have affected the Company's earnings and financial position during
the periods included in the accompanying financial statements. This discussion
should be read in conjunction with the financial statements and associated
notes.
The table below lists certain financial data expressed as a percentage of
revenues for the periods ended June 30, 1995 and June 30, 1994.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues 100% 100% 100% 100%
Gross margin 53% 60% 54% 60%
Research and development expenses 14% 22% 15% 21%
Selling, general and administrative expenses 17% 29% 20% 28%
Income from operations 22% 9% 19% 11%
Net income 15% 7% 13% 8%
</TABLE>
RESULTS OF OPERATIONS
REVENUES
Revenues increased 123% to $7.2 million for the quarter ended June 30, 1995
compared to $3.2 million for the same period in 1994. Revenues increased 85% to
$11.8 million during the six months ended June 30, 1995, from $6.4 million
during the comparable period in 1994, as both sensor revenues and system
revenues improved. Sensor revenues increased 117% to $4.8 million for the
quarter ended June 30, 1995 compared to $2.2 million for the same period in
1994. Sensor revenues increased $3.7 million or 89% for the first six months of
1995 when compared to the same period last year. The primary reasons for this
increase were increased unit shipments of LaserAlign (principally to Philips
Electronic Manufacturing Technology BV) and an increase in unit shipments of
other OEM sensor products to existing customers. Sensor revenues represented 67%
of total revenues ($7.9 million) for the first six months of 1995 compared to
65% of revenues ($4.2 million) in the first six months of 1994. System revenues
increased 129% to $2.4 million for the quarter ended June 30, 1995 compared to
$1.1 million for the same period in 1994. System revenues increased 77% during
the first six months of 1995 compared to the same period in 1994. This increase
is due principally to revenues from the current version of the CyberSentry
product which began shipping in March 1995. System revenues accounted for 33% of
revenues ($3.9 million) for the first six months of 1995 compared to 35% of
revenues ($2.2 million) for the same period last year. International revenues
totaled $7.1 million in the 1995 period, or 60% of total revenues, compared to
$3.4 million or 54% in the 1994 period.
COST OF REVENUES
Cost of revenues increased 161% to $3.4 million for the quarter ended June 30,
1995 compared to $1.3 million for the same period last year and increased as a
percentage of revenues from 40% for the quarter ended June 30, 1994 to 47% for
the same period in 1995. Cost of revenues increased 116% to $5.4 million during
the six months ended June 30, 1995, from $2.5 million during the comparable
period in 1994 and increased as a percentage of revenues to 46% during the 1995
period from 40% during the 1994 period. This increase in the cost of revenues as
a percentage of revenues is due to expenditures in manufacturing related to
start-up expenses and increasing capacity for the LaserAlign sensor and the
production of the CyberSentry products. In addition the Company increased its
reserves for inventory obsolescence and warranty accrual by $100,000 and
$50,000, respectively in the second quarter of 1995. The Company believes these
increases are appropriate and are roughly proportionate to increases in
inventory and revenues.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses increased 43% to $1.0 million for the quarter
ended June 30, 1995 up from $730,000 for the same period last year but decreased
as a percentage of revenues from 22% in 1994 to 14% in 1995 for the quarter.
Research and development expenses increased 28% to $1.8 million during the six
months ended June 30, 1995, from $1.4 million during the comparable period in
1994, but decreased as a percentage of revenues to 15% during the 1995 period,
from 21% during the period in 1994. Research and development efforts in the
first six months of 1995 focused primarily on the completion of CyberSentry,
CyberGage and CyberScan LV. The Company anticipates that research and
development expenses will increase in future periods but will not increase
substantially as a percentage of revenues.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased 34% to $1.2 million up
from $927,000 for the quarter ended June 30, 1995 and 1994. As a percentage of
revenues, expenses dropped from 29% in 1994 to 17% in 1995 for the quarter ended
June 30. Selling, general and administrative expenses increased 30% to $2.3
million during the first six months of 1995, compared to $1.8 million during the
comparable period in 1994, but decreased as a percentage of revenues to 20%
during the 1995 period from 28% during the 1994 period. The increase in selling,
general, and administrative expenses can be attributed to the growth in
resources to support increased revenues. The decrease as a percentage of
revenues is due primarily to the large increase in revenues, but is also
attributable to the high percentage of sensor sales to OEM customers, which are
made primarily by the Company rather than through distributors.
EFFECTIVE TAX RATE
The Company applied an effective tax rate of 31% for the first six months of
1995, compared to 28% in 1994. Benefits from the Company's foreign sales
corporation and the use of the research and development tax credit will be
primarily responsible for reducing the effective tax rate below the statutory
federal rate in 1995. Although the Company anticipates that its tax rate will
continue to benefit from sales through its foreign sales corporation, the
research and development credit expired as of June 30, 1995.
ORDER RATE AND BACKLOG
CyberOptics' order rate totaled $8.2 million for the quarter ended June 30, 1995
compared to $3.3 million for the same period in 1994. The order rate totaled
$15.4 million for the first six months of 1995, compared to $6.6 million for the
same period in 1994. Backlog totaled $6.4 million and $2.8 million for the
periods ended June 30, 1995 and June 30, 1994, respectively. The scheduled
shipment of the June 30, 1995 backlog is as follows (amounts in thousands):
3rd Quarter 1995 $5,563
4th Quarter 1995 489
1st Quarter 1996 367
Total Backlog $6,419
LIQUIDITY AND CAPITAL RESOURCES
The Company used $977,000 of cash during the first six months of 1995. The
Company used $982,000 of cash in operations during the six-month period,
primarily to finance a $2.6 million increase in accounts receivable and a $2.2
million increase in inventory. The increase in accounts receivable is due to the
increase in shipment levels and the timing of end of period shipments. Inventory
increases are primarily due to increased levels of shipments and orders. The
working capital requirements were offset by net income of $1.6 million, non-cash
expenses of $364,000, and an increase in current liabilities of $1.8 million.
The Company used $119,000 in investing activities in the first six months of
1995, as $357,000 was expended for the purchase of capital equipment offset by
$250,000 generated from net maturities of short-term investments. Financing
activities, consisting of sale of common stock upon exercise of employee
options, generated $124,000 of cash during the first six months of 1995.
PART II. OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of CyberOptics Corporation was held at 3:30
p.m. on Tuesday, May 3, 1995. Shareholders holding 3,470,787 shares, or
approximately 81.79% of the outstanding shares, were represented at the meeting
by proxy or in person. Only one matter, election of directors, was submitted at
the meeting for vote by the shareholders. The following nominees were elected to
serve as members of the Board of Directors until the annual meeting of
shareholders in 1996 or until such time as a successor may be elected:
Tabulation of Votes
For Withheld
Steven K. Case 3,460,547 10,240
Alex B. Cimochowski 3,460,547 10,240
George E. Kline 3,457,347 13,440
Steven M. Quist 3,460,547 10,240
Erwin Kelen 3,460,547 10,240
P. June Min 3,460,547 10,240
There were no abstentions or broker nonvotes.
ITEM 6 - EXHIBITS AND REPORTS ON 8-K
a. Exhibits
Exhibit 27--Financial Data Schedule (For SEC use only)
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended June 30, 1995
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.
CyberOptics Corporation
/s/ Kent O. Lillemoe
Kent O. Lillemoe, Treasurer
(Principal Financial Officer and
Duly Authorized Officer)
Dated: August 9, 1995
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