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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 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 No. 0-27122
ADEPT TECHNOLOGY, INC.
----------------------
(Exact name of Registrant as specified in its charter)
California 94-2900635
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
150 Rose Orchard Way
San Jose, California 95134
- --------------------------------- ------------------------------------
(Address of Principal executive offices) (Zip Code)
(408) 432-0888
---------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 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 of the Registrant's common stock outstanding as of
September 27, 1997 was 8,280,785.
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<PAGE>
<TABLE>
ADEPT TECHNOLOGY, INC.
INDEX
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Condensed Consolidated Balance Sheets
September 27, 1997 and June 30, 1997........................................................ 3
Condensed Consolidated Statements of Income
Three months ended September 27, 1997 and September 28, 1996................................ 4
Condensed Consolidated Statements of Cash Flows
Three months ended September 27, 1997 and September 28, 1996................................ 5
Notes to Condensed Consolidated Financial Statements.......................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........... 9
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders ............................................ 15
Item 6. Exhibits and Reports on Form 8-K................................................................ 15
Signatures...................................................................................... 16
Index to Exhibits............................................................................... 17
</TABLE>
2
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<TABLE>
ADEPT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
<CAPTION>
September 27, June 30,
1997 1997 (1)
--------------- --------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 17,238 $ 11,101
Short term investments 4,912 7,366
Accounts receivable, less allowance for doubtful accounts of
$465 at September 27, 1997 and $449 at June 30, 1997 20,738 17,250
Inventories 12,725 13,096
Deferred tax assets and prepaid expenses 2,588 2,517
--------------- --------------
Total current assets 58,201 51,330
Property and equipment at cost 19,001 18,412
Less accumulated depreciation and amortization 13,735 13,184
--------------- --------------
Net property and equipment 5,266 5,228
Long term investments - 1,000
Intangible assets related to acquisition of SILMA Incorporated, net of
accumulated amortization of $712 and $642 at September 27, 1997 621 774
and June 30, 1997, respectively
Other assets 732 1,161
--------------- --------------
Total assets $ 64,820 $ 59,493
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,557 $ 3,927
Other accrued liabilities 9,573 8,445
Current portion of obligations under capital leases 15 27
--------------- --------------
Total current liabilities 16,145 12,399
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value:
5,000 shares authorized, none issued and outstanding - -
Common stock, no par value:
25,000 shares authorized; 8,281 and 8,240 issued and outstanding
at September 27, 1997 and June 30, 1997, respectively 47,095 46,897
Retained earnings 1,580 197
--------------- --------------
Total shareholders' equity 48,675 47,094
--------------- --------------
Total liabilities and shareholders' equity $ 64,820 $ 59,493
=============== ==============
<FN>
(1) Amount derived from the Company's audited financial statements for the year ended June 30, 1997
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
ADEPT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
<CAPTION>
Three months ended
--------------------------------------
September 27, September 28,
1997 1996
--------------- --------------
<S> <C> <C>
Net revenues $ 25,982 $ 18,437
Cost of revenues 14,971 11,059
--------------- --------------
Gross margin 11,011 7,378
Operating expenses:
Research, development and engineering 2,382 1,976
Selling, general and administrative 6,579 5,152
--------------- --------------
Total operating expenses 8,961 7,128
--------------- --------------
Operating income 2,050 250
Interest income, net 256 134
--------------- --------------
Income before provision for income taxes 2,306 384
Provision for income taxes 923 138
--------------- --------------
$ 1,383 $ 246
=============== ==============
Net income per share $ .16 $ .03
=============== ==============
Shares used in computing net income per share 8,829 8,370
=============== ==============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
ADEPT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(unaudited)
(in thousands)
<CAPTION>
Three months ended
-------------------------------------
September 27, September 28,
1997 1996
-------------- --------------
<S> <C> <C>
Operating activities
Net income $ 1,383 $ 246
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 719 654
(Gain)/ loss on disposal of property and equipment 95 -
Tax benefit from stock plans 53 73
Changes in operating assets and liabilities:
Accounts receivable (3,488) 1,592
Inventories 307 (300)
Deferred tax assets and prepaid expenses (71) (935)
Other assets 429 (52)
Accounts payable 2,630 (319)
Accrued liabilities 1,208 817
-------------- --------------
Total adjustments 1,882 1,530
-------------- --------------
Net cash provided by operating activities 3,265 1,776
-------------- --------------
Investing activities
Purchase of property and equipment, net (730) (763)
Proceeds from sale of property and equipment 15 -
Proceeds from sale of long term available for sale investments 1,000 -
Purchases of short term available for sale (4,012) (2,000)
Proceeds from sale of short term available forsale investments 6,466 1,000
-------------- --------------
Net cash provided by (used in) investing activities 2,739 (1,763)
-------------- --------------
Financing activities
Principal payment for capital lease obligations (12) (35)
Proceeds from employee stock incentive program 145 125
-------------- --------------
Net cash provided by financing activities 133 90
-------------- --------------
Increase in cash and cash equivalents 6,137 103
Cash and cash equivalents, beginning of period 11,101 8,075
-------------- --------------
Cash and cash equivalents, end of period $ 17,238 $ 8,178
============== ==============
Supplemental disclosure of noncash activities:
Inventory capitalized into property, equipment and related tax $ 68 $ 110
Cash paid during the period for:
Interest $ 5 $ 3
Taxes $ 616 $ 67
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
ADEPT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands)
1. General
The accompanying condensed consolidated financial statements have been
prepared in conformity with generally accepted accounting principles.
However, certain information or footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the
rules and regulations of the Securities and Exchange Commission. The
information furnished in this report reflects all adjustments which, in
the opinion of management, are necessary for a fair statement of the
consolidated financial position, results of operations and cash flows
as of and for the interim periods. Such adjustments consist of items of
a normal recurring nature. The condensed consolidated financial
statements included herein should be read in conjunction with the
audited financial statements and notes thereto for the fiscal year
ended June 30, 1997 included in the Company's Form 10-K as filed with
the Securities and Exchange Commission on September 26, 1997. Results
of operations for interim periods are not necessarily indicative of the
results of operations that may be expected for the fiscal year ending
June 30, 1998 or for any other future period.
2. Financial Instruments
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
Short-term investments consist principally of commercial paper and tax
exempt municipal bonds with maturities between three and twelve months,
money market auction rate preferred stock and auction rate notes with
maturities of twelve months or less. Long-term investments consist of
U.S. government agency securities with maturities exceeding twelve
months. Investments are classified as held-to-maturity, trading, or
available-for-sale at the time of purchase.
At September 27 and June 30, 1997, all of the Company's investments in
marketable securities were classified as available-for-sale and were
carried at fair market value which approximated cost. Material
unrealized gains and losses, if any, would have been recorded in
shareholders' equity. Fair market value is based on quoted market
prices on the last day of the fiscal period. The cost of the securities
is based upon the specific identification method. Realized gains or
losses, interest, and dividends are included in interest income. During
fiscal year 1997 and the three months ended September 27, 1997,
realized and unrealized gains and losses on available for sale
investments were not material.
3. Inventories
Inventories are summarized as follows:
September 27, June 30,
1997 1997
---- ----
Raw materials $ 6,233 $ 6,323
Work-in-process 3,760 3,509
Finished goods 2,732 3,264
--------- ---------
$ 12,725 $ 13,096
========= =========
6
<PAGE>
ADEPT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands)
4. Property and Equipment
Cost of property and equipment is summarized as follows:
September 27, June 30,
1997 1997
--------- ---------
Machinery and equipment $ 11,137 $ 11,008
Computer equipment 5,688 5,211
Office furniture and equipment 2,176 2,193
--------- ---------
$ 19,001 $ 18,412
========= =========
5. Income Taxes
The Company provides for income taxes during interim reporting periods
based upon an estimate of its annual effective tax rate. This estimate
reflects the utilization of tax credits, offset by taxes on the
Company's foreign operations.
6. Net Income per Share
Net income per share is computed using the weighted average number of
shares of common stock and dilutive common equivalent shares from stock
options (using the treasury stock method). (See also Note 7)
7. Accounting Pronouncement
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per
Share", which is required to be adopted on December 31, 1997. At that
time, the Company will be required to change the method currently used
to compute earnings per share and to restate all prior periods. Under
the new requirement for calculating primary earnings per share, the
dilutive effect of stock options will be excluded. The impact is
expected to result in an increase of $0.01 in primary earnings per
share for the three months ended September 27, 1997, and no change in
net income per share for the three months ended September 28, 1996. The
impact of SFAS 128 on the calculation of fully diluted earnings per
share for these periods is not expected to be material.
8. Stock Compensation
The Company expects to incur a charge of approximately $800,000 in the
second quarter of fiscal 1998 for compensation expense related to the
Emerging Issues Task Force No. 97-12, "Accounting for Increased Share
Authorizations in an IRS Section 423 Employee Stock Purchase Plan under
APB Opinion No. 25, Accounting for Stock Issued to Employees" which was
approved by the EITF in September 1997. This one-time, non-cash charge
will represent the difference between 85% of the fair market value of
common stock on the date of the beginning of the offering period and
the fair market value of common stock on the date the shareholders
approved the increase in shares authorized for issuance, multiplied by
the number of shares in the 1995 Employee Stock Purchase Plan ("ESPP")
that had been subscribed for purchase by employees, but not authorized
by the shareholders, prior to the Company's Annual Meeting of
Shareholders. Shareholder approval was granted to make available for
issuance an additional 500,000 shares to the ESPP on October 31, 1997.
7
<PAGE>
ADEPT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(in thousands)
9. Contingencies
The Company has from time to time received communications from third
parties asserting that the Company is infringing certain patents and
other intellectual property rights of others or seeking indemnification
against such alleged infringement. There is presently no litigation
involving such claims, and the Company believes that the ultimate
resolution, if any, of these matters will not have a material adverse
effect on its financial position, results of operations or cash flows.
10. Reclassification
Certain amounts presented in the financial statements for fiscal 1997
have been reclassified to conform to the presentation for fiscal 1998.
8
<PAGE>
ADEPT TECHNOLOGY, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
Certain statements in the following Management's Discussion and Analysis of
Financial Condition and Results of Operations constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the following: the potential fluctuations in the Company's
quarterly and annual results of operations; the cyclicality of capital spending
of the Company's customers; the Company's dependence on the continued growth of
the intelligent automation market; the risks associated with sole or single
sources of supply and lengthy procurement lead times; the Company's highly
competitive industry; rapid technological change within the Company's industry;
the lengthy sales cycles for the Company's products; the risks associated with
reliance on system integrators; the risks associated with international sales
and purchases; the risks associated with potential acquisitions and the need to
manage growth; the risks associated with new product development and the need to
manage product transitions, including any difficulties or delays in the
development, production, testing and marketing of the Company's new products
under development; the Company's dependence on retention and attraction of key
employees; the risks associated with product defects; the Company's dependence
on third-party relationships; the uncertainty of patent and proprietary
technology protection and third party intellectual property claims; changes in,
or failure or inability to comply with, government regulations; general economic
and business conditions; the failure of any new products to be accepted in the
marketplace; decreased investment in robotics generally, and in the Company's
intelligent automation products particularly, as a result of general or specific
economic conditions or conditions affecting any of the Company's primary
markets; decreased acceptance of the Company's current products in the
marketplace; and the other factors referenced in this Management's Discussion
and Analysis of Financial Condition and Results of Operations and the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 1997, in
particular the section titled "Significant Fluctuations in Operating Results".
OVERVIEW
The Company designs, manufactures and markets intelligent automation software
and hardware products for assembly, material handling and packaging
applications. The Company's products currently include machine controllers for
robot mechanisms and other flexible automation equipment, machine vision
systems, simulation software and a family of mechanisms including robots, linear
modules and vision-based flexible part feeders. In addition, the Company
recently introduced a new line of Cartesian scalable robots targeted for the
electronics and assembly applications markets. In recent years, the Company has
expanded its robot product lines, developed advanced software and sensing
technologies that have enabled robots to perform a wider range of functions, and
the Company has expanded its channel of system integrators. The Company has also
expanded its international sales and marketing operations. As a result of these
developments, the nature and composition of the Company's revenues have changed
over time. Specifically, software license and service revenues, although still
relatively insignificant, have increased as a percentage of total revenues, and
international sales comprise a significant portion of the Company's revenues.
9
<PAGE>
ADEPT TECHNOLOGY, INC.
The Company sells its products through system integrators, its direct sales
force and original equipment manufacturers ("OEMs"). System integrators and OEMs
add application-specific hardware and software to the Company's products,
thereby enabling the Company to provide solutions to a diversified industry
base, including the electronics, telecommunications, appliances, pharmaceutical,
food processing and automotive components industries. Net revenues have
increased in each of the Company's last three fiscal years; however, there can
be no assurance that the Company's net revenues will continue to grow or that
the Company will be profitable in future periods. Accordingly, the Company's
historical results of operations should not be relied upon as an indication of
future performance.
Results of Operations
Three Month Periods Ended September 27, 1997 and September 28, 1996
Net revenues. The Company's net revenues increased by 40.9% to $26.0 million for
the three months ended September 27, 1997 from $18.4 million for the three
months ended September 28, 1996. The growth in net revenues was primarily due to
increased product sales, including robot and motion controller sales,
particularly in the European markets, and to a lesser extent, to increased
service and upgrade revenues, including revenues from the Company's recently
formed Rapid Deployment Automation (RDA) Services group which provides
engineering contract services. In the September quarter of fiscal 1997, sales to
European and other international markets decreased substantially, as several
large orders were delayed by customers. The decrease in product bookings
resulted in lower than expected net revenue for the three months ended September
28, 1996. In the event product bookings and net revenues for any quarter are
insufficient to compensate for the lower product bookings in a prior quarter,
the Company's result of operations for that quarter and future quarters could be
materially adversely affected.
International sales, including sales to Canada, were $10.2 million or
approximately 39.3% of net revenues for the three months ended September 27,
1997 as compared with $6.6 million or 35.7% of net revenues for three months
ended September 28, 1996.
Gross margin. Gross margin percentage was 42.4% for the three months ended
September 27, 1997 and 40.0% for the three months ended September 28, 1996. The
increase in gross margin was primarily attributable to the higher service and
upgrade revenues and higher sales of robot products, and to a lesser extent, to
the higher motion controller sales. The Company expects that it will continue to
experience quarterly fluctuations in gross margin percentage due to changes in
its sales and product mix.
Research, Development and Engineering. Research, development and engineering
expenses increased by 20.6% to $2.4 million for the three months ended September
27, 1997 from $2.0 million for the three months ended September 28, 1996. The
increase was primarily due to increases in information system related expenses
and project material spending, and a lower level of third party development
funding. Research, development and engineering expenses for the three months
ended September 27, 1997 were partially offset by $165,000 of third party
development funding as compared with $227,000 of third party development funding
for the three months ended September 28, 1996. The Company expects that it will
continue to receive third party development funding from the federal and
California state governments during fiscal 1998. There can be no assurance that
any funds budgeted by either government for the Company's development projects
will not be curtailed or eliminated at any time.
10
<PAGE>
ADEPT TECHNOLOGY, INC.
As a percentage of net revenues, research, development and engineering expenses
decreased to 9.2% for the three months ended September 27, 1997 from 10.7% in
the three months ended September 28, 1996. Research, development and engineering
expenses as a percentage of net revenues decreased due to the relative growth in
the level of net revenues in the three months ended September 27, 1997 as
compared to the same period in the prior year.
Selling, General and Administrative. Selling, general and administrative
expenses increased 27.7% to $6.6 million or 25.3% of net revenues for the three
months ended September 27, 1997, as compared with $5.2 million or 27.9% of net
revenues for the three months ended September 28, 1996. This increased level of
spending was primarily attributable to increased headcount and compensation
related expenses, including an employee incentive bonus plan accrual, and to a
lesser extent, to higher travel expenses and bad debt provisions for doubtful
accounts receivable. The decline in selling, general and administrative expenses
as a percentage of total revenue in the three months ended September 27, 1997 as
compared to the same period in the prior year was due to the growth in total
revenues that outpaced growth in the in selling, general and administrative
expenses. The Company expects that selling, general and administrative expenses
will continue to increase in absolute dollars in future periods, although as a
percentage of net revenues, selling, general and administrative expenses may
fluctuate.
Interest Income, Net. Interest income, net for the three months ended September
27, 1997 was $256,000, compared to $134,000 for the three months ended September
28, 1996. The increase was due to higher levels of invested funds.
Provision for Income Taxes. The Company's effective tax rate for the three
months ended September 27, 1997 was 40%, as compared with 36% for the three
months ended September 28, 1996. The Company's tax rate differs from the
statutory income tax rate primarily due to the benefit of federal and state tax
credits.
Derivative Financial Instruments. The Company makes yen-denominated purchases of
certain components and mechanical subsystems from Japanese suppliers. Current
exchange rate fluctuations are not expected to result in material unfavorable
foreign exchange transactions included in cost of revenues.
11
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ADEPT TECHNOLOGY, INC.
Significant Fluctuations in Operating Results
The Company's operating results have historically been, and will continue to be,
subject to significant quarterly and annual fluctuations due to a number of
factors, including fluctuations in capital spending domestically and
internationally or in one or more industries to which the Company sells its
products, new product introductions by the Company or its competitors, changes
in product mix and pricing by the Company, its suppliers or its competitors,
availability of components and raw materials, failure to manufacture a
sufficient volume of products in a timely and cost-effective manner, failure to
introduce new products on a timely basis, failure to anticipate changing
customer product requirements, lack of market acceptance or shifts in the demand
for the Company's products, changes in the mix of sales by distribution channel,
changes in the spending patterns of the Company's customers, and extraordinary
events such as litigation or acquisitions. The Company's gross margins may vary
greatly depending on the mix of sales of lower margin hardware products,
particularly mechanical subsystems sourced from third parties, and higher margin
software products. The Company's operating results will also be affected by
general economic and other conditions affecting the timing of customer orders
and capital spending. The Company generally recognizes product revenue upon
shipment or, for certain international sales, upon receipt by the customer. The
Company's net revenues and results of operations for a period will therefore be
affected by the timing of orders received and orders shipped during such period.
A delay in shipments near the end of a period, due for example to delays in
product development or delays in obtaining materials, could materially adversely
affect the Company's business, financial condition and results of operations for
such period. Moreover, continued investments in research and development,
capital equipment and ongoing customer service and support capabilities will
result in significant fixed costs which the Company will not be able to reduce
rapidly and, therefore, if the Company's sales for a particular period are below
expected levels, the Company's business, financial condition and results of
operations for such period could be materially adversely affected. In addition,
while in some years revenue from international sales has helped buffer the
Company against slowdowns in U.S. capital spending, in other years the higher
costs associated with international sales, combined with downturns in
international markets, have adversely affected the Company's results of
operations. There can be no assurance that the Company will be able to increase
or sustain profitability on a quarterly or annual basis in the future.
The Company has experienced and is expected to continue to experience
seasonality in product bookings. The Company has typically had higher bookings
for its products during the June quarter of each year and lower bookings during
the September quarter of each year, due primarily to the slowdown in sales to
European markets. The Company has generally been able to maintain revenue levels
during the September quarter by utilizing backlog from the June quarter. In the
event bookings for the Company's products in the June quarter are lower than
anticipated and the Company's backlog at the end of the June quarter is
insufficient to compensate for lower bookings in the September quarter, the
Company's results of operations for the September quarter and future quarters
could be materially adversely affected. In fact, in the September quarter of
fiscal 1997, sales to European and other international markets decreased
substantially, as several large orders were delayed by customers. The decrease
in product bookings resulted in decreased net revenues for the September quarter
of fiscal 1997. In contrast however, entering into fiscal 1998, the Company's
backlog was up significantly from where it began the prior year. In the event
product bookings and net revenues for any quarter are insufficient to compensate
for the lower product bookings in a prior quarter, the Company's results of
operations for that quarter and future quarters could be materially adversely
affected.
12
<PAGE>
ADEPT TECHNOLOGY, INC.
In addition, a significant percentage of the Company's product shipments occur
in the last month of each quarter. Historically this has been due to a lack of
component availability from sole or single source suppliers or, with respect to
components with long procurement lead times, due to inaccurate forecasting of
the level of demand for the Company's products or of the product mix for a
particular quarter. The Company has therefore from time to time been required to
utilize components and other materials for current shipments which were
scheduled to be incorporated into products to be shipped in subsequent periods.
If the Company were unable to obtain additional components or mechanical
subsystems to meet increased demand for its products, or to meet demand for a
product mix which differed from the forecasted product mix, or if for any reason
the Company failed to ship sufficient product prior to the end of the quarter,
the Company's business, financial condition and results of operations could be
materially adversely affected.
Liquidity and Capital Resources
As of September 27, 1997, the Company had working capital of approximately $42.1
million, including $17.2 million in cash and cash equivalents and $4.9 million
in short term investments.
The Company's cash requirements during the three months ended September 27, 1997
were met primarily through cash provided by operations and investing activities
and to a lesser extent, to financing activities. Cash, cash equivalents and
investments increased $2.7 million from June 30, 1997 primarily as a result of
$3.3 million of cash generated from operating activities, offset by $700,000 of
capital expenditures.
Net cash provided by operating activities was primarily attributable to net
income adjusted by depreciation and amortization, and increased accounts payable
and accrued liabilities, offset by higher accounts receivable arising from
increased revenue. Financing activities consisted mainly of proceeds from
employee stock incentive plans.
The Company currently anticipates capital expenditures of approximately $3.8
million during fiscal 1998, including approximately $1.1 million for test
fixtures, tooling and other factory investments, approximately $1.0 million for
MIS equipment and approximately $1.7 million for laboratory and other equipment.
The Company believes that the existing cash and cash equivalent balances as well
as short term investments and anticipated cash flow from operations will be
sufficient to support the Company's working capital requirements for at least
the next twelve months.
New Accounting Pronouncement
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings Per Share", which is required
to be adopted on December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to restate
all prior periods. Under the new requirement for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The impact is
expected to result in an increase of $0.01 in primary earnings per share for the
three months ended September 27, 1997, and no change in net income per share for
the three months ended September 28, 1996. The impact of SFAS 128 on the
calculation of fully diluted earnings per share for these periods is not
expected to be material.
13
<PAGE>
ADEPT TECHNOLOGY, INC.
Stock Compensation
The Company expects to incur a charge of approximately $800,000 in the second
quarter of fiscal 1998 for compensation expense related to the Emerging Issues
Task Force No. 97-12, "Accounting for Increased Share Authorizations in an IRS
Section 423 Employee Stock Purchase Plan under APB Opinion No. 25, Accounting
for Stock Issued to Employees" which was approved by the EITF in September 1997.
This one-time, non-cash charge will represent the difference between 85% of the
fair market value of common stock on the date of the beginning of the offering
period and the fair market value of common stock on the date the shareholders
approved the increase in shares authorized for issuance, multiplied by the
number of shares in the 1995 Employee Stock Purchase Plan ("ESPP") that had been
subscribed for purchase by employees, but not authorized by the shareholders,
prior to the Company's Annual Meeting of Shareholders. Shareholder approval was
granted to make available for issuance an additional 500,000 shares to the ESPP
on October 31, 1997.
14
<PAGE>
ADEPT TECHNOLOGY, INC.
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1997 Annual Meeting of Shareholders on October 31, 1997, the
shareholders approved the following actions:
a) Election of five (5) directors to serve until the next Annual
Meeting of Shareholders or until their successors are duly
elected and qualified
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Brian R. Carlisle: For: 6,642,190 Against: Nil Abstain: 383,924
Bruce E. Shimano: For: 6,642,190 Against: Nil Abstain: 383,924
Michael P. Kelly: For: 6,641,540 Against: Nil Abstain: 384,574
Cary R. Mock: For: 6,642,190 Against: Nil Abstain: 383,924
John E. Pomeroy: For: 6,642,190 Against: Nil Abstain: 383,924
</TABLE>
b) Amendment of 1995 Employee Stock Purchase Plan to increase the
number of shares available for issuance thereunder by 500,000
shares.
For: 5,150,735 Against: 312,077 Abstain: 27,819
c) Amendment of 1993 Stock Plan to (i) approve the amendment of the
1993 Stock Plan to increase the number of shares reserved for
issuance thereunder by 1,000,000 shares and (ii) to approve the
material terms of the Stock Plan, including but not limited to,
limitations on the number of options that may be granted to
participants in any fiscal year.
For: 2,821,213 Against: 1,225,814 Abstain: 58,507
d) Ratification of the appointment of Ernst & Young LLP as
independent auditors for the Company for the fiscal year ending
June 30, 1998.
For: 7,002,184 Against: 16,536 Abstain: 7,394
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) The Exhibits listed on the accompanying index immediately
following the signature page are filed as part of this report.
b) Reports on Form 8-K. No reports on Form 8-K were filed by the
Company during the quarter ended September 27, 1997.
15
<PAGE>
ADEPT TECHNOLOGY, INC.
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.
ADEPT TECHNOLOGY, INC.
Date: November 12, 1997 By: /s/ Brian R. Carlisle
---------------------
Brian R. Carlisle
Chairman of the Board and Chief
Executive Officer
Date: November 12, 1997 By: /s/ Betsy A. Lange
------------------
Betsy A. Lange
Vice President of Finance and Chief
Financial Officer
16
<PAGE>
ADEPT TECHNOLOGY, INC.
INDEX TO EXHIBITS
SEQUENTIALLY
NUMBERED
EXHIBITS PAGE
- --------------------------------------------------------------------------------
11.1 Statement of Computation of Net Income Per Share. 18
27.1 Financial Data Schedule. 19
17
<TABLE>
ADEPT TECHNOLOGY, INC.
Statement of Computation of Net Income Per Share
(unaudited)
(in thousands, except per share date)
<CAPTION>
Three months ended
--------------------------------------
September 27, September 28,
1997 1996
--------------- --------------
<S> <C> <C>
Net income $ 1,383 $ 246
=============== ==============
Weighted average common stock outstanding 8,265 7,928
Weighted average common stock equivalent shares 564 442
--------------- --------------
Shares used to compute net income per share 8,829 8,370
=============== ==============
Net income per common share $ .16 $ .03
=============== ==============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 27, 1997 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 27, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> SEP-27-1997
<CASH> 17,238
<SECURITIES> 4,912
<RECEIVABLES> 21,203
<ALLOWANCES> 465
<INVENTORY> 12,725
<CURRENT-ASSETS> 58,201
<PP&E> 19,001
<DEPRECIATION> 13,735
<TOTAL-ASSETS> 64,820
<CURRENT-LIABILITIES> 16,145
<BONDS> 0
<COMMON> 47,095
0
0
<OTHER-SE> 1,580
<TOTAL-LIABILITY-AND-EQUITY> 64,820
<SALES> 25,982
<TOTAL-REVENUES> 25,982
<CGS> 14,971
<TOTAL-COSTS> 23,932
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> 2,306
<INCOME-TAX> 923
<INCOME-CONTINUING> 1,383
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,383
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
