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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 26, 1998
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
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(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 26, 1998 was 8,533,824.
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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 26, 1998 and June 30, 1998........................................................ 3
Condensed Consolidated Statements of Income
Three months ended September 26, 1998 and September 27, 1997................................ 4
Condensed Consolidated Statements of Cash Flows
Three months ended September 26, 1998 and September 27, 1997................................ 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 ............................................ 19
Item 6. Exhibits and Reports on Form 8-K................................................................ 19
Signatures...................................................................................... 20
Index to Exhibits............................................................................... 21
</TABLE>
2
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<TABLE>
ADEPT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
September 26, June 30,
1998 1998 (1)
------------- -------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 8,529 $ 9,603
Short-term investments 12,186 11,300
Accounts receivable, less allowance for doubtful accounts of
$549 at September 26, 1998 and $452 at June 30, 1998 19,293 19,904
Inventories 14,487 15,190
Deferred tax assets and prepaid expenses 4,712 4,766
------------- -------------
Total current assets 59,207 60,763
Property and equipment at cost 22,656 22,138
Less accumulated depreciation and amortization 16,495 16,285
------------- -------------
Net property and equipment 6,161 5,853
Other assets 1,577 1,342
------------- -------------
Total assets $ 66,945 $ 67,958
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,917 $ 5,226
Other accrued liabilities 9,471 10,063
------------- -------------
Total current liabilities 15,388 15,289
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; 8,534 and 8,723 issued and
outstanding at September 26, 1998 and June 30, 1998,
respectively 48,864 50,225
Retained earnings 2,693 2,444
------------- -------------
Total shareholders' equity 51,557 52,669
------------- -------------
Total liabilities and shareholders' equity $ 66,945 $ 67,958
============= =============
<FN>
(1) Amount derived from the Company's audited financial statements for the year ended June 30, 1998
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
3
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<TABLE>
ADEPT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
<CAPTION>
Three months ended
------------------------------------
September 26, September 27,
1998 1997
-------------- --------------
<S> <C> <C>
Net revenues $ 20,197 $ 25,982
Cost of revenues 11,296 14,971
-------------- --------------
Gross margin 8,901 11,011
Operating expenses:
Research, development and engineering 2,471 2,382
Selling, general and administrative 5,659 6,579
-------------- --------------
Total operating expenses 8,130 8,961
-------------- --------------
Operating income 771 2,050
Interest income, net 215 256
-------------- --------------
Income before provision for income taxes 986 2,306
Provision for income taxes 394 923
-------------- --------------
Net income $ 592 $ 1,383
============== ==============
Basic net income per share $ .07 $ .17
============== ==============
Diluted net income per share $ .07 $ .16
============== ==============
Shares used in computing basic net income per share 8,655 8,265
============== ==============
Shares used in computing diluted net income per share 8,706 8,829
============== ==============
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
4
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ADEPT TECHNOLOGY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(unaudited)
(in thousands)
<CAPTION>
Three months ended
-------------------------------
September 26, September 27,
1998 1997
------------- -------------
<S> <C> <C>
Operating activities
Net income $ 592 $ 1,383
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 743 719
(Gain)/ loss on disposal of property and equipment (2) 95
Tax benefit from stock plans - 53
Changes in operating assets and liabilities:
Accounts receivable 611 (3,488)
Inventories 540 307
Deferred tax assets and prepaid expenses 54 (71)
Other assets (235) 429
Accounts payable 691 2,630
Accrued liabilities (605) 1,196
------------- -------------
Total adjustments 1,797 1,870
------------- -------------
Net cash provided by operating activities 2,389 3,253
------------- -------------
Investing activities
Purchase of property and equipment, net (882) (730)
Proceeds from sale of property and equipment 9 15
Sales of long-term available for sale investments - 1,000
Purchases of short-term available for sale investments (5,686) (4,012)
Sales of short-term available for sale investments 4,800 6,466
------------- -------------
Net cash provided by (used in) investing activities (1,759) 2,739
------------- -------------
Financing activities
Proceeds from employee stock incentive program 205 145
Repurchase of common stock (1,909) -
------------- -------------
Net cash provided by (used in) financing activities (1,704) 145
------------- -------------
Increase (decrease) in cash and cash equivalents (1,074) 6,137
Cash and cash equivalents, beginning of period 9,603 11,101
------------- -------------
Cash and cash equivalents, end of period $ 8,529 $ 17,238
============= =============
Supplemental disclosure of noncash activities:
Inventory capitalized into property, equipment and related tax $ 176 $ 68
Cash paid during the period for:
Interest $ 1 $ 5
Taxes $ 215 $ 616
<FN>
See accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
5
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ADEPT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(unaudited)
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, 1998 included in the Company's Form 10-K as filed with
the Securities and Exchange Commission on September 28, 1998. 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, 1999 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,
market auction rate preferred stock and auction rate notes with
maturities of twelve months or less. Investments are classified as
held-to-maturity, trading, or available-for-sale at the time of
purchase.
At September 26, 1998 and June 30, 1998, 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 1998 and the three months ended
September 26, 1998, realized and unrealized gains and losses on
available for sale investments were not material.
3. Inventories
Inventories are summarized as follows:
September 26, June 30,
1998 1998
--------- ---------
Raw materials $ 7,252 $ 7,407
Work-in-process 4,050 4,916
Finished goods 3,185 2,867
--------- ---------
$ 14,487 $ 15,190
========= =========
6
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ADEPT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(unaudited)
4. Property and Equipment
Cost of property and equipment is summarized as follows:
September 26, June 30,
1998 1998
--------- ---------
Machinery and equipment $ 12,861 $ 12,395
Computer equipment 7,037 7,040
Office furniture and equipment 2,758 2,703
--------- ---------
$ 22,656 $ 22,138
========= =========
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. Repurchase of Shares
In August 1998, the Board of Directors (Board) authorized the Company
to repurchase up to 450,000 shares of the Company's Common Stock on the
open market or in privately negotiated transactions. During the first
quarter of fiscal 1999 the Company repurchased 277,500 shares at an
average per share price of $6.88. The Company may, from time to time,
continue to repurchase additional shares, subject to the 450,000
aggregate share limitation.
7. Net Income per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per
Share". Statement 128 replaced the previously reported primary and
fully diluted earnings per share with basic and diluted earnings per
share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants, and convertible
securities. Diluted earnings per share is very similar to the
previously recorded fully diluted earnings per share. All earnings per
share amounts for all periods have been restated to conform to the
Statement 128 requirement.
7
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ADEPT TECHNOLOGY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(unaudited)
<TABLE>
The following table sets forth the computation of basic and diluted
earnings per share:
<CAPTION>
Three months ended
------------------------------------------
September 26, September 27,
1998 1997
--------- ---------
<S> <C> <C>
Numerator:
Net income $ 592 $ 1,383
--------- ---------
For basic and diluted earnings per share
- income available to common
stockholders $ 592 $ 1,383
========= =========
Denominator:
For basic earnings per share
- weighted average shares 8,655 8,265
Effect of dilutive securities
- employee stock options 51 564
--------- ---------
For diluted earnings per share
- adjusted weighted average shares
and assumed conversion 8,706 8,829
========= =========
</TABLE>
8. Impact of Recently Issued Accounting Standards
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130 (SFAS 130), "Reporting Comprehensive Income". This statement
requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as
other financial statements. This statement is effective for fiscal
years beginning after December 15, 1997. Reclassification of prior
periods for comparison purposes is required. Comprehensive income
generally represents all changes in stockholders' equity except those
resulting from investments or contributions by stockholders. SFAS 130
requires unrealized gains or losses on the Company's available-for-sale
securities, which prior to adoption were reported separately in
stockholders' equity if material, to be included in other comprehensive
income. The Company adopted FAS 130 in the quarter ended September 26,
1998 and comprehensive income is materially the same as net income in
the accompanying condensed consolidated statements of income.
In addition, during June 1997, the Financial Accounting Standards Board
issued Statement No. 131 (SFAS 131), "Disclosures About Segments of an
Enterprise and Related Information". This statement replaces Statement
No. 14 and changes the way public companies report segment information.
This statement is effective for fiscal years beginning after December
15, 1997 and will be adopted by the Company for the year ended June 30,
1999. Adoption of this pronouncement is not expected to have a material
impact on the Company's financial statements.
9. Reclassification
Certain amounts presented in the financial statements for fiscal 1997
have been reclassified to conform to the presentation for fiscal 1998.
8
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ADEPT TECHNOLOGY, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or anticipated results, including those set forth under
"Factors Affecting Future Operating Results" under "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
report and the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1998, in particular the section titled "Factors Affecting Future
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, vision-based flexible part feeders, as well as a line of Cartesian
scalable robots targeted for the electronics and assembly applications markets.
In recent years, the Company has expanded its robot product lines and developed
advanced software and sensing technologies that have enabled robots to perform a
wider range of functions. The Company has also expanded its channel of system
integrators and 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.
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 four fiscal years; however, the rates of
increase have varied substantially from year to year, and 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. Additionally, the Company's net
revenues have declined in each of the last three fiscal quarters. 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 26, 1998 and September 27, 1997
Net revenues. The Company's net revenues decreased by 22.3% to $20.2 million for
the three months ended September 26, 1998 from $26.0 million for the three
months ended September 27, 1997. The decrease in net revenues for the three
months ended September 26, 1998 was primarily due to decreased product sales,
including robot and motion controller sales, and decreased service and upgrade
revenues. The decrease in revenue was partially offset by an increase in
software revenue. The revenue decline was seen throughout the markets and
industries the Company serves. The Company can not estimate when or if a revival
in its key hardware markets will occur.
9
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ADEPT TECHNOLOGY, INC.
International sales, including sales to Canada, were $9.6 million or
approximately 47.5% of net revenues for the three months ended September 26,
1998 as compared with $10.3 million or 39.5% of net revenues for the three
months ended September 27, 1997. While the Company's direct sales into the
Asian-Pacific region have been relatively insignificant to date, the widely
reported economic instability in that region has affected certain domestic
customers who have seen their Asian-Pacific revenues decline. This was a leading
cause in the Company's declining revenue growth for the period ending September
26, 1998 relative to the three month period of the prior fiscal year. Because
international revenues constitute a significant portion of the Company's net
revenues, adverse economic conditions or instability in foreign markets where
the Company operates directly can be expected to have an adverse effect on the
Company's revenues and results of operations. In addition, and as noted above,
fluctuations in economic conditions internationally can also affect the
Company's revenues and operating results indirectly to the extent significant
customers of the Company (or industry segments on which the Company is
significantly dependent) are affected by such international fluctuations.
Gross margin. Gross margin percentage was 44.1% for the three months ended
September 26, 1998 compared to 42.4% for the three months ended September 27,
1997. The increase in gross margin percentage for the three months ended
September 26, 1998 was attributable primarily to increased sales of higher
margin software products, and to a lesser extent, to lower cost of sales on
product revenue. The Company expects to continue to experience quarterly
fluctuations in its gross margin percentage due to changes in its sales and
product mix.
Research, Development and Engineering. Research, development and engineering
expenses increased by 3.7% to $2.5 million or 12.2% of net revenues for the
three months ended September 26, 1998 from $2.4 million or 9.2% of net revenues
for the three months ended September 27, 1997. The increase in the three month
period was primarily due to increases in facilities expenses and depreciation on
capital equipment. Research, development and engineering expenses for the three
months ended September 26, 1998 were partially offset by $143,000 of third party
development funding as compared with $165,000 of third party development funding
for the three months ended September 27, 1997. The Company expects that it will
continue to receive third party development funding from the government as well
as other third parties during fiscal 1999. There can be no assurance, however,
that any funds budgeted by the government or other third parties for the
Company's development projects will not be curtailed or eliminated at any time.
Research, development and engineering expenses as a percentage of net revenues
fluctuated due to the relative decline in the level of net revenues in the three
months ended September 26, 1998 as compared to the same period in the prior
year.
Selling, General and Administrative. Selling, general and administrative
expenses decreased 14.0% to $5.7 million or 28.0% of net revenues for the three
months ended September 26, 1998, as compared with $6.6 million or 25.3% of net
revenues for the three months ended September 27, 1997. The decreased level of
spending for the three months ended September 26, 1998 was primarily
attributable to lower headcount and compensation related expenses including
commissions, and to a lesser extent, foreign currency gains on balance sheet
remeasurement and the closure of the Company's Japan office. Selling, general
and administrative expenses as a percentage of net revenues fluctuated due to
the relative decline in the level of net revenues in the three months ended
September 26, 1998 as compared to the same period in the prior year. The Company
expects that selling, general and administrative expenses will continue to
fluctuate as a percentage of net revenues.
Interest Income, Net. Interest income, net for the three months ended September
26, 1998 was $215,000, compared to $256,000 for the three months ended September
27, 1997. The decrease in net interest income was due to a higher concentration
of tax advantaged investments yielding lower gross interest income in the first
quarter of fiscal 1999.
Provision for Income Taxes. The Company's effective tax rate for the three month
periods ended September 26, 1998 and September 27, 1997 was 40%.
10
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ADEPT TECHNOLOGY, INC.
Derivative Financial Instruments. The Company's product sales are predominantly
denominated in U.S. dollars. However, certain international operating expenses
are predominately paid in their respective local currency. The Company generally
does not hedge its exposure to foreign currency exchange risk on local
operational expenses and revenues. Although the Company believes that unhedged
risk associated with foreign currency fluctuations for those transactions have
not been material to date, there can be no assurance that such risk will not
become material in the future or that the Company will not incur foreign
exchange transaction losses which will have an adverse effect on the Company's
results of operations. The Company makes yen-denominated purchases of certain
components and mechanical subsystems from Japanese suppliers. Based on the
amount of such purchases, current exchange rate fluctuations would not typically
be expected to result in material unfavorable foreign exchange transactions
included in cost of revenues. From time to time, the Company manages the
currency risk associated with the yen-denominated purchases using forward rate
currency contracts.
Liquidity and Capital Resources
As of September 26, 1998, the Company had working capital of approximately $43.8
million, including $8.5 million in cash and cash equivalents and $12.2 million
in short-term investments.
The Company's cash requirements during the three months ended September 26, 1998
were met primarily through cash provided by operations. Cash, cash equivalents
and investments decreased $188,000 from June 30, 1998, primarily as a result of
$1.7 million of cash used in financing activities including $1.9 million of cash
used to repurchase common stock, and to a lesser extent, to $882,000 of capital
expenditures, offset by $2.4 million of cash generated from operating
activities. Net cash provided by operating activities was primarily attributable
to net income adjusted by depreciation and amortization, and decreased accounts
receivable and inventory.
The Company currently anticipates capital expenditures of approximately $3.5
million during fiscal 1999, including approximately $800,000 for test fixtures,
tooling and other factory investments, approximately $600,000 for MIS equipment
and approximately $2.1 million for laboratory and other equipment. Included in
the MIS expenditures are costs associated with an enterprise resource planning
software system which is intended in part to address issues concerning Year 2000
compliance with the Company's internal MIS systems. This system, if successfully
implemented, is expected to make the Company compliant in regards to Year 2000.
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.
FACTORS AFFECTING FUTURE OPERATING RESULTS
FLUCTUATING OPERATING RESULTS
The Company's operating results have been historically 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
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 purchased from
third party vendors and higher margin software products.
11
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ADEPT TECHNOLOGY, INC.
The Company's operating results may also be affected by general economic and
other conditions affecting the timing of customer orders and capital spending.
For example, the Company's operations during the third and fourth quarters of
fiscal 1998 and the first quarter of fiscal 1999 were adversely affected by a
continuing downturn in hardware purchases by customers in the electronics
industry, particularly disk-drive and telecommunication manufacturers. In
connection with that downturn, the Company was forced to affect a restructuring
program in the fourth quarter of fiscal 1998. The Company can not estimate when
or if a revival in these key hardware markets will occur. 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 fiscal 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 fiscal period, due for example to product development delays or to
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 fiscal period are below expected levels,
the Company's business, financial condition and results of operations for such
fiscal period could be materially adversely affected. In addition, in the event
that in some future fiscal quarter the Company's net revenues or operating
results were below the expectations of public market analysts and investors, the
price of the Company's common stock could be materially adversely affected.
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.
SEASONALITY IN ORDERS
The Company has experienced and is expected to continue to experience
seasonality in product bookings. The Company has historically had higher
bookings for its products during the June quarter of each fiscal year and lower
bookings during the September quarter of each fiscal year, due primarily to the
slowdown in sales to European markets. In the past, the Company has generally
been able to maintain revenue levels during the September fiscal quarter by
filling backlog from the June fiscal quarter. In the event bookings for the
Company's products in the June fiscal quarter were lower than anticipated and
the Company's backlog at the end of the June fiscal quarter was insufficient to
compensate for lower bookings in the September fiscal quarter, the Company's
results of operations for the September fiscal quarter and future quarters could
be materially adversely affected. For example, as a result of reduced product
bookings in the quarters ending June 30, 1998 and September 26, 1998, net
revenues fell in the quarter ended September 26, 1998. In addition, during
fiscal 1998 as a whole, the Company's revenues were adversely affected by a
decline in orders from customers in the disk-drive and telecommunications
markets. The Company also believes that backlog is not a useful measure of
anticipated activity or future revenues, because the orders constituting the
Company's backlog are subject to changes in delivery schedules and in certain
instances are subject to cancellation without significant penalty by the
customer.
In addition, a significant percentage of the Company's product shipments occur
in the last month of each fiscal quarter. Historically, this has been due in
part, at times, to an inability of the Company to forecast the level of demand
for the Company's products or of the product mix for a particular fiscal
quarter. To address this problem the Company periodically stocks inventory
levels of completed robots, machine controllers and certain strategic
components. If shipments of the Company's products fail to meet forecasted
levels, the increased inventory levels could have a material adverse effect on
the Company's business, financial condition and results of operations.
CYCLICALITY OF CAPITAL SPENDING
Intelligent automation systems utilizing the Company's products can range in
price from $75,000 to several million dollars. Accordingly, the Company's
success is directly dependent upon the capital expenditure budgets of its
customers. The Company's future operations may be subject to substantial
fluctuations as a consequence of domestic and foreign economic conditions,
industry patterns and other factors affecting capital spending. Although the
majority of the Company's international customers are not in the Asian-Pacific
region, the Company believes that continuing instability in the Asian-Pacific
economies could also have a material adverse effect on the results of the
Company's operations as a result of a reduction in sales by the Company's
customers to those
12
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ADEPT TECHNOLOGY, INC.
markets. Domestic or international recessions or a downturn in one or more of
the Company's major markets, such as the electronics, telecommunications,
appliances, pharmaceutical, food processing or automotive components industries,
and resulting cutbacks in capital spending would have a direct, material adverse
impact on the Company's business, financial condition and results of operations.
SOLE OR SINGLE SOURCES OF SUPPLY AND LENGTHY PROCUREMENT LEAD TIMES
The Company obtains many key components and materials and some significant
mechanical subsystems from sole or single source suppliers with whom the Company
has no guaranteed supply arrangements. In addition, certain of the sole or
single sourced components and mechanical subsystems incorporated into the
Company's products have long procurement lead times. The Company's reliance on
sole or single source suppliers involves several significant risks, including
loss of control over the manufacturing process, the potential absence of
adequate supplier capacity, potential inability to obtain an adequate supply of
required components, materials or mechanical subsystems and reduced control over
manufacturing yields, costs, timely delivery, reliability and quality of
components, materials and mechanical subsystems. In the event that any
significant sole or single source supplier was unable or unwilling to
manufacture certain components, materials or mechanical subsystems in required
volumes, the Company would be required to identify and qualify acceptable
replacements. The process of qualifying suppliers may be lengthy, and there can
be no assurance that any additional sources would be available to the Company on
a timely basis or on acceptable terms. If supplies of such items were not
available from the Company's existing suppliers and a relationship with an
alternative vendor could not be timely developed, shipments of the Company's
products could be interrupted and reengineering of such products could be
required.
The Company has experienced quality control or specification problems with
certain key components provided by sole source suppliers, and has had to design
around the particular flawed item. The Company has also experienced delays in
filling customer orders due to the failure of certain suppliers to meet the
Company's volume and schedule requirements. Certain suppliers of the Company
have also ceased manufacturing components which the Company requires for its
products, and the Company has been required to purchase sufficient supplies for
the estimated life of its product line. There can be no assurance that these
problems will not occur in the future with the Company's suppliers. Disruption
or termination of the Company's supply sources could require the Company to seek
alternative sources of supply, and could delay the Company's product shipments
and damage relationships with current and prospective customers, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. If the Company incorrectly forecasts
product mix for a particular period and the Company is unable to obtain
sufficient supplies of any components or mechanical subsystems on a timely basis
due to long procurement lead times, the Company's business, financial condition
and results of operations could be materially adversely affected. Moreover, if
demand for a product for which the Company has purchased a substantial amount of
components fails to meet the Company's expectations, the Company would be
required to write off the excess inventory, thereby materially adversely
affecting the Company's results of operations. A prolonged inability to obtain
adequate timely deliveries of key components would have a material adverse
effect on the Company's business, financial condition and results of operations.
COMPETITION
The market for intelligent automation products is highly competitive. The
Company competes with a number of robot companies, motion control companies,
machine vision companies and simulation software companies. Some of the
Company's competitors have substantially greater financial, technical, marketing
and other resources than the Company. Although to date the Company's competitors
have not offered a broad range of intelligent automation products, it is
possible that one or more of these competitors may in the future, through
acquisitions or otherwise, offer a more comprehensive line of products which are
competitive with the Company's. In addition, the Company may in the future face
competition from new entrants in one or more of its markets.
Many of the Company's competitors in the robot market are integrated
manufacturers of products that produce robotics equipment internally for their
own use and may also compete with the Company's products for sales to other
customers. Certain of these large manufacturing companies have greater
flexibility in pricing than the
13
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ADEPT TECHNOLOGY, INC.
Company, because they generate substantial unit volumes of robots for internal
demand and may have access through their parent companies to large sources of
capital. There can be no assurance that any of the Company's competitors will
not seek to expand its presence in other markets in which the Company competes.
The Company's principal competitors in the market for motion control systems
include Allen-Bradley Co. ("Allen-Bradley"), a subsidiary of Rockwell
International Corporation, in the United States, and Siemens AG in Europe. In
addition, the Company faces motion control competition from two major suppliers
of motion control boards, Galil Motion Control, Inc. and Delta Tau Data Systems
Inc. These motion control boards are purchased by end users which engineer their
own custom motion control systems. In the simulation software market, the
Company's competitors include Tecnomatix Technologies, Inc., an Israeli company
which sells mostly to major automotive manufacturers and Deneb Robotics Inc., a
subsidiary of Dassault Systemes. In the machine vision market, the Company faces
competition from Cognex Corporation, Robotic Vision Systems, Inc. and
Allen-Bradley.
There can be no assurance that current or potential competitors of the Company
will not develop products comparable or superior in terms of price and
performance features to those developed by the Company or adapt more quickly
than the Company to new or emerging technologies and changes in customer
requirements. In addition, no assurance can be given that the Company will not
be required to make substantial additional investments in connection with its
research, development, engineering, marketing and customer service efforts in
order to meet any competitive threat, or that the Company will be able to
compete successfully in the future. Increased competitive pressure could result
in a loss of sales or market share or cause the Company to lower prices for its
products, any of which could materially adversely affect the Company's business,
financial condition and results of operations.
RAPID TECHNOLOGICAL CHANGE AND NEW PRODUCT DEVELOPMENT
The intelligent automation industry is characterized by rapid technological
change and new product introductions and enhancements. The Company's ability to
remain competitive and its future success will depend in significant part upon
the technological quality of its products and processes relative to those of its
competitors and its ability both to continue to develop new and enhanced
products and to introduce such products at competitive prices and on a timely
and cost-effective basis. There can be no assurance that the Company will be
successful in selecting, developing and manufacturing new products or in
enhancing its existing products on a timely basis or at all, or that such new or
enhanced products will achieve market acceptance. The failure to successfully
select, develop and manufacture new products, or to timely enhance its existing
technologies and meet customers' technical specifications for any new products
or enhancements, or to successfully market new products, could materially
adversely affect the Company's business, financial condition and results of
operations. New technology or product introductions by the Company's competitors
could also cause a decline in sales or loss of market acceptance for the
Company's existing products or force the Company to significantly reduce the
prices of its existing products. The failure of the Company to develop,
manufacture and sell new products in quantities sufficient to offset a decline
in revenues from existing products or to manage product and related inventory
transitions successfully could have a material adverse effect on the Company's
business, financial condition and results of operations. The success of the
Company in developing, introducing, selling and supporting new and enhanced
products depends upon a variety of factors, including timely and efficient
completion of hardware and software design and development, timely and efficient
implementation of manufacturing processes and effective sales, marketing and
customer service. Because of the complexity of the Company's products,
significant delays may occur between a product's initial introduction and
commencement of the Company's volume production. The Company has from time to
time experienced delays in the introduction of, and certain technical and
manufacturing difficulties with, certain of its products and the Company may
experience technical and manufacturing difficulties and delays in future
introductions of new products and enhancements.
The Company's future success will depend on its ability to enhance its existing
products and to develop and introduce, on a timely and cost-effective basis, new
products and enhancements that keep pace with technological developments and
address the needs of its customers. The development and commercialization of new
products involve many risks, including the identification of new product
opportunities, the retention and hiring of
14
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ADEPT TECHNOLOGY, INC.
appropriate research and development personnel, the definition of the product's
technical specifications and the successful completion of the development
process. Other risks would include the successful marketing of the product, the
risk of having customers embrace new technological advances, additional customer
service costs associated with supporting new product introductions and
additional customer service costs required for field upgrades. For example, the
Company is currently in the process of releasing its new AdeptWindows Controller
"AWC." This product includes significant new networking, communications, and
control technology. Due to these technological advances, the AWC substantially
changes how customers interface this product to their work cells and factory
control systems. There can be no assurance that the development of these
products will be completed in a timely manner or that such products will achieve
acceptance in the market. The development of these products has required, and
will require, the Company to expend significant financial and management
resources. If the Company is unable to successfully develop these or other new
products that respond to customer requirements or technological changes, the
Company's business, financial condition and results of operations would be
materially adversely affected.
SOFTWARE DEFECTS
New or existing software products or enhancements may contain errors or
performance problems when first introduced, when new versions or enhancements
are released or even after such products or enhancements have been used in the
marketplace for a period of time. Despite testing by the Company, such defects
may be discovered only after a product has been installed and used by customers.
There can be no assurance that such errors or performance problems will not be
discovered in future shipments of the Company's products. Such errors could
result in expensive and time consuming design modifications or large warranty
charges, damage customer relationships and result in loss of market share, any
of which could have a material adverse effect on the Company's business,
financial condition and results of operations.
RELIANCE ON SYSTEM INTEGRATORS
A substantial portion of the Company's sales are to system integrators that
specialize in designing and building production lines for manufacturers. Many of
these companies are small operations with limited financial resources, and the
Company has from time to time experienced difficulty in collecting payments from
certain of these companies. To the extent the Company is unable to mitigate this
risk of collections from system integrators, the Company's results of operations
may be materially adversely affected. Furthermore, the Company's relationships
with its system integrators are generally not exclusive, and some of these
system integrators may expend a significant amount of effort or give higher
priority to selling products of the Company's competitors. There can be no
assurance that any of these system integrators will not discontinue its
relationship with the Company or form additional competing arrangements with the
Company's competitors. The Company believes that its ability to sell products to
system integrators will continue to be important to the Company's success.
Although to date none of the Company's system integrators has accounted for a
material percentage of the Company's net revenues, the loss of, or a significant
reduction in revenues from, system integrators to which the Company sells a
significant amount of its product could have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
as the Company enters new geographic and applications markets, it must locate
system integrators to assist the Company in building sales in those markets.
There can be no assurance that the Company will be successful in obtaining
effective new system integrators or in maintaining sales relationships with
them. In the event a number of the Company's system integrators experience
financial problems, terminate their relationships with the Company or
substantially reduce the amount of the Company's products they sell, or in the
event the Company fails to build an effective systems integrator channel in any
new markets, the Company's business, financial condition and results of
operations could be materially adversely affected.
INTERNATIONAL SALES AND PURCHASES
Net revenues from international sales, including sales to Canada, have accounted
for a significant portion of the Company's net revenues. In the first quarter of
fiscal year 1999 and in each of the fiscal years 1998, 1997 and
15
<PAGE>
ADEPT TECHNOLOGY, INC.
1996 net revenues from international sales accounted for approximately 47.5%,
40.5%, 35.8% and 39.4%, respectively, of the Company's net revenues. The Company
anticipates that international sales will continue to account for a significant
portion of its net revenues; however, there can be no assurance that
international sales will increase or that the current level of international
sales will be sustained. In addition, the Company currently purchases certain
components and mechanical subsystems from foreign suppliers. The Company's
operating results are subject to the risks inherent in international sales and
purchases, including, but not limited to, various regulatory requirements,
political and economic changes and disruptions, transportation delays, foreign
currency fluctuations, export/import controls, tariff regulations, higher
freight rates, difficulties in staffing and managing foreign sales operations,
greater difficulty in accounts receivable collection and potentially adverse tax
consequences. Duty, tariff and freight costs can materially increase the cost of
crucial components for the Company's products. Foreign exchange fluctuations may
render the Company's products less competitive relative to locally manufactured
product offerings, or could result in foreign exchange losses. In addition,
because substantially all of the Company's foreign sales are denominated in
United States dollars, increases in the value of the dollar relative to the
local currency would increase the price of the Company's products in foreign
markets and make the Company's products relatively more expensive and less price
competitive than competitors' products that are priced in local currencies.
There can be no assurance that these factors will not have a material adverse
effect on the Company's future international sales and, consequently, on the
Company's business, financial condition and results of operations. The Company
anticipates that the recent turmoil in Asian financial markets and the recent
deterioration of the underlying economic conditions in certain Asian countries
may continue to have an impact on its sales to customers located in or whose
projects are based in those countries due to the impact of currency fluctuations
on the relative price of the Company's products and restrictions on government
spending imposed by the International Monetary Fund (the "IMF") on those
countries receiving the IMF's assistance. In addition, customers in those
countries may face reduced access to working capital to fund component
purchases, such as the Company's products, due to higher interest rates, reduced
bank lending due to contractions in the money supply or the deterioration in the
customer's or its bank's financial condition or the inability to access local
equity financing. A substantial majority of the Company's products are sold to
system integrators who incorporate the Company's products into systems sold and
installed to end-user customers. The Company also makes yen-denominated
purchases of certain components and mechanical subsystems from Japanese
suppliers. Depending on the amount of yen-denominated purchases, the Company may
engage in hedging transactions in the future. However, notwithstanding these
precautions, the Company remains subject to the transaction exposures that arise
from foreign exchange movements between the dates foreign currency export sales
or purchase transactions are recorded and the dates cash is received or payments
are made in foreign currencies. There can be no assurance that the Company's
current or any future currency exchange strategy will be successful in avoiding
exchange related losses or that any of the factors listed above will not have a
material adverse effect on the Company's business, financial condition and
results of operations.
COMPLIANCE WITH INTERNATIONAL STANDARDS
The Company's hardware products are required to comply with European Union
("EU") Low Voltage, Electro-Magnetic Compatibility, and Machinery Safety
Directives (laws) in certain European countries, including United Kingdom,
France, Germany and Italy. The EU mandates that the Company's products carry the
CE mark denoting that these products are manufactured in strict accordance to
design guidelines (Standards) in support of these directives. These Standards
can change and are subject to varying interpretation. New Standards impacting
machinery design go into effect each year. To date, the Company has retained TUV
Rheinland to help certify that its VME controller-based products, including
robots, meet applicable EU Directives and Standards. Although the Company's
existing products meet the requirements of the applicable Directives, there can
be no assurance that future products can be designed, within market window
constraints, to meet the future requirements. In the event any of the Company's
robot products or any other major hardware products do not meet the requirements
of the directives, the Company would be unable to legally sell these products in
Europe. The Company's financial condition and results of operations could be
materially adversely affected.
16
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ADEPT TECHNOLOGY, INC.
YEAR 2000 IMPACT ON INFORMATION TECHNOLOGY
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, in approximately one year, computer systems
and/or software used by many companies may need to be upgraded to comply with
such "Year 2000" requirements. Significant uncertainty exists in the software
industry concerning the potential effects associated with such compliance.
In fiscal 1998, the Company commenced a program, to be substantially completed
by the Fall of 1999, to review the Year 2000 compliance status of the software
and systems used in its internal business processes, to obtain appropriate
assurances of compliance from the manufacturers of these products and agreement
to modify or replace all non-compliant products. The Company has contacted its
critical suppliers and major customers to determine whether the products
obtained by the Company from such vendors or sold by the customer to third
parties are Year 2000 compliant. The Company's suppliers and customers are under
no contractual obligation to provide such information to the Company. In
addition, the Company is presently implementing a Year 2000 compliant enterprise
resource planning system from a third-party vendor and is also considering
converting certain of its other software and systems to commercial products that
are known to be Year 2000 compliant. Implementation of software products of
third parties, however, will require the dedication of substantial
administrative and management information resources, the assistance of
consulting personnel from third party software vendors and the training of the
Company's personnel using such systems. Based on the information available to
date, the Company believes it will be able to complete its Year 2000 compliance
review and make necessary modifications prior to the end of 1999. Software or
systems, which are deemed critical to the Company's business, are scheduled to
be Year 2000 compliant by the end of calendar year 1998. Nevertheless,
particularly to the extent the Company is relying on the products of other
vendors to resolve Year 2000 issues, there can be no assurances that the Company
will not experience delays in implementing such products. If key systems, or a
significant number of systems were to fail as a result of Year 2000 problems, or
the Company were to experience delays implementing Year 2000 compliant software
products, the Company could incur substantial costs and disruption of its
business, which would potentially have a material adverse effect on the
Company's business and results of operations.
The Company in its ordinary course of business tests and evaluates its own
software products. The Company believes that its software products are generally
Year 2000 compliant, meaning that the use or occurrence of dates on or after
January 1, 2000 will not materially affect the performance of the Company's
software products with respect to four digit date dependent data or the ability
of such products to correctly create, store, process and output information
related to such date data. To the extent the Company's software products are not
fully Year 2000 compliant, there can be no assurance that the Company's software
products contain all necessary software routines and codes necessary for the
accurate calculation, display, storage and manipulation of data involving dates.
To the extent that the Company's products are sold through system integrators or
other third parties, there can be no assurances that users of the Company's
products will not experience Year 2000 problems as a result of the integration
of the Company's software with noncompliant Year 2000 products of such third
party suppliers. In addition, in certain circumstances, the Company has
warranted that the use or occurrence of dates on or after January 1, 2000 will
not adversely affect the performance of the Company's products with respect to
four digit date dependent data or the ability to create, store, process and
output information related to such data. If any of the Company's licensees
experience Year 2000 problems, such licensees could assert claims for damages
against the Company.
To date the Company has not identified a complete and separate budget for
investigating and remedying issues related to Year 2000 compliance whether
involving the Company's own software products or the software of systems used in
its internal operations. The Company has incurred costs of approximately $2.6
million and expects to incur in total, approximately $2.8 million in connection
with its implementation of a new enterprise resource planning software system,
which is Year 2000 compliant. Additionally, the Company has currently not
developed a contingency plan related to Year 2000. There can be no assurances
that the Company's resources spent on investigating and remedying Year 2000
compliance issues will not have a material adverse effect on the Company's
business, financial condition and results of operations.
17
<PAGE>
ADEPT TECHNOLOGY, INC.
INTRODUCTION OF SINGLE EUROPEAN CURRENCY
The Company is in the process of addressing the issues raised by the
introduction of the Single European Currency (the "Euro") as of January 1, 1999
and transition to full adoption as of January 1, 2002. The Company expects that
its internal systems that will be affected by the initial introduction of the
Euro will be Euro capable by January 1, 1999, provided the Company's new
enterprise resource planning system is implemented as expected, and does not
expect the costs of system modifications to be material. The Company does not
presently expect that the introduction and use of the Euro will materially
affect the Company's foreign exchange and hedging activities, or the Company's
use of derivative instruments, or will result in any material increase in costs
to the Company. While the Company will continue to evaluate the impact of the
Euro introduction over time, based on currently available information,
management does not believe that the introduction of the Euro currency will have
a material adverse impact on the Company's financial condition or overall trends
in results of operations.
PROPRIETARY TECHNOLOGY AND INTELLECTUAL PROPERTY
The Company relies on a combination of patent, copyright and trade secret
protection and nondisclosure agreements to protect its proprietary rights. There
can be no assurance, however, that patent and copyright law and trade secret
protection will be adequate to deter misappropriation of its technology, that
any patents issued to the Company will not be challenged, invalidated or
circumvented, that the rights granted thereunder will provide competitive
advantages to the Company, or that the claims under any patent application will
be allowed. Furthermore, there can be no assurance that others will not
independently develop similar products, duplicate the Company's products or
design around any patents issued to the Company. The Company may be subject to
or may initiate interference proceedings in the United States Patent and
Trademark Office, which can demand significant financial and management
resources. The process of seeking patent protection can be time consuming and
expensive and there can be no assurance that patents will issue from currently
pending or future applications or that the Company's existing patents or any new
patents that may be issued will be sufficient in scope or strength to provide
meaningful protection or any commercial advantage to the Company. In addition, a
substantial amount of the Company's sales are in international markets and there
can be no assurance that foreign intellectual property laws will adequately
protect the Company's intellectual property rights.
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. As claims arise, the Company evaluates their merits. No assurance
can be given that any of these claims will not result in protracted and costly
litigation, that damages for infringement will not be assessed or that should it
be necessary or desirable to obtain a license relating to one or more of the
Company's products or current or future technologies, the Company will be able
to do so on commercially reasonable terms or at all. Litigation, which could
result in substantial cost to and diversion of resources of the Company, may be
necessary to enforce patents or other intellectual property rights of the
Company or to defend the Company against claimed infringement of the rights of
others. Any such litigation and the failure to obtain necessary licenses or
other rights could have a material adverse effect on the Company's business,
financial condition and results of operations. In particular, some end users of
the Company's products have notified the Company that they have received a claim
of patent infringement from the Jerome H. Lemelson Foundation, alleging that its
use of the Company's machine vision products infringes certain patents issued to
Mr. Lemelson. In addition, the Company has been notified that other end users of
the Company's AdeptVision VME line and the predecessor line of Multibus machine
vision products have received letters from Mr. Lemelson which refer to Mr.
Lemelson's patent portfolio and offer the end user a license to the particular
patents. Certain end users have notified the Company that they may seek
indemnification from the Company for damages or expenses resulting from this
matter. The Company cannot predict the outcome of this or any similar litigation
which may arise in the future, and although such products have not represented a
material portion of the Company's net revenues in fiscal 1999, 1998, 1997 and
1996, there can be no assurance that such litigation will not have a material
adverse effect on the business, financial condition or results of operations of
the Company.
18
<PAGE>
ADEPT TECHNOLOGY, INC.
PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's 1998 Annual Meeting of Shareholders on November 5, 1998, the
shareholders approved the following actions:
a) Election of six (6) directors to serve until the next Annual Meeting of
Shareholders or until their successors are duly elected and qualified:
Brian R. Carlisle: For: 7,907,571 Withheld: 78,274
Bruce E. Shimano: For: 7,911,349 Withheld: 74,496
Michael P. Kelly: For: 7,908,264 Withheld: 77,581
Ronald E.F. Codd For: 7,903,214 Withheld: 82,631
Cary R. Mock: For: 7,907,883 Withheld: 77,962
John E. Pomeroy: For: 7,906,638 Withheld: 79,207
b) Approval of (i) adoption of the 1998 Employee Stock Purchase Plan, (ii)
reservation of 600,000 shares of Common Stock for issuance thereunder and
(iii) an annual increase in the number of shares of Common Stock reserved
for issuance thereunder, beginning on July 1, 1999, in an amount equal to
the lesser of (x) 300,000 shares, (y) 3.0% of Common Stock outstanding as
of the last day of the prior fiscal year or (z) such amount as may be
determined by the Board of Directors.
For: 3,987,581 Against: 615,551 Abstain: 35,115
c) Ratification of the appointment of Ernst & Young LLP as independent
auditors for the Company for the fiscal year ending June 30, 1999.
For: 7,943,927 Against: 18,113 Abstain: 23,803
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 26, 1998.
19
<PAGE>
ADEPT TECHNOLOGY, INC.
SIGNATURES
<TABLE>
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.
<CAPTION>
ADEPT TECHNOLOGY, INC.
<S> <C> <C>
Date: November 10, 1998 By: /s/ Brian R. Carlisle
---------------------------------------------------------
Brian R. Carlisle
Chairman of the Board and Chief Executive Officer
Date: November 10, 1998 By: /s/ Betsy A. Lange
---------------------------------------------------------
Betsy A. Lange
Vice President of Finance and Chief Financial Officer
20
</TABLE>
<PAGE>
ADEPT TECHNOLOGY, INC.
INDEX TO EXHIBITS
SEQUENTIALLY
NUMBERED
EXHIBITS PAGE
- --------------------------------------------------------------------------------
27.1 Financial Data Schedule. 22
21
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 26, 1998 AND THE CONDENSED
CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 26, 1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-26-1998
<CASH> 8,529
<SECURITIES> 12,186
<RECEIVABLES> 19,842
<ALLOWANCES> 549
<INVENTORY> 14,487
<CURRENT-ASSETS> 59,207
<PP&E> 22,656
<DEPRECIATION> 16,495
<TOTAL-ASSETS> 66,945
<CURRENT-LIABILITIES> 15,388
<BONDS> 0
0
0
<COMMON> 48,864
<OTHER-SE> 2,693
<TOTAL-LIABILITY-AND-EQUITY> 66,945
<SALES> 20,197
<TOTAL-REVENUES> 20,197
<CGS> 11,296
<TOTAL-COSTS> 19,426
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1
<INCOME-PRETAX> 986
<INCOME-TAX> 394
<INCOME-CONTINUING> 592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 592
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
