<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A-4
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 [FEE REQUIRED] OR [ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM _________ TO
_________.
COMMISSION FILE NUMBER: 0-20206
PERCEPTRON, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Michigan 38-2381442
(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
47827 Halyard Drive
Plymouth, Michigan 48170-2461
(313) 414-6100
(Registrant's telephone number, including area code)
Securities registered pursuant to section 12(b) of the act: None
Securities registered pursuant to section 12(g) of the act:
COMMON STOCK, $0.01 PAR VALUE
(TITLE OF CLASS)
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.
---- ----
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, indefinitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of the Common Stock on March
14, 1996, as reported by The Nasdaq Stock Market, was approximately
$136,752,397 (assuming, but not admitting for any purpose, that all directors
and executive officers of the registrant are affiliates).
The number of shares of Common Stock, $0.01 par value, issued and
outstanding as of March 14, 1996 was: 6,792,454.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
1
<PAGE> 2
The Company has related its financial statements to reflect the effects
of a non-cash compensation expense. Beginning in late 1994, some participants in
the Company's stock option plan used Perceptron stock options to pay the
exercise price of stock options issued under the plan. The Company was
advised by its independent accounting firm that generally accepted accounting
principles (GAAP) require the recording of a non-cash compensation expense
relating to the certain option exercises during 1996 and 1995. See Note 2 to
the financial statements.
ITEM 6: SELECTED CONSOLIDATED FINANCIAL INFORMATION
PERCEPTRON, INC. AND SUBSIDIARIES
(In thousands, except per share data)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------
Statement of Operations Data: 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
(as restated)
<S> <C> <C> <C> <C> <C>
Net sales $37,291 $27,835 $17,022 $14,462 $ 12,638
Gross profit 23,116 16,807 10,045 8,528 7,307
Write-off of intangible assets -- -- -- -- 2,011
Income from operations 7,388 5,720 2,907 2,267 37
Net income (loss) 8,409 5,839 2,702 1,824 (398)
Net income (loss) per weighted
average common and common
equivalent share (1) $ 1.16 $ .83 $ .45 $ .37 $ (.38)
Weighted average common and
common equivalent shares (1) (2) 7,258 6,998 5,973 4,908 1,044
<CAPTION>
As of December 31,
------------------------------------------
Balance Sheet Data: 1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Working capital $27,831 $18,620 $12,605 $ 6,555 $ 3,461
Total assets 38,581 24,507 16,138 8,966 7,547
Long term debt, net of current
portion -- -- -- -- 4,390
Redeemable convertible
preferred stock -- -- -- -- 19,407
Shareholders' equity (deficit) 30,358 19,737 13,451 7,251 (19,649)
</TABLE>
(1) No cash dividends have been declared or paid during the periods
presented. The Company's Board of Directors announced a three-for-two
stock split of the Company's Common Stock which was effected in the form
of a stock dividend payable on November 30, 1995 to shareholders of record
on November 20, 1995. All reported historical information has been
adjusted accordingly to reflect the impact of this stock split.
(2) Shares of redeemable convertible preferred stock were excluded from
weighted average common shares for the year ended December 31, 1991
because the inclusion of such shares would have been antidilutive.
2
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ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The Company's Board of Directors announced a three-for-two stock split of
the Company's common stock which was effected in the form of a stock dividend
payable on November 30, 1995 to shareholders of record on November 20, 1995.
All reported historical information has been adjusted accordingly to reflect
the impact of this stock split.
OVERVIEW
Perceptron, Inc. ("Perceptron" or the "Company") was founded in September
1981, and operated as a development stage company through 1982. From 1983
through 1987, the Company continued to incur significant product development
expenses as it redesigned and modified the initial triangulation based
three-dimensional machine vision system using laser technology in response to
customer input. The Company commenced production and shipment of its initial
products in 1984. In early 1988, the Company introduced its second-generation
(DataCam) system, and in late 1993, released the third-generation (TriCam)
version of its three-dimensional machine vision system. The Company also
offers its proprietary LASAR based three-dimensional machine vision system,
which employs laser radar technology and generates three-dimensional images
over a larger field of view than do TriCam based systems.
The Company's products have been sold primarily to North American,
European and Asian automobile manufacturers. Sales to automotive customers
typically depend on new model re-tooling programs. Accordingly, sales may vary
significantly among customers on a year-to-year and quarter-to-quarter basis.
RESULTS OF OPERATIONS
Year Ended December 31, 1995, Compared to Year Ended December 31, 1994
Net Sales. Net sales, which are substantially all attributable to the
automotive market, consist of product sales together with training and service
revenue. The Company's net sales increased by 34% from $27.8 million in 1994
to $37.3 million in 1995. Net sales in the North American market increased
slightly from $24.2 million in 1994 to $24.3 million in 1995. Net sales in the
European and Asian markets increased from $3.6 million in 1994 to $13.0 million
in 1995, as a result of increased demand from the European and Asian automotive
industry.
The P-1000 system accounted for 80% of net sales in 1994 and 79% of net
sales in 1995. The RGS and NCA systems combined accounted for 12% and 14% of
net sales in 1994 and 1995, respectively. Training and service revenues
accounted for less than 10% of net sales in both years.
New order bookings for 1994 totaled $30.9 million, compared to $42.3
million in 1995. North American orders were up from $25.5 million in 1994 to
$29.4 million in 1995 and European and Asian orders were up from $5.4 million
in 1994 to $12.9 million in 1995. The P-1000 systems accounted for 78% of new
order bookings in 1994 and 76% in 1995.
Gross profit. Gross profit increased from $16.8 million in 1994 to $23.1
million in 1995, and as a percentage of net sales gross profit increased from
60.4% in 1994 to 62.0% in 1995. The Company charged cost of sales for
increased reserves for obsolete inventory by $340,000 in 1994 and $125,000 in
1995. Without these charges, gross profit for 1994 and 1995 would have been
61.6% and 62.3%, respectively.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased by 36% from $7.3 million in 1994 to $9.9
million in 1995. This increase is due primarily to increases in personnel and
various operating expenses required to support the increased 1995 operating
activity and, to a lesser extent, to increased management performance bonuses.
The Company's 1995 selling, general and administrative expenses included a
charge of $325,000 for to stock option compensation expense related to the 1993
grants of performance based stock options, compared to a charge of $390,000 in
1994. As a percentage of net sales, selling, general and administrative
expenses increased slightly from 26.2% in 1994, to 26.5% in 1995.
3
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Engineering, research and development. Engineering, research and
development expenses increased by 17%, from $3.8 million in 1994, to
approximately $4.5 million in 1995, due primarily to increased personnel and,
to a lesser extent, to increased expenditures for materials associated with
products under development. The expenses in 1994 included a one-time charge of
$160,000 for costs incurred in connection with a customer specific development
project, as well as one-time redesign costs of $85,000. Without these one-time
1994 costs, engineering, research and development costs would have increased by
25% in 1995 as compared to 1994. As a percentage of net sales, engineering,
research and development expenses decreased from 13.7% in 1994 to 12% in 1995
principally due to the higher sales base and, to a lesser extent, to the one
time charges and costs in 1994.
Non-cash stock compensation expense. Beginning in late 1994, some
participants in the Company's stock option plan used Perceptron stock options
to pay the exercise price of stock options issued under the plan. The Company
was advised that accounting rules require the recording of a non-cash
compensation expense relating to certain of these exercises during 1995. See
Note 2 to the Consolidated Financial Statements for further information.
The Company has restated its financial statements for 1995 to record
non-cash stock compensation expense, including $1.4 million before tax, or net
of taxes, of $895,000. The effect of these non-cash stock compensation charges
on net-income for fiscal 1995 was a reduction of $.12 per share.
Interest income, net. Interest income, net, increased from approximately
$119,000 in 1994 to $539,000 in 1995, due to increased cash balances and
related investing activities during 1995.
Net income. In 1994, Perceptron had net income of approximately $5.8
million representing 21.0% of net sales, or $0.83 per share based on 7.0
million shares, as compared to 1995 net income of approximately $8.4 million
representing 22.5% of net sales, or $1.16 per share on 7.3 million shares.
During 1995, there was a tax benefit for U.S. federal income taxes in the
Consolidated Statement of Income. See Note 8 to the Consolidated Financial
Statements, "Income Taxes".
The Company has elected not to adopt SFAS No. 123 "Accounting for Stock
Based Compensation" and will comply with the disclosure provisions of SFAS No.
123 for the year ended December 31, 1996.
Year Ended December 31, 1994, Compared to Year Ended December 31, 1993
Net Sales. Net sales, which are substantially all attributable to the
automotive industry, consist of product sales together with training and
service revenues. The Company's net sales increased from $17.0 million in 1993
to $27.8 million in 1994, an increase of approximately 64%. This increase was
primarily attributable to increased sales to North American automotive assembly
companies. The increase in North America is principally attributable to an
increased level of customer awareness of the benefits of the Company's
products, and increased sales of the P-1000 system into new vehicle re-tooling
programs. The increase is, to a lesser extent, attributable to the successful
introduction of a new product (NCA), and new software that provided additional
applications for all existing products. Sales in Europe and Asia increased
from $2.4 million in 1993 to $3.6 million in 1994. This increase was coupled
with an increase in sales in North America from $14.6 million in 1993 to $24.2
million in 1994. The aggregate training and service revenues in both 1994 and
1993 was less than 10% of total net sales.
Gross Profit. Gross profit increased from $10.0 million in 1993 to $16.8
million in 1994. As a percentage of sales, gross profit increased from 59.0%
in 1993 to 60.4% in 1994. This increase reflects reduced material costs for
the TriCam sensors which the Company introduced in late 1993, partially offset
by higher production costs for the period. During 1994, the company increased
its reserve for obsolete inventory by approximately $500,000 for potentially
obsolete parts related to prior generation sensor components, and for systems
that continue to be in late stage development. Of this amount, $340,000 was
charged to cost of goods sold and $160,000 was charged to research, development
and engineering expense.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $4.9 million in 1993, or 29% of net
sales, to $7.3 million or 26% of net sales in 1994. The increase was
principally due to various operating expense increases required to support the
increased operating activity in 1994 and the planned increased operating
activity in 1995, and to a lesser extent, due to performance incentive bonuses
and stock option compensation expense. The Company's selling, general and
administrative expenses
4
<PAGE> 5
for 1995 through 1998 will be affected by a non-cash charge for additional stock
option compensation expense to be recognized during these periods relating to
1993 grants of performance-based stock options. The Company recognized a charge
of approximately $390,000 in 1994. This expense relates to performanced-based
options for 244,500 shares granted in 1993 at an average exercise price of
approximately $4.67 per share and which had a market value of approximately
$9.00 per-share on March 2, 1994, the date the performance standards were
removed. The Company estimates that stock option compensation expense for 1995
will be approximately $325,000.
Engineering, Research and Development Expenses. Engineering, research and
development expenses increased from $2.2 million, or 13.1% of net sales in
1993, to $3.8 million, or 13.7% of net sales in 1994. This increase is
primarily due to an increase in the number of engineers, and to a lesser
extent, to a $160,000 reserve related to materials for a customer specific
development project which was in process for over one year and had not met
customer specifications as of December 31, 1994. Additionally, in mid-1993,
research and development expenses were reduced by $191,000 due to the
capitalization of manufacturing and test equipment built primarily by the
Company's engineering department to support the newly introduced TriCam sensor.
In 1994, the Company redesigned this equipment to increase capacity and
performance. The Company capitalized the new version of equipment, which was
primarily outsourced, and recognized an expense of $134,000 relating to the
prior version that was disposed of during the latter part of 1994.
Interest Income (Expense), net. Net interest expense of $21,000 in 1993
compares to $119,000 of net interest income in 1994 due to increased cash
balances and related investing activities during 1994. Other than capital
leases, there were no domestic borrowings during 1994, versus occasional
borrowings against the line of credit during 1993. At December 31, 1994, the
Company's German subsidiary had a short term working capital loan of $0.3
million (0.4 DM million) outstanding under these facilities.
Foreign currency transaction loss. During 1993, the Company incurred a
foreign currency transaction loss of approximately $184,000. The Company
implemented a limited hedging program in mid-1993 and, as a result, incurred no
such loss during 1994. See Note 4 to the Consolidated Financial Statements,
"Commitments".
Net Income. In 1993, Perceptron had net income of approximately $2.7
million, representing 16% of net sales or $.45 per share based 6.0 million
shares, as compared to 1994 net income of approximately $5.8 million
representing 21% of net sales, or $.83 per share based on 7.0 million shares.
Because of the availability of tax loss carry forwards, there is no
provision for income taxes in the Company's statements of income. See Note 7
to the Consolidated Financial Statements, "Income Taxes".
Effective January 1, 1993, the Company adopted SFAS No. 109 "Accounting
for Income Taxes". The adoption of SFAS No. 109 did not have a significant
impact on net income for the year ended December 31, 1994 or 1993.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents as of December 31, 1995 totaled
approximately $15.0 million, as compared with approximately $7.9 million as of
December 31, 1994. This increase was due primarily to net income generated
during 1995, partially offset by increased capital expenditures, and increased
working capital requirements.
The Company has unsecured credit facilities totaling $4.0 million U.S. and
1.0 million DM. These facilities may be used to finance working capital needs
and equipment purchases or capital leases. Any borrowings for working capital
needs will bear interest at the bank's prime rate (8.25% as of March 14, 1996);
any borrowings to finance equipment purchases will bear interest at the bank's
prime rate plus 1/2%. The credit facilities expire on June 30, 1996 unless
canceled earlier by the Company or the bank. As of December 31, 1995,
Perceptron had no outstanding borrowings on these facilities. The Company
expects to renew these credit facilities.
The credit facility requires the Company to maintain a minimum amount of
tangible net worth and a minimum debt to tangible net worth ratio. The
facility also prohibits the Company from paying dividends, acquiring or
retiring any of its capital stock, or incurring any other debt, liens, or
guarantying any third party debt.
5
<PAGE> 6
The Company's working capital increased to $27.8 million at December 31,
1995, from $18.6 million at December 31, 1994. Accounts receivable increased
from $11.7 million as of December 31, 1994 to $14.3 million as of December 31,
1995 primarily as a result of increased sales. The increase of approximately
$0.9 million in inventory is due primarily to an increase in component parts
inventory in preparation for delivery of products to customers during 1996.
The increase in prepaid expenses and deferred tax assets is primarily
attributable to the recognition of a deferred tax asset. The increase of $3.5
million in current liabilities is due primarily to an increase in accounts
payable and accrued expenses relating to the increased operating activity in
1995 and an increase in accrued compensation and stock option expense relating
to 1995 performance bonuses.
The Company does not believe that inflation has had any significant impact
on reported historical operations, and does not expect any significant
near-term inflationary impact.
The Company believes that cash on hand and existing credit facilities will
be sufficient to fund its currently anticipated 1996 cash flow requirements.
The Company expects to expend approximately $2.5 million during 1996 for
capital equipment, although there is no binding commitment to do so.
On March 5, 1996, the Company signed a 15 year lease for a new facility
which the Company expects to be able to occupy in December 1996. This lease is
expected to be accounted for as a capital lease, unless the Company exercises
its option to purchase the facility for approximately $5.4 million on or before
March 31, 1996. The Company intends to exercise this purchase option, and
purchase the facility in December 1996. See Note 3 to the Consolidated
Financial Statements, "Leases".
For a discussion of certain contingencies relating to the Company's
financial position and results of operations, see Note 9 to the Consolidated
Financial Statements, "Contingencies".
6
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ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
Page
------
<S> <C>
Report of Independent Accountants ......................................... 8
Consolidated Financial Statements:
Balance Sheets - December 31, 1995 and 1994 ........................ 9
Statements of Income for the years ended
December 31, 1995, 1994 and 1993 ................................... 10
Statements of Shareholders' Equity
for the years ended December 31, 1995, 1994 and 1993 ............... 11
Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993 ...................................................... 12
Notes to Consolidated Financial Statements ......................... 13-20
</TABLE>
7
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REPORT OF INDEPENDENT ACCOUNTS
To the Board of Directors of
Perceptron, Inc.:
We have audited the accompanying consolidated balance sheets of Perceptron,
Inc. and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, shareholders' equity and cash flows, and
financial statement schedule referred to in item 14a (2) for each of the three
years in the period ended December 31, 1995. These financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express and opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Perceptron, Inc.
and Subsidiaries as of December 31, 1995 and 1994, and the consolidated results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1995 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information required to be included therein.
As discussed in Note 2, the accompanying financial statements have been
restated.
Coopers & Lybrand L.L.P.
Detroit, Michigan
March 14, 1996
8
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PERCEPTRON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
------------------------------
1995 1994
----------- -----------
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $14,990,000 $ 7,917,000
Accounts receivable, net of reserves of $35,000 and $236,000 14,292,000 11,745,000
Inventories, net of reserves of $670,000 and $700,000 4,114,000 3,263,000
Prepaid expenses and deferred tax asset 2,658,000 419,000
----------- -----------
Total current assets 36,054,000 23,344,000
----------- -----------
Property and equipment:
Leased equipment 318,000 318,000
Machinery and equipment 7,696,000 5,800,000
Furniture and fixtures 492,000 389,000
Leasehold improvements 95,000 95,000
Less: Accumulated depreciation and amortization (6,074,000) (5,439,000)
----------- -----------
Total property and equipment 2,527,000 1,163,000
----------- -----------
Total assets $38,581,000 $24,507,000
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Notes payable to a bank $ 0 $ 287,000
Current portion of capital lease obligations 46,000 94,000
Accounts payable 2,070,000 1,692,000
Accrued expenses 3,823,000 1,186,000
Accrued compensation and stock option expense 2,284,000 1,465,000
----------- -----------
Total current liabilities 8,223,000 4,724,000
----------- -----------
Capital lease obligations, net of current portion 0 46,000
----------- -----------
Total liabilities 8,223,000 4,770,000
----------- -----------
Commitments and Contingencies ---- ----
Shareholders' equity:
Preferred Stock, no par value, 1,000,000 shares authorized,
none issued 0 0
Common Stock, $.01 par value; 19,000,000 shares authorized,
6,723,000 and 6,380,000 issued and outstanding at
December 31, 1995 and 1994, respectively 67,000 64,000
Cumulative translation adjustments (474,000) (438,000)
Additional paid-in capital 30,771,000 28,526,000
Retained earnings (deficit) (6,000) (8,415,000)
----------- -----------
Total shareholders' equity 30,358,000 19,737,000
----------- -----------
Total liabilities and shareholders' equity $38,581,000 $24,507,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
9
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PERCEPTRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------
1995 1994 1993
------------- -------------- --------------
(as restated)
<S> <C> <C> <C>
Net sales $ 37,291,000 $ 27,835,000 $17,022,000
Cost of sales 14,175,000 11,028,000 6,977,000
------------- ------------ -----------
Gross profit 23,116,000 16,807,000 10,045,000
------------- ------------ -----------
Selling, general and administrative expense 9,884,000 7,279,000 4,908,000
Engineering, research and development expense 4,467,000 3,808,000 2,230,000
Non-cash stock compensation expense 1,377,000 --- ---
------------- ------------ -----------
Income from operations 7,388,000 5,720,000 2,907,000
------------- ------------ -----------
Interest income (expense), net 539,000 119,000 (21,000)
Foreign currency transaction (loss) ---- ---- (184,000)
------------- ------------ -----------
Income before provision for
federal income taxes $ 7,927,000 $ 5,839,000 $ 2,702,000
Provision (benefit) for federal income taxes (482,000) --- ---
------------- ------------ -----------
Net income $ 8,409,000 $ 5,839,000 $ 2,702,000
============= ============ ===========
Net income per weighted average share $ 1.16 $ 0 .83 $ 0.45
============= ============ ===========
Weighted average common and
common equivalent shares 7,257,784 6,998,380 5,973,502
============= ============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
10
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PERCEPTRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
for the years ended December 31, 1993, 1994 and 1995
<TABLE>
<CAPTION>
Cumulative
Common Stock Foreign
----------------- Currency
Translation
Shares Amount Adjustments
-------------------------------- -----------
<S> <C> <C> <C>
Balances, January 1, 1993 5,249,040 $ 52,000 $ (379,000)
Net Proceeds from Private Placement of Common Stock 450,000 5,000
Stock Options Exercised, net of shares tendered 142,471 1,000
Translation Adjustment on Investment
in Foreign Subsidiaries 13,000
Net Income
--------- -------- -----------
Balances, December 31, 1993 5,841,511 $ 58,000 $(366,000)
--------- -------- -----------
Stock Options Exercised, net of shares tendered 538,708 6,000
Translation Adjustment on Investment
in Foreign Subsidiaries (72,000)
Net Income
--------- -------- -----------
Balances, December 31, 1994 6,380,219 $ 64,000 $ (438,000)
--------- -------- -----------
Stock Options Exercised, net of shares tendered 342,560 3,000
Tax benefit of non-qualified stock
options exercised
Benefit of previously recorded stock option
compensation expense attributable to options exercised
Non-cash stock compensation expense
attributable to options exercised
Translation Adjustment on Investment
in Foreign Subsidiaries (36,000)
Net Income
--------- -------- -----------
Balances, December 31, 1995 6,722,779 $ 67,000 $ (474,000)
========= ======== ===========
<CAPTION>
Additional Retained Total
Paid-In Earnings Shareholders'
Capital (Deficit) Equity
---------------- ------------ -------------
<S> <C> <C> <C>
Balances, January 1, 1993 $ 24,534,000 $ (16,956,000) $ 7,251,000
Net Proceeds from Private Placement of Common Stock 3,389,000 3,394,000
Stock Options Exercised, net of shares tendered 90,000 91,000
Translation Adjustment on Investment
in Foreign Subsidiaries 13,000
Net Income 2,702,000 2,702,000
------------- ------------- -----------
Balances, December 31, 1993 $28,013,000 $(14,254,000) $13,451,000
------------- ------------ -----------
Stock Options Exercised, net of shares tendered 513,000 519,000
Translation Adjustment on Investment
in Foreign Subsidiaries (72,000)
Net Income 5,839,000 5,839,000
------------- ------------ -----------
Balances, December 31, 1994 $ 28,526,000 $ (8,415,000) $19,737,000
------------- ------------ -----------
Stock Options Exercised, net of shares tendered 591,000 594,000
Tax benefit of non-qualified stock
options exercised 150,000 150,000
Benefit of previously recorded stock option
compensation expense attributable to options exercised 127,000 127,000
Non-cash stock compensation expense
attributable to options exercised 1,377,000 1,377,000
Translation Adjustment on Investment
in Foreign Subsidiaries (36,000)
Net Income 8,409,000 8,409,000
------------- ------------ -----------
Balances, December 31, 1995 $ 30,771,000 $(6,000) $30,358,000
============= ============ ===========
(as restated) (as restated)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
11
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PERCEPTRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------------------------------
1995 1994 1993
------------- ------------- -----------
(as restated)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 8,409,000 $ 5,839,000 $ 2,702,000
------------- ------------ -----------
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization 635,000 458,000 317,000
Disposal of fixed assets ---- 134,000 ----
Foreign currency transaction loss ---- ---- 184,000
Non-cash stock compensation 1,377,000 ---- ----
Changes in operating assets and liabilities:
Accounts receivable (2,645,000) (2,833,000) (4,092,000)
Inventories (851,000) (887,000) (773,000)
Prepaid expenses and deferred tax asset (2,239,000) (164,000) (94,000)
Accounts payable 378,000 267,000 451,000
Accrued expenses 3,583,000 1,356,000 536,000
Deferred revenue ---- 175,000 ----
------------- ------------ -----------
Total adjustments 238,000 (1,494,000) (3,471,000)
------------- ------------ -----------
Net cash provided by (used in) operating activities 8,647,000 4,345,000 (769,000)
------------- ------------ -----------
Cash flows (used in) investing activities:
Capital expenditures (1,999,000) (738,000) (390,000)
------------- ------------ -----------
Net cash (used in) investing activities (1,999,000) (738,000) (390,000)
------------- ------------ -----------
Cash flows from financing activities:
Principal payments under capital leases (94,000) (103,000) (72,000)
Proceeds from issuance of short-term debt ---- 287,000 2,700,000
Principal payments on short-term debt (287,000) ---- (2,700,000)
Proceeds from the private placement of common stock,
net of expenses ---- ---- 3,394,000
Proceeds from the exercise of stock options 594,000 519,000 91,000
Tax benefit of non-qualified options exercised 150,000 ---- ----
------------- ------------ -----------
Net cash provided by financing activities 363,000 703,000 3,413,000
------------- ------------ -----------
Effect of exchange rates on cash and cash equivalents 62,000 36,000 (32,000)
------------- ------------ -----------
Net increase in cash and cash equivalents 7,073,000 4,346,000 2,222,000
Cash and cash equivalents, beginning of year 7,917,000 3,571,000 1,349,000
------------- ------------ -----------
Cash and cash equivalents, end of year $ 14,990,000 $ 7,917,000 $ 3,571,000
============= ============ ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for interest expense $ 28,000 $ 23,000 $ 24,000
============= ============ ===========
Non-cash transactions:
Equipment acquired under capital leases $ 0 $ 101,000 $ 57,000
============= ============ ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
12
<PAGE> 13
PERCEPTRON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
OPERATIONS
Perceptron, Inc. and its wholly-owned subsidiaries (the "Company") are
collectively involved in the design, development, manufacture, and marketing of
three-dimensional machine vision systems which are used primarily in the
automotive industry, and to a lesser extent, in other industries.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
CURRENCY TRANSLATION
The financial statements of the Company's wholly-owned foreign
subsidiaries have been translated in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 52, with the functional currency being the
local currency in the foreign country. Under this standard, translation
adjustments are accumulated in a separate component of shareholders' equity.
Gains and losses on foreign currency transactions are included in the
consolidated statement of income.
THREE-FOR-TWO-STOCK SPLIT
The Company's Board of Directors announced a three-for-two stock split of
the Company's Common Stock which was effected in the form of a stock dividend
payable on November 30, 1995 to shareholders of record on November 20, 1995.
All reported historical information has been adjusted accordingly to reflect
the impact of this stock split.
CONCENTRATION OF CREDIT RISK
The Company markets and sells its products primarily to automotive
assembly companies and to system integrators or original equipment
manufacturers, who in turn sell to automotive assembly companies. The
Company's accounts receivable are principally from a small number of large
customers. The Company performs ongoing credit evaluations of its customers.
To date, the Company has not experienced any significant losses related to the
collection of accounts receivable.
A significant portion of the Company's cash and cash equivalents were on
deposit at one bank as of December 31, 1995.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
13
<PAGE> 14
INVENTORY
Inventory is stated at the lower of cost or market. The cost of inventory
is determined by the first-in, first-out (FIFO) method. Inventory, net of
reserves, is comprised of the following:
<TABLE>
<CAPTION>
December 31,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Component parts $3,022,000 $1,427,000
Work in process 641,000 1,341,000
Finished goods 451,000 495,000
---------- ----------
Total $4,114,000 $3,263,000
========== ==========
</TABLE>
PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost. Depreciation related to
leased equipment, machinery and equipment, and furniture and fixtures is
computed on a straight-line basis over estimated useful lives ranging from
three to five years. Leasehold improvements are amortized over the term of the
lease or estimated useful life, whichever is shorter.
When properties are retired, the costs of such properties and related
accumulated depreciation or amortization are eliminated from the respective
accounts, and the resulting gain or loss is reflected in the consolidated
statement of income.
REVENUE RECOGNITION
The Company's products are generally configured to customer
specifications. Certain customers may require a demonstration of the system
prior to shipment. At the time of satisfactory demonstration, a written
customer acceptance is completed. Revenue is recognized upon the earlier of
written customer acceptance or shipment of the product to the customer.
RESEARCH AND DEVELOPMENT
Research and development costs, including software development costs, are
expensed as incurred.
NET INCOME PER SHARE
Net income per common and common equivalent share is calculated based upon
the weighted average number of shares of Common Stock outstanding, adjusted for
the dilutive effect of stock options and warrants, using the treasury stock
method. The dilutive effect of convertible shares held by a minority
shareholder of a foreign subsidiary has also been included in the calculation
of net income per share up to June 23, 1994, at which time these shares were
converted into Common Stock of the Company.
CASH AND CASH EQUIVALENTS
In accordance with SFAS No. 95, the Company considers all highly liquid
investments purchased with maturities of three months or less to be cash
equivalents.
RECLASSIFICATIONS
Certain 1994 and 1993 amounts have been reclassified to conform to the
1995 presentation.
ACCOUNTING FOR STOCK BASED COMPENSATION
The Company has elected not to adopt SFAS No. 123 "Accounting for Stock
Based Compensation", and will comply with the disclosure provisions of SFAS No.
123 for the year ended December 31, 1996.
2. NON-CASH STOCK COMPENSATION EXPENSE
Beginning in late 1994, some participants in the Company's stock option
plan used Perceptron stock options to pay the exercise price of stock options
issued under the plan. The Company was advised by its
14
<PAGE> 15
independent accounting firm that generally accepted accounting principles (GAAP)
require the recording of a non-cash compensation expense relating to certain
option exercises during 1996 and 1995.
The Company has restated its financial statements to record non-cash stock
compensation expense, net of taxes, of $895,000 in the third quarter of fiscal
1995. The effect of this non-cash stock compensation charge on net income for
fiscal 1995 was a reduction of $.12 per share.
3. CREDIT FACILITY:
The Company has unsecured credit facilities totaling $4.0 million U.S. and
1.0 million DM. These facilities may be used to finance working capital needs
and equipment purchases or capital leases. Any borrowings for working capital
needs will bear interest at the bank's prime rate (8.5% as of December 31,
1995); any borrowings to finance equipment purchases will bear interest at the
bank's prime rate plus 1/2%. The credit facilities expire on June 30, 1996
unless canceled earlier by the Company or the bank. The Company expects to
renew these credit facilities. At December 31, 1995, the Company had no
outstanding liabilities under these facilities.
The credit facility requires the Company to maintain a minimum amount of
tangible net worth and a minimum debt to tangible net worth ratio. The
agreement also prohibits the Company from paying dividends, acquiring or
retiring any of its capital stock, or incurring any other debt, liens, or
guarantying any third party debt.
4. LEASES:
The following is a summary, as of December 31, 1995, of the future minimum
annual lease payments required under the Company's real estate and other
operating and capital leases having initial or remaining noncancelable terms in
excess of one year:
<TABLE>
Year Capital Operating
---- ------- ---------
<S> <C> <C>
1996 $43,000 $381,000
1997 3,000 114,000
1998 ---- 24,000
------- --------
Total minimum lease payments 46,000 $519,000
========
Less amount representing interest 0
-------
Present value of net minimum lease payments 46,000
Less current portion 46,000
-------
Long-term obligation under capital leases $ 0
=======
</TABLE>
Depreciation of the assets recorded under capital leases is included in
depreciation expense. Rental expense for operating leases in 1995,1994 and
1993 was $380,000, $365,000 and $333,000, respectively.
On March 5, 1996, the Company signed a 15 year lease for a new which the
Company expects to be able to occupy in December 1996. This lease is expected
to be accounted for as a capital lease, unless the Company elects to exercise
its option to purchase the facility on or before March 31, 1996. The Company
intends to exercise this purchase option, and purchase the facility in December
1996. In the event the Company does not purchase the facility, minimum annual
lease payments required under this lease are as follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 55,000
1997 665,000
1998 685,000
1999 706,000
2000 762,000
Thereafter 9,457,000
</TABLE>
5. COMMITMENTS:
The Company has committed to provide funding in the amount of $50,000 to a
university in conjunction with research in manufacturing methods utilizing the
Company's products and technology. At December 31, 1995, the Company had
funded $25,000 of its commitment for the university's fiscal year ended June
30, 1996.
15
<PAGE> 16
The Company has received a $1.22 million grant from the U.S. Department of
Commerce, through the National Institute of Standards and Technology (NIST),
for software development related to high-speed image processing techniques for
three-dimensional machine vision systems. This grant is for the period
beginning January 1, 1994, and ending March 31, 1996.
In connection with this grant, the Company has subcontracted a portion of
the research effort to a university and to an independent research institute,
at a total cost of $1.0 million. In addition, the Company granted warrants to
the research institute to purchase 30,000 shares of Common Stock. The
exercise price of these warrants is $11.17 per share. During 1994 and 1995,
the Company incurred total costs of $444,000 and $558,000 in connection with
this grant, which were substantially reimbursed by NIST. The amounts
reimbursed by NIST are not recognized as net sales by the Company, but are
rather treated as a reduction of engineering, research and development expense.
During 1993, the Company began a limited hedging program to minimize the
impact of foreign currency fluctuations. As the Company exports product, it
generally enters into limited hedging transactions relating to the accounts
receivable arising as a result of such shipment. These transactions involve
the use of forward contracts. At December 31, 1995, the Company had entered
into forward contracts covering $975,000 (1,386,000 DM). These contracts
mature on various dates through May 1996. The fair market value of the
contracts at December 31, 1995 was $965,000 U.S., resulting in a net receivable
of $10,000.
6. SHAREHOLDERS EQUITY:
- Convertible Equity of Subsidiary
On June 23, 1994 the owner of a minority interest in the Company's
European subsidiary converted its equity interest in this subsidiary into
197,802 shares of Common Stock of the Company.
- Stock options
The Company maintains 1983 and 1992 Stock Option Plans covering
substantially all company employees and certain other key persons, including
the Chairman of the Board of Directors. These Plans are administered by a
committee of the Board of Directors. Activity under these Plans is shown in
the following table:
<TABLE>
<CAPTION>
Number of
Shares Option Price
--------- -------------
<S> <C> <C>
Outstanding, January 1, 1993 ...... 626,700 0.23 - 4.16
Options authorized and granted .. 1,025,734 3.70 - 8.66
Options terminated .............. (41,484) 0.23 - 4.54
Options exercised ............... (144,067) 0.23 - 4.16
--------- --------------
Outstanding, December 31, 1993 .... 1,466,883 0.23 - 8.66
Options authorized and granted .. 253,323 8.83 -15.50
Options terminated .............. (46,133) 0.23 -11.75
Options exercised ............... (355,333) 0.23 - 7.33
--------- --------------
Outstanding, December 31, 1994 .... 1,318,740 $ 0.23 -15.50
--------- --------------
Options authorized and granted .. 236,350 10.08 -21.87
Options terminated .............. (124,259) 0.23 -17.83
Options exercised ............... (353,944) 0.23 -11.92
--------- --------------
Outstanding, December 31, 1995 .... 1,076,887 $ 0.23 -21.87
--------- --------------
</TABLE>
Options outstanding under these Plans generally become exercisable at 25
percent per year beginning one year after the date of the grant and expire five
to ten years after the date of the grant. At December 31, 1995,
options covering 267,669 shares were exercisable and options covering 231,738
shares were available for future grants under these plans.
During 1994, the Company granted, under the 1992 Stock Option Plan, a
non-qualified option to purchase 120,000 shares to the Chairman of the Board of
Directors, at an exercise price of $3.71 per share. At December 31, 1995,
26,944 of these fully exercisable options remained outstanding. In connection
with the issuance of these non-qualified stock options, the Company agreed to
reimburse the Chairman any difference between his actual tax rate and the
statutory capital gains tax rate in connection with his exercising these
options.
16
<PAGE> 17
The Company also maintains a Director Stock Option Plan covering all
non-employee directors. This Plan is administered by a committee of the Board
of Directors.
<TABLE>
Number of
Shares Option Price
--------- --------------
<S> <C> <C>
Outstanding, December 31, 1994 0
Options authorized and granted 60,000 $11.83 - 12.83
Options terminated 0
Options exercised 0
--------- --------------
Outstanding, December 31, 1995 60,000 $11.83 - 12.83
--------- --------------
</TABLE>
Each non-employee director at the date the Director Stock Option Plan was
adopted received, and each non-employee director as of the date they are first
elected to the Board of Directors will receive, an option to purchase 15,000
shares of Common Stock (the "Initial Option"). Initial Options become
exercisable in full on the first anniversary of the day of the grant. In
addition, each non-employee director who has been a director for six months
before the date of each Annual Meeting of Shareholders automatically will be
granted, as of the date of such Annual Meeting, an option to purchase an
additional 1,500 shares of Common Stock. These Annual Options become
exercisable in three annual increments of 33 1/3% of the shares subject to the
option, and expire ten years from the date of the grant. At December 31, 1995
none of these options were exercisable and options covering 52,500 shares were
available for future grants under this plan.
The Company granted warrants to an independent research institute to
purchase 30,000 shares of Common Stock, 15,000 of which expire in each of 1997
and 1998. The exercise price of these warrants is $11.17 per share.
7. 401K PLAN:
The Company has a 401(k) tax deferred savings plan that covers all
eligible employees. The Company may make discretionary contributions to the
plan. The Company's contributions to the plan during 1995, 1994 and 1993 were
$163,000, $108,000 and $48,000, respectively.
8. INCOME TAXES:
The Company adopted Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes ("SFAS No. 109"), as of January 1, 1993. The
adoption of SFAS No. 109 did not have a significant impact on net income for
the years ended December 31, 1994 or 1993. As a result of available net
operating losses, there was no provision for income taxes in 1994 and 1993.
The income tax provision reflected in the statement of income consists of the
following for the year ended December 31, 1995:
<TABLE>
<S> <C>
Current provision, included in accrued expenses $ 1,018,000
Deferred taxes (1,500,000)
-----------
Total provision (482,000)
===========
</TABLE>
Differences between the deferred tax provision and amounts recorded as
deferred tax assets as of December 31, 1995 in the consolidated balance sheet
reflect the tax benefit of approximately $218,000 for deductions on certain
stock options exercised.
17
<PAGE> 18
Deferred income taxes, on an SFAS No.109 basis, reflect the estimated
future tax effect of temporary differences between the amount of assets and
liabilities for financial reporting purposes and such amounts as measured by
tax laws and regulations. The Company's deferred tax assets are substantially
represented by the tax benefit of net operating loss carry forwards, together
with investment tax credit, research activities tax credit and general business
credit carry forwards. As of December 31, 1994, the Company had deferred tax
assets which were entirely offset by a valuation reserve. The components of
deferred tax assets as of December 31, 1995 were as follows:
<TABLE>
<CAPTION>
Deferred
Tax
Assets
----------
<S> <C>
Net operating loss carry forwards $1,200,000
Investment tax credit carry forwards 100,000
Increasing research activities carry forwards 800,000
Other 300,000
----------
Subtotal 2,400,000
Valuation reserve (200,000)
----------
Deferred tax asset $2,200,000
==========
</TABLE>
As of December 31, 1995, net operating loss carry forwards were available
for U.S. income tax purposes of approximately $3.6 million. Investment tax and
research activities credits of $860,000 are also available to benefit future
reported U.S. taxable earnings. These losses and credits expire, if unused, at
various dates from 1998 through 2007. The Company also has tax loss carry
forwards available at foreign subsidiaries of approximately $4.0 million, which
may generally be carried forward indefinitely. For the years ended December
31, 1995, 1994 and 1993 the Company realized benefits of approximately $3
million, $2 million and $1 million, respectively, related to the utilization of
net operating loss carry forwards.
Differences between income tax provision (benefit) and that computed by
applying the statutory federal income tax rate is as follows for the year ended
December 31, 1995.
<TABLE>
<S> <C>
Income tax provision at the federal statutory rate 34%
Utilization of net operating loss carryforwards (40)
Change in the valuation allowance (20)
Net provision for taxes on foreign earnings 20
----
(6)%
====
</TABLE>
The deferred tax asset relates primarily to net operating loss
carryforwards and tax credit carryforwards. The Company anticipates utilizing
its net operating loss carryforwards and tax credit carryforwards during 1996.
Accordingly, management believes that it is more likely than not that
substantially all of the deferred tax will be realized, although realization is
not assured.
Utilization of the Company's net operating loss carry forwards, tax credit
carry forwards and certain future deductions could be restricted, in the event
of future changes in the Company's equity structure, by provisions contained in
the Tax Reform Act of 1986.
9. INFORMATION ABOUT MAJOR CUSTOMERS:
The Company sells its products directly to both domestic and international
automotive assembly companies. For the year ended December 31, 1995, the
Company derived 36% of its net sales from three such customers, one of which was
a shareholder until October 1994, when this customer sold their shares. The
Company also sells to system integrators or original equipment manufacturers
("integrators"), who in turn sell to those same automotive companies. For the
year ended December 31, 1995, 28% of net sales were to integrators, where those
products were for the benefit of the same three automotive assembly companies.
In 1995, sales by the Company to each of these three customers exceeded 8% of
the Company's net sales. During 1994, 34% of total net sales was derived from
three domestic automotive companies, and 49% from sales by integrators to such
companies. In 1994, sales
18
<PAGE> 19
by the Company to each of these three customers exceeded 10% of the Company's
net sales. During 1993, 38% of net sales were derived from three automotive
companies and 28% from sales by integrators to such companies. In 1993, sales
by the Company to each of these three companies exceeded 10% of the Company's
net sales.
10. CONTINGENCIES:
The Company may, from time to time, be subject to legal proceedings and
claims. Litigation involves many uncertainties. Management is currently
unaware of any significant pending litigation affecting the Company, other than
the indemnification matter and the complaint discussed in the following
paragraphs.
The Company has been informed that certain of its customers have received
allegations of possible patent infringement involving processes and methods
used in the Company's products. One such customer is currently engaged in
litigation relating to such matter. This customer has notified various
companies from which it has purchased such equipment, including the Company,
that it expects the suppliers of such equipment to indemnify such customer, on
a pro-rata basis, for expenses and damages, if any, incurred in this matter.
Management believes, however, that the processes used in the Company's products
were independently developed without utilizing any previously patented process
or technology. Because of the uncertainty surrounding the nature of any
possible infringement and the validity of any such claim or any possible
customer claim for indemnity, it is not possible to estimate the ultimate
effect, if any, of this matter on the company's financial position.
On March 13, 1996, a complaint was filed naming the Company as a
defendant, along with two other co-defendants, in an action alleging that the
Company's TriCam sensor violates a patent held by the plaintiff and seeking
preliminary and permanent injunctions and damages. Management believes that
its TriCam sensor was independently developed without utilizing any previously
patented process or technology and intends to vigorously defend its position.
11. FOREIGN OPERATIONS:
The Company operates in three primary geographic areas: North America,
Europe and Asia. Geographical area data is as follows ($000):
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Net Sales:
North America* $26,899 $25,341 $15,554
Europe and Asia 13,049 3,606 2,351
Intercompany Sales (2,657) (1,112) (883)
------- ------- -------
Total Net Sales $37,291 $27,835 $17,022
======= ======= =======
Income (Loss) from Operations:
North America* $ 3,011 $ 5,513 $ 3,312
Europe and Asia 5,754 207 (405)
------- ------- -------
Total Income from Operations $ 8,765 $ 5,720 $ 2,907
======= ======= =======
Identifiable assets at December 31:
North America* $30,808 $22,209 $13,686
Europe and Asia 7,773 2,298 2,452
------- ------- -------
Total Assets $38,581 $24,507 $16,138
======= ======= =======
</TABLE>
- ---------------
* Includes intercompany amounts; intercompany sales prices are based on
cost plus a transfer fee.
19
<PAGE> 20
12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):
Selected unaudited quarterly financial data for the years ended December
31, 1995 and 1994, are as follows ($000's except earnings per share):
<TABLE>
<CAPTION>
Quarter ended
----------------------------------
3-31 6-30 9-30 12-31
----- ----- ------- ------
1995 (as restated)
----
<S> <C> <C> <C> <C>
Net sales $5,989 $8,603 $9,311 $13,388
Gross profit 3,606 5,250 5,823 8,437
Net income 733 1,914 1,621 4,141
Earnings per share $.10 $.27 $.22 $.56
Weighted average shares 7,087 7,127 7,310 7,391
<CAPTION>
1994 3-31 6-30 9-30 12-31
---- ----- ----- ---- -----
Net Sales $4,479 $6,251 $7,769 $9,336
Gross profit 2,664 3,868 4,795 5,480
Net income 427 1,371 1,824 2,217
Earnings per share $ .06 $ .20 $ .26 $ .31
Weighted average shares 6,867 6,927 6,974 7,064
</TABLE>
20
<PAGE> 21
PART IV
ITEM 14: EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
A. Financial Statements and Schedules Filed
1. Financial Statements - see Item 8 of this report.
2. Financial Statement Schedule - the schedule filed
with this report is listed on page 23.
3. Exhibits - the exhibits filed with this report are
listed on pages 25 through 28.
B. Reports on Form 8-K: The Company did not file any reports on
Form 8-K in the fourth quarter of 1995 with the Securities and
Exchange Commission.
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to its
Annual Report on Form 10-K to be signed on its behalf by the undersigned,
thereunto duly authorized.
PERCEPTRON, INC.
(Registrant)
By: /S/ Alfred A. Pease
---------------------------
Alfred A. Pease, President
and Chief Executive Officer
Date: February 28, 1997
22
<PAGE> 23
PERCEPTRON, INC. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS SCHEDULE
Financial Statements Schedule:
Designation Description Page
- ----------- ----------- ----
Schedule II Valuation and qualifying accounts 33
The schedules not filed are omitted because the information required to be
contained therein is disclosed elsewhere in the financial statements or the
amounts involved are not sufficient to require submission.
23
<PAGE> 24
PERCEPTRON, INC. AND SUBSIDIARIES
SCHEDULE II, VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
CHARGED TO
BEGINNING COSTS AND ENDING
DESCRIPTION BALANCE EXPENSE CHARGE-OFFS BALANCE
- ----------- --------- ---------- ----------- --------
December 31, 1993:
------------------
<S> <C> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL
ACCOUNTS $ 10,000 $135,000 $ 20,000 $125,000
INVENTORY RESERVES $201,000 $ 29,000 $ 0 $230,000
December 31, 1994:
------------------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS $125,000 $116,000 $ 5,000 $236,000
INVENTORY RESERVES $230,000 $506,000 $ 36,000 $700,000
December 31, 1995:
----------------------
ALLOWANCE FOR DOUBTFUL
ACCOUNTS $236,000 $ 35,000 $236,000 $ 35,000
INVENTORY RESERVES $700,000 $125,000 $155,000 $670,000
</TABLE>
24
<PAGE> 25
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION OF EXHIBITS
3. Restated Articles of Incorporation and Bylaws.
3.1 Restated Articles of Incorporation, as amended to date,
are incorporated herein by reference to Exhibit 3.3 of the
Company's Report on Form 10-Q for the Quarter Ended
June 30, 1994.
3.2 Bylaws, as amended to date, are incorporated herein by
reference to Exhibit 19 of the Company's Report on Form
10-Q for the Quarter Ended September 30, 1992.
4. Instruments Defining the Rights of Securities Holders.
4.1 Articles IV and V of the Company's Restated Articles of
Incorporation are incorporated herein by reference to
Exhibit 3.3 of the Company's Report on Form 10-Q for the
Quarter Ended June 30, 1994.
4.2 Articles I, II, III, VI, VII and X of the Company's
Bylaws are incorporated herein by reference to Exhibit 19
of the Company's Report on Form 10-Q for the Quarter Ended
September 30, 1992.
4.3 Revised Credit Agreement dated June 30, 1995, between
Perceptron, Inc., Perceptron GmbH and NBD Bank, N.A. and
related Demand Business Loan Note are incorporated herein by
reference to Exhibit 4.4 of the Company's Report on Form
10-Q for the Quarter Ended June 30, 1995.
10. Material Contracts.
10.1 Registration Agreement, dated as of June 13, 1985,
as amended, among the Company and the Purchasers
identified therein, is incorporated by reference to
Exhibit 10.3 of the Company's Form S-1 Registration
Statement (amended by Exhibit 10.2) No. 33-47463.
10.2 Patent License Agreement, dated as of August 23, 1990,
between the Company and Diffracto Limited, is incorporated
herein by reference to Exhibit 10.10 of the Company's
Report on Form S-1 Registration Statement No. 33-47463.
Form of Proprietary Information and Inventions Agreement
10.3 between the Company and all of the employees of the Company
is incorporated herein by reference to Exhibit 10.11 of the
Company's Form S-1 Registration Statement No. 33-47463.
10.4 Form of Confidentiality and Non-Disclosure Agreement between
the Company and certain vendors and customers of the Company
is incorporated herein by reference to Exhibit 10.12 of the
Company's Form S-1 Registration Statement No. 33-47463.
10.5 Two Forms of Agreement Not to Compete between the Company
and certain officers of the Company, one of which is
incorporated herein by reference to Exhibit 10.13 of the
Company's Form S-1 Registration Statement No. 33-47463, and
the other one of which is incorporated herein by reference
to Exhibit 10.6 of the Company's Annual Report on Form 10-K
for the Year Ended December 31, 1993.
25
<PAGE> 26
10.6 Co-operative Agreement, dated April 1, 1992, between the
Company and Sumitomo Corporation, is incorporated herein by
reference to Exhibit 10.17 of the Company's Form S-1
Registration Statement No. 33-47463.
10.7 Lease, dated August 3, 1989, as amended, between the Company
and HiTech Real Estate Venture, a Michigan co-partnership,
is incorporated herein by reference to Exhibit 10.20 of the
Company's Form S-1 Registration Statement No. 33-47463.
10.8 Second Amendment to Lease, dated May 7, 1993, amending a
Lease, dated August 3, 1989, between the Company and HiTech
Real Estate Venture, a Michigan co-partnership, is
incorporated herein by reference to Exhibit 10.22 of the
Company's Report on Form 10-Q for the Quarter Ended June 30,
1993.
10.9* Single Tenant Building Lease, dated March 5, 1996, between
Demco XVI Limited Partnership and Perceptron, Inc.
10.10@ 1983 Stock Option Plan, as amended, and forms of Stock
Option Agreement are incorporated herein by reference to
Exhibit 10.21 of the Company's Form S-1 Registration
Statement No. 33-47463.
10.11@ 1992 Stock Option Plan is incorporated herein by reference
to Exhibit 10.22 of the Company's Form S-1 Registration
Statement No. 33-47463.
10.12@ First Amendment to the 1992 Stock Option Plan is
incorporated herein by reference of Exhibit 10.14 of the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1992.
10.13@ Second Amendment to the 1992 Stock Option Plan is
incorporated herein by reference to Exhibit 10.21 of the
Company's Report on Form 10-Q for the Quarter Ended June 30,
1993.
10.14@ Third Amendment to the 1992 Stock Option Plan, is
incorporated herein by reference to Exhibit 10.17 of the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1993.
10.15@ Fourth Amendment to the 1992 Stock Option Plan is
incorporated herein by reference to Exhibit 10.35 of the
Company's Report on Form 10-Q for the Quarter Ended
September 30,1994.
10.16@ Fifth Amendment to the 1992 Stock Option Plan, is
incorporated by reference to Exhibit 10.36 of the
Company's Report on Form 10-Q for the Quarter Ended
June 30, 1995.
10.17*@ Sixth Amendment to the 1992 Stock Option Plan.
10.18@ Form of Stock Option Agreements, for July 1993 Stock Option
Grants, is incorporated herein by reference to Exhibit 10.23
of the Company's Report on Form 10-Q for the Quarter Ended
September 30, 1993 and Exhibit 10.32 of the Company's Report
on Form 10-Q for the Quarter Ended March 31, 1994.
10.19@ Stock Option Agreement, December 1993 Option Grant, dated
December 13, 1993, between the Company and James A. Ratigan
is incorporated herein by reference to Exhibit 10.25 of the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1993.
10.20@ First Amendment to Stock Option Agreement, December 1993
Option Grant between the Company and James A. Ratigan, is
incorporated by reference to Exhibit 10.41 of the Company's
Report on Form 10-Q for the Quarter Ended September 30,
1995.
26
<PAGE> 27
10.21@ Stock Option Agreement, Performance Options, dated December
13, 1993, between the Company and James A. Ratigan is
incorporated herein by reference to Exhibit 10.26 of the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1993.
10.22@ First Amendment to Stock Option Agreement, Performance
Options dated December 13, 1993, between the Company and
James A. Ratigan, is incorporated by reference to Exhibit
10.42 of the Company's Report on Form 10-Q for the Quarter
Ended September 30, 1995.
10.23@ Form of Stock Option Agreements for Performance Options, is
incorporated herein by reference to Exhibit 10.27 of the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1993. The performance standards under these
options were waived effective March 2, 1994.
10.24@ First Amendments to Stock Option Agreements for Performance
Options is incorporated herein by reference to Exhibit 10.20
of the Company's Annual Report on Form 10-K for the Year
Ended December 31, 1994.
10.25@ Form of Stock Option Agreements under 1992 Stock Option
Plan, (Team Members and Officers) prior to February 9, 1995,
is incorporated herein by reference to Exhibit 10.28 of the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1993.
10.26@ Forms of Master Amendments to Stock Option Agreements (Team
Members and Officers) under 1992 Stock Option Plan, prior to
February 9, 1995 is incorporated herein by reference to
Exhibit 10.22 to the Company's Annual Report on Form 10-K
for the Year Ended December 31, 1994.
10.27@ Forms of Incentive Stock Option Agreements (Team Members and
Officers) under 1992 Stock Option Plan after February 9,
1995 is incorporated by reference to Exhibit 10.23 to the
Company's Annual Report on Form 10-K for the Year Ended
December 31, 1994.
10.28@ Stock Option Agreement, dated May 21, 1993 between the
Company and James E. McGrath is incorporated herein by
reference to Exhibit 10.33 of the Company's Report on Form
10-Q for the Quarter Ended March 31, 1994.
10.29*@ Incentive Stock Option Agreement, dated February 14, 1996,
between the Company and Alfred A. Pease.
10.30*@ Non-qualified Stock Option Agreement, dated February 14,
1996, between the Company and Alfred A. Pease.
10.31@ Directors Stock Option Plan and Form of Non-Qualified Stock
Option Agreement is incorporated by reference to Exhibit
10.25 to the Company's Annual Report on Form 10-K for the
Year Ended December 31, 1994.
10.32@ First Amendment to Director Stock Option Plan, is
incorporated herein by reference to Exhibit 10.39 of the
Company's Report on Form 10-Q for the Quarter Ended June 30,
1995.
10.33@ Letter Agreement dated December 13, 1993, between the
Company and James A. Ratigan is incorporated herein by
reference to Exhibit 10.24 of the Company's Annual Report on
Form 10-K for the Year Ended December 31, 1993.
10.34@ Amendment dated October 26, 1995 to Letter Agreement dated
December 13, 1993, between the Company and James A. Ratigan,
is incorporated herein by reference to Exhibit 10.40 of the
Company's Report on Form 10-Q for the Quarter Ended
September 30, 1995.
27
<PAGE> 28
10.35@ Compensation Arrangement Letter, dated May 21, 1993, between
the Company and James E. McGrath, is incorporated herein by
reference to Exhibit 10.34 of the Company's Report on Form
10-Q for the Quarter Ended March 31, 1994.
10.36@ 1993 Management Bonus Plan is incorporated herein by
reference to Exhibit 10.21 to the Company's Annual Report on
Form 10-K for the Year Ended December 31, 1993.
10.37@ 1994 Management Bonus Plan is incorporated herein by
reference to Exhibit 10.30 to the Company's Annual Report on
Form 10-K for the Year Ended December 31, 1994.
10.38*@ 1995 Management Bonus Plan.
10.39@ Employee Stock Purchase Plan is incorporated by reference to
Exhibit 10.37 of the Company's Report on Form 10-Q for the
Quarter Ended June 30, 1995.
10.40*@ First Amendment to Employee Stock Purchase Plan is
incorporated herein by reference to Exhibit 10.38 of the
Company's Report on Form 10-Q for the Quarter Ended June 30,
1995.
10.41*@ Letter Agreement, dated February 14, 1996, between the
Company and Alfred A. Pease. Portions of this exhibit have
been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidential
treatment pursuant to Rule 24b-2.
10.42*@ Employment Agreement, dated February 12, 1996, between the
Company and Dwight D. Carlson.
10.43@ Separation, Release and Settlement Agreement between
Perceptron, Inc. and Gary D. Johnson, dated July 15, 1995,
is incorporated herein by reference to Exhibit 10.35 of the
Company's Report on Form 10-Q for the Quarter Ended June 30,
1995.
10.44 Financial Assistance Award, dated December 17, 1993,
received from the U.S. Department of Commerce - National
Institute of Standards and Technology, and incorporated
herein by reference to Exhibit 10.31 of the Company's Annual
Report on Form 10-K for the Year Ended December 31, 1993.
10.45* Third Amendment to Lease, dated March 8, 1996, Amending a
Lease, dated August 3, 1989 between the Company and HiTech
Real Estate Venture, a Michigan co-partnership.
11.(1) Statement re: computations of per share earnings.
21. A list of subsidiaries of the Company is incorporated herein
by reference to Exhibit 21 of the Company's Annual Report on
Form 10-K for the Year Ended December 31, 1994.
23.(1) Consent of Experts.
27.(1) Financial Data Schedule. Where are schedules 21 and 23.
- ---------------
* Filed with the Company's Annual Report on Form 10K for the year ended
December 31, 1995.
@ Indicates a management contract, compensatory plan or arrangement.
- --------------------
(1) As amended and refiled with Amendment No.4 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995.
28
<PAGE> 1
EXHIBIT 11.1
PERCEPTRON, INC. AND SUBSIDIARIES
EXHIBIT 11, STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Earnings Per Share
Year Ended December 31,
--------------------------------------------------
1995 1994 1993
---------- ---------- ----------
(as restated)
<S> <C> <C> <C>
A. Net income $8,409,000 $5,839,000 $2,702,000
---------- ---------- ----------
Weighted average number of common shares outstanding 6,554,445 6,129,972 5,313,024
Effect of the issuance of stock options and assumed
exercise of stock options at prices which are lower
than the average market price of the common shares
during the period, using the treasury stock method 703,339 774,655 462,676
Effect of convertible shares held by a minority shareholder
of a foreign subsidiary, which were converted into
common stock on June 23, 1994 --- 93,753 197,802
B. Weighted average number of common shares and common ---------- ---------- ----------
equivalent shares for primary earnings per share 7,257,784 6,998,380 5,973,502
---------- ---------- ----------
Weighted average number of common shares outstanding 6,554,445 6,129,972 5,313,024
Effect of the issuance of stock options and assumed
exercise of stock options at prices which are lower
than the market price of the common shares at the
end of the period, using the treasury stock method 871,833 946,413 590,093
Effect of convertible shares held be a minority shareholder
of a foreign subsidiary, which were converted into
common stock on June 23, 1994 --- 93,753 197,802
C. Weighted average number of common shares and common ---------- ---------- ----------
equivalent shares for fully diluted earnings per share 7,426,278 7,170,138 6,100,919
---------- ---------- ----------
Primary earnings per share (A/B) $ 1.16 $ 0.83 $ 0.45
========== ========== ==========
Fully diluted earnings per shares (A/C) $ 1.13 $ 0.81 $ 0.44
========== ========== ==========
</TABLE>
<PAGE> 1
EXHIBIT 23.1
[COOPERS & LYBRAND LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Perceptron, Inc. and Subsidiaries on Form S-8 (File Nos. 33-63666, 33-63664,
33-85656, 33-93910, 333-00446 and 333-00444) and on Form S-3 (File No. 33-78594)
of our report dated March 14, 1996, on our audits of the consolidated financial
statements and financial statement schedule of Perceptron, Inc. and Subsidiaries
as of December 31, 1995 and 1994, and for the years ended December 31, 1995,
1994 and 1993, which report is included in this amended Annual Report on Form
10-K/A-4.
Coopers & Lybrand LLP
Detroit, Michigan
March 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 14,990,000
<SECURITIES> 0
<RECEIVABLES> 14,327,000
<ALLOWANCES> (35,000)
<INVENTORY> 4,114,000
<CURRENT-ASSETS> 36,054,000
<PP&E> 8,601,000
<DEPRECIATION> 6,074,000
<TOTAL-ASSETS> 38,581,000
<CURRENT-LIABILITIES> 8,223,000
<BONDS> 0
0
0
<COMMON> 67,000
<OTHER-SE> 30,291,000
<TOTAL-LIABILITY-AND-EQUITY> 38,581,000
<SALES> 37,291,000
<TOTAL-REVENUES> 37,291,000
<CGS> 14,175,000
<TOTAL-COSTS> 14,351,000
<OTHER-EXPENSES> 1,377,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (539,000)
<INCOME-PRETAX> 7,927,000
<INCOME-TAX> (482,000)
<INCOME-CONTINUING> 8,409,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,409,000
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 1.16
</TABLE>
