<PAGE>
The undersigned Registrant hereby amends Item 7 of its
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 27, 1996
---------------
General Scanning Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Massachusetts
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)
0-26646 04-2445884
- ------------------------------- --------------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
500 Arsenal Street, Watertown, Massachusetts 02172
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(617) 924-1010
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned Registrant hereby amends Item 7 of its Current
Report on Form 8-K dated September 6, 1996 to read in its entirety as follows:
Item 7. Financial Statement and Exhibits.
Restated Financial Statements including the acquisition of
----------------------------------------------------------
View Engineering, Inc.
----------------------
See pages 3 through 18 hereof.
Exhibits:
--------
See Exhibit Index attached hereto.
-2-
<PAGE>
General Scanning Inc.
Consolidated Balance Sheets
(in thousands, except share data)
<TABLE>
<CAPTION>
As of December 31,
---------------------- Sept. 28,
1994 1995 1996
--------- --------- -----------
(unaudited)
<S> <C> <C> <C>
Assets
- ------
Current assets:
Cash and cash equivalents...................................... $ 1,362 $ 25,695 $ 16,322
Accounts receivable, less allowance of $511 in 1994, $792 in
1995 and $833 in 1996...................................... 19,294 23,552 29,715
Inventories.................................................... 16,012 25,087 27,894
Deferred tax assets............................................ 2,604 3,376 3,376
Other current assets........................................... 790 1,538 1,671
--------- --------- ---------
Total current assets....................................... 40,062 79,248 78,978
--------- --------- ---------
Property, plant and equipment, net................................. 8,480 9,191 13,108
Other assets....................................................... 448 484 440
Intangible assets, net of amortization of $1,585 in 1994,
$1,669 in 1995 and $1,732 in 1996............................... 869 785 722
--------- --------- ---------
$ 49,859 $ 89,708 $ 93,248
========= ========= =========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Notes payable to banks and current portion of long-term debt... $ 2,617 $ 4,475 $ 3,448
Other notes payable............................................ - 700 -
Accounts payable............................................... 6,458 8,084 8,336
Accrued expenses............................................... 10,712 13,593 12,451
--------- --------- ---------
Total current liabilities.................................. 19,787 26,852 24,235
--------- --------- ---------
Long-term debt due after one year.................................. 1,734 1,556 1,541
Deferred compensation.............................................. 1,227 1,546 1,854
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $.01 par value; authorized 1,000,000
shares; issued and outstanding - none....................... - - -
Common stock, $.01 par value; authorized 15,000,000 shares;
issued 9,227,845 in 1994, 11,967,845 in 1995 and
12,214,805 in 1996.......................................... 92 119 122
Additional paid-in capital..................................... 13,286 41,587 43,112
Retained earnings.............................................. 14,513 19,084 23,490
Cumulative translation adjustment.............................. (192) (448) (518)
Treasury stock, at cost; 365,995 shares in 1994, 1995
and 1996.................................................... (588) (588) (588)
--------- --------- ---------
Total stockholders' equity................................. 27,111 59,754 65,618
--------- --------- ---------
$ 49,859 $ 89,708 $ 93,248
========= ========= =========
</TABLE>
See accompanying notes.
-3-
<PAGE>
General Scanning Inc.
Consolidated Statements of Income
(in thousands, except share data)
<TABLE>
<CAPTION>
Nine months ended
For the years ended December 31, -------------------------
--------------------------------------- Sept. 30, Sept. 28,
1993 1994 1995 1995 1996
---------- ---------- ----------- ---------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net sales:
Laser systems and components...................... $ 62,994 $ 77,488 $ 103,405 $ 73,703 $ 98,616
Thermal printers.................................. 18,821 20,624 22,915 17,114 17,901
---------- ---------- ----------- ---------- -----------
Total sales.................................. 81,815 98,112 126,320 90,817 116,517
---------- ---------- ----------- ---------- -----------
Cost of sales:
Laser systems and components...................... 33,209 39,728 55,544 39,633 52,530
Thermal printers.................................. 11,207 12,091 12,854 9,568 10,202
---------- ---------- ----------- ---------- -----------
Total cost of sales.......................... 44,416 51,819 68,398 49,201 62,732
---------- ---------- ----------- ---------- -----------
Gross profit:
Laser systems and components...................... 29,785 37,760 47,861 34,070 46,086
Thermal printers.................................. 7,614 8,533 10,061 7,546 7,699
---------- ---------- ----------- ---------- -----------
Total gross profit........................... 37,399 46,293 57,922 41,616 53,785
---------- ---------- ----------- ---------- -----------
Operating expenses:
Research and product development.................. 11,208 13,090 17,106 12,881 13,990
Selling, general and administrative............... 21,689 27,326 33,091 23,566 29,592
---------- ---------- ----------- ---------- -----------
Total operating expenses..................... 32,897 40,416 50,197 36,447 43,582
Income from operations................................. 4,502 5,877 7,725 5,169 10,203
Merger expenses........................................ - - - - 1,950
Interest income (expense), net......................... (896) (847) (682) (823) 191
Foreign exchange transaction gains (losses)............ (24) 636 331 318 (131)
---------- ---------- ----------- ---------- -----------
Income before income taxes............................. 3,582 5,666 7,374 4,664 8,313
Income taxes........................................... 1,291 1,868 2,803 1,773 3,907
---------- ---------- ----------- ---------- -----------
Net income............................................. $ 2,291 $ 3,798 $ 4,571 $ 2,891 $ 4,406
========== ========== =========== ========== ===========
Net income per common and common
equivalent share outstanding...................... $ 0.26 $ 0.42 $ 0.44 $ 0.30 $ 0.35
========== ========== =========== ========== ===========
Weighted average common and common
equivalent shares outstanding..................... 8,863,178 9,099,474 10,357,287 9,699,460 12,482,970
========== ========== =========== ========== ===========
</TABLE>
See accompanying notes.
-4-
<PAGE>
General Scanning Inc.
Consolidated Statements of Stockholders' Equity
(in thousands, except share data)
<TABLE>
<CAPTION>
Common Stock Treasury stock
---------------- -----------------
Number $.01 Additional Cumulative Number
of par paid-in Retained translation of
shares value capital earnings adjustment shares Cost
---------- ----- --------- --------- ----------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992, as previously reported........ 7,629,020 $76 $ 1,824 $ 11,621 $ (221) (315,550) $ (450)
Adjustments for View Engineering, Inc. pooling
of interests............................................ 1,437,060 14 11,070 (3,197) - - -
---------- ---- --------- --------- ---------- --------- -------
Balance, December 31, 1992, as restated................... 9,066,080 90 12,894 8,424 (221) (315,550) (450)
Net income................................................ - - - 2,291 - - -
Stock option and warrant exercises, net of tax effects.... 42,410 1 145 - - - -
Purchase of treasury stock................................ - - - - - (12,695) (32)
Cumulative translation adjustment......................... - - - - 74 - -
---------- ---- --------- --------- ---------- --------- -------
Balance, December 31, 1993................................ 9,108,490 91 13,039 10,715 (147) (328,245) (482)
Net income................................................ - - - 3,798 - - -
Stock option and warrant exercises, net of tax effects.... 119,355 1 247 - - - -
Purchase of treasury stock................................ - - - - - (37,750) (106)
Cumulative translation adjustment......................... - - - - (45) - -
---------- ---- --------- --------- ---------- --------- -------
Balance, December 31, 1994................................ 9,227,845 92 13,286 14,513 (192) (365,995) (588)
Net income................................................ - - - 4,571 - - -
Issuance of common stock.................................. 2,585,000 26 27,714 - - - -
Stock option and warrant exercises, net of tax effects.... 155,000 1 587 - - - -
Cumulative translation adjustment......................... - - - - (256) - -
---------- ---- --------- --------- ---------- --------- -------
Balance, December 31, 1995................................ 11,967,845 $119 $ 41,587 $ 19,084 $ (448) (365,995) $ (588)
Net income (unaudited).................................... - - - 4,406 - - -
Stock option and warrant exercises, net of
tax effects (unaudited)................................. 246,960 3 1,525 - - - -
Cumulative translation adjustment (unaudited)............. - - - - (70) - -
---------- ---- --------- --------- ---------- --------- -------
Balance, September 28, 1996 (unaudited)................... 12,214,805 $122 $ 43,112 $ 23,490 $ (518) (365,995) $ (588)
========== ==== ========= ========= ========== ========= =======
</TABLE>
See accompanying notes.
-5-
<PAGE>
General Scanning Inc.
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Nine months ended
---------------------
For the years ended December 31, Sept. 30, Sept. 28,
--------------------------------- --------- ---------
1993 1994 1995 1995 1996
------ ------ ------ ------ ------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income..................................................... $ 2,291 $ 3,798 $ 4,571 $ 2,891 $ 4,406
Adjustments to reconcile net income to net cash provided by
(used in) operating activities-
Depreciation and amortization................................ 3,083 2,410 1,984 1,559 1,992
Deferred compensation........................................ 131 93 319 285 308
Deferred income taxes........................................ 510 (489) (460) (662) -
Changes in current assets and liabilities-
Accounts receivable.......................................... (1,670) (1,722) (4,194) (3,650) (6,619)
Inventories.................................................. (1,131) (1,263) (9,104) (8,109) (2,920)
Other current assets......................................... (169) 196 (1,111) (230) (43)
Accounts payable and accrued expenses........................ 636 4,132 4,520 3,515 (715)
------- ------- ------- ------- -------
Net cash provided by (used in) operating activities............ 3,681 7,155 (3,475) (4,401) (3,591)
------- ------- ------- ------- -------
Cash flows from investing activities:
Additions to property, plant, and equipment, net............... (1,236) (1,765) (2,596) (2,175) (5,867)
Decrease (increase) in other assets............................ 309 117 (67) (93) 17
------- ------- ------- ------- -------
Net cash (used in) investing activities........................ (927) (1,648) (2,663) (2,268) (5,850)
------- ------- ------- ------- -------
Cash flows from financing activities:
Net proceeds (payments) on notes payable to banks and others... 260 (2,233) 2,464 2,298 (1,612)
Net proceeds (payments) on long-term debt...................... (1,410) (4,112) (178) (166) (15)
Net proceeds from issuance of common stock..................... - - 27,740 24,058 -
Stock option and warrant exercises, net of tax effects......... 146 248 588 427 1,528
Purchase of treasury stock..................................... (32) (106) - - -
------- ------- ------- ------- -------
Net cash provided by (used in) financing activities............ (1,036) (6,203) 30,614 26,617 (99)
------- ------- ------- ------- -------
Effect of exchange rate changes on cash and cash equivalents... 74 (480) (143) (79) 167
------- ------- ------- ------- -------
Increase (decrease) in cash and cash equivalents............... 1,792 (1,176) 24,333 19,869 (9,373)
Cash and cash equivalents, beginning of period................. 746 2,538 1,362 1,362 25,695
------- ------- ------- ------- -------
Cash and cash equivalents, end of period....................... $ 2,538 $ 1,362 $ 25,695 $ 21,231 $ 16,322
======= ======= ======= ======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for-
Interest..................................................... $ 864 $ 908 $ 1,064 $ 816 $ 754
======= ======= ======= ======= =======
Income taxes................................................. $ 688 $ 1,973 $ 2,540 $ 2,046 $ 4,643
======= ======= ======= ======= =======
</TABLE>
See accompanying notes.
-6-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
1. Significant Accounting Policies
Nature of operations
General Scanning Inc. (the Company) develops, manufactures, and sells its
products on a worldwide basis through two industry segments: laser systems and
components; and thermal printers. The laser systems and components segment
provides products for a variety of industrial applications that require high-
speed micropositioning and precise power control of lasers. The thermal printer
segment provides a line of thermal printers, primarily for the medical industry.
Basis of presentation
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. The Company's 50% joint
venture in the United Kingdom, which had been accounted for by the equity
method, was fully acquired on December 31, 1995 in a purchase transaction. The
acquisition was not material to the Company's operations.
On August 27, 1996, the Company completed its acquisition of View
Engineering, Inc. (View), Simi Valley, California by issuing 1,437,060 shares of
General Scanning Inc. common stock (after giving effect to certain adjustments
at the closing) in exchange for all of View's outstanding shares of capital
stock, accrued preferred dividends and the net value of warrants and options.
View uses laser image processing technology to serve applications requiring
precision inspection, measurement and process control. The transaction has been
accounted for as a pooling of interests for accounting purposes and accordingly,
the accompanying consolidated financial statements have been retroactively
restated to include the accounts of View for all periods presented. Merger
expenses include brokers fees and legal and accounting costs. The following is a
reconciliation of certain restated amounts with amounts previously reported.
<TABLE>
<CAPTION>
Nine months ended
Year ended Dec. 31, ----------------------
------------------------------ Sept. 30, Sept. 28,
(in thousands) 1993 1994 1995 1995 1996
------------------------------ ----------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Sales:
General Scanning Inc. $58,686 $76,214 $101,819 $72,648 $99,294
View Engineering, Inc. 23,129 21,898 24,501 18,169 17,223
------------------------------ ----------------------
As restated $81,815 $98,112 $126,320 $90,817 $116,517
============================== ======================
Net income:
General Scanning Inc. $865 $3,694 $6,009 $3,822 $7,998
View Engineering, Inc. (1) 2,564 104 (1,438) (931) (3,592)
------------------------------ ----------------------
As restated $3,429 $3,798 $4,571 $2,891 $4,406
============================== ======================
</TABLE>
(1) Includes $1,950 in pre-tax merger related expenses in 1996.
-7-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
Use of 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.
Interim financial presentation
The accompanying consolidated balance sheet as of September 28, 1996, the
accompanying consolidated statements of income and cash flows for the nine
months ended September 30, 1995 and September 28, 1996 and the accompanying
consolidated statement of stockholders' equity for the nine months ended
September 28, 1996 are unaudited but, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of results for these interim periods. The results of
operations for the nine months ended September 28, 1996 are not necessarily
indicative of the results to be expected for the entire fiscal year.
Fiscal year
The Company's fiscal year ends on December 31. For interim reporting
purposes, the Company closes its books on the Saturday closest to each quarter-
end. Each of the quarters in the years 1994 and 1995 and the nine months ended
September 1996 included 13 weeks.
Cash and cash equivalents
Cash and cash equivalents include cash in banks and highly liquid
investments having original maturity dates not exceeding three months. The
Company does not believe it is exposed to any significant credit risk on its
cash and cash equivalents. The investments are stated at cost, which approximate
their fair value.
Inventories
Inventories, which include materials and conversion costs, are stated at the
lower of cost (first-in, first-out) or market. The components of inventory are:
<TABLE>
<CAPTION>
(in thousands) Dec. 31, Dec. 31, Sept. 28,
1994 1995 1996
-------------------------------
(unaudited)
<S> <C> <C> <C>
Materials $6,902 $11,163 $10,068
Work-in-process 5,187 6,648 7,509
Finished goods 3,923 7,276 10,317
-------------------------------
Total inventory $16,012 $25,087 $27,894
===============================
</TABLE>
Depreciation and amortization
Depreciation and amortization are determined by the straight-line and
declining-balance methods over the estimated useful lives of the owned assets.
Estimated useful lives for buildings and improvements
-8-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
range from 5 to 31 years and for machinery and equipment from 3 to 15 years.
Leasehold improvements are amortized over the lesser of their useful lives or
the lease term.
Statement of Financial Accounting Standards No. 123
During 1995, the Financial Accounting Standards Board issued SFAS 123 which
defines a fair value based method of accounting for an employee stock option or
similar equity instrument and encourages all entities to adopt that method of
accounting for all of their employee stock compensation plans. However, it also
allows an entity to continue to measure compensation costs for those plans using
the method of accounting prescribed by APB 25. Entities electing to remain with
the accounting in APB 25 must make pro forma disclosures of net income and, if
presented, earnings per share as if the fair value based method of accounting
defined in the Statement had been applied. The Company has elected to account
for its stock-based compensation plans under APB 25; however, the Company has
not yet computed the pro forma impact for 1995.
Foreign currency
Assets and liabilities of foreign operations are translated from foreign
currencies into U.S. dollars at the exchange rates in effect at the period end.
Revenues and expenses are translated at the average exchange rate in effect for
the period. Gains and losses arising from the translations are included in the
cumulative translation adjustment section of stockholders' equity.
Foreign exchange forward contracts and local currency borrowings are used to
reduce the impact of certain foreign currency balance sheet fluctuations. Gains
and losses from the forward contracts that are not hedges of firm commitments
are accrued at each balance sheet date and included in the Consolidated
Statements of Income as foreign exchange transactions. At December 31, 1995,
the Company had such contracts to exchange foreign currencies (yen and deutsche
marks) for U.S. dollars totaling $6,000,000 maturing through March 29, 1996 and
at September 28, 1996 the Company has contracts to exchange foreign currencies
(yen, deutsche marks and French francs) for U.S. dollars totaling $4,000,000
maturing through November 29, 1996.
In certain circumstances, the Company enters into foreign exchange forward
contracts to reduce the impact of foreign currency fluctuations arising from
foreign currency denominated customer sales. Gains and losses on these
contracts are deferred until the contract matures. At December 31, 1995, and
September 28, 1996 there were no such contracts and at December 31, 1994 a loss
of $21,000 was deferred relating to such contracts.
To the extent the Company utilizes foreign exchange forward contracts, it
purchases them from major financial institutions for terms that do not exceed
six months.
Net income per share of common stock
Net income per common and common equivalent share is computed using the
weighted number of common shares and dilutive common equivalent shares
outstanding during each period. Dilutive common equivalent shares, consisting
of outstanding stock options and warrants, are determined using the treasury
stock method. Common shares issuable pursuant to stock options or warrants
granted from September 21, 1994 through September 21, 1995 have been reflected
as outstanding through July 1, 1995, using the treasury stock method. Fully
diluted net income per common and common equivalent share has not been
-9-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
presented as it is not materially different from primary net income per common
and common equivalent share or is anti-dilutive.
Revenue recognition
The Company recognizes product revenues at the later of the time of shipment
or when substantially all terms and conditions of the sale have been met. The
Company provides for estimated warranty costs at the time of revenue
recognition.
Research and product development expense
Expenditures for research and development of products and manufacturing
processes are expensed as incurred.
Interest expense, net
Net interest expense in 1995 is net of $373,000 of interest income. Net
interest expense for the nine months ended September 30, 1995 is net of $12,000
of interest income and net interest income for the nine months ended September
28, 1996 is net of $721,000 of interest expense.
Income tax
The Company does not provide United States federal income taxes on
undistributed earnings of consolidated foreign subsidiaries as such earnings are
intended to be permanently reinvested in non-U.S. operations.
2. Intangible Assets
In connection with the acquisition of the minority interest in Teradyne
Laser Systems, Inc. in 1991, the Company allocated the excess purchase price
over the fair market value of the assets acquired to intangible assets. These
intangible assets, which include noncompete agreements, patents, and goodwill,
are being amortized over their estimated useful lives of from 3 to 15 years.
Amortization expense was $518,000 in 1993, $366,000 in 1994 and $84,000 in 1995.
Amortization expense was $63,000 for each of the nine months ended September 30,
1995 and September 28, 1996.
The Company periodically assesses the realizability of these intangible
assets in accordance with Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of. Based on its review, the Company does not believe that an
impairment of its intangible assets has occurred.
-10-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
3. Property, Plant and Equipment
Property, plant, and equipment consists of:
<TABLE>
<CAPTION>
(in thousands) Dec. 31, Dec. 31,
1994 1995
---------------------
<S> <C> <C>
Cost:
Land, buildings and improvements $9,644 $10,283
Machinery and equipment 20,631 22,655
---------------------
Total cost 30,275 32,938
Accumulated depreciation and amortization (21,795) (23,747)
---------------------
Net property, plant and equipment $8,480 $9,191
=====================
</TABLE>
4. Accrued Expenses
Accrued expenses consists of:
<TABLE>
<CAPTION>
(in thousands) Dec. 31, Dec. 31,
1994 1995
-----------------------
<S> <C> <C>
Accrued compensation and benefits $5,413 $6,255
Income taxes 2,421 3,499
Other 2,878 3,839
-----------------------
Total accrued expenses $10,712 $13,593
=======================
</TABLE>
5. Debt
Notes payable to banks
Notes payable to banks includes $2,000,000 at December 31, 1994 and
$4,460,000 at December 31, 1995 of borrowings under revolving credit agreements
with lending banks. The effective revolving credit agreement at September 28,
1996, which expires on December 31, 1998, provides for borrowings up to
$10,000,000. Borrowings bear interest at the London InterBank Offered Rate
(LIBOR) plus one and one-half percent or prime, determined at the time of
borrowing. A commitment fee of 3/8% per annum is paid quarterly in arrears on
the unused portion. Among other restrictions, the agreement requires a minimum
level of tangible net worth and compliance with certain financial ratios. In
addition, the Company's foreign operations have bank lines of credit with a
maximum availability of $4,000,000 at December 31, 1995 and September 28, 1996.
At December 31, 1994, $602,000 and at September 28, 1996 $3,433,000 of such
debt, denominated in yen, was outstanding. No such debt was outstanding at
December 31, 1995.
Other notes payable of $700,000 at December 31, 1995 were issued by View
Engineering, Inc. during 1995 with detachable warrants. The notes earned
interest at 10% per annum. All exercisable warrants were converted into common
shares of View Engineering, Inc. prior to or coincident with the merger of View
Engineering, Inc. with General Scanning Inc. The notes have been repaid and no
warrants remain outstanding.
-11-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
Long-term debt
Long-term debt consists of a mortgage payable at 10.4% interest (11.2% at
December 31, 1994), collateralized by certain land and building. Interest and
principal are payable at $14,906 per month until maturity in February 2000 at
which time the remaining principal of $1,507,516 will be payable. The portion
of principal payable within one year, which is included in current liabilities,
is $15,000.
Fair value of financial instruments
Statement of Financial Accounting Standards No. 107, Disclosure About Fair
Value of Financial Instruments, requires disclosure of the year-end fair value
of significant financial instruments, including debt. The Company believes,
based upon current terms, that the carrying value of its debt approximated its
fair value.
6. Deferred Compensation
Officers and certain employees may defer payment of their compensation until
termination of employment or later. Interest on the outstanding balance is
credited quarterly at the prime rate.
7. Stockholders' Equity
Recapitalization
On August 10, 1995, the Company's stockholders voted to amend its Articles
of Organization to change the par value of the Company's common stock from $1.00
to $.01. Subsequently, the Board of Directors authorized a 5-for-1 stock split,
effected as a dividend, of the Company's common stock. All share and per share
amounts of common stock for all periods presented have been retroactively
adjusted to reflect the change in par value and the stock split.
Preferred stock
On August 10, 1995, the stockholders approved an amendment to the Articles
of Organization which authorizes 1,000,000 shares of preferred stock, $.01 par
value. The preferred stock is divisible and issuable into one or more series.
The rights and preferences of the different series may be established by the
Board of Directors without further action by the stockholders. The Board of
Directors is authorized, with respect to each series, to fix and determine,
among other things: (i) the dividend rate, (ii) the liquidation preference,
(iii) whether such shares will be convertible into, or exchangeable for, any
other securities and (iv) whether such shares will have voting rights and, if
so, the conditions under which such shares will vote as a separate class.
Stock options
The 1992 Stock Option Plan, as amended on August 10, 1995, provides for the
issuance of non-qualified and incentive stock options to purchase up to
1,000,000 shares of the Company's common stock, of which 609,057 were available
for future grant as of December 31, 1995. Under this Plan, options are granted
at the fair value per share as determined by the Board of Directors at the date
of grant. Outstanding options vest over periods of three or four years beginning
on the date of grant and expire ten years from the date of grant. The Company's
1981 Stock Option Plan has terminated; however, options to purchase 726,220
shares of common stock were outstanding under this Plan at December 31, 1995.
-12-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
Stock option activity for the years ended December 31, 1993, 1994 and 1995
is:
<TABLE>
<CAPTION>
Options Price per share
---------- ---------------
<S> <C> <C>
Outstanding at December 31, 1992 1,187,720 $1.45- $ 2.89
Granted 30,000 2.54
Exercised (42,410) 1.45- 2.36
Canceled (26,250) 1.75- 2.50
---------- ---------------
Outstanding at December 31, 1993 1,149,060 1.45- 2.89
Granted 127,631 2.36- 6.05
Exercised (119,355) 1.55- 2.36
Canceled (36,685) 2.89
---------- ---------------
Outstanding at December 31, 1994 1,120,651 1.70- 3.50
Granted 117,562 4.32- 12.09
Exercised (155,000) 1.70- 2.54
Canceled (750) 2.36
---------- ---------------
Outstanding at December 31, 1995 1,082,463 $1.70- $12.09
========== ===============
Exercisable at December 31, 1995 873,376 $1.70- $11.00
=============================
</TABLE>
Warrants
The Company has issued warrants for the purchase of common stock to the non-
employee members of the Board of Directors. Warrants issued through 1995 vested
over periods of three or four years, beginning on the date of grant, and expire
ten years from the date of grant. No such warrants were granted, exercised, or
canceled in 1993, 1994, or 1995.
During 1995, the stockholders adopted the 1995 Directors' Warrant Plan and
reserved 100,000 shares for future issuance of warrants to non-employee
Directors under the Plan. The exercise price of such warrants is the fair
market value per share as determined by a committee of the Board of Directors at
the date of grant. The warrants are subject to vesting as determined by such
committee and expire ten years from the date of grant. No such warrants were
issued during 1995.
<TABLE>
<CAPTION>
Warrants Price per share
-------- ---------------
<S> <C> <C>
Outstanding at December 31, 1995 120,000 $1.75-$ 2.50
======== ===============
Exercisable at December 31, 1995 120,000 $1.75-$ 2.50
======== ===============
</TABLE>
8. Benefit Plans
Employee Stock Ownership Plan
Under the Employee Stock Ownership Plan (ESOP) established in 1989, Company
contributions were in the form of cash or common stock and were allocated to
eligible employees based on their relative compensation. The amount of the
annual contribution was determined by the Board of Directors but could not
exceed the maximum amount deductible for federal income tax purposes. The ESOP
was terminated effective December 31, 1995 and the Plan assets will be
distributed to Plan participants. Company
-13-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
contributions to the ESOP were $272,000, $307,000, and $367,000 in the years
ended December 31, 1993, 1994, and 1995, respectively.
401(k) Plans
Under the General Scanning Inc. 401(k) Plan employee benefit plan
established in 1990, eligible United States employees are allowed to make
contributions up to 12% of their annual compensation, subject to Internal
Revenue Code maximums. The Company's Board of Directors annually determines the
Company's matching contributions. During 1993, 1994 and 1995, the Company match
was 25% of the participant's elective deferral up to 1% of compensation, 75% of
the deferral up to 2% of compensation and 66-2/3% of the deferral up to 3% of
compensation. Effective February 1996, the Company match was increased to equal
that of the participant's elective deferral up to 4% of compensation. All
employee and employer contributions immediately vest for all participants.
View Engineering, Inc.'s employees currently have a separate 401(k) Plan.
Employees may make voluntary contributions and such contributions are partially
matched by View Engineering, Inc.
For the years ended December 31, 1993, 1994, and 1995 and for the nine month
periods ended September 30, 1995 and September 28, 1996, the total 401(k)
expense recorded was approximately $326,000, $363,000, $488,000, $371,000, and
$821,000, respectively.
9. Income Taxes
The Company accounts for income taxes using the liability method. Under this
method, deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax basis of assets and
liabilities using the currently enacted tax rates.
The components of income before income taxes for the years ended December 31
are as follows:
<TABLE>
<CAPTION>
Year ended Dec. 31,
----------------------
(in thousands) 1993 1994 1995
----------------------
<S> <C> <C> <C>
United States $3,339 $3,221 $5,245
Foreign 243 2,445 2,129
----------------------
Total $3,582 $5,666 $7,374
======================
</TABLE>
The provision for income taxes for the years ended December 31 consists of
the following:
<TABLE>
<CAPTION>
Year ended Dec. 31,
----------------------
(in thousands) 1993 1994 1995
----------------------
<S> <C> <C> <C>
Current:
Federal $370 $780 $2,000
State 70 153 200
Foreign 1 938 1,292
----------------------
Total current 441 1,871 3,492
Deferred:
</TABLE>
-14-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
<TABLE>
<S> <C> <C> <C>
Federal 723 37 (554)
State 127 (40) (135)
Foreign - - -
------------------------
Total deferred 850 (3) (689)
------------------------
Total $1,291 $1,868 $2,803
========================
</TABLE>
The income tax provision for the years ended December 31 is different from
that which would be computed by applying the U.S. federal income tax rate to
income before taxes as follows:
<TABLE>
<CAPTION>
Year ended Dec. 31,
------------------------
(in thousands) 1993 1994 1995
------------------------
<S> <C> <C> <C>
U.S. federal statutory tax rate 34.0% 34.0% 34.0%
State income taxes, net 4.0% 2.5% 3.9%
Foreign sales corporation -3.6% -3.0% -4.1%
Other taxes provided 8.3% 4.2% 6.2%
Research and development credits -13.9% -6.3% -6.6%
Effect of foreign losses utilized
or not benefited and of foreign
tax rate differential -6.8% 2.0% 1.0%
Other, net 14.0% -0.4% 3.6%
------------------------
Effective tax rate 36.0% 33.0% 38.0%
========================
</TABLE>
Significant components of deferred income tax assets as of December 31 are
as follows:
<TABLE>
<CAPTION>
(in thousands) Dec. 31, Dec. 31,
1994 1995
-----------------------------
<S> <C> <C>
Research and development credit $342 -
Alternative minimum tax credit 112 -
Deferred compensation 417 556
Vacation and sick benefit 413 497
Inventory reserve 1,220 1,879
Warranty reserve 157 269
Depreciation (171) (289)
Net operating loss carryforwards and
tax credits 1,995 2,213
Other 114 464
-----------------------------
Total deferred tax asset 4,599 5,589
Less valuation allowance (1,995) (2,213)
-----------------------------
Net deferred tax asset $2,604 $3,376
=============================
</TABLE>
The Company has provided a valuation allowance on the net operating loss
carryforwards and tax credits related to its wholly-owned subsidiary, View
Engineering, Inc., due to the uncertainty of their realizability as a result of
limitations on their utilization in accordance with certain tax laws and
regulations.
-15-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
10. Commitments and Contingencies
Operating leases
The Company leases certain equipment and facilities under operating lease
agreements that expire through 2003. The facility leases require the Company to
pay real estate taxes and other operating costs. For the years ended December
31, 1993, 1994, and 1995 and for the nine month periods ended September 30, 1995
and September 28, 1996, lease expense was approximately $1,434,000, $1,362,000,
$1,500,000, $1,111,000, and $922,000, respectively.
Minimum lease payments under operating leases expiring subsequent to
December 31, 1995 are:
<TABLE>
<S> <C>
(in thousands)
1996 $1,513
1997 1,247
1998 563
1999 349
2000 316
Thereafter 676
---------
Total minimum lease payments $4,664
=========
</TABLE>
Recourse receivables
In Japan, where it is customary to do so, the Company discounts certain
notes receivable at a bank with recourse. The Company's maximum exposure was
$2,554,000 at December 31, 1994, $3,476,000 at December 31, 1995 and $1,988,000
at September 28, 1996. The fair value of the recourse receivables was not
determinable. The Company received cash proceeds relating to the discounted
receivables of $1,425,000, $4,671,000, $7,188,000, $5,358,000 and $3,390,000
during the years ended December 31, 1993, 1994, and 1995, and during the nine
months ended September 30, 1995 and September 28, 1996, respectively.
Legal proceedings
On August 5, 1996, Robotic Vision Systems, Inc. commenced an action against
General Scanning in the United States District Court for the Eastern District of
New York. Robotic Vision Systems claims that General Scanning improperly
obtained proprietary information from Robotic Vision Systems for the purpose of
obtaining ownership of View Engineering, Inc. and of thwarting Robotic Vision
Systems' attempts to acquire View Engineering. The plaintiff is seeking
compensatory and punitive damages in an unspecified amount. General Scanning
believes the claims are without merit and intends to defend this action
vigorously.
11. Related Party Transaction
In 1992, the Company's Board of Directors authorized a loan to an officer in
the amount of $160,000 as a reimbursement for certain relocation expenses.
Under the agreement, 80% of the loan is being forgiven over a period of four
years, provided that the officer remains an employee of the Company. This loan
is secured by deferred compensation due to this officer. If the officer should
terminate employment,
-16-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
the remaining balance is due upon termination. In each of 1993, 1994, and 1995,
$32,000 of the loan was forgiven and charged as compensation expense.
12. Segment Information
Industry segment reporting
Information with respect to the Company's industry segments is set forth in
the table below.
<TABLE>
<CAPTION>
Year ended Dec. 31,
-----------------------------
(in thousands) 1993 1994 1995
-----------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
Laser systems and components $63,472 $77,951 $103,564
Thermal printers 18,821 20,624 22,915
Intersegment elimination (478) (463) (159)
-----------------------------
Total $81,815 $98,112 $126,320
=============================
Income from operations:
Laser systems and components $2,470 $4,449 $6,330
Thermal printers 3,202 3,327 3,845
Corporate expenses (1,170) (1,899) (2,450)
-----------------------------
Total $4,502 $5,877 $7,725
=============================
Identifiable assets:
Laser systems and components $38,573 $41,269 $55,556
Thermal printers 4,506 4,624 5,081
Corporate assets 4,653 3,966 29,071
-----------------------------
Total $47,732 $49,859 $89,708
=============================
Capital expenditures:
Laser systems and components $988 $1,565 $2,155
Thermal printers 248 200 441
-----------------------------
Total $1,236 $1,765 $2,596
=============================
Depreciation and amortization:
Laser systems and components $2,611 $1,919 $1,699
Thermal printers 472 491 285
-----------------------------
Total $3,083 $2,410 $1,984
=============================
</TABLE>
-17-
<PAGE>
General Scanning Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(including data applicable to unaudited periods)
Geographic segment information
Information with respect to the Company's geographic operations is set forth
in the table below.
<TABLE>
<CAPTION>
Year ended Dec. 31,
-----------------------------
(in thousands) 1993 1994 1995
-----------------------------
<S> <C> <C> <C>
Sales to unaffiliated customers:
United States, including export $63,506 $69,623 $84,621
Europe 7,698 9,408 12,461
Asia 10,611 19,081 29,238
-----------------------------
Total $81,815 $98,112 $126,320
=============================
Transfers to affiliates $8,243 $14,216 $25,188
=============================
Export sales:
From United States $11,336 $9,273 $17,245
=============================
Income from operations:
United States, including export $5,334 $5,594 $7,884
Europe 266 487 456
Asia 72 1,695 1,835
Corporate (1,170) (1,899) (2,450)
-----------------------------
Total $4,502 $5,877 $7,725
=============================
Identifiable assets:
United States, including export $36,353 $37,361 $48,935
Europe 3,070 3,051 4,845
Asia 3,656 5,481 5,952
Corporate 4,653 3,966 29,976
-----------------------------
Total $47,732 $49,859 $89,708
=============================
</TABLE>
-18-
<PAGE>
Report of Independent Public Accountants
To the Stockholders of General Scanning Inc.:
We have audited the accompanying consolidated balance sheets of General Scanning
Inc. (a Massachusetts corporation) and subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1995.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements 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 financial position of General Scanning Inc. and
subsidiaries as of December 31, 1995 and 1994 and the 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.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
October 30, 1996
-19-
<PAGE>
SIGNATURE
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 hereunto duly authorized.
Date: November 8, 1996 General Scanning Inc.
(Registrant)
/s/ Charles D. Winston
-----------------------
By: Charles D. Winston
President, Chief Executive Officer
and Director
-20-
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
2* Agreement and Plan of Merger, dated as of June 7, 1996, among
the Company, the Merger Subsidiary and View Engineering, Inc.
(For a list of omitted exhibits and schedules, see the table
of contents to the Merger Agreement. The Registrant will
furnish a copy of any omitted exhibit or schedule to the
Commission upon request.
27 Financial Data Schedule
99.1* Press Release issued August 28, 1996
- ------
* Previously Filed
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-28-1996
<CASH> 25,695 16,322
<SECURITIES> 0 0
<RECEIVABLES> 23,552 29,715
<ALLOWANCES> 792 833
<INVENTORY> 25,087 27,894
<CURRENT-ASSETS> 79,248 78,978
<PP&E> 32,938 38,720
<DEPRECIATION> 23,747 25,612
<TOTAL-ASSETS> 89,708 93,248
<CURRENT-LIABILITIES> 26,852 24,235
<BONDS> 0 0
0 0
0 0
<COMMON> 119 122
<OTHER-SE> 59,605 65,496
<TOTAL-LIABILITY-AND-EQUITY> 89,708 93,248
<SALES> 126,320 116,517
<TOTAL-REVENUES> 126,320 116,517
<CGS> 68,398 62,732
<TOTAL-COSTS> 68,398 62,732
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 281 41
<INTEREST-EXPENSE> 1,055 723
<INCOME-PRETAX> 7,374 8,313
<INCOME-TAX> 2,803 3,907
<INCOME-CONTINUING> 4,571 4,406
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 4,571 4,406
<EPS-PRIMARY> .44 .35
<EPS-DILUTED> .44 .35
</TABLE>
