-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JT4SgXqyoJOkalIDZ8Xut8KxpAlbxHzzXV6DNeqSS0HK/K2IrQeEzWcCUJIf2K5C +jII9/vb8oGWAohZlIrcyw== 0000815910-96-000008.txt : 19961125 0000815910-96-000008.hdr.sgml : 19961125 ACCESSION NUMBER: 0000815910-96-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961113 DATE AS OF CHANGE: 19961122 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: METROLOGIC INSTRUMENTS INC CENTRAL INDEX KEY: 0000815910 STANDARD INDUSTRIAL CLASSIFICATION: 3577 IRS NUMBER: 221866172 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24712 FILM NUMBER: 96669688 BUSINESS ADDRESS: STREET 1: COLES ROAD AT RTE 42 CITY: BLACKWOOD STATE: NJ ZIP: 08012 BUSINESS PHONE: 609-228-8100 MAIL ADDRESS: STREET 1: COLES ROAD ROUTE 42 CITY: BLACKWOOD STATE: NJ ZIP: 08012 10-Q 1 FORM 10-Q THIRD QUARTER UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 29, 1996 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-24172 Metrologic Instruments, Inc. (Exact name of registrant as specified in its charter) New Jersey 22-1866172 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) Coles Road at Route 42, Blackwood, New Jersey 08012 (Address of principal executive offices) (Zip Code) (609) 228-8100 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . As of October 31, 1996 there were 5,269,322 shares of Common Stock, $.01 par value per share, outstanding. METROLOGIC INSTRUMENTS, INC. INDEX Part I - Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets - September 29, 1996 and December 31, 1995 3 Condensed Consolidated Statements of Operations - Three and Nine Months Ended September 29, 1996 and September 30, 1995 4 Condensed Consolidated Statements of Cash Flows - Nine Months Ended September 29, 1996 and September 30, 1995 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II - Other Information Item 1. Legal Proceedings 13 Item 2. Changes in Securities 14 Item 3. Defaults upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 15 Exhibit Index Statement Regarding Computation of Per Share Earnings. Financial Data Schedule PART I - FINANCIAL INFORMATION Item 1. Financial Statements METROLOGIC INSTRUMENTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (amounts in thousands except share data) September 29, December 31, 1996 1995 (Unaudited) Assets Current assets: Cash and cash equivalents $ 9,397 $12,065 Accounts receivable, net of allowance of $550 and $224 in 1996 and 1995, respectively 7,766 6,924 Inventory 6,528 3,456 Deferred income taxes 1,569 1,314 Other current assets 410 506 Total current assets 25,670 24,265 Property, plant and equipment, net 4,614 3,880 Patents and trademarks, net of amortization of $251 and $356 in 1996 and 1995, respectively 999 878 Holographic technology, net of amortization of $47 and $0 in 1996 and 1995, respectively 762 468 Security deposits and other assets 548 459 Deferred income taxes 1,330 1,451 Total assets $33,923 $31,401 Liabilities and stockholders' equity Current liabilities: Line of credit $ - $ 175 Current portion of notes payable 396 390 Accounts payable 3,242 2,301 Accrued expenses 6,616 6,067 Accrued legal settlement 548 599 Total current liabilities 10,802 9,532 Notes payable, net of current portion 557 817 Due to former officer, net of current portion - 84 Deferred income taxes 29 42 Accrued legal settlement 2,719 3,000 Stockholders' equity Preferred stock, $.01 par value: authorized shares - 500,000 issued shares - none - - Common stock, $.01 par value: authorized shares - 10,000,000 issued and outstanding shares - 5,253,608 in 1996 and 5,249,150 in 1995 53 52 Additional paid-in capital 14,857 14,807 Retained earnings 4,536 2,621 Deferred compensation (19) (37) Translation adjustment 389 483 Total stockholders' equity 19,816 17,926 Total liabilities and stockholders' equity $33,923 $31,401 See accompanying notes. METROLOGIC INSTRUMENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (amounts in thousands except share and per share data) Three Months Ended Nine Months Ended Sept. 29, Sept. 30, Sept. 29, Sept. 30, 1996 1995 1996 1995 (Unaudited) (Unaudited) Sales $11,525 $9,716 $33,624 $30,369 Cost of sales 7,032 5,908 20,457 17,493 Gross profit 4,493 3,808 13,167 12,876 Selling, general and administrative expenses 2,502 2,646 7,791 7,755 Research and development expenses 808 725 2,379 2,173 Operating income 1,183 437 2,997 2,948 Other income (expense) Interest expense (29) (61) (85) (121) Interest income 94 114 321 337 Other income (expense) (55) - (133) 26 10 53 103 242 Income before provision for income taxes 1,193 490 3,100 3,190 Provision for income taxes 453 191 1,185 1,272 Net income $ 740 $ 299 $ 1,915 $ 1,918 Net income per share $ 0.14 $0.06 $ 0.36 $ 0.36 Weighted average number of shares used in computing net income per share 5,285,097 5,250,531 5,271,470 5,287,566 See accompanying notes. METROLOGIC INSTRUMENTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (amounts in thousands) Nine Months Ended Sept. 29 Sept. 30 1996 1995 (Unaudited) Net cash (used in) provided by operating activities $ (236) $ 1,465 Investing activities: Purchase of Holoscan, Inc. and holographic technology, net of cash acquired (521) (332) Purchase of equipment and building improvements (1,235) (1,145) Expenditures on patents and trademarks (172) (264) Net cash used in investing activities (1,928) (1,741) Financing activities: Net proceeds from employee stock purchase plan and exercise of stock options 42 208 Payments on line of credit (170) - Payments of amounts due to former officer (150) (150) Principal payments of notes payable (134) - Capital lease payments (120) (89) Net cash used in financial activities (532) (31) Effect of exchange rate changes on cash 28 (337) Net decrease in cash (2,668) (644) Cash and cash equivalents at beginning of period 12,065 11,925 Cash and cash equivalents at end of period $ 9,397 $11,281 Supplemental disclosure of cash flow information: Cash paid for interest $ 56 $ 38 Cash paid for income taxes $ 1,947 $ 1,487 Capital lease obligations incurred $ - $ 531 See accompanying notes. METROLOGIC INSTRUMENTS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (amounts in thousands except share and per share data) (Unaudited) 1. Business Metrologic Instruments, Inc. and its wholly owned subsidiaries (the "Company") design, manufacture and market bar code scanning equipment incorporating laser and holographic technology. These scanners rapidly, accurately and efficiently read and decode all widely used bar codes and provide an efficient means for data capture and automated data entry into computerized systems. 2. Accounting Policies Interim Financial Information The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the Condensed Consolidated Financial Statements have been included. Results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. The Condensed Consolidated Financial Statements and these Notes should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations contained in this Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 31, 1995, including the Consolidated Financial Statements and the Notes thereto for the year ended December 31, 1995. 3. Inventory Inventory consists of the following: September 29, December 31, 1996 1995 Raw materials $2,932 $1,698 Work-in-process 2,329 1,311 Finished goods 1,267 447 $6,528 $3,456 4. Net Income Per Share Net income per share is calculated based on net income and the weighted average number of common shares and common share equivalents outstanding during the three and nine months ended September 29, 1996 and September 30, 1995. 5. Commitments and Contingencies The Company files domestic and foreign patent applications to protect its technological position and new product development. From time to time, the Company receives legal challenges to the validity of its patents or allegations that its products infringe the patents or other intellectual property of others. The Company is a party to a legal action alleging that the Company's prior version of one of its scanners infringed a patent held by another company. The Company has filed a counterclaim for a declaratory judgment asserting that the plaintiff's patent is invalid, and management believes that this action will not result in any material damages. Since 1995, the Company and a competitor have been negotiating an extensive cross-licensing of patents for which the Company and the competitor may pay royalties to each other under certain circumstances. There can be no assurance that these negotiations will result in the execution of a definitive agreement by the Company and the competitor, or that patent litigation between the Company and the competitor will not result if the current negotiations are unsuccessful. 6. Notes Payable The Company has an unsecured revolving demand loan with a commercial bank which allows for maximum borrowings of $5,000. The demand loan, which expires on June 30, 1997, bears interest at the bank's prime rate, which was 8.25% at September 29, 1996. The demand loan agreement requires the Company to comply with certain financial covenants and other restrictions. As of October 31, 1996, the Company was in compliance with such covenants and no amounts were outstanding under this revolving demand loan. On January 31, 1996, the Company paid a note payable which related to a patent litigation settlement entered into in December 1993. The note represented the excess of the minimum obligation pursuant to the related patent litigation settlement for the year ended December 31, 1993. (See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations.") 7. Acquisition of Holoscan, Inc. including Holographic Technology The Company exercised its option to purchase all of the outstanding shares of common stock of Holoscan, Inc. ("Holoscan") on March 1, 1996 for $521, net of cash acquired. The Company purchased a 51% interest in Holoscan in 1995 in the form of non-voting, convertible preferred stock for $360. Concurrent with the exercise of the above option, the Company converted its non-voting, convertible preferred stock of Holoscan to an equal number of shares of Holoscan common stock and now owns 100% of the outstanding capital stock of Holoscan. The Company has consolidated the assets and liabilities at September 29, 1996 and results of operations and cash flows of Holoscan for the period March 1, 1996 to September 29, 1996. The amount by which the consideration paid by the Company for the acquisition of Holoscan's convertible preferred stock, the conversion of the preferred stock to common stock and the purchase of all outstanding common stock exceeded Holoscan's identifiable assets less liabilities was recorded as holographic technology and is being amortized over ten years. For the period March 1, 1996 through September 29, 1996, $47 was recorded as amortization of the holographic technology. Pursuant to an option agreement entered into in March 1995 among the Company, Holoscan and the holders of all of Holoscan's outstanding common stock and options and warrants to purchase common stock (collectively, the "Holders"), the Company agreed to pay to each Holder, through 1998, a payment based on the Company's sales of certain holographic laser scanners. As of September 29, 1996, an aggregate of $4 had been paid to the Holders. Such payments in future periods will be considered additions to holographic technology and will be amortized over the remainder of the ten year period. (The remainder of this page is intentionally left blank.) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion of the Company's results of operations and liquidity and capital resources should be read in conjunction with the unaudited Condensed Consolidated Financial Statements of the Company and the related Notes thereto appearing elsewhere in this Form 10-Q, the Consolidated Financial Statements and the Notes thereto for the year ended December 31, 1995 appearing in the Company's Form 10-K for the year ended December 31, 1995 and the Forms 10-Q for the three months ended March 31, 1996 and June 30, 1996. The Condensed Consolidated Financial Statements for the three and nine months ended September 29, 1996 and September 30, 1995 are unaudited. The Company derives its revenues from sales of its scanners through distributors, value-added resellers ("VARs"), original equipment manufacturers ("OEMs") and directly to end-users in the United States and in over 80 foreign countries. Since 1991, the Company has experienced growth in revenues with a significant percentage of its revenues derived from international sales. Results of Operations Three Months Ended September 29, 1996 Compared with Three Months Ended September 30, 1995 Sales increased 18.6% to $11,525,000 in the three months ended September 29, 1996 from $9,716,000 in the three months ended September 30, 1995, principally as a result of an increase in market acceptance of the Company's hand-held and fixed projection scanners. International sales accounted for $7,062,000 (61.3% of total sales) in the three months ended September 29, 1996 and $4,860,000 (50.0% of total sales) in the three months ended September 30, 1995. The increase in the percentage of international sales to total sales in the three months ended September 29, 1996 compared with the corresponding period in 1995 is primarily due to the Company's increased sales and marketing efforts abroad and the completion of shipments to a U.S. customer during the second quarter of 1996. Shipments to such U.S. customer had accounted for approximately 13% of total sales for the three months ended September 30, 1995. One customer accounted for approximately 6.6% of total sales for the three months ended September 29, 1996. During the same period, no other customer accounted for more than 5% of the Company's sales. Cost of sales increased 19.0% from $5,908,000 in the three months ended September 30, 1995 to $7,032,000 in the three months ended September 29, 1996. Cost of sales as a percentage of sales increased to 61.0% from 60.8% for the same period a year ago. These increases were due primarily to reductions in the average selling prices of certain of the Company's products. Selling, general and administrative expenses decreased 5.4% to $2,502,000 in the three months ended September 29, 1996 from $2,646,000 in the three months ended September 30, 1995 and decreased as a percentage of sales from 27.2% to 21.7%. These decreases were due to higher legal costs incurred in the three months ended September 30, 1995 compared to the corresponding period in 1996. Research and development expenses increased 11.4% from $725,000 in the three months ended September 30, 1995 to $808,000 in the three months ended September 29, 1996, but decreased as a percentage of sales from 7.5% to 7.0% for the three months ended September 30, 1995 and September 29, 1996, respectively. The increase in research and development expenses was due to salaries for additional research and development personnel hired in 1996, partially offset by the completion as of March 31, 1996 of expenditures associated with the initial development of holographic technology. Operating income increased 170.7% to $1,183,000 in the three months ended September 29, 1996 from $437,000 in the three months ended September 30, 1995, and operating income as a percentage of sales increased to 10.3% in the three months ended September 29, 1996 from 4.5% in the three months ended September 30, 1995. Other income decreased to $10,000 in the three months ended September 29, 1996 from $53,000 in the three months ended September 30, 1995. Other income for the three months ended September 29, 1996 and September 30, 1995 consisted of interest income of $94,000 and $114,000, respectively, offset by aggregate amounts of $84,000 and $61,000, respectively, which include interest expense in both periods and foreign currency transaction losses incurred by the Company's German subsidiary in the three months ended September 29, 1996. Net income increased 147.5% to $740,000 in the three months ended September 29, 1996 from $299,000 in the three months ended September 30, 1995. Net income reflects a 38.0% effective income tax rate in the third quarter of 1996 compared with 39.0% in the third quarter of 1995. The reduced effective income tax rate resulted primarily from increased tax benefits arising from the existence of the Company's foreign sales corporation which, in accordance with the United States Internal Revenue Code permits the Company to reduce its U.S. federal income tax liability on profits from sales to foreign customers. Nine Months Ended September 29, 1996 Compared with Nine Months Ended September 30, 1995. Sales increased 10.7% to $33,624,000 in the first nine months of 1996 from $30,369,000 in the first nine months of 1995 principally as a result of an increase in market acceptance of the Company's hand-held and fixed projection scanners and increased marketing and sales efforts. International sales accounted for $20,447,000 (60.8% of total sales) for the first nine months of 1996 and $16,764,000 (55.2% of total sales) for the first nine months of 1995. One customer accounted for approximately 6.1% of total sales in the first nine months of 1996. Two other customers accounted for approximately 5.6% and 5.4%, respectively of total sales in the first nine months of 1996. No other customer accounted for more than 5.0% of total sales for the first nine months of 1996. Cost of sales increased 16.9% to $20,457,000 in the first nine months of 1996 from $17,493,000 in the first nine months of 1995. Cost of sales as a percentage of sales increased to 60.8% from 57.6%. These increases were due primarily to reductions in the average selling prices of certain of the Company's products. Selling, general, and administrative expenses increased 0.5% to $7,791,000 in the first nine months of 1996 from $7,755,000 in the first nine months of 1995 and decreased as a percentage of sales from 25.5% to 23.2%. Research and development expenses increased 9.5% to $2,379,000 in the first nine months of 1996 from $2,173,000 in the first nine months of 1995 but decreased as a percentage of sales from 7.2% to 7.1% for the nine months ended September 30, 1995 and September 29, 1996, respectively. The increase was due primarily to salaries for additional research and development personnel hired during the nine months ended September 29, 1996, which were partially offset by the completion as of March 31, 1996 of expenditures associated with the initial development of holographic technology. Operating income increased 1.7% to $2,997,000 in the first nine months of 1996 from $2,948,000 in the first nine months of 1995. Operating income as a percentage of sales decreased to 8.9% in the first nine months of 1996 from 9.7% in the first nine months of 1995. Other income decreased to $103,000 in the first nine months of 1996 from $242,000 in the first nine months of 1995. Other income for the nine months ended September 29, 1996 and September 30, 1995 consisted of interest income of $321,000 and $337,000, respectively, offset by aggregate amounts of $218,000 and $95,000, respectively, which includes interest expense and foreign currency transaction losses and gains incurred by the Company's German subsidiary. Net income decreased to $1,915,000 in the first nine months of 1996 from $1,918,000 in the first nine months of 1995. Net income reflects a 38.0% effective income tax rate in the nine months ended September 29, 1996 compared with 40.0% in the corresponding period in 1995. The reduced effective income tax rate resulted primarily from increased tax benefits arising from the existence of the Company's foreign sales corporation which, in accordance with The United States Internal Revenue Code, permits the Company to reduce its U.S. federal income tax liability on profits from sales to foreign customers. Inflation and Seasonality Inflation and seasonality have not had a material impact on the Company's results of operations. There can be no assurance, however, that the Company's sales in future years will not be impacted by fluctuations in seasonal demand from European customers in its third quarter or from reduced production days in its fourth quarter. Liquidity and Capital Resources As of September 29, 1996 and December 31, 1995, the Company's working capital was approximately $14,868,000 and $14,733,000, respectively. During the nine months ended September 29, 1996, the Company used net cash of $236,000 compared with funds provided of $1,465,000 in operating activities for the nine months ended September 30, 1995. The cash used in operating activities in the nine months ended September 29, 1996 primarily resulted from an increase in inventory and accounts receivable which was partially financed by an increase in accounts payable and accrued expenses. The Company's primary uses of cash have been for operating expenses, research and development expenses, capital expenditures, investments in patents and trademarks and the acquisition of Holoscan including its holographic technology. Pursuant to the settlement of a patent lawsuit in December 1993, the Company is required to pay amounts based on gross sales commencing in 1993 for a 12 year period with an aggregate maximum of $7,500,000 and an aggregate minimum of $4,450,000, which minimum amount was charged to net income in 1993. Annual minimum payment obligations are $375,000. In addition to such minimum obligations for 1996, the Company incurred approximately $334,000 pursuant to the settlement agreement during the nine months ended September 29, 1996. On January 31, 1996, the Company paid a note payable relating to the patent litigation settlement which represented the excess of the minimum obligation for the year ended December 31, 1993. The Company's total deferred income tax asset (current and long-term) of approximately $2,899,000 is based upon cumulative temporary differences as of September 29, 1996, which provide approximately $6,743,000 of future income tax deductions against future taxable income. The temporary differences arise primarily from recording the patent lawsuit settlement as an expense for accounting purposes prior to receiving the related tax benefit. The Company has an unsecured revolving demand loan with PNC Bank, NA which allows for maximum borrowings of $5,000,000. The demand loan requires the Company to comply with certain financial covenants and other restrictions. As of October 31, 1996, the Company was in compliance with the financial covenants and no amounts were outstanding under this facility. The Company also has a 500,000 deutsche mark (approximately $328,000 as of September 29, 1996) unsecured revolving credit facility with Bayerische Hypotheken-Und Wechsel-Bank in the name of its German subsidiary, Metrologic Instruments GmbH. As of October 31, 1996, approximately $152,000 ($0 at September 29, 1996) was outstanding under this revolving credit facility. The Company's current plans for additional capital expenditures in the 1996 fiscal year include manufacturing automation equipment and office equipment in the aggregate amount of approximately $500,000. The Company may be subject to losses as a result of foreign currency transactions. Accordingly, the Company's liquidity could be adversely affected by changes in foreign currency exchange rates. On March 1, 1996, the Company exercised its option under its March 1995 Option Agreement (as defined herein) with Holoscan to acquire the outstanding equity securities of Holoscan and made payments aggregating approximately $521,000. (See also Part II, Item 5. "Other Information.") The Company believes that its current cash and cash equivalents, along with cash generated from operations and its revolving credit facilities, will be adequate to fund the Company's operations through at least the next 12 months. The discussion in this Form 10-Q includes forward-looking statements based on current management expectations. Factors which would cause the results to differ from these expectations include the following: general economic conditions; competitive factors and pricing pressures; technological changes in the scanner industry; availability of patent protection for the Company's holographic scanners and other products; possible patent litigation between the Company and a competitor if the current negotiations are unsuccessful (see Condensed Consolidated Financial Statements Note 5); and market acceptance of the Company's new products. PART II - OTHER INFORMATION Item 1. Legal Proceedings On July 7, 1992, PSC, Inc. ("PSC"), a competitor of the Company, filed a lawsuit in the United States District Court for the Western District of New York (the "Court") against the Company, alleging that the Company's prior version of its MS900 series of hand-held scanners infringed a PSC patent. The complaint seeks an injunction and damages in an unstated amount. The Company filed a counterclaim for a declaratory judgment asserting that the PSC patent is invalid and that the Company's prior version of its MS900 series of hand-held scanners did not infringe such patent. On October 13, 1995, the Court interpreted the claims of the PSC patent in a patent infringement lawsuit filed by PSC against another competitor. Based upon that interpretation, it is the Company's belief that the MS900 series scanners do not infringe the subject patent. Accordingly, on October 20, 1995, Metrologic filed a motion seeking summary judgment of non-infringement. In response, the Court stayed this action, including the motion for summary judgment, pending the outcome of the appeal filed by PSC in the other patent infringement lawsuit. The Company redesigned its MS900 series of hand-held scanners in 1993 in an effort to avoid any interruption of sales which would result from the possibility of the entry of an injunction and to minimize any damage award that PSC might receive. While the Company believes that PSC will not prevail on this infringement claim with respect to the redesigned MS900 series of hand-held scanners, there can be no assurance that PSC will not prevail. While the amount of any potential damage award is presently unknown, the Company believes that an adverse decision in this action would not have a material adverse effect on the Company. However, patent damage awards are unpredictable and there can be no certainty with respect to the size of any such award. Item 2. Changes in Securities Not applicable. Item 3. Defaults upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information In March 1995, the Company, Holoscan and the Holders entered into a stock purchase agreement (the "Stock Purchase Agreement") and an option agreement (the "Option Agreement"). Pursuant to the terms of the Stock Purchase Agreement, the Company purchased, for $360,000, shares of Holoscan's convertible preferred stock. The Company elected to convert these shares of convertible preferred stock into shares of common stock on March 1, 1996, resulting in the Company's ownership of 51% of Holoscan's outstanding common stock. Pursuant to the Option Agreement, the Holders granted the Company an option to acquire from each Holder the equity securities of Holoscan owned by such Holder. On March 1, 1996, the Company exercised its option under the Option Agreement and acquired the remaining 49% of the outstanding Holoscan common stock and other outstanding equity securities of Holoscan from the Holders. As a result, Holoscan is a wholly-owned subsidiary of the Company. In addition, the Company agreed to pay to each Holder, through 1998, a payment based on the Company's sales of certain holographic laser scanners. As of September 29, 1996, the Company has paid an aggregate of $4,000 to the Holders pursuant to the Option Agreement. (See also Part I, Item 2. - "Management's Discussion and Analysis of Financial Condition and Results of Operations"). Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit Number 11 Statement Regarding Computation of Per Share Earnings. 27 Financial Data Schedule. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter ended September 29, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. METROLOGIC INSTRUMENTS, INC. Date: November 13, 1996 By:/s/ C. Harry Knowles C. Harry Knowles Chairman of the Board, President and Chief Executive Officer Date: November 13, 1996 By:/s/Thomas E. Mills IV Thomas E. Mills IV Vice President Finance & Chief Financial Officer (Principal Financial Officer) EXHIBIT INDEX Exhibit No. 11 Statement Regarding Computation of Per Share Earnings 27 Financial Data Schedule EX-11 2 COMPUTATION OF PER SHARE EARNINGS Three Months Ended Nine Months Ended Sept. 29, Sept. 30, Sept. 29, Sept. 30, 1996 1995 1996 1995 (Unaudited) (Unaudited) Primary Average shares outstanding 5,253 5,243 5,251 5,235 Net effect of dilutive stock options- based on the treasury stock method using average market price 27 - 15 44 Net effect of dilutive restricted stock grants 5 8 5 9 Total 5,285 5,251 5,271 5,288 Net income $ 740 $ 299 $ 1,915 $ 1,918 Per share earnings $ 0.14 $ 0.06 $ 0.36 $ 0.36 The computation of per share earnings on a fully diluted basis does not materially differ from the amounts calculated on a primary basis. EX-27 3 FDS --
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNAUDITED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 29, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JAN-01-1996 DEC-31-1995 SEP-29-1996 9,397,000 0 8,316,000 550,000 6,528,000 25,670,000 4,614,000 0 33,923,000 10,802,000 0 0 0 53,000 19,763,000 33,923,000 33,624,000 33,624,000 20,457,000 30,627,000 (103,000) 0 85,000 3,100,000 1,185,000 0 0 0 0 1,915,000 .36 .36
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