0000950124-01-503640.txt : 20011031
0000950124-01-503640.hdr.sgml : 20011031
ACCESSION NUMBER: 0000950124-01-503640
CONFORMED SUBMISSION TYPE: 10-K405/A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20011029
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PERCEPTRON INC/MI
CENTRAL INDEX KEY: 0000887226
STANDARD INDUSTRIAL CLASSIFICATION: OPTICAL INSTRUMENTS & LENSES [3827]
IRS NUMBER: 382381442
STATE OF INCORPORATION: MI
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10-K405/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-20206
FILM NUMBER: 1768785
BUSINESS ADDRESS:
STREET 1: 47827 HALYARD DRIVE
CITY: PLYMOUTH
STATE: MI
ZIP: 48170-2461
BUSINESS PHONE: 3134144816
MAIL ADDRESS:
STREET 1: 47827 HALYARD DRIVE
CITY: PLYMOUTH
STATE: MI
ZIP: 48170-2461
10-K405/A
1
x65105ae10-k405a.txt
AMENDMENT NO. 1 TO FORM 10-K
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2001 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: 0-20206
PERCEPTRON, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-2381442
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
47827 Halyard Drive
Plymouth, Michigan 48170-2461
(734) 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
RIGHTS TO PURCHASE PREFERRED STOCK
(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, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x]
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 September
17, 2001, as reported by The Nasdaq Stock Market, was approximately $8,500,000
(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 September 17, 2001, was 8,185,439.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document, to the extent specified in this report, are
incorporated by reference in Part III of this report:
Document Incorporated by reference in:
-------- -----------------------------
Proxy Statement for 2001
Annual Meeting of Shareholders Part III, Items 10-13
--------------------------------------------------------------------------------
This Form 10-K/A is being filed to amend Item 8 for an incorrect sub-total
number on the line entitled "Total Other Assets" in the Consolidated Balance
Sheets.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
----
Report of Independent Accountants..................................................... 3
Consolidated Financial Statements:
Balance Sheets - June 30, 2001, 2000 and 1999..................................... 4
Statements of Income for the twelve months ended June 30, 2001 and 2000, the six
months ended June 30, 1999 and the year ended December 31, 1998................... 5
Statements of Cash Flows for the twelve months ended June 30, 2001 and 2000,
the six months ended June 30, 1999 and the year ended December 31, 1998........... 6
Statements of Shareholders' Equity for the twelve months ended June 30, 2001 and
2000, the six months ended June 30, 1999 and the year ended December 31, 1998..... 7
Notes to Consolidated Financial Statements........................................ 8
2
[PRICEWATERHOUSECOOPERS LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of Perceptron, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity and cash flows present
fairly, in all material respects, the financial position of Perceptron, Inc. and
its subsidiaries ("the Company") at June 30, 2001, June 30, 2000 and June 30,
1999, and the results of their operations and their cash flows for the years
ended June 30, 2001 and June 30, 2000, for the six months ended June 30, 1999
and for the year ended December 31, 1998, in conformity with accounting
principles generally accepted in the United States of America. In addition, in
our opinion, the financial statement schedule referred to in item 14(A)(2) for
the years ended June 30, 2001 and June 30, 2000, for the six months ended June
30, 1999 and for the year ended December 31, 1998 presents fairly, in all
material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
As discussed in Note 2 to the consolidated financial statements, during the year
ended June 30, 2001, the Company changed its method of recognizing revenue.
PricewaterhouseCoopers LLP
Detroit, Michigan
August 15, 2001 except as to Note 9 for which the date
is September 24, 2001.
3
PERCEPTRON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AT, JUNE 30,
(In Thousands, except per share amount) 2001 2000 1999
-------------- -------------- --------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,680 $ 5,947 $ 4,205
Receivables:
Billed receivables, net of allowance for doubtful accounts 20,981 26,507 21,128
of $734, $268 and $218, respectively
Unbilled and other receivables 4,435 6,126 4,611
Inventories, net of reserves of $2,038, $1,200 and $600, respectively 16,011 12,582 12,323
Deferred taxes and other current assets 1,246 1,564 1,307
-------------- -------------- --------------
Total current assets 49,353 52,726 43,574
-------------- -------------- --------------
PROPERTY AND EQUIPMENT
Building and land 6,032 6,004 5,990
Machinery and equipment 10,045 9,598 9,774
Furniture and fixtures 1,253 1,195 1,469
-------------- -------------- --------------
17,330 16,797 17,233
Less - Accumulated depreciation and amortization (7,549) (6,125) (6,121)
-------------- -------------- --------------
Net property and equipment 9,781 10,672 11,112
-------------- -------------- --------------
OTHER ASSETS
Intangible assets, net of accumulated amortization 1,482 1,313 1,692
of $1,134, $660 and $279, respectively
Deferred tax asset and other 6,903 1,516 4,956
-------------- -------------- --------------
Total other assets 8,385 2,829 6,648
-------------- -------------- --------------
TOTAL ASSETS $ 67,519 $ 66,227 $ 61,334
============== ============== ==============
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,401 $ 4,549 $ 3,550
Accrued liabilities and expenses 3,858 4,503 4,256
Deferred revenue (Note 2) 2,588 139 363
Notes payable (Note 9) 13,615 - -
Income taxes payable 273 87 633
Accrued compensation 449 2,785 203
-------------- -------------- --------------
Total current liabilities 26,184 12,063 9,005
-------------- -------------- --------------
LONG-TERM LIABILITIES
Notes payable (Note 9) 1,040 4,595 4,265
-------------- -------------- --------------
Total long-term liabilities 1,040 4,595 4,265
-------------- -------------- --------------
Total liabilities 27,224 16,658 13,270
-------------- -------------- --------------
SHAREHOLDERS' EQUITY
Preferred stock - no par value, authorized 1,000 shares, issued none - - -
Common stock, $0.01 par value, authorized 19,000 shares, issued
and outstanding 8,185, 8,170, and 8,169, respectively 82 82 82
Accumulated other comprehensive income (loss) (5,505) (3,723) (3,340)
Additional paid-in capital 41,056 41,010 40,979
Retained earnings 4,662 12,200 10,343
-------------- -------------- --------------
Total shareholders' equity 40,295 49,569 48,064
-------------- -------------- --------------
TOTAL LIABILITIES AND COMMON SHAREHOLDERS' EQUITY $ 67,519 $ 66,227 $ 61,334
============== ============== ==============
The notes to the consolidated financial statements are an integral part of these
statements.
4
PERCEPTRON, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
TWELVE MONTHS ENDED SIX MONTHS TWELVE MONTHS
JUNE 30, ENDED ENDED
(In Thousands, Except Per Share Amounts) 2001 2000 JUNE 30, 1999 DECEMBER 31, 1998
--------------- --------------- --------------- -----------------
NET SALES $ 50,714 $ 69,821 $ 21,256 $ 49,635
COST OF SALES 26,121 31,232 10,768 22,442
--------------- --------------- --------------- ---------------
GROSS PROFIT 24,593 38,589 10,488 27,193
OPERATING EXPENSES
Selling, general and administrative 19,319 21,815 10,693 20,113
Engineering, research and development 13,821 13,115 6,455 11,384
Restructuring Charge (Note 3) 900 - - -
Non-cash intangible asset write-off (Note 8) - - - 1,472
--------------- --------------- --------------- ---------------
Total operating expenses 34,040 34,930 17,148 32,969
--------------- --------------- --------------- ---------------
OPERATING INCOME (LOSS) (9,447) 3,659 (6,660) (5,776)
--------------- --------------- --------------- ---------------
OTHER INCOME AND (DEDUCTIONS)
Interest expense (769) (424) (93) (193)
Interest income 232 191 93 842
Foreign currency gain (loss) (250) (30) (18) (23)
Other (Note 5) 223 (102) (671) 7
--------------- --------------- --------------- ---------------
Total other income (deductions) (564) (365) (689) 633
--------------- --------------- --------------- ---------------
INCOME (LOSS) BEFORE INCOME TAXES (10,011) 3,294 (7,349) (5,143)
INCOME TAX EXPENSE (BENEFIT) (3,806) 1,437 (2,489) (1,804)
--------------- --------------- --------------- ---------------
INCOME (LOSS) BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE (6,205) 1,857 (4,860) (3,339)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
PRINCIPLE, NET OF $764 OF TAXES (NOTE 2) (1,333) - - -
--------------- --------------- --------------- ---------------
NET INCOME (LOSS) $ (7,538) $ 1,857 $ (4,860) $ (3,339)
=============== =============== =============== ===============
EARNINGS (LOSS) PER SHARE BEFORE CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
BASIC $ (0.76) $ 0.23 $ (0.59) $ (0.41)
DILUTED $ (0.76) $ 0.23 $ (0.59) $ (0.41)
EARNINGS (LOSS) PER SHARE OF CUMULATIVE
EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
BASIC $ (0.16) $ - $ - $ -
DILUTED $ (0.16) $ - $ - $ -
EARNINGS (LOSS) PER SHARE
BASIC $ (0.92) $ 0.23 $ (0.59) $ (0.41)
DILUTED $ (0.92) $ 0.23 $ (0.59) $ (0.41)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 8,178 8,170 8,185 8,239
DILUTED 8,178 8,199 8,185 8,239
The notes to the consolidated financial statements are an integral part of these
statements.
5
PERCEPTRON, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
TWELVE MONTHS ENDED SIX MONTHS TWELVE MONTHS
JUNE 30, ENDED ENDED
(In Thousands) 2001 2000 JUNE 30, 1999 DECEMBER 31, 1998
------------ ------------ ------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (7,538) $ 1,857 $ (4,860) $ (3,339)
Adjustments to reconcile net income (loss) to net cash provided from
(used for) operating activities:
Depreciation and amortization 2,076 2,293 1,268 2,488
Deferred income taxes (4,931) 2,325 (1,950) (3,190)
Non-cash write-off of intangible asset (Note 8) - - - 1,472
Other 29 31 18 -
Changes in assets and liabilities, exclusive of changes shown
separately 2,934 (3,369) 2,141 (4,393)
------------ ------------ ------------ ------------
Net cash provided from (used for) operating activities (7,430) 3,137 (3,383) (6,962)
------------ ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of short-term debt 27,060 17,585 8,847 2,000
Repayment of short-term debt (17,000) (17,255) (5,622) (2,000)
Repurchase of company stock - - (257) (1,642)
Proceeds from stock plans 46 31 - 1,212
------------ ------------ ------------ ------------
Net cash provided from (used for) financing activities 10,106 361 2,968 (430)
------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (1,652) (1,456) (995) (2,400)
Sales and maturities of marketable securities - - - 2,000
Sale (purchase) of assets (Note 8) 270 - - (1,114)
------------ ------------ ------------ ------------
Net cash (used for) investing activities (1,382) (1,456) (995) (1,514)
------------ ------------ ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (561) (300) (138) 211
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 733 1,742 (1,548) (8,695)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,947 4,205 5,753 14,448
------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,680 $ 5,947 $ 4,205 $ 5,753
============ ============ ============ ============
CHANGES IN ASSETS AND LIABILITIES, EXCLUSIVE OF CHANGES SHOWN SEPARATELY
Billed, unbilled and other receivables, net $ 5,996 $ (7,028) $ 4,310 $ (667)
Inventories (3,428) (259) (959) (3,262)
Accounts payable 852 999 (220) 687
Other current assets and liabilities (486) 2,919 (990) (1,151)
------------ ------------ ------------ ------------
$ 2,934 $ (3,369) $ 2,141 $ (4,393)
============ ============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for interest $ 714 $ 371 $ 93 $ 6
Cash paid during the year for income taxes 230 1,031 322 1,288
Non-cash transactions:
Intangible assets acquired by assumption of note payable (Note 8) - - - 1,040
The notes to the consolidated financial statements are an integral part of these
statements.
6
PERCEPTRON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ACCUMULATED
OTHER ADDITIONAL RETAINED TOTAL
COMMON STOCK COMPREHENSIVE PAID-IN EARNINGS SHAREHOLDERS'
(In Thousands) SHARES AMOUNT INCOME CAPITAL (DEFICIT) EQUITY
-------------------------------------------------------------------------------
BALANCES, JANUARY 1, 1998 8,207 $ 82 $(2,411) $ 41,666 $ 18,542 $ 57,879
Comprehensive income (loss)
Net loss (3,339) (3,339)
Other comprehensive income
Foreign currency translation adjustments 742 742
--------------
Total comprehensive income (loss) (2,597)
--------------
Stock options exercised, net of shares tendered 135 1 988 989
Tax benefit relating to stock option plans 223 223
Stock repurchased (123) (1) (1,641) (1,642)
------------------------------------------------------------------------------
BALANCES, DECEMBER 31, 1998 8,219 $ 82 $(1,669) $ 41,236 $ 15,203 $ 54,852
==============================================================================
Comprehensive income (loss)
Net loss (4,860) (4,860)
Other comprehensive income
Foreign currency translation adjustments (1,671) (1,671)
--------------
Total comprehensive income (loss) (6,531)
--------------
Stock repurchased (50) - (257) (257)
------------------------------------------------------------------------------
BALANCES, JUNE 30, 1999 8,169 $ 82 $(3,340) $ 40,979 $ 10,343 $ 48,064
==============================================================================
Comprehensive income
Net income 1,857 1,857
Other comprehensive income
Foreign currency translation adjustments (383) (383)
--------------
Total comprehensive income 1,474
--------------
Stock plans 1 - 31 31
------------------------------------------------------------------------------
BALANCES, JUNE 30, 2000 8,170 $ 82 $(3,723) $ 41,010 $ 12,200 $ 49,569
==============================================================================
Comprehensive income (loss)
Net loss (7,538) (7,538)
Other comprehensive income
Foreign currency translation adjustments (1,782) (1,782)
--------------
Total comprehensive income (loss) (9,320)
--------------
Stock plans 15 - 46 46
------------------------------------------------------------------------------
BALANCES, JUNE 30, 2001 8,185 $ 82 $(5,505) $ 41,056 $ 4,662 $ 40,295
==============================================================================
The notes to the consolidated financial statements are an integral part of these
statements.
7
PERCEPTRON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
Perceptron, Inc. and its wholly-owned subsidiaries (collectively, the "Company")
are involved in the design, development, manufacture, and marketing of
information-based measurement and inspection focused solutions for process
improvements primarily for the automotive and forest products industries.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
On June 24, 1999, the Company elected to change its reporting period from a
calendar year ending December 31, to a fiscal year ending June 30. As a result,
the financial statements include the six-month transition period January 1, 1999
through June 30, 1999.
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. Certain amounts for prior
periods have been reclassified to conform to the current period presentation.
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.
FOREIGN 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 under
"Other Income and Deductions".
CONCENTRATION OF CREDIT RISK
The Company markets and sells its products primarily to automotive assembly
companies and to system integrators or original equipment manufacturers
("OEMs"), who in turn sell to automotive assembly companies. The Company also
markets and sells its forest products to lumber mills and to OEMs, who in turn,
sell to end-users. 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.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with maturities of
three months or less to be cash equivalents. Fair value approximates carrying
value because of the short maturity of the cash equivalents. Those with a
greater life are recorded as marketable securities.
PROPERTY, EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment are recorded at cost. Depreciation related to machinery
and equipment and furniture and fixtures is primarily computed on a
straight-line basis over estimated useful lives ranging from 3 to 10 years.
Depreciation on buildings is computed on a straight-line basis over 37 1/2
years. Intangible assets are being amortized generally over 5 years.
When assets are retired, the costs of such assets 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.
WARRANTY
Automotive industry systems carry a three year warranty for parts and a one year
warranty for labor and travel related to warranty. Forest Products industry
systems carry a three-year warranty for parts for systems that do not
incorporate lasar scanners. Lasar scanning systems carry a one-year warranty for
parts. Labor and travel are not covered by warranty in the
8
Forest Products industry. The Company provides a reserve for warranty based on
its experience. If a special circumstance arises requiring a higher level of
warranty, the Company would make a special warranty provision commensurate with
the facts.
INVENTORIES
Inventory is stated at the lower of cost or market. The cost of inventory is
determined by the first-in, first-out ("FIFO") method. The Company provides a
reserve for obsolescence to recognize the effects of engineering change orders
and other matters that affect the value of the inventory. When the related
inventory is disposed of, the obsolescence reserve is released. Inventory, net
of reserves, is comprised of the following (in thousands):
AT JUNE 30,
-------------------------------------------
2001 2000 1999
------------ ------------ ------------
Component parts $ 8,507 $ 7,214 $ 6,553
Work in process 1,627 1,204 1,683
Finished goods 5,877 4,164 4,087
------------ ------------ ------------
Total $16,011 $12,582 $12,323
============ ============ ============
EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing net income by the
weighted average number of common shares outstanding during the period. Other
obligations, such as stock options and warrants, are considered to be
potentially dilutive common shares. Diluted EPS assumes the issuance of
potential dilutive common shares outstanding during the period and adjusts for
any changes in income and the repurchase of common shares that would have
occurred from the assumed issuance unless such effect is anti-dilutive. A
reconciliation of both calculations is shown below (in thousands, except per
share amounts).
TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2001 2000 1999 1998
------------ ------------ ------------------- -----------------------
Income (loss) before cumulative
effect of change in accounting
principle $ (6,205) $ 1,857 $ (4,860) $ (3,339)
Cumulative effect of change in
accounting principle (1,333) - - -
------------ ------------ ------------ -------------
Net income (loss) $ (7,538) $ 1,857 $ (4,860) $ (3,339)
============ ============ ============ =============
Weighted average common shares:
Basic shares 8,178 8,170 8,185 8,239
Effect of dilutive securities:
Stock options and warrants - 29 - -
------------ ------------ ------------ -------------
Diluted Shares 8,178 8,199 8,185 8,239
============ ============ ============ =============
Basic earnings (loss) per share:
Before cumulative effect of
change in accounting principle $ (0.76) $ 0.23 $ (0.59) $ (0.41)
Cumulative effect of change in
accounting principle (0.16) - - -
After cumulative effect of change ------------ ------------ ------------ -------------
in accounting principle $ (0.92) $ 0.23 $ (0.59) $ (0.41)
============ ============ ============ =============
Diluted earnings (loss) per share:
Before cumulative effect of
change in accounting principle $ (0.76) $ 0.23 $ (0.59) $ (0.41)
Cumulative effect of change in
accounting principle (0.16) - - -
After cumulative effect of change ------------ ------------ ------------ -------------
in accounting principle $ (0.92) $ 0.23 $ (0.59) $ (0.41)
============ ============ ============ =============
9
Options to purchase 1,426,000, 1,161,000, 1,188,000 and 914,000 shares of common
stock were outstanding in the twelve months ended June 30, 2001 and 2000, six
months ended June 30, 1999 and the year ended December 31, 1998, respectively,
and were not included in the computation of diluted EPS because the effect would
have been anti-dilutive.
REVENUE RECOGNITION
Revenue related to products is recognized upon shipment when title and risk of
loss has passed to the customer, there is persuasive evidence of an arrangement,
the sales price is fixed or determinable, collection of the related receivable
is reasonably assured and customer acceptance criteria have been successfully
demonstrated. For multiple element arrangements, the Company defers the greater
of the fair value of any undelivered elements of the contract, such as
installation services, or the portion of the sales price of the contract which
is not payable until the undelivered elements are completed. See also Note 2,
"Change in Accounting Principle".
RESEARCH AND DEVELOPMENT
Research and development costs, including software development costs, are
expensed as incurred.
IMPAIRMENT OF LONG-LIVED ASSETS AND CERTAIN IDENTIFIABLE INTANGIBLES
The Company evaluates the carrying value of long-lived and intangible assets and
long-lived assets to be disposed of for potential impairment on an ongoing
basis. The Company considers projected future undiscounted cash flows or fair
values, as appropriate, compared with carrying amounts, trends and other
circumstances in making such estimates and evaluations. If an impairment is
indicated, the carrying amount of the asset or intangible is adjusted based on
its fair value.
FINANCIAL INSTRUMENTS
The carrying amounts of the Company's financial instruments, which include cash,
marketable securities, accounts receivable, accounts payable, and amounts due to
banks or other lenders, approximate their fair values at June 30, 2001, 2000 and
1999. Fair values have been determined through information obtained from market
sources and management estimates.
2. CHANGE IN ACCOUNTING PRINCIPLE
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 ("SAB 101"), "Revenue Recognition in Financial
Statements". SAB 101 summarizes certain areas of the Staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. Historically, the Company recognized revenue from the sales of
products upon shipment, and accrued for any costs of installation not completed.
The Company accounted for contractual acceptance terms based upon probable
achievement of meeting the acceptance criteria. Under the new accounting method
adopted retroactive to July 1, 2000, the Company recognizes the portion of
revenue from the sales of products upon shipment when both title and risk of
loss pass to the customer and defers the greater of the fair value or the
contractual holdback of any undelivered elements, such as installation services,
until the undelivered elements are completed. During the fourth quarter of
fiscal 2001, the Company implemented the SEC's SAB 101 guidelines, retroactive
to the beginning of the year. This was reported as a cumulative effect of a
change in accounting principle as of July 1, 2000. The cumulative effect of the
change in accounting principle on prior years resulted in a charge to income of
$1.3 million (net of income taxes of $764,000) or $.16 per diluted share which
has been included in income for the fiscal year ending June 30, 2001. For the
fiscal year ending June 30, 2001, the Company recognized $2.1 million in revenue
that is included in the cumulative effect adjustment as of July 1, 2000.
Implementing SAB 101 also had the effect of deferring sales of $1.9 million that
historically would have been recorded in fiscal 2001. The overall impact of SAB
101 on income before the cumulative effect of the accounting change for fiscal
2001 was a decrease of $192,000. The results for the first three-quarters of the
fiscal year ending June 30, 2001 have been restated in accordance with SAB 101
(see Note 17, Selected Quarterly Financial Data). Actual and pro forma amounts
for fiscal year 2000 are shown below for comparative purposes. Pro forma amounts
for the periods prior to July 1, 1999 have not been presented as the effect of
the change in accounting principle could not be reasonably determined.
Twelve Months Ended
June 30, 2000
(in thousands, except per share amounts) Reported Pro forma
-------------------- --------------------
Net Sales $69,821 $68,952
Gross Profit 38,589 37,798
Income before income taxes 3,294 2,503
Income tax expense 1,437 1,092
Net income 1,857 1,411
Earnings per share
Basic $ 0.23 $ 0.17
Diluted $ 0.23 $ 0.17
10
3. RESTRUCTURING CHARGE
The Company recorded a $2.2 million restructuring charge during fiscal 2001.
Approximately $1.3 million of the charge was recorded to engineering, research
and development and related to reserving for write-offs of inventory and capital
assets that were purchased to support product development projects that were
either stopped or put on hold and for which it was determined that alternative
uses were no longer available. The balance totaling $900,000 was recorded as a
restructuring charge, of which, approximately 60% represented accrued separation
costs and 40% related primarily to closing leased facilities.
4. TRANSITION PERIOD COMPARATIVE FINANCIAL INFORMATION
The following table presents certain unaudited financial information that has
been restated from a calendar year basis to a fiscal year basis as a result of
the Company's change to a fiscal year ending June 30 (in thousands, except per
share amounts):
Six Months Ended June 30, Twelve Months Ended June 30,
1999 1998 2000 1999
---------------- ----------------- ---------------- -----------------
(unaudited) (unaudited)
Net Sales $ 21,256 $ 18,310 $ 69,821 $ 52,581
Gross Profit 10,488 9,458 38,589 28,223
Income (loss) before income taxes (7,349) (4,768) 3,294 (7,724)
Income tax expense (benefit) (2,489) (1,597) 1,437 (2,696)
Net income (loss) (4,860) (3,171) 1,857 (5,028)
Earnings (loss) per share
Basic (0.59) (0.38) 0.23 (0.61)
Diluted (0.59) (0.38) 0.23 (0.61)
Weighted average common shares outstanding
Basic 8,185 8,250 8,170 8,218
Diluted 8,185 8,250 8,199 8,218
5. LITIGATION EXPENSES
During the six months ended June 30, 1999, the Company expensed $671,000 of
legal expenses related to a civil action for which the Company was awarded a
favorable judgement (see Note 12). The Company is in the process of trying to
collect on this judgement.
6. MARKETABLE SECURITIES
The Company had no marketable securities at June 30, 2001, June 30, 2000 and
June 30, 1999. In 1998, proceeds from sales of available for sale securities
were $2,000,000; no gross gains or losses were realized on those sales.
7. LEASES
The following is a summary, as of June 30, 2001, of the future minimum annual
lease payments required under the Company's operating leases having initial or
remaining non-cancelable terms in excess of one year (in thousands):
FISCAL YEAR OPERATING
-------------- --------------
2002 $ 1,240
2003 601
2004 400
2005 311
2006 126
2007 and beyond -
--------------
Total minimum lease payments $ 2,678
==============
Rental expense for operating leases in the twelve months ended June 30, 2001 and
2000, six months ended June 30, 1999 and calendar year 1998 was $1,380,000,
$1,428,000, $725,000 and $1,318,000, respectively.
11
8. INTANGIBLE ASSETS
In October 1998, the Company purchased the assets, including ultrasound
intellectual property, of Sonic Industries, Inc. and Sonic Technologies, Inc.
("Sonic") and assumed certain liabilities and long-term debt (see Note 9).
Intangible assets, including goodwill, totaled $1,848,000 and are being
amortized over five years.
During 1998, the Company developed a new suite of non-contact three-dimensional
measurement technologies, which superseded certain existing technologies
recorded as intangible assets. As a result, the carrying value of these
intangible assets was evaluated for impairment. This evaluation resulted in a
write-off of intangible assets with a net book value of $1,472,000 in 1998.
9. SHORT-TERM AND LONG-TERM NOTES PAYABLE
At June 30, 2001, the Company's principal bank had agreed to provide short-term
credit facilities of 1.0 million Deutsche marks and $1.0 million Canadian
dollars. These facilities were available to finance working capital needs and
equipment purchases or capital leases. Interest on any borrowings was based at
the bank's prime rate (6.5% as of September 13, 2001). These credit facilities
expired on July 31, 2001. The Company had no borrowings outstanding under these
credit facilities at June 30, 2001. In September 2001, the Company entered into
a collateral-based $1.5 million line of credit that expires August 31, 2002. The
line of credit can be used to finance working capital needs and for general
corporate purposes. Any borrowings will bear interest at 1/4% above the bank's
prime rate (6.5% as of September 13, 2001). The aggregate principal amount
outstanding at any one time cannot exceed the lesser of $1.5 million or the
borrowing base, which is 50% of finished goods inventory located in the United
States.
At June 30, 2001, the Company had a $15.0 million Revolving Credit Agreement
(Credit Agreement) that expires on July 31, 2002. The Credit Agreement was
replaced in September 2001 (see paragraph below). The Credit Agreement
prohibited the Company from paying dividends. In addition, the Credit Agreement
contained various financial covenants that, among other things, restricted
dividend payments by requiring the Company to maintain a Fixed Charge Coverage
Ratio and a Total Liabilities to Tangible Net Worth Ratio and required the
Company to maintain certain levels of earnings before interest, taxes,
depreciation and amortization ("EBITDA"). The Company's EBITDA for the twelve
months ended June 30, 2001 was below the level required by the financial
covenant. The Company's bank waived the covenant default through June 30, 2001.
The Company had $13.6 million outstanding under the Credit Agreement at June 30,
2001.
In September 2001, the Company replaced its existing $15.0 million Credit
Agreement with a new $17.0 million collateral-based Revolving Line of Credit
Agreement (Revolver) that expires on August 31, 2003. Proceeds under the
Revolver may be used for working capital and general corporate purposes and can
be designated as a Floating Rate Loan or as a Eurodollar Rate loan when the
Company achieves a ratio of funded debt to earnings before interest, taxes,
depreciation, and amortization of less than 5:1. Interest on Floating Rate
borrowings is calculated daily at 1/2% below the bank's prime rate (6.5% as of
September 13, 2001) and is payable on the last day of each month. Interest on
Eurodollar Rate borrowings is calculated at a Eurodollar Rate for the period
chosen (approximately 5.0% as of September 13, 2001) and is payable on the last
day of the applicable period. Quarterly, the Company pays a commitment fee of
1/4% per annum on the daily unused portion of the Revolver. The aggregate
principal amount outstanding at any one time cannot exceed the lesser of
$17.0 million or the borrowing base which is comprised of 80% of eligible
accounts receivable billed in the United States, aged up to 180 days, 35% of
raw material located in the United States, and $4.8 million representing 80%
of the appraised value of the Company's real property located in Plymouth,
Michigan. The collateral for the Revolver is substantially all U.S. assets of
the Company and a pledge of 65% of the common stock of Perceptron BV owned by
the Company. The Revolver prohibits the Company from paying dividends. In
addition, the Revolver contains various financial covenants that, among other
things, restrict dividend payments by requiring the Company to maintain a
Fixed Charge Coverage Ratio and a Total Liabilities to Tangible Net Worth
Ratio and require the Company to maintain certain levels of earnings before
interest, depreciation and amortization, and taxes.
In conjunction with the Company's October 1, 1998 purchase of Sonic assets,
discussed in Note 8, the Company assumed a long-term note payable totaling
$1,040,000. The note is payable in full on November 1, 2003 and requires
quarterly payments of interest at 7.5% per annum on the outstanding principal
balance. The note may be prepaid without penalty in whole or in part at anytime.
10. COMMITMENTS AND OTHER
As part of the purchase of the Sonic intellectual property (see Note 8), the
Company agreed to pay contingent royalty payments on sales using the Sonic
technology over a five-year period beginning October 1, 1998. The purchase
agreement was amended in October 2000 to extend the contingent royalty period by
one year to October 1, 2004. The maximum total amount of royalties is capped at
$6 million on sales of $90 million. The Company has prepaid approximately $1.9
million of
12
the contingent royalty payments generally through the assumption of liabilities
in connection with the acquisition of the Sonic assets. These prepaid royalties
generally offset the first contingent royalties due.
The Company has received a National Institute for Science and Technology -
Advanced Technology Program award to participate in a joint venture to develop a
robot guidance system for powertrain assembly automation. The Company's in-kind
development contribution is approximately $500,000 over a four-year period that
began in 1998. The joint venture is administered by the National Center for
Manufacturing Sciences and includes a major automotive manufacturer.
The Company may use, from time to time, a limited hedging program to minimize
the impact of foreign currency fluctuations. As the Company exports product, it
may enter into limited hedging transactions relating to the accounts receivable
arising as a result of such shipment. These transactions involve the use of
forward contracts. During the periods presented, the Company did not engage in
any hedging activities.
11. INFORMATION ABOUT MAJOR CUSTOMERS
The Company sells its products directly to both domestic and international
automotive assembly companies. During the twelve months ended June 30, 2001, 22%
of net sales were derived from three automotive companies. During the twelve
months ended June 30, 2000, six months ended June 30, 1999, and calendar year
1998, 35%, 25% and 22% of net sales, respectively, were derived from these same
three automotive companies. The Company also sells to system integrators or
OEMs, who in turn sell to these same automotive companies. For the twelve months
ended June 30, 2001 and 2000, six months ended June 30, 1999 and for the year
ended December 31, 1998, approximately 8%, 11%, 8% and 13% of net sales,
respectively, were to system integrators and OEMs for the benefit of the same
three automotive companies. During the twelve months ended June 30, 2001, sales
to General Motors were 11.8% of the Company's total net sales.
12. 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 matters
discussed below.
On December 11, 1998, a jury in a civil case in the U.S. District Court for the
Eastern District of Michigan returned a favorable judgement for the Company and
awarded damages of over $732,000. The suit, filed by the Company in June 1996,
charged Sensor Adaptive Machines, Inc. ("SAMI") with violation of a covenant not
to compete. SAMI filed counterclaims against the Company alleging, in part, that
the Company was engaged in unlawful monopolization and tortious interference
with business practice and sought damages. In response to a motion for summary
disposition filed by the Company, the counterclaim for unlawful monopolization
was dismissed by the court in June 1998. The jury found that the remaining
counterclaims were without merit. On March 4, 1999, the Company's motion for
interest was granted. SAMI's appeal of the judgement including the counterclaims
against the Company was denied by the U.S. Court of Appeals for the Sixth
Circuit. The Company has instituted legal action to collect the judgement. SAMI
is subject to bankruptcy proceedings in Canada.
On September 25, 1998, the U.S. District Court for the Eastern District of
Michigan dismissed, with prejudice, a suit filed against the Company by Speroni,
S.p.A. ("Speroni") which alleged tortious interference in conjunction with
exclusive distributorship contracts covering the sale of the P-1000 products in
Italy and France. Speroni's appeal of the dismissal was denied by the Federal
Court of Appeals. The suit alleged tortious interference in conjunction with
exclusive distributorship contracts covering the sale of P-1000 products in
Italy and France between Perceptron B.V., a wholly-owned subsidiary of the
Company, and Speroni. Perceptron B.V. terminated the exclusive distributorship
contracts in 1997 for breach of contract by Speroni and has sought arbitration
of this matter with the International Chamber of Commerce International Court of
Arbitration ("ICC"), to confirm the terminations and to award damages. Speroni
has filed counterclaims with the ICC alleging breach of the exclusive
distributorship contracts and seeking damages of $6.5 million. On February 12,
2001, the arbitrator determined that 1) Speroni breached its duty to properly
inform Perceptron B.V., but did not act in bad faith, and so Perceptron B.V. did
not satisfy the conditions required under French law and Italian law to
rightfully terminate the distributorship agreements without prior notice; and 2)
Perceptron B.V. did not breach its agreements with Speroni by providing certain
information to a customer of both Perceptron B.V. and Speroni and by submitting
a bid to a customer of both Perceptron B.V. and Speroni outside of Speroni's
territories, but did not act in good faith in not informing Speroni of these
activities. Damages, if any, on the claims on which the arbitrator found in
favor of Speroni shall be decided in the second phase of the arbitration
proceedings. The Company intends to vigorously defend against any damage claim
made against it by Speroni.
The Company is a party to a suit filed by Analog Technologies, Inc. ("Analog")
on October 8, 1999 in the Circuit Court for the County of Oakland, Michigan. The
suit alleges that the Company breached a non-disclosure agreement and
misappropriated Analog's confidential information and trade secrets in
connection with the Company's development of a potential new product. The
potential new product involved is one of a number of new products under
development by the Company, which have not been discussed in the Company's
filings with the Securities and Exchange Commission. On February 15, 2000, the
Oakland
13
County Circuit Court denied Analog's motion for preliminary injunction against
the Company. Analog also seeks unspecified compensatory damages in excess of
$25,000. The Company believes that Analog's claims are without merit and intends
to vigorously defend Analog's claims.
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. Certain of these customers, including one customer
who was a party to a patent infringement suit relating to this matter, have
settled such claims. 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 relating to claims against
these customers, it is not possible to estimate the ultimate effect, if any, of
this matter on the Company's financial statements.
13. 401(K) 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 during the twelve months ended June 30, 2001 and 2000,
six months ended June 30, 1999, and the calendar year 1998, were $334,093,
$456,000, $218,000 and $439,000, respectively.
14. STOCK OPTION PLANS
The Company maintains 1992 and 1998 Stock Option Plans covering substantially
all company employees and certain other key persons and a Director Stock Option
Plan covering all non-employee directors. The 1992 and Director Plans are
administered by a committee of the Board of Directors. The 1998 Plan is
administered by the President of the Company. Activity under these Plans is
shown in the following table:
TWELVE MONTHS ENDED TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, 2001 JUNE 30, 2000 JUNE 30, 1999 DECEMBER 31, 1998
---------------------- ----------------------- ------------------------- ---------------------
WEIGHTED WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE SHARES PRICE
----------- --------- ---------- ------------ ------------ ----------- ---------- ----------
Shares subject to option
Outstanding at beginning of period 1,345,258 $ 14.77 1,286,391 $ 17.56 1,239,186 $ 19.14 1,088,765 $21.39
New grants (based on fair value of
common stock at dates of grant) 835,916 1.80 375,625 3.92 148,200 4.91 397,399 8.72
Exercised - - - - - - (134,931) 7.28
Terminated and expired (254,525) 12.07 (316,758) 13.22 (100,995) 18.28 (112,047) 22.89
Outstanding at end of period 1,926,649 9.48 1,345,258 14.77 1,286,391 17.56 1,239,186 19.14
Exercisable at end of period 799,726 17.98 669,410 20.88 525,054 22.46 4,668,824 23.00
The following table summarizes information about stock options at June 30, 2001:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- ------------------------------
WEIGHTED AVERAGE
RANGE OF REMAINING WEIGHTED AVERAGE WEIGHTED AVERAGE
EXERCISE PRICES SHARES CONTRACTUAL LIFE EXERCISE PRICE SHARES EXERCISE PRICE
-------------------- ------------ ------------------ ------------------ --------- ----------------
$ 1.42 6,500 9.91 years $ 1.42 0 $ 0.00
$ 1.52 to $ 1.53 606,816 9.51 years 1.53 0 0.00
$ 1.72 to $ 4.65 487,216 8.45 years 3.63 122,896 4.06
$ 5.05 to $ 33.96 826,117 5.72 years 18.83 676,830 20.51
-------------------- --------- ---------- --------- -------- ---------
$ 1.42 to $ 33.96 1,926,649 7.62 years $ 9.48 799,726 $ 17.98
-------------------- --------- ---------- --------- -------- ---------
Option prices for options granted under these Plans must not be less than fair
market value of the Company's stock on the date of grant. At June 30, 2001,
options covering 799,726 shares were exercisable and options covering 690,200
shares were available for future grants under these plans.
Options outstanding under the 1992 and 1998 Stock Option Plans generally become
exercisable at 25% per year beginning one year after the date of grant and
expire ten years after the date of grant. Options outstanding under the Director
Stock Option Plan are either an initial option or an annual option. Initial
options of 15,000 shares are granted as of the date the non-employee director is
first elected to the Board of Directors and become exercisable in full on the
first anniversary of the
14
date of grant. Annual options are granted as of the date of the respective
annual meeting to each non-employee director serving at least six months prior
to the annual meeting and become exercisable in three annual increments of 33
1/3% after the date of grant and expire ten years from the date of grant. In
1999, the Directors Stock Option Plan was amended to increase the amount of the
annual options from 1,500 to 3,000 shares of Common Stock for grants beginning
in the year 2000, to eliminate the annual option grant for 1,500 shares in 1999
and to provide for a one time grant to each Director at the time of the 1999
Annual Meeting of an additional option to purchase 10,000 shares of Common
Stock.
The estimated fair value as of the date options were granted during the twelve
months ended June 30, 2001 and 2000, six months ended June 30, 1999 and calendar
year 1998, using the Black-Scholes option-pricing model was as follows:
TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2001 2000 1999 1998
------------- ------------- -------------- -----------------
Weighted average estimated fair
value per share of options
granted during the year $ 1.28 $ 3.44 $ 3.96 $ 5.57
Assumptions:
Amortized dividend yield - - - -
Common stock price volatility 121.36% 96.85% 94.17% 73.69%
Risk-free rate of return 4.63% 6.75% 6.00% 0.43%
Expected option term (in years) 5 5 5 5
The Company adopted the disclosure requirements of Statement of Financial
Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based
Compensation," effective with the 1996 financial statements, but elected to
continue to measure compensation cost using the intrinsic value method, in
accordance with APB Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees." Accordingly, compensation cost for stock options has been recognized
under the provisions of APB 25. If compensation cost had been determined based
on the estimated fair value of options granted during the twelve months ended
June 30, 2001 and 2000, six months ended June 30, 1999 and year 1998, consistent
with the methodology in SFAS 123, the Company's net income and income per share
would have been adjusted to the pro forma amounts indicated below (in thousands
except per share amounts):
TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2001 2000 1999 1998
-------------- --------------- ---------------- -------------------
Net income (loss)
As reported $ (7,538) $ 1,857 $ (4,860) $ (3,339)
Pro forma $ (8,447) $ (111) $ (6,062) $ (5,377)
Earnings (loss) per share - diluted
As reported $ (0.92) $ 0.23 $ (0.59) $ (0.41)
Pro forma $ (1.03) $ (0.01) $ (0.74) $ (0.65)
15. INCOME TAXES
Income before income taxes for U.S. and foreign operations was as follows (in
thousands):
TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2001 2000 1999 1998
-------------- --------------- -------------- -----------------
U.S. $ (10,875) $ 58 $ (8,289) $ (7,881)
Foreign 864 3,236 940 2,738
-------------- --------------- -------------- -----------------
Total $ (10,011) $ 3,294 $ (7,349) $ (5,143)
============== =============== ============== =================
15
The income tax provision (benefit) reflected in the statement of income consists
of the following (in thousands):
TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2001 2000 1999 1998
-------------- -------------- ---------------- -------------------
Current provision (benefit):
U.S. federal $ (3,612) $ 70 $ - $ -
Foreign (194) 1,367 389 1,366
Deferred taxes - - (2,878) (3,170)
-------------- -------------- --------------- -----------------
Total provision (benefit) $ (3,806) $ 1,437 $ (2,489) $ (1,804)
============== ============== =============== =================
The Company's deferred tax assets are substantially represented by the tax
benefit of net operating losses and the tax benefit of future deductions
represented by reserves for bad debts, warranty expenses and inventory
obsolescence. The components of deferred tax assets were as follows (in
thousands):
AT JUNE 30, AT JUNE 30, AT DECEMBER 31,
2001 2000 1999 1998
--------------- -------------- ---------------- -----------------
Benefit of net operating losses $ 6,831 $ 3,229 $ 4,892 $ 2,202
Other, principally reserves 825 (734) 65 175
--------------- -------------- ---------------- -----------------
Deferred tax asset $ 7,656 $ 2,495 $ 4,957 $ 2,377
=============== ============== ================ =================
TWELVE MONTHS ENDED SIX MONTHS ENDED TWELVE MONTHS ENDED
JUNE 30, JUNE 30, DECEMBER 31,
2001 2000 1999 1998
--------------- -------------- ---------------- -------------------
Rate reconciliation:
Provision at U.S. statutory rate (34.0)% 34.0% (34.0)% (34.0)%
Net effect of taxes on foreign
activities (4.0)% 9.6% 0.1 % (1.0)%
--------------- -------------- ---------------- -----------------
Effective tax rate (38.0)% 43.6% (33.9)% (35.0)%
=============== ============== ================ =================
No provision was made with respect to retained earnings as of June 30, 2001 that
have been retained for use by foreign subsidiaries. It is not practicable to
estimate the amount of unrecognized deferred tax liability for the undistributed
foreign earnings. At June 30, 2001, the Company had net operating losses for
Federal income tax purposes of $6,831,000 that expire in 2020, 2021 and 2022.
16. SEGMENT AND GEOGRAPHIC INFORMATION
The Company has two reportable segments: Automotive and Industrial Businesses.
The Automotive Business segment designs, manufactures, and markets
information-based measurement and inspection focused solutions for process
improvements within the automotive industry. The Industrial Businesses segment
uses the same technology and primarily contains the Forest Products business
unit. The accounting policies of the segments are the same as those described in
the summary of significant policies. The Company evaluates performance based on
operating income. Company-wide costs are allocated between the segments based on
revenues and/or labor as deemed appropriate. The Company primarily accounts for
geographic sales and transfers based on cost plus a transfer fee and/or royalty
fees.
16
The Company's reportable segments are strategic business units that offer
similar products and services to different industries. They have separate
management teams because each business unit requires different marketing
strategies. The business units were created as a result of a combination of
existing businesses and acquisitions.
REPORTABLE SEGMENTS ($000'S) AUTOMOTIVE INDUSTRIAL BUSINESSES CONSOLIDATED
------------------- ---------------------------- ------------------
TWELVE MONTHS ENDED JUNE 30, 2001
Net sales $ 40,230 $ 10,484 $ 50,714
Depreciation and amortization 1,419 657 2,076
Operating income (loss) (1,944) (7,503) (9,447)
Assets 58,633 8,886 67,519
Capital expenditures 1,081 571 1,652
TWELVE MONTHS ENDED JUNE 30, 2000
Net sales $ 55,473 $ 14,348 $ 69,821
Depreciation and amortization 1,676 617 2,293
Operating income (loss) 7,081 (3,422) 3,659
Assets 57,190 9,037 66,227
Capital expenditures 1,228 228 1,456
SIX MONTHS ENDED JUNE 30, 1999
Net sales $ 17,977 $ 3,279 $ 21,256
Depreciation and amortization 977 291 1,268
Operating income (loss) (3,357) (3,303) (6,660)
Assets 53,370 7,964 61,334
Capital expenditures 754 241 995
TWELVE MONTHS ENDED DECEMBER 31, 1998
Net sales $ 39,555 $ 10,080 $ 49,635
Depreciation and amortization 2,191 297 2,488
Operating income (loss) (4,425) (1,351) (5,776)
Assets 58,654 7,754 66,408
Capital expenditures 2,080 320 2,400
The Company operates in two primary geographic areas: Domestic (United States)
and International (primarily Europe, with limited operations in Canada, Asia and
South America).
GEOGRAPHICAL REGIONS (000'S) DOMESTIC INTERNATIONAL(1) CONSOLIDATED
------------------- ---------------------------- ------------------
TWELVE MONTHS ENDED JUNE 30, 2001
Net external sales $ 30,864 $ 19,850 $ 50,714
Identifiable assets 43,602 23,917 67,519
TWELVE MONTHS ENDED JUNE 30, 2000
Net external sales $ 53,396 $ 16,425 $ 69,821
Identifiable assets 47,424 18,803 66,227
SIX MONTHS ENDED JUNE 30, 1999
Net external sales $ 12,416 $ 8,840 $ 21,256
Identifiable assets 42,366 18,968 61,334
TWELVE MONTHS ENDED DECEMBER 31, 1998
Net external sales $ 34,731 $ 14,904 $ 49,635
Identifiable assets 49,080 17,328 66,408
--------------
(1) The Company's German subsidiary had net external sales of $13.2 million,
$13.3 million, $5.8 million and $11.0 million in the twelve months ended
June 30, 2001 and 2000, six months ended June 30, 1999 and twelve months
ended December 31, 1998, respectively. Total assets of the Company's
German subsidiary were $14.9 million, $10.5 million, $11.5 million and
$10.7 million as of June 30, 2001 and 2000, June 30, 1999, and December
31, 1998, respectively.
17
17. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected unaudited quarterly financial data for the fiscal years ended June 30,
2001 and 2000, are as follows (in thousands, except per share amounts):
QUARTER ENDED
------------------------------------------------------------
FISCAL YEAR 2001 (RESTATED)(a) 9-30-00 12-31-00 3-31-01 6-30-01
------------ ------------- ------------ ------------
Net sales $ 8,436 $ 16,911 $ 11,393 $ 13,974
Gross profit 3,932 7,833 4,752 8,076
Net income (loss) before cumulative
effect of change in accounting principle (2,459) 410 (3,393) (763)
Cumulative effect of change in accounting
principle (1,333) - - -
Net income (loss) (3,792) 410 (3,393)(b) (763)(b)
Earnings (loss) per share before cumulative
effect of change in accounting principle
Basic (0.30) 0.05 (0.41) (0.09)
Diluted (0.30) 0.05 (0.41) (0.09)
Earnings (loss) per share
Basic (0.46) 0.05 (0.41) (0.09)
Diluted (0.46) 0.05 (0.41) (0.09)
FISCAL YEAR 2001 (AS PREVIOUSLY REPORTED)(a) 9-30-00 12-31-00 3-31-01
------------ ------------- ------------
Net sales $ 8,011 $ 17,569 $ 11,466
Gross profit 3,517 8,603 4,889
Net income (loss) (2,713) 882 (3,376)(b)
Basic earnings (loss) per share (0.33) 0.11 (0.41)
Diluted earnings (loss) per share (0.33) 0.11 (0.41)
FISCAL YEAR 2000 (AS REPORTED)(a) 9-30-99 12-31-99 3-31-00 6-30-00
------------ ------------- ------------ ------------
Net sales $ 18,471 $ 18,533 $ 13,721 $ 19,096
Gross profit 10,382 10,270 7,503 10,434
Net income (loss) 1,128 959 (447) 217
Basic earnings (loss) per share 0.14 0.12 (0.05) 0.03
Diluted earnings (loss) per share 0.14 0.12 (0.05) 0.03
FISCAL YEAR 2000 (PROFORMA)(a) 9-30-99 12-31-99 3-31-00 6-30-00
------------ ------------- ------------ ------------
Net sales $ 17,972 $ 18,701 $ 13,394 $ 18,885
Gross profit 10,053 10,477 7,176 10,092
Net income (loss) 942 1,076 (631) 25
Basic earnings (loss) per share 0.12 0.13 (0.08) -
Diluted earnings (loss) per share 0.12 0.13 (0.08) -
a) During the fourth quarter of fiscal 2001, the Company implemented the
Securities and Exchange Commission's Staff Accounting Bulletin 101 (SAB
101) guidelines retroactive to the beginning of the year. As a result of
this implementation, the Company changed its method of revenue recognition
and reported a cumulative effect of a change in accounting as of July 1,
2000 (see Note 2). The quarterly financial information for fiscal 2001 was
restated in accordance with SAB 101. Quarterly information as previously
reported has been shown for comparative purposes. The quarterly information
for fiscal 2000 has also been presented on both an as reported basis and on
a pro forma basis to show the effects of the change in accounting principle
on a comparative basis.
b) In the third and fourth quarters of fiscal 2001, the company recorded
restructuring charges of $1.6 million and $0.6 million, respectively (see
Note 3).
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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, Chairman, President
and Chief Executive Officer
Date: October 26, 2001
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