-----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, FoM/S4EOWU2QmhkdDQ4FxY0nUIqTG99Lzd2Nrip59zHkC1k/k8RMx0vA/h0PdbU+ eQrk44TgUuK7MH/AhETd5w== 0000950124-97-002412.txt : 19970425 0000950124-97-002412.hdr.sgml : 19970425 ACCESSION NUMBER: 0000950124-97-002412 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970424 SROS: NASD 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: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20206 FILM NUMBER: 97586687 BUSINESS ADDRESS: STREET 1: PERCEPTRON INC STREET 2: 47827 HALYARD DRIVE CITY: PLYMOUTH STATE: MI ZIP: 48170-2461 BUSINESS PHONE: 3134144816 MAIL ADDRESS: STREET 1: PERCEPTRON INC STREET 2: 47827 HALYARD DRIVE CITY: PLYMOUTH STATE: MI ZIP: 48170-2461 10-K/A 1 10-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A-1 (Mark One) [x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996 [FEE REQUIRED] OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE TRANSITION PERIOD FROM _________ TO _________. COMMISSION FILE NUMBER: 0-20206 PERCEPTRON, INC. (Exact name of registrant as specified in its charter) Michigan 38-2381442 (State or other jurisdiction or (I.R.S. Employer incorporation or organization) Identification No.) 47827 Halyard Drive Plymouth, Michigan 48170-2461 (313) 414-6100 (Registrant's telephone number, including area code) Securities registered pursuant to section 12(b) of the act: None Securities registered pursuant to section 12(g) of the act: COMMON STOCK, $0.01 PAR VALUE (TITLE OF CLASS) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes__X__ No _____ Indicate by check mark if disclosure of delinquent filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, 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. [ ] The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing sale price of the Common Stock on March 14, 1997, as reported by The Nasdaq Stock Market, was approximately $254,000,000 (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 March 14, 1997 was: 7,694,628. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following document, to the extent specified in this report, are incorporated by reference in the Part III of this report: Document Incorporated by reference in: ------------------------------ ----------------------------- Proxy Statement for 1997 Annual Meeting of Shareholders Part III, Items 10-13 2 ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company has filed this Form 10K/A-1 to revise certain information contained in the last sentence of the first paragraph of Note 14 to Notes to Consolidated Financial Statements.
Page ---- Report of Independent Accountants ................................... 3 Consolidated Financial Statements: Balance Sheets - December 31, 1996 and 1995 ................... 4 Statements of Income for the years ended December 31, 1996, 1995 and 1994 .............................. 5 Statements of Shareholders' Equity for the years ended December 31, 1996, 1995 and 1994 .......... 6 Statements of Cash Flows for the years ended December 31, 1996, 1995 and 1994 ................................................. 7 Notes to Consolidated Financial Statements .................... 8-15
2 3 [COOPERS & LYBRAND LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Perceptron, Inc.: We have audited the accompanying consolidated balance sheets of Perceptron, Inc. and Subsidiaries as of December 31, 1996 and 1995, and the related consolidated statements of income, shareholders' equity and cash flows, and the financial statement schedule referred to in item 14A.(2) for each of the three years in the period ended December 31, 1996. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express and opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Perceptron, Inc. and Subsidiaries as of December 31, 1996 and 1995, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. In addition, in our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information required to be included therein. COOPERS & LYBRAND L.L.P. Detroit, Michigan January 31, 1997, except as to note 14 for which the date is February 3, 1997 3 4 PERCEPTRON, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, --------------------------- 1996 1995 --------------------------- ASSETS (as restated) - ------ Current assets: Cash and cash equivalents $14,666,000 $ 14,990,000 Accounts receivable, net of reserves of $60,000 and $35,000 20,898,000 14,292,000 Inventories, net of reserves of $860,000 and $670,000 6,001,000 4,114,000 Income tax receivables 2,103,000 --- Prepaid expenses and deferred tax asset 1,813,000 2,658,000 ----------- ------------- Total current assets 45,481,000 36,054,000 ----------- ------------- Property and equipment: Construction in progress 6,202,000 --- Machinery and equipment 4,077,000 8,014,000 Furniture and fixtures 252,000 492,000 Leasehold improvements 0 95,000 ----------- ------------- 10,531,000 8,601,000 Less: Accumulated depreciation and amortization (1,416,000) (6,074,000) ----------- ------------- Net property and equipment 9,115,000 2,527,000 Intangible assets 2,300,000 --- ----------- ------------- Total assets $56,896,000 $ 38,581,000 =========== ============= LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable 4,291,000 2,070,000 Accrued payables 4,171,000 3,869,000 Accrued compensation and stock option expense 1,930,000 2,284,000 ----------- ------------- Total current liabilities 10,392,000 8,223,000 ----------- ------------- Shareholders' equity: Preferred Stock, no par value, 1,000,000 shares authorized, none issued 0 0 Common Stock, $0.01 par value; 19,000,000 shares authorized, 7,253,000 and 6,723,000 issued and outstanding at December 31, 1996 and 1995, respectively 73,000 67,000 Cumulative translation adjustments (929,000) (474,000) Additional paid-in capital 39,472,000 30,771,000 Retained earnings (deficit) 7,888,000 (6,000) ----------- ------------- Total shareholders' equity $46,504,000 $ 30,358,000 ----------- ------------- Total liabilities and shareholders' equity $56,896,000 $ 38,581,000 =========== =============
The accompanying notes are an integral part of the consolidated financial statements. 4 5 PERCEPTRON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, ------------------------------------- 1996 1995 1994 ----------- ----------- ----------- (As restated) Net sales $49,679,000 $37,291,000 $27,835,000 Cost of sales 18,989,000 14,175,000 11,028,000 ----------- ----------- ---------- Gross profit 30,690,000 23,116,000 16,807,000 ----------- ----------- ---------- Selling, general and administrative expense 11,456,000 9,884,000 7,279,000 Engineering, research and development expense 5,854,000 4,467,000 3,808,000 Non-cash stock compensation expense 3,202,000 1,377,000 --- ----------- ----------- ---------- Income from operations 10,178,000 7,388,000 5,720,000 ----------- ----------- ---------- Interest income, net 786,000 539,000 119,000 ----------- ----------- ---------- Net income before provision for income taxes 10,964,000 7,927,000 5,839,000 Provision for income taxes 3,070,000 (482,000) --- ----------- ----------- ---------- Net income $7,894,000 $8,409,000 $5,839,000 =========== =========== ========== Net income per weighted average share $1.03 $1.16 $0.83 =========== =========== ========== Weighted average common and common equivalent shares 7,636,296 7,257,784 6,998,380 =========== =========== ==========
The accompanying notes are an integral part of the consolidated financial statements. 5 6 PERCEPTRON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY for the years ended December 31, 1994, 1995 and 1996
Cumulative Foreign Common Stock Currency Additional Retained Total -------------------- Translation Paid-In Earnings Shareholders' Shares Amount Adjustments Capital (Deficit) Equity ---------- -------- ----------- ----------- ------------- ------------- Balances, January 1, 1994 5,841,511 $ 58,000 $ (366,000) $28,013,000 $ (14,254,000) $ 13,451,000 Stock options exercised, net of shares tendered 538,708 6,000 513,000 519,000 Translation adjustment on investment (72,000) (72,000) in foreign subsidiaries Net Income 5,839,000 5,839,000 ---------- -------- ----------- ----------- ------------- ------------- Balances, December 31, 1994 6,380,219 $ 64,000 $(438,000) $28,526,000 $ (8,415,000) $ 19,737,000 ---------- -------- ----------- ----------- ------------- ------------- Stock options exercised, net of shares tendered 342,560 3,000 591,000 594,000 Tax benefit of non-qualified stock 150,000 150,000 options exercised Previously recorded stock option compensation expense attributable to options exercised 127,000 127,000 Non-cash stock compensation expense attributable to options exercised 1,377,000 1,377,000 Translation adjustment on investment in foreign subsidiaries (36,000) (36,000) Net Income 8,409,000 8,409,000 ---------- -------- ----------- ----------- ------------- ------------- Balances, December 31, 1995 (as restated) 6,722,779 $ 67,000 $(474,000) $30,771,000 $ (6,000) $ 30,358,000 ========== ======== =========== =========== ============= ============= Shares issued for intangible assets 82,510 1,000 2,299,000 2,300,000 Stock options exercised, net of shares tendered 447,278 5,000 2,066,000 2,071,000 Tax benefit of non-qualified stock options exercised 600,000 600,000 Previously recorded stock option compensation attributable to options exercised 534,000 534,000 Non-cash compensation expense attributable to options exercised 3,202,000 3,202,000 Translation adjustment on investment in foreign subsidiaries (455,000) (455,000) Net income 7,894,000 7,894,000 ---------- -------- ----------- ----------- ------------- ------------- Balances, December 31, 1996 7,252,567 73,000 (929,000) 39,472,000 7,888,000 46,504,000 ========== ======== =========== =========== ============= =============
The accompanying notes are an integral part of the consolidated financial statements. 6 7 PERCEPTRON, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, ---------------------------------------- 1996 1995 1994 ----------- -------------- ----------- (as restated) Cash flows from operating activities: Net income $7,894,000 $8,409,000 $5,839,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 720,000 635,000 458,000 Disposal of fixed assets 293,000 --- 134,000 Non-cash stock compensation expense 3,202,000 1,377,000 --- Changes in operating assets and liabilities: Accounts receivable and income tax receivable (8,989,000) (2,645,000) (2,833,000) Inventories (1,887,000) (851,000) (887,000) Prepaid expenses and deferred tax asset 845,000 (2,239,000) (164,000) Accounts payable (47,000) 378,000 267,000 Accrued expenses 482,000 3,583,000 1,356,000 Deferred revenue --- --- 175,000 ----------- ----------- ----------- Total adjustments (5,381,000) 238,000 (1,494,000) ----------- ----------- ----------- Net cash provided by operating activities 2,513,000 8,647,000 4,345,000 ----------- ----------- ----------- Cash flows (used in) investing activities: Capital expenditures (5,333,000) (1,999,000) (738,000) ----------- ----------- ----------- Net cash (used in) investing activities (5,333,000) (1,999,000) (738,000) ----------- ----------- ----------- Cash flows from financing activities: Principal payments under capital leases -0- (94,000) (103,000) Proceeds from issuance of short-term debt -0- --- 287,000 Principal payments on short-term debt -0- (287,000) --- Proceeds from the exercise of stock options 2,071,000 594,000 519,000 Tax benefit of non-qualified options exercised 600,000 150,000 --- ----------- ----------- ----------- Net cash provided by financing activities 2,671,000 363,000 703,000 ----------- ----------- ----------- Effect of exchange rates on cash and cash equivalents (175,000) 62,000 36,000 ----------- ----------- ----------- Net increase/(decrease) in cash and cash equivalents (324,000) 7,073,000 4,346,000 Cash and cash equivalents, beginning of year 14,990,000 7,917,000 3,571,000 ----------- ----------- ----------- Cash and cash equivalents, end of year $14,666,000 $14,990,000 $7,917,000 =========== =========== =========== Supplemental disclosure of cash flow information: Cash paid during the year for interest expense $0 $28,000 $23,000 =========== =========== =========== Cash paid during the year for income taxes $ 2,518,000 $100,000 $150,000 =========== =========== =========== Non-cash transactions: Equipment acquired under capital leases $0 $0 $101,000 Previously recorded compensation expense attributable to options exercised 534,000 127,000 0 Intangible assets acquired for stock 2,300,000 0 0
The accompanying notes are an integral part of the consolidated financial statements 7 8 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 three-dimensional machine vision systems which are used primarily in the automotive industry, and to a lesser extent, in other industries. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. CURRENCY TRANSLATION The financial statements of the Company's wholly-owned foreign subsidiaries have been translated in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52, with the functional currency being the local currency in the foreign country. Under this standard, translation adjustments are accumulated in a separate component of shareholders' equity. Gains and losses on foreign currency transactions are included in the consolidated statement of income. CONCENTRATION OF CREDIT RISK The Company markets and sells its products primarily to automotive assembly companies and to system integrators or original equipment manufacturers, who in turn sell to automotive assembly companies. The Company's accounts receivable are principally from a small number of large customers. The Company performs ongoing credit evaluations of its customers. To date, the Company has not experienced any significant losses related to the collection of accounts receivable. A significant portion of the Company's cash and cash equivalents were with one bank as of December 31, 1996. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. INVENTORIES Inventories are stated at the lower of cost or market. The cost of inventories is determined by the first-in, first-out (FIFO) method. Inventories, net of reserves, are comprised of the following:
December 31, ------------------------ 1996 1995 ------------ ---------- Component parts $4,234,000 $3,022,000 Work in process 1,247,000 641,000 Finished goods 520,000 451,000 ------------ ---------- Total $6,001,000 $4,114,000 ============ ==========
PROPERTY AND EQUIPMENT Property and equipment is recorded at cost. Depreciation related to machinery and equipment and furniture and fixtures is computed on a straight-line basis over estimated useful lives ranging from three to five years. Leasehold improvements are amortized over the term of the lease or estimated useful life, whichever is shorter. Intangible assets recorded in 1996 will be amortized over approximately 5 years. 8 9 When properties are retired, the costs of such properties and related accumulated depreciation or amortization are eliminated from the respective accounts, and the resulting gain or loss is reflected in the consolidated statement of income. REVENUE RECOGNITION The Company's products are generally configured to customer specifications. Certain customers may require a demonstration of the system prior to shipment. At the time of satisfactory demonstration, a written customer acceptance is completed. Revenue is recognized upon the earlier of written customer acceptance or shipment of the product to the customer. RESEARCH AND DEVELOPMENT Research and development costs, including software development costs, are expensed as incurred. NET INCOME PER SHARE Net income per common and common equivalent share is calculated based upon the weighted average number of shares of Common Stock outstanding, adjusted for the dilutive effect of stock options and warrants, using the treasury stock method. The dilutive effect of convertible shares held by a minority shareholder of a foreign subsidiary has also been included in the calculation of net income per share up to June 23, 1994, at which time these shares were converted into Common Stock of the Company. CASH AND CASH EQUIVALENTS In accordance with SFAS No. 95, the Company considers all highly liquid investments purchased with maturities of three months or less to be cash equivalents. Fair value approximates carrying value because of the short maturity of the cash equivalents. RECLASSIFICATIONS Certain 1995 and 1994 amounts have been reclassified to conform to the 1996 presentation. IMPAIRMENT OF LONG-LIVED ASSETS AND CERTAIN IDENTIFIABLE INTANGIBLES The Company adopted Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of January 1, 1996. The effect of adopting this standard was not material. The Company evaluates the carrying value of long-lived assets and long-lived assets to be disposed of for potential impairment on an ongoing basis. The Company considers projected future operating results, trends and other circumstances in making such estimates and evaluations. 2. NON-CASH STOCK COMPENSATION EXPENSE Beginning in late 1994, some participants in the Company's stock option plan have used Perceptron stock options to pay the exercise price of stock options issued under the plan. The Company was recently advised by its independent accounting firm that generally accepted accounting principles require the recording of a non-cash compensation expense relating to certain option exercises during 1996 and 1995. The Company has restated its 1995 financial statements to record non-cash stock compensation expense, net of taxes, of $895,000. 3. CREDIT FACILITY: The Company has unsecured credit facilities totaling $4.0 million U.S. and 1.0 million DM. These facilities may be used to finance working capital needs and equipment purchases or capital leases. Any borrowings for working capital needs will bear interest at the bank's prime rate (8.25% as of December 31, 1996); any borrowings to finance equipment purchases will bear interest at the bank's prime rate plus 1/2%. The credit facilities expire on 9 10 May 31, 1997 unless canceled earlier by the Company or the bank. The Company expects to renew these credit facilities. At December 31, 1996, the Company had no outstanding liabilities under these facilities. The credit facility requires the Company to maintain a minimum amount of tangible net worth and a minimum debt to tangible net worth ratio. The agreement also prohibits the Company from paying dividends, acquiring or retiring any of its capital stock, or incurring any other debt, liens, or guarantying any third party debt. 4. LEASES: The following is a summary, as of December 31, 1996, of the future minimum annual lease payments required under the Company's real estate and other operating leases having initial or remaining noncancelable terms in excess of one year:
Year Operating - ---- --------- 1997 $158,000 1998 110,000 1999 0 --------- Total minimum lease payments $268,000 =========
Rental expense for operating leases in 1996, 1995 and 1994 was $352,000, $380,000 and $365,000, respectively. 5. COMMITMENTS AND OTHER: The Company has committed to provide funding in the amount of $50,000 to a university in conjunction with research in manufacturing methods utilizing the Company's products and technology. At December 31, 1996, the Company had funded $25,000 of its commitment for the university's fiscal year ended June 30, 1997. The Company had received a $1.22 million grant from the U.S. Department of Commerce, through the National Institute of Standards and Technology (NIST), for software development related to high-speed image processing techniques for three-dimensional machine vision systems. This grant was for the period which began on January 1, 1994, and which ended March 31, 1996. In connection with this grant, the Company had subcontracted a portion of the research effort to a university and to an independent research institute, at a total cost of $1.0 million. In addition, the Company granted warrants to the research institute to purchase 30,000 shares of Common Stock, 15,000 of which are currently unexercised. The exercise price of these warrants is $11.17 per share. During 1994, 1995, and 1996, the Company incurred total costs of $444,000, $558,000, and $250,000 in connection with this grant, which were substantially reimbursed by NIST. The amounts reimbursed by NIST are not recognized as net sales by the Company, but are rather treated as a reduction of engineering, research and development expense. The Company uses, from time to time, a limited hedging program to minimize the impact of foreign currency fluctuations. As the Company exports product, it generally enters into limited hedging transactions relating to the accounts receivable arising as a result of such shipment. These transactions involve the use of forward contracts. At December 31, 1996, the Company had no forward contracts outstanding. 6. SHAREHOLDERS EQUITY: - Convertible Equity of Subsidiary On June 23, 1994, the owner of a minority interest in the Company's European subsidiary converted its equity interest in this subsidiary into 197,802 shares of Common Stock of the Company. 10 11 - Stock options The Company maintains 1983 and 1992 Stock Option Plans covering substantially all company employees and certain other key persons. These Plans are administered by a committee of the Board of Directors. Activity under these Plans is shown in the following table:
1996 1995 1994 Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price Shares subject to option Outstanding at beginning of period 1,060,943 $ 8.26 1,318,740 $ 5.85 1,466,883 $ 4.35 New grants (based on fair value of Common Stock at dates of grant) 339,300 25.24 236,350 14.93 253,323 10.08 Exercised* (430,129) 6.07 (353,944) 3.81 (355,333) 2.47 Terminated and expired (16,603) 9.90 (140,203) 7.93 (46,133) 7.63 Outstanding at end of Period** 953,511 15.22 1,060,943 8.26 1,318,740 5.85 Outstanding but not exercisable 799,224 16.35 829,205 8.29 1,094,106 5.88 Exercisable at end of period 154,287 9.36 231,738 8.13 224,634 5.71
* Exercised at option prices ranging from $.23 to $21.87 during 1996, $.23 to $11.92 during 1995, and $.23 to $7.33 during 1994 ** All outstanding shares at December 31, 1996 are under the 1992 Plan. The following table summarizes information about stock options at December 31, 1996:
Outstanding Stock Options Exercisable Stock Options ------------------------------------------------ ------------------------- Weighted-Average Range of Remaining Weighted-Average Weighted-Average Exercise Prices Shares Contractual Life Exercise Price Shares Exercise Price - -------------------------------------------------------------------------------------------------- $3.00 to $10.00 358,132 6.7 years $6.25 108,703 $6.60 $10.01 to $20.00 198,553 8.1 years $12.29 31,271 $12.92 $20.01 to $30.00 322,875 9.2 years $24.30 14,313 $22.48 $30.01 to $40.00 73,951 9.6 years $36.02 0 $0 - -------------------------------------------------------------------------------------------------- $3.00 to $40.00 953,511 8.1 years $15.22 154,287 $9.36 - --------------------------------------------------------------------------------------------------
Options outstanding under these Plans generally become exercisable at 25 percent per year beginning one year after the date of the grant and expire five to ten years after the date of the grant. At December 31, 1996, options covering 154,287 shares were exercisable and options covering 174,983 shares were available for future grants under these plans. The Company also maintains a Director Stock Option Plan covering all non-employee directors. This Plan is administered by a committee of the Board of Directors.
1996 1995 Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price Shares subject to option Outstanding at beginning of period 60,000 $12.58 New grants 64,500 $30.75 60,000 $12.58 Terminated and expired (16,500) $13.55 0 Outstanding at end of period 108,000 $23.28 60,000 $12.58 Outstanding but not exercisable 63,000 $30.75 60,000 $12.58 Exercisable at end of period 45,000 $12.58 0
At December 31, 1996, the weighted-average remaining exercise period relating to the outstanding options was approximately 8.6 years. Each non-employee director at the date the Director Stock Option Plan was adopted received, and each non-employee director as of the date they are first elected to the Board of Directors will receive, an option to purchase 15,000 shares of Common Stock (the "Initial Option"). Initial Options become exercisable in full on the first anniversary of the day of the grant. In addition, each non-employee director who has been a director for six 11 12 months before the date of each Annual Meeting of Shareholders automatically will be granted, as of the date of such Annual Meeting, an option to purchase an additional 1,500 shares of Common Stock. These Annual Options become exercisable in three annual increments of 33 1/3% of the shares subject to the option, and expire ten years from the date of the grant. At December 31, 1996, 45,000 of these options were exercisable and options covering 67,500 shares were available for future grants under this plan. The estimated fair value as of the date options were granted in 1996 and 1995, using the Black-Scholes option-pricing model was as follows:
1996 1995 Weighted average estimated fair value per share of options granted during the year $16.55 $12.33 Assumptions: Amortized dividend yield - - Common Stock price volatility 57.94% 57.94% Risk-free rate of return 5.78% 6.46% Expected option term (in years) 6 6
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. APB 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 in 1996 and 1995, consistent with the methodology in SFAS 123, the Company's net income and income per share would have been adjusted to the proforma amount indicated below:
1996 1995 Net income ..As reported $7,894,000 $8,409,000 ..Pro forma 4,795,000 7,543,000 Primary earnings per share ..As reported $1.03 $1.16 ..Pro forma $0.63 $1.04
The Company granted warrants to an independent research institute to purchase 30,000 shares of Common Stock, 15,000 which were exercised in 1996 and 15,000 of which expire in 1998. The exercise price of these warrants is $11.17 per share. 7. 401K PLAN: The Company has a 401(k) tax deferred savings plan that covers all eligible employees. The Company may make discretionary contributions to the plan. The Company's contributions to the plan during 1996, 1995 and 1994 were $251,000, $163,000, and $108,000, respectively. 12 13 8. INCOME TAXES: The income tax provision reflected in the statement of income consists of the following for the years ending December 31, 1996 and 1995:
1996 1995 ---------- ----------- Current provision U.S. federal $1,159,000 $ 54,000 Foreign 1,136,000 1,446,000 Deferred taxes 775,000 (1,500,000) Tax benefit attributable to non-cash stock compensation 0 (482,000) ---------- ----------- 3,070,000 (482,000) ========== ===========
The Company's deferred tax assets are substantially represented by the tax benefit of minimum tax credits, investment tax credits, research activities credits, and general business credits carry forwards. The components of deferred tax assets as of December 31, 1996 and 1995 were as follows:
1996 1995 ---------- ---------- Net operating loss carry forwards $ 0 $1,200,000 Minimum tax credits 400,000 300,000 Investment tax credits 100,000 100,000 Research activities and general business credits 600,000 800,000 Other 325,000 --- ---------- ---------- Subtotal 1,425,000 2,400,000 Valuation reserve 0 (200,000) ---------- ---------- Deferred tax asset $1,425,000 $2,200,000 ========== ==========
With the exception of the minimum tax credits, which have an indefinite carryforward period, the credits giving rise to the deferred tax assets will expire, if unused, at various dates from 1998 through 2008.
Rate reconciliation: 1996 1995 ---- ---- Provision at U.S. statutory rate 34% 34% Recognition of net operating loss carryforwards -- (40%) Net effect of taxes on foreign activities (4%) 20% Change in valuation allowance (2%) (20%) ---- ---- 28% (6%) ==== ====
9. INFORMATION ABOUT MAJOR CUSTOMERS: The Company sells its products directly to both domestic and international automotive assembly companies. For the year ended December 31, 1996, the Company derived 49% of its net sales from three such customers, one of which was a shareholder until October 1994, when this customer sold their shares. The Company also sells to system integrators or original equipment manufacturers ("integrators"), who in turn sell to those same automotive companies. For the year ended December 31, 1996, 18% of net sales were to integrators, where those products were for the benefit of the same three automotive assembly companies. In 1996, sales by the Company to each of these three customers exceeded 13% of the Company's net sales. During 1995, 36% of total net sales was derived from three domestic automotive companies, and 28% from sales by integrators to such companies. In 1995, sales by the Company to each of these three customers exceeded 8% of the Company's net sales. During 1994, 34% of net sales were derived from three automotive companies and 49% from sales by integrators to such companies. In 1994, sales by the Company to each of these three companies exceeded 10% of the Company's net sales. 13 14 10. CONTINGENCIES: The Company may, from time to time, be subject to legal proceedings and claims. Litigation involves many uncertainties. Management is currently unaware of any significant pending litigation affecting the Company, other than the indemnification matter and the complaint discussed in the following paragraphs. The Company has been informed that certain of its customers have received allegations of possible patent infringement involving processes and methods used in the Company's products. One such customer is currently engaged in litigation relating to such matter. This customer has notified various companies from which it has purchased such equipment, including the Company, that it expects the suppliers of such equipment to indemnify such customer, on a pro-rata basis, for expenses and damages, if any, incurred in this matter. Management believes, however, that the processes used in the Company's products were independently developed without utilizing any previously patented process or technology. Because of the uncertainty surrounding the nature of any possible infringement and the validity of any such claim or any possible customer claim for indemnity, it is not possible to estimate the ultimate effect, if any, of this matter on the company's financial position. On March 13, 1996, a complaint was filed naming the Company as a defendant, along with Trident and Nanoose, in an action alleging that the Company's TriCam sensor violates a patent held by the plaintiff and seeking preliminary and permanent injunctions and damages. Management believes that its TriCam sensor was independently developed without utilizing any previously patented process or technology and intends to vigorously defend its position. 11. FOREIGN OPERATIONS: The Company operates in three primary geographic areas: North America, Europe and Asia. Geographical area data is as follows ($000):
Years ended December 31, --------------------------- 1996 1995 1994 -------- -------- ------- Net sales: North America* $41,352 $ 26,899 $25,341 Europe and Asia 12,686 13,049 3,606 Intercompany Sales (4,359) (2,657) (1,112) -------- --------- ------- Total Net Sales $49,679 $ 37,291 $27,835 ======== ========= ======= Income from operations: (as restated) North America* $5,581 $ 1,634 $5,513 Europe and Asia 4,597 5,754 207 -------- --------- ------- Total Income from Operations $10,178 $ 7,388 $5,720 ======== ========= ======= Identifiable assets at December 31: North America* $44,399 $ 30,808 $22,209 Europe and Asia 12,497 7,773 2,298 -------- --------- ------- Total Assets $56,896 $ 38,581 $24,507 ======== ========= =======
__________________________ * Includes intercompany amounts; intercompany sales prices are based on cost plus a transfer fee. 14 15 12. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED): Selected unaudited quarterly financial data for the years ended December 31, 1996 and 1995, are as follows ($000's except earnings per share):
Quarter ended --------------------------------- 1996 3-31 6-30 9-30 12-31 ---- ------ ------- ------- ------- Net Sales $9,062 $11,663 $12,856 $16,098 Gross profit 5,307 7,046 8,140 10,197 Net income 928 588 2,487 3,891 Earnings per share $.12 $.08 $.32 $.50 Weighted average shares 7,468 7,677 7,680 7,706 3-31 6-30 9-30* 12-31 ------ ------- ------- ------- 1995 ---- Net sales $5,989 $8,603 $9,311 $13,388 Gross profit 3,606 5,250 5,823 8,437 Net income 733 1,914 1,621 4,141 Earnings per share $.10 $.27 $.22 $.56 Weighted average shares 7,087 7,127 7,310 7,391 *See Note 2.
13. INTANGIBLE ASSETS On November 26, 1996, the Company's German subsidiary acquired the assets of a division of HGV Vosseler GmbH ("Vosseler") engaged in the development and sale of non-contact three-dimensional measurement systems for aggregate consideration consisting of 82,150 shares of Common Stock and DM 300,000 and recorded $2.3 million in intangible assets relating to the acquisition. 14. SUBSEQUENT EVENTS On February 3, 1997, the Company consummated its acquisition of Autospect, Inc. ("Autospect") through the merger of a wholly owned subsidiary of the Company with and into Autospect for aggregate consideration consisting of 387,093 shares of Common Stock of the Company. Autospect, based in Ann Arbor, Michigan, designs, develops and manufactures information-based coatings inspection and defect detection systems primarily for use in the automotive industry. The transaction will be accounted for as a pooling of interests. As of and for the year ended December 31, 1996, Autospect's revenues, net income, and net assets were approximately $4 million, $0.5 million and $1.3 million respectively. [UNAUDITED] The Company recently signed letters of intent to acquire Trident Systems, Inc. ("Trident") and Nanoose Systems Corporation ("Nanoose"). The closing of these acquisitions is subject to a number of factors, including the negotiation, approval and execution of definitive documents and completion of satisfactory due diligence. The proposed consideration for these acquisitions will be shares of Common Stock of the Company, aggregating less than 5% of the outstanding Common Stock. 15 16 PART IV ITEM 14: EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K There were no changes to Item 14 in this Form 10-K/A-1, except to file a new Exhibit 23 Consent of Experts and a new Exhibit 27 Financial Data Schedule. A. Financial Statements and Schedules Filed 1. Financial Statements - see Item 8 of this report. 2. Financial Statement Schedule - the schedule filed with this report is listed on page 35. 3. Exhibits - the exhibits filed with this report are listed on pages 37 through 40. B. Reports on Form 8-K: The Company did not file any reports on Form 8-K in the fourth quarter of 1996 with the Securities and Exchange Commission. 16 17 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: April 24, 1997 17 18 EXHIBIT INDEX EXHIBIT NO. DESCRIPTION OF EXHIBITS 3. Restated Articles of Incorporation and Bylaws. 3.1 Restated Articles of Incorporation, as amended to date, are incorporated herein by reference to Exhibit 3.3 of the Company's Report on Form 10-Q for the Quarter Ended June 30, 1994. 3.2 Bylaws, as amended to date, are incorporated herein by reference to Exhibit 19 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1992. 4. Instruments Defining the Rights of Securities Holders. 4.1 Articles IV and V of the Company's Restated Articles of Incorporation are incorporated herein by reference to Exhibit 3.3 of the Company's Report on Form 10-Q for the Quarter Ended June 30, 1994. 4.2 Articles I, II, III, VI, VII and X of the Company's Bylaws are incorporated herein by reference to Exhibit 19 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1992. 4.3 Revised Credit Agreement dated May 22, 1996, between Perceptron, Inc., Perceptron GmbH and NBD Bank, N.A. and related Demand Business Loan Note are incorporated herein by reference to Exhibit 4.4 of the Company's Report on Form 10-Q for the Quarter Ended June 30, 1996. 10. Material Contracts. 10.1 Registration Agreement, dated as of June 13, 1985, as amended, among the Company and the Purchasers identified therein, is incorporated by reference to Exhibit 10.3 of the Company's Form S-1 Registration Statement (amended by Exhibit 10.2) No. 33-47463. 10.2 Patent License Agreement, dated as of August 23, 1990, between the Company and Diffracto Limited, is incorporated herein by reference to Exhibit 10.10 of the Company's Report on Form S-1 Registration Statement No. 33-47463. 10.3 Form of Proprietary Information and Inventions Agreement between the Company and all of the employees of the Company is incorporated herein by reference to Exhibit 10.11 of the Company's Form S-1 Registration Statement No. 33-47463. 10.4 Form of Confidentiality and Non-Disclosure Agreement between the Company and certain vendors and customers of the Company is incorporated herein by reference to Exhibit 10.12 of the Company's Form S-1 Registration Statement No. 33-47463. 10.5 Two Forms of Agreement Not to Compete between the Company and certain officers of the Company, is incorporated herein by reference to Exhibit 10.50 of the Company's Report on Form 10-Q for the Quarter Ended June 30, 1996. 18 19 10.6 Co-operative Agreement, dated April 1, 1992, between the Company and Sumitomo Corporation, is incorporated herein by reference to Exhibit 10.17 of the Company's Form S-1 Registration Statement No. 33-47463. 10.7 Development and Purchase Agreement between DeMattia Development Company, Plymouth-West Limited Partnership and Perceptron, Inc. dated June 2, 1996 is incorporated by reference to Exhibit 10.51 to the Company's Report on Form 10-Q for the Quarter Ended June 30, 1996. 10.8 Mortgage between DeMattia Development Company and Perceptron, Inc. dated June 6, 1996 is incorporated by reference to Exhibit 10.52 to the Company's Report on Form 10-Q for the Quarter Ended June 30, 1996. 10.9 Single Tenant Building Lease, dated March 5, 1996, between Demco XVI Limited Partnership and Perceptron, Inc. is incorporated by reference to Exhibit 10.9 to the Company's Annual Report on Form 10-K for the Year Ended December 31, 1995. 10.10@ 1983 Stock Option Plan, as amended, and forms of Stock Option Agreement are incorporated herein by reference to Exhibit 10.21 of the Company's Form S-1 Registration Statement No. 33-47463. 10.11@ Amended and Restated 1992 Stock Option Plan is incorporated herein by reference to Exhibit 10.53 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1996. 10.12@ Form of Stock Option Agreements, for July 1993 Stock Option Grants, is incorporated herein by reference to Exhibit 10.23 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1993 and Exhibit 10.32 of the Company's Report on Form 10-Q for the Quarter Ended March 31, 1994. 10.13@ Stock Option Agreement, December 1993 Option Grant, dated December 13, 1993, between the Company and James A. Ratigan is incorporated herein by reference to Exhibit 10.25 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1993. 10.14@ First Amendment to Stock Option Agreement, December 1993 Option Grant between the Company and James A. Ratigan, is incorporated by reference to Exhibit 10.41 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1995. 10.15@ Stock Option Agreement, Performance Options, dated December 13, 1993, between the Company and James A. Ratigan is incorporated herein by reference to Exhibit 10.26 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1993. 10.16@ First Amendment to Stock Option Agreement, Performance Options dated December 13, 1993, between the Company and James A. Ratigan, is incorporated by reference to Exhibit 10.42 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1995. 10.17@ Form of Stock Option Agreements for Performance Options, is incorporated herein by reference to Exhibit 10.27 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1993. The performance standards under these options were waived effective March 2, 1994. 10.18@ First Amendments to Stock Option Agreements for Performance Options is incorporated herein by reference to Exhibit 10.20 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1994. 19 20 10.19@ Form of Stock Option Agreements under 1992 Stock Option Plan, (Team Members and Officers) prior to February 9, 1995, is incorporated herein by reference to Exhibit 10.28 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1993. 10.20@ Forms of Master Amendments to Stock Option Agreements (Team Members and Officers) under 1992 Stock Option Plan, prior to February 9, 1995 is incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K for the Year Ended December 31, 1994. 10.21@ Forms of Incentive Stock Option Agreements (Team Members and Officers) under 1992 Stock Option Plan after February 9, 1995 is incorporated by reference to Exhibit 10.23 to the Company's Annual Report on Form 10-K for the Year Ended December 31, 1994. 10.22*@ Forms of Incentive Stock Option Agreements (Team Members and Officers) and Non-Qualified Stock Option Agreements under 1992 Stock Option Plan after January 1, 1997 and Amendments to existing Stock Option Agreements under the 1992 Stock Option Plan. 10.23@ Stock Option Agreement, dated May 21, 1993 between the Company and James E. McGrath is incorporated herein by reference to Exhibit 10.33 of the Company's Report on Form 10-Q for the Quarter Ended March 31, 1994. 10.24@ Incentive Stock Option Agreement, dated February 14, 1996, between the Company and Alfred A. Pease is incorporated by reference to Exhibit 10.29 of the Company's Annual Report on From 10-K for the Year Ended December 31, 1995. 10.25@ Non-qualified Stock Option Agreement, dated February 14, 1996, between the Company and Alfred A. Pease is incorporated by reference to Exhibit 10.30 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1995. 10.26@ Amended and Restated Directors Stock Option Plan is incorporated by reference to Exhibit 10.56 to the Company's Report on Form 10-Q for the Quarter Ended September 30, 1996. 10.27*@ Form of Non-Qualified Stock Option Agreements and Amendments under the Director Stock Option Plan. 10.28@ Letter Agreement dated December 13, 1993, between the Company and James A. Ratigan is incorporated herein by reference to Exhibit 10.24 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1993. 10.29@ Amendment dated October 26, 1995 to Letter Agreement dated December 13, 1993, between the Company and James A. Ratigan, is incorporated herein by reference to Exhibit 10.40 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1995. 10.30@ Amendment dated April 19, 1996 to letter agreement dated December 13, 1993, between the Company and James A. Ratigan is incorporated by reference to Exhibit 10.46 to the Company's Report on Form 10-Q for the Quarter Ended March 31, 1996. 10.31@ Compensation Arrangement Letter, dated May 21, 1993, between the Company and James E. McGrath, is incorporated herein by reference to Exhibit 10.34 of the Company's Report on Form 10-Q for the Quarter Ended March 31, 1994. 10.32@ 1994 Management Bonus Plan is incorporated herein by reference to Exhibit 10.30 to the Company's Annual Report on Form 10-K for the Year Ended December 31, 1994. 10.33@ 1995 Management Bonus Plan is incorporated herein by reference to Exhibit 10.38 to the Company's Annual Report on Form 10-K for the Year Ended December 31, 1995. 20 21 10.34*@ 1996 Management Bonus Plan. 10.35@ Amended and Restated Employee Stock Purchase Plan is incorporated by reference to Exhibit 10.54 of the Company's Report on Form 10-Q for the Quarter Ended September 30, 1996. 10.36*@ Letter Agreement, dated February 14, 1996, between the Company and Alfred A. Pease. 10.37@ Employment Agreement, dated February 12, 1996, between the Company and Dwight D. Carlson is incorporated by reference to Exhibit 10.42 to the Company's Annual Report on Form 10-K for the Year Ended December 31, 1995. 10.38 Financial Assistance Award, dated December 17, 1993, received from the U.S. Department of Commerce - National Institute of Standards and Technology, and incorporated herein by reference to Exhibit 10.31 of the Company's Annual Report on Form 10-K for the Year Ended December 31, 1993. 11.* Statement re: computations of per share earnings. 21.* A list of subsidiaries of the Company. 23.** Consent of Experts. 27.** Financial Data Schedule. - ---------- * Filed with the Company's Annual Report on Form 10K for the year ended December 31, 1996. @ Indicates a management contract, compensatory plan or arrangement. ** Filed with the Company's Annual Report on Form 10-K and Form 10-K/A-1 for the year ended December 31, 1996. 21 EX-23 2 EXHIBIT 23 1 EXHIBIT 23 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Perceptron, Inc. and Subsidiaries on Form S-8 (File Nos. 33-63666, 33-63664, 33-85656, 33-93910, 333-00446 and 333-00444) and on Form S-3 (File No. 33-78594 and 333-24239) of our report dated January 31, 1996, except as to note 14 for which the date is February 3, 1997, on our audits of the consolidated financial statements and financial statement schedule of Perceptron, Inc. and Subsidiaries as of December 31, 1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994, which report is included in this Annual Report on Form 10-K/A. COOPERS & LYBRAND LLP Detroit, Michigan April 21, 1997 EX-27 3 EXHIBIT 27
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE SHEET AND STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 12-MOS DEC-31-1996 JAN-01-1996 DEC-31-1996 14,666,000 0 20,958,000 (60,000) 6,001,000 45,481,000 10,531,000 (1,416,000) 56,896,000 10,392,000 0 73,000 0 0 46,431,000 56,896,000 49,679,000 49,679,000 18,989,000 17,310,000 3,202,000 0 (786,000) 10,964,000 3,070,000 7,894,000 0 0 0 7,894,000 1.03 1.02
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