-----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, DUlteDrWPnsCm81/4DQILlMn8s0kRsD8cTkrQXRWldh0IyVCfjFw3QORkHrfMDQH Ht+EslAtXvwQBf5OeVLPrA== 0000950124-97-003859.txt : 19970722 0000950124-97-003859.hdr.sgml : 19970722 ACCESSION NUMBER: 0000950124-97-003859 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970710 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970721 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20206 FILM NUMBER: 97642999 BUSINESS ADDRESS: STREET 1: PERCEPTRON INC STREET 2: 47827 HALYARD DR 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 8-K 1 FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 17, 1997 PERCEPTRON, INC. (Exact Name of registrant as specified in its charter) MICHIGAN (State or other jurisdiction of incorporation) 0-20206 38-2381442 (Commission File Number) (IRS Employer Identification No.) 47827 Halyard Drive Plymouth, Michigan 48170-2461 (313) 414-6100 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (313) 414-6100 1 2 ITEM 5. OTHER EVENTS I. ACQUISITION OF TRIDENT SYSTEMS INC. AND NANOOSE SYSTEMS CORPORATION On April 30, 1997, Perceptron, Inc. (the "Company") consummated its acquisitions of Trident Systems Inc. (Trident) and Nanoose Systems Corporation (Nanoose) through the mergers with wholly owned subsidiaries of the Company for aggregate consideration consisting of 219,962 and 89,820 shares respectively of Common Stock of the Company. The transactions were accounted for as poolings-of-interest. Trident is a full-service systems integrator for the solid woods sector of the forest and wood products industry, providing applications that address a wide spectrum of mill processes. Trident purchases TriCam and LASAR-based systems from the Company for integration into systems sold by Trident to the forest and wood products industry. Nanoose, based in British Columbia, Canada, is a software design and engineering company, specializing in industrial scanning and optimization systems. Optimization software written by Nanoose is an important element of the systems sold by Trident to the forest and wood products industry. This software accepts scanner information from the Company's TriCam and LASAR systems. The following are the supplemental consolidated balance sheets of Perceptron, Inc. and its subsidiaries, including Trident and Nanoose, as of December 31, 1996 and December 31, 1995 and the related supplemental consolidated statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1996, together with the report of independent accountants relating thereto. See Note 1 to Notes to Supplemental Consolidated Financial Statements. 2 3 [COOPERS & LYBRAND LETTERHEAD] REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Perceptron, Inc.: We have audited the supplemental consolidated balance sheets of Perceptron, Inc. and subsidiaries as of December 31, 1996 and 1995, and the related supplemental consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The supplemental combined financial statements give retroactive effect to the acquisitions by Perceptron, Inc. of Trident Systems, Inc. and Nanoose Systems Corporation, to be accounted for as poolings of interests as described in Note 1 to the supplemental consolidated financial statements. Generally accepted accounting principles prescribe giving effect to consummated business combinations accounted for by the pooling of interests method in financial statements that do not include the date of consummation. These financial statements do not extend through the date of consummation; however, they become the historical consolidated financial statements of Perceptron, Inc. and subsidiaries after financial statements covering the date of consummation of the business combinations are issued. In our opinion, the financial statements referred to above present fairly, in all material respects, the supplemental consolidated financial position of Perceptron, Inc. and subsidiaries at December 31, 1996 and 1995, and the supplemental 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 applicable after financial statements are issued for a period which includes the date of consummation of the business combinations. /s/ Coopers & Lybrand LLP Detroit, Michigan January 31, 1997 3 4 PERCEPTRON, INC. AND SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED BALANCE SHEETS
December 31, -------------------------- 1996 1995 -------------------------- ASSETS Current assets: Cash and cash equivalents $ 14,924,000 $ 15,442,000 Accounts receivable, net of reserves of $108,000 and $35,000 22,750,000 15,689,000 Inventories, net of reserves of $860,000 and $670,000 7,176,000 5,038,000 Income tax receivables 2,103,000 --- Prepaid expenses and deferred tax asset 2,500,000 2,918,000 ------------ ------------ Total current assets 49,453,000 39,087,000 ------------ ------------ Property and equipment: Construction in progress 6,202,000 --- Machinery and equipment 4,986,000 8,617,000 Furniture and fixtures 376,000 589,000 Leasehold improvements 12,000 107,000 ------------ ------------ 11,576,000 9,313,000 Less: Accumulated depreciation and amortization (1,925,000) (6,398,000) ------------ ------------ Net property and equipment 9,651,000 2,915,000 Intangible assets 2,352,000 15,000 ------------ ------------ Total assets $ 61,456,000 $ 42,017,000 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Current liabilities: Due to bank 980,000 200,000 Accounts payable 4,892,000 2,588,000 Accrued payables 6,223,000 5,896,000 Accrued compensation and stock option expense 2,914,000 2,284,000 ------------ ------------ Total current liabilities 15,009,000 10,968,000 ------------ ------------ 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, 7,950,000 and 7,420,000 issued and outstanding at December 31, 1996 and 1995, respectively 80,000 74,000 Cumulative translation adjustments (929,000) (474,000) Additional paid-in capital 39,560,000 30,863,000 Retained earnings 7,736,000 586,000 ------------ ------------ $ 46,447,000 $ 31,049,000 ------------ ------------ Total liabilities and shareholders' equity $ 61,456,000 $ 42,017,000 ============ ============
The accompanying notes are an integral part of the supplemental consolidated financial statements. 4 5 PERCEPTRON, INC. AND SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, ----------------------------------------------------------- 1996 1995 1994 ------- ------- ------- Net sales $ 58,975,000 $ 43,154,000 $ 33,224,000 Cost of sales 23,608,000 16,970,000 13,976,000 -------------- -------------- -------------- Gross profit 35,367,000 26,184,000 19,248,000 -------------- -------------- -------------- Selling, general and administrative expense 15,369,000 11,672,000 8,799,000 Engineering, research and development expense 7,294,000 5,436,000 4,403,000 Non-cash stock compensation expense 3,202,000 1,377,000 --- -------------- -------------- -------------- Income from operations 9,502,000 7,699,000 6,046,000 -------------- -------------- -------------- Interest income, net 743,000 528,000 133,000 -------------- -------------- -------------- Net income before provision for income taxes 10,245,000 8,227,000 6,179,000 Provision for income taxes 3,095,000 (264,000) --- -------------- -------------- -------------- Net income $ 7,150,000 $ 8,491,000 $ 6,179,000 ============== ============== ============== Net income per weighted average share $ .86 $ 1.07 $ .80 ============== ============== ============== Weighted average common and common equivalent shares 8,333,171 7,954,659 7,695,255 ============== ============== ==============
The accompanying notes are an integral part of the supplemental consolidated financial statements. 5 6 PERCEPTRON, INC. AND SUBSIDIARIES SUPPLEMENTAL 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 6,538,386 $ 65,000 $ (366,000) $ 28,105,000 ($ 14,084,000) $ 13,720,000 Stock options exercised, net of shares tendered 538,708 6,000 513,000 519,000 Translation adjustment on investment in foreign subsidiaries (72,000) (72,000) Net Income 6,179,000 6,179,000 --------- --------- ---------- ------------ ------------- ------------ Balances, December 31, 1994 7,077,094 $ 71,000 $ (438,000) $ 28,618,000 $ (7,905,000) $ 20,346,000 --------- --------- ---------- ------------ ------------- ------------ 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 8,491,000 8,491,000 --------- --------- ---------- ------------ ------------- ------------ Balances, December 31, 1995 7,419,654 $ 74,000 $ (474,000) $30,863,000 $ 586,000 $31,049,000 ========= ========= ========== ============ ============= ============ 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 2,062,000 2,067,000 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 7,150,000 7,150,000 --------- --------- ---------- ------------ ------------- ------------ Balances, December 31, 1996 7,949,442 80,000 (929,000) 39,560,000 7,736,000 46,447,000 ========= ========= ========== ============ ============= ============
The accompanying notes are an integral part of the supplemental consolidated financial statements. 6 7 PERCEPTRON, INC. AND SUBSIDIARIES SUPPLEMENTAL CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, ---------------------------------------------------- 1996 1995 1994 -------------- ------------- ----------------- Cash flows from operating activities: Net income $ 7,150,000 $ 8,491,000 $ 6,179,000 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 904,000 854,000 506,000 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 (9,996,000) (3,387,000) (3,361,000) Inventories (2,138,000) (1,496,000) (1,166,000) Prepaid expenses and deferred tax asset 510,000 (2,393,000) (270,000) Accounts payable 588,000 1,201,000 370,000 Accrued expenses 1,396,000 4,679,000 2,196,000 ------------ ------------ ------------- Total adjustments (5,241,000) 835,000 (1,591,000) ------------ ------------ ------------- Net cash provided by operating activities 1,909,000 9,326,000 4,588,000 ------------ ------------ ------------- Cash flows (used in) investing activities: Capital expenditures (5,703,000) (2,415,000) (992,000) ------------ ------------ ------------- Net cash (used in) investing activities (5,703,000) (2,415,000) (992,000) ------------ ------------ ------------- Cash flows from financing activities: Principal payments under capital leases -0- (94,000) (103,000) Proceeds from issuance of short-term debt 980,000 200,000 709,000 Principal payments on short-term debt (200,000) (422,000) (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 3,451,000 428,000 838,000 ------------ ------------ ------------- Effect of exchange rates on cash and cash equivalents (175,000) 62,000 36,000 ------------ ------------ ------------- Net increase/(decrease) in cash and cash equivalents (518,000) 7,401,000 4,470,000 Cash and cash equivalents, beginning of year 15,442,000 8,041,000 3,571,000 ------------ ------------ ------------- Cash and cash equivalents, end of year $ 14,924,000 $ 15,442,000 $ 8,041,000 ============ ============ ============= Supplemental disclosure of cash flow information: Cash paid during the year for interest expense $ 24,000 $ 45,000 $ 30,000 ============ ============ ============= Cash paid during the year for income taxes $ 2,711,000 $ 318,000 $ 213,000 ============ ============ ============= Non-cash transactions: Equipment acquired under capital leases $ 0 $ 128,000 $ 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 supplemental consolidated financial statements 7 8 PERCEPTRON, INC. AND SUBSIDIARIES NOTES TO SUPPLEMENTAL 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 machine vision systems which are used primarily in the automotive industry, and to a lesser extent, in other industries. BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION The supplemental consolidated financial statements of the Company have been prepared to give retroactive affect to the acquisition by the Company of Trident Systems Inc. ("Trident") and Nanoose Systems Corporation ("Nanoose") which acquisition was consummated on April 30, 1997. The acquisitions are being accounted for as poolings-of-interest. Generally accepted accounting principals proscribe giving the effect to a consummated business combination accounted for by the pooling-of-interests method in financial statements that do not include the date of consummation. These financial statements do not extend through the date of consummation; however, they become the historical consolidated financial statements of the Company after financial statements covering the date of consummation of the business combination are issued. 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. The transaction was 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, $.5 million and $1.3 million respectively. The supplemental 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. 8 9 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 $ 4,627,000 $ 3,419,000 Work in process 1,829,000 1,044,000 Finished goods 720,000 575,000 ------------- ------------- Total $ 7,176,000 $ 5,038,000 ============= =============
PROPERTY AND EQUIPMENT Property and equipment is 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 three to ten 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. 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. 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. 9 10 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: At December 31, 1996 the Company has unsecured credit facilities totaling $5.8 million U.S. and 1.0 million DM. These facilities may be used to finance working capital needs and equipment purchases or capital leases. Under the principal facility, 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 Company's principal credit facilities expire on May 31, 1997 unless canceled earlier by the Company or the bank. A portion of the credit facilities are subject to a borrowing formula based on eligible accounts receivables. In June 1997, the Company renewed the Company's principal credit facilities. At December 31, 1996, borrowings under a portion of the facilities, by Autospect and Trident, were collateralized by substantially all of the assets of Autospect and Trident, in the amounts of $830,000 and $150,000. The principal 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 Capital ---- ---------- ---------- 1997 $ 278,000 $ 44,000 1998 244,000 27,000 1999 129,000 12,000 2000 123,000 2,000 2001 124,000 --- ---------- ---------- Total minimum lease payments $ 898,000 $ 85,000 ========== ========== Less amount representing interest $ 8,000 ---------- Present value of net minimum lease payments $ 77,000 ==========
Rental expense for operating leases in 1996,1995 and 1994 was $480,000, $484,000 and $466,000, respectively. Depreciation of the assets recorded under capital assets is included in depreciation expense. The net book value of the leased assets included in property and equipment at December 31, 1996 was $72,000. 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. 10 11 In 1993, the Company was awarded a $1.22 million NIST-ATP grant from the United States Department of Commerce for software development related to high-speed image processing techniques for three-dimensional machine vision systems. This grant, now completed, provided the Company $0.4 million in 1994, $0.6 million in 1995, and $0.2 million in 1996. The Company includes all development costs incurred internally and subcontracted to an independent research organization and to a university in engineering, research and development expense, and offsets these costs with any reimbursements due from NIST. Work under this grant has supplied the Company with a substantial repertoire of widely usable and tested machine vision algorithm components for use with its TriCam and LASAR products. In late 1995, Autospect received a $1.8 million NIST grant which will provide funding of $600,000 per year over three years for development of a system to measure the thickness of wet film (e.g. paint). Prototype testing of this system has begun. During 1996 Autospect received revenue reimbursements of $0.4 million which offset the related cost. 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. - 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. 11 12 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 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
12 13 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 $ 7,150,000 $ 8,491,000 ..Pro forma 4,051,000 7,625,000 Primary earnings per share ..As reported $ .86 $ 1.07 ..Pro forma $ .49 $ .96
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 401(k) tax deferred savings plans that cover 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 $292,000, $181,000, and $124,000, respectively. 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 $ 1,184,000 $ 272,000 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) --------- ---------- Total provision 3,095,000 (264,000) ========= ==========
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 465,000 --- --------- --------- Subtotal 1,565,000 2,400,000 Valuation reserve 0 (200,000) --------- --------- Deferred tax asset $1,565,000 $ 2,200,000 ========= =========
13 14 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 and other credits 2% (37%) Net effect of taxes on foreign activities (4%) 20% Change in valuation allowance (2%) (20%) ---- ---- 30% (3%) ==== ====
As a result of available net operating losses, there was no provision for income tax in 1994. 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 46% 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, 16% 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 12% of the Company's net sales. During 1995, 34% of total net sales was derived from three domestic automotive companies, and 26% from sales by integrators to such companies. In 1995, sales by the Company to each of these three customers exceeded 7% of the Company's net sales. During 1994, 32% of net sales were derived from three automotive companies and 44% from sales by integrators to such companies. In 1994, sales by the Company to each of these three companies exceeded 9% of the Company's net sales. 10. CONTINGENCIES: The Company may, from time to time, be subject to legal proceedings and claims. Litigation involves many uncertainties. Management is currently unaware of any significant pending litigation affecting the Company, other than the indemnification matter and the complaint discussed in the following paragraphs. The Company has been informed that certain of its customers have received allegations of possible patent infringement involving processes and methods used in the Company's products. One such customer is currently engaged in litigation relating to such matter. This customer has notified various companies from which it has purchased such equipment, including the Company, that it expects the suppliers of such equipment to indemnify such customer, on a pro-rata basis, for expenses and damages, if any, incurred in this matter. Management believes, however, that the processes used in the Company's products were independently developed without utilizing any previously patented process or technology. Because of the uncertainty surrounding the nature of any possible infringement and the validity of any such claim or any possible customer claim for indemnity, it is not possible to estimate the ultimate effect, if any, of this matter on the company's financial position. 14 15 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* $ 53,217 $ 32,762 $ 30,730 Europe and Asia 12,744 13,049 3,606 Intercompany Sales (6,986) (2,657) (1,112) ---------- ---------- ---------- Total Net Sales $ 58,975 $ 43,154 $ 33,224 ========== ========== ========== Income from operations: North America* $ 4,905 $ 1,945 $ 5,839 Europe and Asia 4,597 5,754 207 ---------- ---------- ---------- Total Income from Operations $ 9,502 $ 7,699 $ 6,046 ========== ========== ========== Identifiable assets at December 31: North America* $ 48,959 $ 34,244 $ 23,543 Europe and Asia 12,497 7,773 2,298 ---------- ---------- ---------- Total Assets $ 61,456 $ 42,017 $ 25,841 ========== ========== ==========
- -------------- * Includes intercompany amounts; intercompany sales prices are based on cost plus a transfer fee. 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 $ 10,117 $ 13,823 $ 15,008 $ 20,027 Gross profit 5,948 8,242 9,390 11,787 Net income 755 964 1,541 3,890 Earnings per share $ .09 $ .12 $ .18 $ .46 Weighted average shares 8,165 8,374 8,377 8,403 3-31 6-30 9-30 12-31 --------- --------- --------- --------- 1995 - ---- Net sales $ 7,181 $ 10,885 $ 10,229 $ 14,859 Gross profit 4,375 6,420 6,305 9,084 Net income 902 2,262 1,246 4,081 Earnings per share $ .12 $ .29 $ .16 $ .50 Weighted average shares 7,784 7,824 8,007 8,088
15 16 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. 16 17 ITEM 7 EXHIBITS 11. Computation of per share earnings 23. Consent of Experts 27. Financial Data Schedule 17 18 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PERCEPTRON, INC. (Registrant) By: /S/ Alfred A. Pease -------------------------------- Alfred A. Pease, Chairman, President and Chief Executive Officer Date: July 17, 1997 18 19 INDEX TO EXHIBITS 11 Computation of per share earnings 23 Consent of Experts 27 Financial Data Schedule 19
EX-11 2 EXHIBIT 11 1 PERCEPTRON, INC. AND SUBSIDIARIES EXHIBIT 11, STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Earnings Per Share Year Ended December 31, --------------------------------------------- 1996 1995 1994 ------------ ----------- ----------- A. Net Income $ 7,150,000 $ 8,491,000 $ 6,179,000 ------------ ----------- ----------- Weighted average number of common shares outstanding 7,661,153 7,251,320 6,826,847 Effect of the issuance of stock options and warrants and assumed exercise of stock options and warrants at prices which are lower than the average market price of the common shares during the period, using the treasury stock method 672,018 703,339 774,655 Effect of convertible shares held by a minority shareholder of a foreign subsidiary, which were converted into common stock on June 23, 1994 --- --- 93,753 ------------ ----------- ----------- B. Weighted average number of common shares and common equivalent shares for primary earnings per share 8,333,171 7,954,659 7,695,255 ------------ ----------- ----------- Weighted average number of common shares outstanding 7,661,153 7,251,320 6,826,847 Effect of the issuance of stock options and warrants and assumed exercised of stock options and warrants at prices which are lower than the market price of the common shares at the end of the period, using the treasury stock method 740,229 871,833 946,413 Effect of convertible shares held by a minority shareholder of a foreign subsidiary, which were converted into common stock on June 23, 1994 --- --- 93,753 ------------ ----------- ----------- C. Weighted average number of common shares and common equivalent shares for fully diluted earnings per share 8,401,382 8,123,153 7,867,013 ------------ ----------- ----------- Primary earnings per share (A/B) $ .86 $ 1.07 $ .80 ============ =========== =========== Fully diluted earnings per share (A/C) $ .85 $ 1.05 $ .79 ============ =========== ===========
20
EX-23 3 EXHIBIT 23 1 EXHIBIT 23 [COOPERS & LYBRAND LETTERHEAD] CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statements of Perceptron, Inc. and Subsidiaries on Form S-8 (File Nos. 33-63666, 33-63664, 33-85656, 33-93910, 333-00446 and 333-00444) and on Form S-3 (File Nos. 33-78594, 333-29263 and 333-24239) of our report dated January 31, 1996, on our audits of the supplemental consolidated financial statements 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 current report on Form 8K. /s/ Coopers & Lybrand LLP Detroit, Michigan July 18, 1997 EX-27 4 EXHIBIT 27
5 THIS 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 14,924,000 0 23,032,000 (60,000) 7,176,000 49,675,000 11,576,000 (1,925,000) 61,678,000 15,231,000 0 0 0 80,000 46,367,000 61,678,000 58,975,000 58,975,000 23,608,000 22,663,000 3,202,000 0 (743,000) 10,245,000 3,095,000 7,150,000 0 0 0 7,150,000 .86 .85
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