UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended
December 31, 2016
.
Commission file number: 0-20206
PERCEPTRON, INC.
(Exact Name of Registrant as Specified in Its Charter)
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Michigan
(State or Other Jurisdiction of
Incorporation or Organization)
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38-2381442
(I.R.S. Employer
Identification No.)
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47827 Halyard Drive, Plymouth, Michigan
(Address of Principal Executive Offices)
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48170-2461
(Zip Code)
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(734) 414-6100
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
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.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer
☐
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Accelerated filer
☑
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Non-accelerated filer
☐
(Do not check if a smaller reporting company)
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Smaller reporting company
☐
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
The number of shares outstanding of each of the issuer’s classes of common stock as
of February 1,
2017
, was:
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Common Stock, $0.01 par value
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9,391,467
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Class
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Number of shares
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PERCEPTRON, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
For the Quarter Ended
December 31, 2016
+
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PERCEPTRON, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEETS
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December 31,
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June 30,
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(In Thousands, Except Per Share Amount)
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2016
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2016
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(unaudited)
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ASSETS
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Current Assets
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Cash and cash equivalents
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$
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5,654
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$
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6,787
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Short-term investments
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551
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1,474
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Receivables:
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Billed receivables, net of allowance for doubtful accounts
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27,258
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23,627
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of
$259
and
$269
, respectively
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Other receivables
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246
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448
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Inventories, net of reserves of
$1,906
and
$1,608
, respectively
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10,405
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12,172
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Short-term deferred income tax asset
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284
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1,031
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Other current assets
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1,384
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1,170
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Total current assets
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45,782
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46,709
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Property and Equipment
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Building and land
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7,634
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7,708
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Machinery and equipment
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15,817
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15,876
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Furniture and fixtures
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1,039
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1,130
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Gross property and equipment
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24,490
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24,714
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Less - Accumulated depreciation
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(17,222)
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(16,788)
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Net property and equipment
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7,268
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7,926
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Goodwill
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7,136
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7,500
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Intangible Assets, Net
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4,289
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5,017
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Long-Term Investments
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725
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770
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Total Assets
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$
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65,200
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$
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67,922
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Current Liabilities
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Accounts payable
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$
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8,070
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$
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8,801
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Accrued liabilities and expenses
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3,777
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4,391
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Accrued compensation
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2,260
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1,789
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Current portion of taxes payable
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843
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1,029
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Short-term deferred income tax liability
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274
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500
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Income taxes payable
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311
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148
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Short-term notes payable
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1,637
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200
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Restructuring reserve
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313
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814
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Deferred revenue
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6,695
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7,711
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Total current liabilities
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24,180
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25,383
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Long-Term Taxes Payable
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1,227
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1,714
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Long-Term Deferred Income Tax Liability
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938
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1,131
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Other Long-Term Liabilities
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923
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1,140
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Total Liabilities
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$
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27,268
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$
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29,368
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Shareholders' Equity
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Preferred stock,
no
par value, authorized
1,000
shares, issued
none
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-
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-
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Common stock,
$0.01
par value, authorized
19,000
shares,
issued
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and
outstanding
9,387
and
9,370
, respectively
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94
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94
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Accumulated other comprehensive loss
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(4,387)
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(3,220)
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Additional paid-in capital
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46,114
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45,738
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Retained deficit
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(3,889)
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(4,058)
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Total shareholders' equity
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37,932
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38,554
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Total Liabilities and Shareholders' Equity
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$
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65,200
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$
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67,922
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The notes to the consolidated financial statements are an integral part of these statements.
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PERCEPTRON, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
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(UNAUDITED)
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Three Months Ended
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Six Months Ended
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December 31,
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December 31,
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(In Thousands, Except Per Share Amounts)
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2016
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2015
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2016
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2015
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Net Sales
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$
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21,751
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$
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17,211
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$
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39,271
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$
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32,279
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Cost of Sales
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12,307
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12,116
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25,253
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22,758
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Gross Profit
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9,444
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5,095
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14,018
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9,521
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Operating Expenses
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Selling, general and administrative
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4,469
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5,386
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8,756
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10,656
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Engineering, research and development
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1,657
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1,970
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3,267
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4,198
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Severance, impairment and other charges
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61
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-
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717
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-
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Total operating expenses
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6,187
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7,356
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12,740
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14,854
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Operating Income (Loss)
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3,257
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(2,261)
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1,278
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(5,333)
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Other Income and (Expenses)
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Interest expense, net
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(61)
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(25)
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(118)
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(46)
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Foreign currency (loss) gain, net
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(393)
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58
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(344)
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59
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Other income, net
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23
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86
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24
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145
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Total other (expense) income
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(431)
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119
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(438)
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158
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Income (Loss) Before Income Taxes
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2,826
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(2,142)
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840
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(5,175)
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Income Tax (Expense) Benefit
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(302)
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596
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(671)
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1,521
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|
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Net Income (Loss)
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$
|
2,524
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|
$
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(1,546)
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$
|
169
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$
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(3,654)
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Income (Loss) Per Common Share
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Basic
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$
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0.27
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|
$
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(0.17)
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$
|
0.02
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|
$
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(0.39)
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Diluted
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$
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0.27
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|
$
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(0.17)
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$
|
0.02
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$
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(0.39)
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|
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Weighted Average Common Shares Outstanding
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Basic
|
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9,381
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|
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9,351
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|
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9,376
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|
|
9,351
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Dilutive effect of stock options
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35
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|
-
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|
33
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|
-
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Diluted
|
|
|
9,416
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|
9,351
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|
|
9,409
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|
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9,351
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The notes to the consolidated financial statements are an integral part of these statements.
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PERCEPTRON, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
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(UNAUDITED)
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Three Months Ended
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Six Months Ended
|
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|
December 31,
|
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December 31,
|
(In Thousands)
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
2,524
|
|
$
|
(1,546)
|
|
$
|
169
|
|
$
|
(3,654)
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
(1,340)
|
|
|
(766)
|
|
|
(1,167)
|
|
|
(1,046)
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|
|
|
|
|
|
|
|
|
|
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|
Comprehensive Income (Loss)
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|
$
|
1,184
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|
$
|
(2,312)
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|
$
|
(998)
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|
$
|
(4,700)
|
|
|
|
|
|
|
|
|
|
|
|
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|
The notes to the consolidated financial statements are an integral part of these statements.
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PERCEPTRON, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOW
|
(UNAUDITED)
|
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|
Six Months Ended
|
|
|
December 31,
|
(In Thousands)
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities
|
|
|
|
|
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|
Net income (loss)
|
|
$
|
169
|
|
$
|
(3,654)
|
Adjustments to reconcile net income (loss) to net cash used for
|
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|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
1,142
|
|
|
1,043
|
Stock compensation expense
|
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|
323
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|
|
372
|
Asset impairment and related inventory write-down
|
|
|
542
|
|
|
-
|
Deferred income taxes
|
|
|
323
|
|
|
(1,404)
|
Gain on disposal of assets
|
|
|
(2)
|
|
|
(829)
|
Allowance for doubtful accounts
|
|
|
10
|
|
|
(55)
|
Changes in assets and liabilities
|
|
|
|
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|
|
Receivables
|
|
|
(4,534)
|
|
|
2,566
|
Inventories
|
|
|
1,087
|
|
|
(1,529)
|
Accounts payable
|
|
|
(502)
|
|
|
2,205
|
Other current assets and liabilities
|
|
|
(1,579)
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|
|
(4,251)
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Net cash used for operating activities
|
|
|
(3,021)
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|
|
(5,536)
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|
|
|
|
|
|
|
Cash Flows from Investing Activities
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(1,425)
|
|
|
(1,832)
|
Sales of short-term investments
|
|
|
2,353
|
|
|
1,861
|
Capital expenditures
|
|
|
(168)
|
|
|
(1,263)
|
Acquisitions of long-term assets
|
|
|
-
|
|
|
(129)
|
Net cash provided by (used for) investing activities
|
|
|
760
|
|
|
(1,363)
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities
|
|
|
|
|
|
|
Proceeds from short-term credit borrowings, net
|
|
|
1,347
|
|
|
201
|
Proceeds from stock compensation plans
|
|
|
56
|
|
|
65
|
Net cash provided by financing activities
|
|
|
1,403
|
|
|
266
|
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash and Cash Equivalents
|
|
|
(275)
|
|
|
(51)
|
|
|
|
|
|
|
|
Net Decrease in Cash and Cash Equivalents
|
|
|
(1,133)
|
|
|
(6,684)
|
Cash and Cash Equivalents, July 1
|
|
|
6,787
|
|
|
11,502
|
Cash and Cash Equivalents, December 31
|
|
$
|
5,654
|
|
$
|
4,818
|
|
|
|
|
|
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
Cash paid during the period for interest
|
|
$
|
191
|
|
$
|
144
|
Cash paid during the period for income taxes
|
|
$
|
42
|
|
$
|
836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The notes to the consolidated financial statements are an integral part of these statements.
|
PERCEPTRON, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1.
Accounting Policies
Perceptron, Inc. (“Perceptron” “we”, “us” or “our”) develops, produces and sells a comprehensive range of automated industrial metrology products and solutions to manufacturing organizations for dimensional gauging, dimensio
nal inspection and 3D scanning
. Our products provide solutions for manufacturing process control as well as sensor and software technologies for non-contact measurement, scanning and inspection applications. We also offer
v
alue
a
dded
s
ervices such as training and customer support services.
Basis of Presentation and Principles of Consolidation
The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and within the rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. Our Consolidated Financial Statements include the accounts of Perceptron and our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
In
our opinion, these statements include all normal recurring
adjustments necessary for a fair presentation of the financial statements for the periods presented.
T
he results of operations for any interim period are not necessarily indicative of the results of operations for a full
fiscal
year
.
The accompanying
unaudited
Consolidated Financial Statements should be read in conjunction with
our
audited Consolidated Financial Statements in our
201
6
Annual Report on Form 10-K
for the fiscal year ended June 30, 2016.
Use of Estimates
Management is required to make certain estimates and assumptions under U.S. GAAP during the preparation of these Consolidated Financial Statements. These estimates and assumptions may affect the reported amounts of assets and liabilities as well as the 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.
2.
New Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update No. 2014-09,
Revenue from Contracts with Customers
(ASU 2014-09)
,
which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.
I
n March 2016, the FASB issued the final guidance to clarify the principal versus agent guidance (i.e., whether an entity should report revenue gross or net
). I
n
April 2016, the FASB issued
final guidance to clarify identifying performance obligation and the licensing implementation guidance. In May 2016, FASB updated the guidance in AS
U No. 2014-09, which updated implementation of
certain narrow topics within ASU 2014-09.
Finally, in December 2016, the FASB issued several technical corrections and improvements, which clarify the previously issued standards and corrected unintended application of previous guidance.
These standards
(collectively “ASC 606”)
will be effective for annual periods beginning after December 15, 2017 (as amended in August 2015, by ASU 2015-14,
Deferral of the Effective Date)
, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the applications of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We
have commenced a
detailed analysis of our contracts under ASC 606 and expect to decide which transition method
we will
utilize to
adopt
ASC 606
by the end of our fiscal year 2017
.
In July 2015, the FASB issued Accounting Standards Update No. 2015-11,
Simplifying the Measurement of Inventory
(ASU 2015-11), which changes the measurement of inventory at the lower of cost and net realizable value. Net realizable value
is the estimated selling price
in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. There were also amendments to the guidance to more clearly articulate the requirements for the measurement and disclosure of inventory. ASU 2015-11 is effective for Perceptron on July 1, 2017 and is not expected to have a significant impact on our consolidated financial statements or disclosures.
In November 2015, the FASB issued Accounting Standards Update No. 2015-17,
Balance Sheet Classification of Deferred Taxes (ASU 2015-17),
which requires all deferred tax assets and liabilities, included related valuation allowances, be classified as non-current on our consolidated balance sheets. ASU 2015-17 is effective beginning July 1, 2017 and is not expected to have a significant impact on our consolidated financial statements or disclosures.
In January 2016, the FASB issued Accounting Standards Update No. 2016-01,
Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities (ASU 2016-01),
which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASC 2016-01 is effective beginning for Perceptron on July 1, 2018 and is not expected to have a significant impact on our consolidated financial statements or disclosures.
In February 2016, the FASB issued Accounting Standards Update No. 2016-02
Leases (ASU 2016-2),
which establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. A modified retrospective transition approach is required for lessees with capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. We are currently evaluating the impact of the adoption of ASU 2016-02 on our consolidated financial statements.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09,
Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09),
which changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for fiscal years and interim periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-09 on our consolidated financial statements.
In June 2016, the FASB issued Accounting Standards Update No. 2016-13,
Financial Instruments – Credit Losses (Topic 326) (ASU 2016-13),
which requires the measurement of all expected credit losses for financial assets held at the reporting date to be based on historical experience, current conditions as well as reasonable and supportable forecasts. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-13 on our consolidated financial statements.
In August 2016, the FASB issued Accounting Standards Update No. 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15),
which will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for Perceptron beginning on July 1, 2018 and requires us to utilize a retrospective adoption unless it is impracticable for us to apply, in which case, we would be required to apply the amendment prospectively as of the earliest date practicable. We are currently evaluating the impact of the adoption of ASU 2016-15 on our consolidated statement of cash flows.
In October 2016, the FASB issued Accounting Standards Update No. 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16),
which requires that an entity should recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU 2016-16 is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted as of the beginning of an annual reporting period for which financial statements (interim or annual) have not been issued or made available for issuance. We are currently evaluating the impact of the adoption of ASU 2016-16 on our consolidated financial statements.
In November 2016, the FASB issued Accounting Standards Update No. 2016-18,
Statement of Cash Flows (Topic 230): Restricted Cash (ASU 2016-18),
which requires a company to present their Statement of Cash Flows including amounts generally described as restricted cash or restricted cash equivalents with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for annual reporting periods beginning after December 15, 2017, with early adoption permitted. We are currently evaluating the impact of the adoption of ASU 2016-18 on
our consolidated statement of cash flows.
In January 2017, the FASB issued Accounting Standards Update No. 2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business,
which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective
for Perceptron on July 1, 2018 and is not expected to have a significant impact on our consolidated financial statements or disclosures.
3.
Goodwill
Goodwill represents the excess purchase price over the fair value of the net amounts assigned to assets acquired and liabilities assumed in connection with our acquisitions. Under ASC Topic 805
“
Business Combinations”
, we are required to test goodwill for impairment annually or more frequently, whenever events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit with goodwill below its carrying amount. Application of the goodwill impairment test requires judgment, including assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units and determination of the fair value of each reporting unit.
The qualitative events or circumstances that could affect the fair value of a reporting unit could include economic conditions; industry and market considerations, including competition; increases in raw materials, labor, or other costs; overall financial performance such as negative or declining cash flows; relevant entity-specific events such as changes in management, key personnel, strategy, or customers; sale or disposition of a significant portion of a reporting unit and regulatory or political developments. Companies have the option under ASC Topic 350
“Intangibles – Goodwill and Other”
to evaluate goodwill based upon these qualitative factors, and if it is more likely than not that the fair value of the reporting unit is greater than its carrying amount, then no further goodwill impairment tests are necessary. If the qualitative review indicates it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a two-step quantitative impairment test is performed to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized, if any. In fiscal year 2016, we elected the two-step quantitative goodwill impairment test.
Step 1 is to identify potential impairment by comparing
the
fair value of a reporting unit with its carrying value, including goodwill. If the fair value is lower than the carrying value, this is an indication of goodwill impairment and Step 2 must be performed. Under Step 2, an impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the implied fair value of that goodwill. This analysis requires significant judgment in developing assumptions, such as estimating future cash flows, which is dependent on internal forecasts, estimating the long-term rate of growth for our business, estimating the useful life over which cash flows will occur and calculating our weighted average cost of capital. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, foreign currency fluctuations and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and could result in goodwill impairment for a reporting unit, negatively impacting
our
results of operations for the period and financial position.
Goodwill is recorded in the local currency of the acquired entities and foreign currency
effects will impact the balance of goodwill in future periods. Our goodwill balance was
$7,136,000
and
$7,500,000
as
of
December 31
,
and June 30, 2016, respectively
. The change
in goodwill
of
$364,000
was due to the change in foreign currency rates from June 30, 201
6
to
December 31
, 2016.
4.
Intangibles
We acquired intangible assets in addition to goodwill in connection with the acquisitions of Coord3 and NMS. These assets are susceptible to shortened estimated useful lives and changes in fair value due to changes in their use, market or economic changes, or other events or circumstances. We evaluate the potential impairment of these intangible assets whenever events or circumstances indicate their carrying value may not be recoverable. Factors that could trigger an impairment review include historical or projected results that are less than the assumptions used in the original valuation of an intangible asset, a change in our business strategy or our use of an intangible asset or negative economic or industry trends.
If an event or circumstance indicates that the carrying value of an intangible asset may not be recoverable, we assess the recoverability of the asset by comparing the carrying value of the asset to the sum of the undiscounted future cash flows that the asset is expected to generate over its remaining economic life. If the carrying value exceeds the sum of the undiscounted future cash flows, we compare the fair value of the intangible asset to the carrying value and record an impairment loss for the difference. We generally estimate the fair value of our intangible assets us
ing the income approach based
on a discounted cash flow model. The income approach requires the use of many assumptions and estimates including future revenues and expenses, discount factors, income tax rates, the identification of groups of assets with highly independent cash flows, and assets’ economic lives. Volatility in the global economy makes these assumptions and estimates more judgmental. Actual future operating results and the remaining economic lives of our other intangible assets could differ from those used in assessing the recoverability of these assets and could result in an impairment of other intangible assets in future periods.
O
ur intangible assets are as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
|
|
June 30,
|
|
|
|
2016
|
|
|
|
|
|
2016
|
|
|
2016
|
|
|
|
|
|
2016
|
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
Gross
|
|
|
|
|
|
Net
|
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
Carrying
|
|
|
Accumulated
|
|
|
Carrying
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
|
|
Amount
|
|
|
Amortization
|
|
|
Amount
|
Customer/Distributor Relationships
|
|
$
|
3,013
|
|
$
|
(1,106)
|
|
$
|
1,907
|
|
$
|
3,170
|
|
$
|
(847)
|
|
$
|
2,323
|
Trade Name
|
|
|
2,339
|
|
|
(429)
|
|
|
1,910
|
|
|
2,461
|
|
|
(328)
|
|
|
2,133
|
Software
|
|
|
676
|
|
|
(248)
|
|
|
428
|
|
|
676
|
|
|
(181)
|
|
|
495
|
Other
|
|
|
112
|
|
|
(68)
|
|
|
44
|
|
|
118
|
|
|
(52)
|
|
|
66
|
Total
|
|
$
|
6,140
|
|
$
|
(1,851)
|
|
$
|
4,289
|
|
$
|
6,425
|
|
$
|
(1,408)
|
|
$
|
5,017
|
Amortization expense was
$286,000
and
$321,000
for the three month periods ended December 31, 2016 and 2015, respectively. Amortization expense was
$542,000
and
$585,000
for the six month periods ended December 31, 2016 and 2015, respectively. The change in the gross carrying value of
$285,000
is due to changes in foreign currency rates from June 30, 2016 to December 31, 2016.
The estimated amortization of the remaining intangible assets by year is as follows (in thousands):
|
|
|
|
|
|
Years Ending June 30,
|
Amount
|
2017 (excluding the six months ended December 31, 2016)
|
|
509
|
2018
|
|
1,035
|
2019
|
|
1,017
|
2020
|
|
635
|
2021
|
|
234
|
after 2021
|
|
859
|
|
$
|
4,289
|
5.
Revenue Recognition
Revenue related to products and services is recognized upon shipment when title and risk of loss has passed to the customer or upon completion of the service, there is persuasive evidence of an arrangement, the sales price is fixed or determinable, collection of the related receivable is reasonably assured and customer acceptance criteria, if any, have been successfully demonstrated.
We also have multiple element arrangements in our Measurement Solutions product line
,
which may include elements such as, equipment, installation, labor support and/or training. Each element has value on a stand-alone basis and the delivered elements do not include general rights of return. Accordingly, each element is considered a separate unit of accounting. When available, we allocate arrangement consideration to each element in a multiple element arrangement based upon vendor specific objective evidence (“VSOE”) of fair value of the respective elements. When VSOE cannot be established, we attempt to establish the selling price of each element based on relevant third-party evidence. Our products contain a significant level of proprietary technology, c
ustomization or differentiation;
therefore, comparable pricing of products with similar functionality cannot be obtained. In these cases, we utilize our best estimate of selling price (“BESP”). We determine the BESP for a product or service by considering multiple factors including, but not limited to, pricing practices, internal costs, geographies and gross margin.
For multiple element arrangements, we defer from revenue recognition the greater of the relative fair value of any undelivered elements of the contract or the portion of the sales price of the contract that is not payable until the undelivered elements are completed. As part of this evaluation, we limit the amount of revenue recognized for delivered elements to the amount that is not contingent on the future delivery of products or services, including a consideration of payment terms that delay payment until those future deliveries are completed.
Some multiple element arrangements contain installment payment terms with a final payment (“final buy-off”) due upon the completion of all elements in the arrangement or when the customer’s final acceptance is received. We recognize revenue for each completed element of a contract when it is both earned and realizable. A provision for final customer acceptance generally does not preclude revenue recognition for the delivered equipment element because we rigorously test equipment prior to shipment to ensure it will function in our customer’s environment. The final acceptance amount is assigned to specific element(s) identified in the contract, or if not specified in the contract, to the last element or elements to be delivered that represent an amount at least equal to the final payment amount.
Our Measurement Solutions are designed and configured to meet each customer’s specific requirements. Timing for the delivery of each element in the arrangement is primarily determined by the customer’s requirements and the number of elements ordered. Delivery of all of the multiple elements in an order will typically occur over a
three
to
15
month period after the order is received. We do not have price protection agreements or requirements to buy back inventory. Our history demonstrates that sales returns have been insignificant.
6
.
Short-Term and Long-Term Investments
We account for our investments in accordance with ASC 320,
“Investments – Debt and Equity Securities
”. Investments with a term to maturity between three months to one year are considered short-term investments and are classified as available-for-sale investments. Investments with a term to maturity beyond one year may be classified as available for sale if we reasonably expect the investment to be realized in cash or sold or consumed during the normal operating cycle of the business. Investments are classified as held-to-maturity if the term to maturity is greater than one year and we have the intent and ability to hold such investments to maturity. All investments are initially recognized at fair value. Subsequent measurement for available-for-sale investments is recorded at fair value. Unrealized
gains and losses on available-for-sale investments are recorded in other comprehensive income. Held-to-maturity investments are subsequently measured at amortized cost. At each balance sheet date, we evaluate all investments for possible other-than-temporary impairment
,
which involves significant judgment.
In making this judgment, we review factors such as the length of time and extent to which fair value has been below the cost basis, the anticipated recovery period, the financial condition of the issuer, the credit rating of the instrument and our ability and intent to hold the investment for a period of time which may be sufficient for recovery of the cost basis. Any losses determined to be other-than-temporary are charged as an impairment loss and recorded in earnings. If market, industry, and/or investee conditions deteriorate, future impairments may be incurred.
As of
December 31
, 2016, we had restricted cash held in short-term bank guarantees. These guarantees provide financial assurance that we will fulfill certain customer obligations in China. The cash is restricted as to withdrawal or use while the related bank guarantee is outstanding. Interest is earned on the restricted cash and recorded as interest income.
At December 31
, 2016 and June 30, 2016, restricted cash in short-term investments
was
$322,000
and
$77,000
, respectively
. Furthermore, at June 30, 2016, we had restricted cash held in
long-term ban
k guarantees of
$45,000
.
At
December 31
, 2
016
,
we
held a
long-term investment in preferred stock that is not registered under the Sec
urities Act of 1933, as amended
and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The preferred stock investment is currently recorded at
$725,000
after consideration of impairment charges recorded in fiscal years 2008 and 2009.
We estimated that the fair market value
of this investment at December 31
, 2016 exceeded $725,000 based on an internal valuation model
,
which included the use of a discounted cash flow model.
The fair market analysis cons
idered the following key inputs:
|
(i)
|
the underlying structure of the security;
|
|
(ii)
|
the present value of the future principal, discounted at rates considered to reflect current market conditions; and
|
|
(iii)
|
the time horizon that the market value of the security could return to its cost and be sold.
|
Under ASC 820
“Fair Value Measurements
and Disclosures
”
(“ASC 820”)
such valuation assumptions are defined as Level 3 inputs.
The foll
owing table presents our Short-Term and Long-T
erm Investments by category
at December 31, 2016 and June 30, 2016
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
Cost
|
|
Fair Value or
Carrying Value
|
Short-Term Investments
|
|
|
|
|
|
Bank Guarantee
|
$
|
322
|
|
$
|
322
|
Mutual Funds
|
|
10
|
|
|
10
|
Time/Fixed Deposits
|
|
219
|
|
|
219
|
Total Short-Term Investments
|
$
|
551
|
|
$
|
551
|
|
|
|
|
|
|
Long-Term Investments
|
|
|
|
|
|
Preferred Stock
|
$
|
3,700
|
|
$
|
725
|
Total Long-Term Investments
|
$
|
3,700
|
|
$
|
725
|
|
|
|
|
|
|
Total Investments
|
$
|
4,251
|
|
$
|
1,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2016
|
|
Cost
|
|
Fair Value or
Carrying Value
|
Short-Term Investments
|
|
|
|
|
|
Bank Guarantee
|
$
|
77
|
|
$
|
77
|
Mutual Funds
|
|
29
|
|
|
29
|
Time/Fixed Deposits
|
|
1,368
|
|
|
1,368
|
Total Short-Term Investments
|
$
|
1,474
|
|
$
|
1,474
|
|
|
|
|
|
|
Long-Term Investments
|
|
|
|
Time Deposits
|
$
|
45
|
|
$
|
45
|
Preferred Stock
|
|
3,700
|
|
|
725
|
Total Long-Term Investments
|
$
|
3,745
|
|
$
|
770
|
|
|
|
|
|
|
Total Investments
|
$
|
5,219
|
|
$
|
2,244
|
7
.
Financial Instruments
For a discussion on
our
fair value measurement policies for Financial I
nstruments, refer to Note 1 in our
Consolidated Financial Statements, “Summary of Significant Accounting Policies – Financial Instruments”, of
our
An
nual Report on Form 10-K for
fiscal year ended June 30, 201
6
.
We have not changed our
valuation techniques in measuring the fair value of any financial assets and liabilities during the period.
The following table presents
our
investments at
December 31
, 2016 and June 30, 201
6
that are measured and recorded at fair value on a recurring basis consistent with the fair value hierarchy provisions of ASC 820
(in thousands). The fair value of
our
short-term
investments approximates their cost basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
December 31, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Mutual Funds
|
$
|
10
|
|
$
|
10
|
|
$
|
-
|
|
$
|
-
|
Time/Fixed Deposits and Bank Guarantees
|
|
541
|
|
|
-
|
|
|
541
|
|
|
-
|
Preferred Stock
|
|
725
|
|
|
-
|
|
|
-
|
|
|
725
|
Total
|
$
|
1,276
|
|
$
|
10
|
|
$
|
541
|
|
$
|
725
|
|
|
|
|
|
|
|
|
|
|
|
|
Description
|
June 30, 2016
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Mutual Funds
|
$
|
29
|
|
$
|
29
|
|
$
|
-
|
|
$
|
-
|
Time/Fixed Deposits and Bank Guarantees
|
|
1,490
|
|
|
-
|
|
|
1,490
|
|
|
-
|
Preferred Stock
|
|
725
|
|
|
-
|
|
|
-
|
|
|
725
|
Total
|
$
|
2,244
|
|
$
|
29
|
|
$
|
1,490
|
|
$
|
725
|
Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect these estimates.
8
.
Inventory
Inventory is stated at the lower of cost or market. The cost of inventory is determined by the first-in, first-out (“FIFO”) method.
We provide
a reserve for obsolescence to recognize inventory impairment for the effects of engineering change orders, age and use of inventory that affect the value of the inventory. The reserve for obsolescence creates a new cost basis for the impaired inventory. When inventory that has previously been impaired is sold or disposed of, the related obsolescence reserve is reduced resulting in the reduced cost basis being reflected in cost of goods sold. A detailed review of the inventory is performed annually with quarterly updates for known changes that have occurred since the annual review. Inventory, net of reserves
of
$1,906,000
and
$1,608,000
at December 31, 2016 and June 30, 2016
, respectively, is comprised of the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,
|
|
At June 30,
|
|
2016
|
|
2016
|
Component Parts
|
$
|
4,684
|
|
$
|
5,054
|
Work in Process
|
|
2,660
|
|
|
3,461
|
Finished Goods
|
|
3,061
|
|
|
3,657
|
Total
|
$
|
10,405
|
|
$
|
12,172
|
9
.
Credit Facilities
We
had
approximately
$1,637,000
and
$200,000
in short-term
notes payable outstanding at
December 31
, 2016 and June 30, 201
6
, respectively.
In addition, we had approximately
$252,000
and
$365,000
in long-term debt outstanding included in ‘Other Long-Term Liabilities’ at December 31, 2016 and June 30, 2016, respectively on our Consolidated Balance Sheet.
At December 31, 2016
,
we
were a party to an
Amended and Restated Credit Agreement with Comerica
Bank (“Credit Agreement”). The Credit Agreement is
an on-demand line of
credit. The
Credit Agreement is cancelable at any time by either Perceptron or Comerica and any amounts outstanding would be immediately due and payable. The
maximum permitted borrowings are
$10.0
million
.
The borrowing b
ase is
equal to the lesser of
50%
of eligible inventory or
$4.0
million and
the lesser of
$6.0
million or
80%
of eligible
receivables. At
December 31
, 2016,
our
additional available
borrowing under this facility was approximately
$4.9
million. Proceeds under the Credit Agreement may be used for working capital and capital
expenditures. Security for the Credit Agreement is substantially all of our assets held in the United States. Borrowings are designated as a Libor-based Advance or as a Prime-based Advance if the
Libor-based Advance is not available. Interest on Libor
-based Advances is calculated at
2.35%
above the Libor Rate offered at the time for
the period chosen
and is payable on the last day of the applicable period.
We are
required to maintain a Tangible Net Worth of at least
$29.0
million
.
We were not in compliance
with the Tangible Net Worth financial covenant at December 31, 2016, however a waiver was obtained from Comerica Bank on February
3
, 201
7
.
We are not allowed to pay cash dividends under the Credit Agreement. We are also required to have no advances outstanding under the Credit Agreement
for
30
days (which need not be consecutive) during
each calendar year. W
e had
$1,425,000
and
zero
in
borrowings outstanding under the Credit Agreement
at December 31
,
and June 30,
2016
, respectively.
At December 31
, 2
016
,
our
German subsidiary (“GmbH”) had an unsecured credit
facility totaling
€350,000
(equivalent
to approximately
$369,000
). The facility allows
€100,000
to be used to finance working capital needs and equipment purchases or capital leases. The facility allows up to
€250,000
to be used for providing bank guarantees. The interest rate on any borrowings for working capital needs is
3.73%
.
Amounts exceeding
€
100,000 will bear interest at
6.63%
.
Any outstanding bank guarantees bear a
2.0%
interest rate. The
GmbH credit facility is cancelable at any time by either GmbH or the bank and any amounts then outstanding would become immediate
ly due and payable. At December 31, 2016 and June 30, 2016
, GmbH had
no
borrowings or bank guarantees outstanding.
During the third quarter of fiscal 2016,
our Italian subsidiary (“
Coord3
”)
exercised an option to purchase th
eir current manufacturing facility
. The total remaining
principal
payments of
€420,000
(equivalent to approximately
$442,000
)
payable
over the following
28
months
at
a
7.0%
annual
interest rate are recorded in ‘
Short-term notes payable’
and ‘Other Long-Term Liabilities’ on our
Consol
idated Balance Sheet at December 31
, 2016.
Our Brazilian subsidiary (“Brazil”) has several credit line and overdraft facilities with their current local bank. Brazil can borrow a total of
B$170,000
(equivalent to approximately
$52,000
). The Brazil facilities are cancelable at any time by either Brazil or the bank and any amounts then outstanding would become immediately due and payable. The monthly interest rates for these facilities range from
2.44%
to
12.64%
. We had
$22,000
and
zero
in borrowings under these facilities at December 31, and June 30, 2016, respectively.
10.
Severance, Impairment and Other Charges
During the third quarter of fiscal 2016, we announced a financial improvement plan that resulted in a reduction in global headcount of approximately
11%
. This plan was implemented to re-align our fixed costs with our near-to mid-term expectations for our business. In addition, during the first quarter of fiscal 2017, we decided
to
terminate
production and marketing of a specific product line due to limitations in its design.
As a result of this decision, we wrote-off related inventory of $397,000 and impaired certain customer receivable balances in the amount of $145,000. Total pre-tax cash and non-cash charges related to the original restructuring plan as well as the additional charges from the terminated product line are expected to be up to
$4.0
million; to date we have incurred $3,543,000.
The charges recorded as Severance, Impairment and Other Charges for the three and six months ended December 31, 2016 related to this restructuring plan are as follows (in thousands):
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|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
December 31, 2016
|
|
December 31, 2016
|
Severance and Related Costs
|
$
|
61
|
|
$
|
175
|
Impairment
|
|
-
|
|
|
145
|
Inventory Write-Off
|
|
-
|
|
|
397
|
Total
|
$
|
61
|
|
$
|
717
|
Severance expense for the three months ended December 31, 2016 was associated with an adjustment at our U.S. location.
Severance expense (income) for the six months ended December 31, 2016 was associated with adjustments at our U.S. (expense of
$171,000
), Chinese (expense of
$82,000
) and German (income of
$78,000
) locations, primarily as we reached final settlements related to several individuals impacted by the reduction in force.
The following table reconciles the activity for the six months ended December 31, 2016 for the Restructuring Reserve (in thousands):
|
|
|
|
|
|
|
Restructuring Reserve
|
Balance at July 1, 2016
|
$
|
814
|
Accruals - Severance Related
|
|
175
|
Payments
|
|
(676)
|
Balance at December 31, 2016
|
$
|
313
|
The accrued balance at December 31, 2016 mainly includes payments to be made related to our U.S., China and Germany reductions in force and is expected to be paid within the
next
3
months
.
1
1
.
Current and Long-Term Taxes Payable
We
acquired current and long-term taxes payable as part of the purchase of Coord3. The tax liabilities represent income and payroll related taxes that are payable in accordance with government authorized installment payment plans. These installment plans require varying monthly payments through
January 2021
.
12
.
Other Long-Term Liabilities
Other long-term liabilities at
December 31
, 2016 and June 30, 2016 include
$671,000
and
$775,000
, respectively for long-term contractual and statutory severance liabilities for our employees located in Italy that represent amounts which will be payable to employees upon termination of employment.
See Note 9
for
the
description of long-term debt included
in ‘Other Long-Term Liabilities’ at December 31, 2016.
13.
Stock-Based Compensation
We maintain a 2004 Stock Incentive Plan (“2004 Plan”) covering substantially all company employees, non-employee directors and certain other key persons. Options previously granted under a 1998 Global Team Member Stock Option Plan (“1998 Plan”) will continue to be maintained until all options are exercised, cancelled or expire. No further grants are permitted to be made under the terms of the 1998 Plan. The 2004 Plan is administered by a committee of our Board of Directors: The Management Development, Compensation and Stock Option Committee. The 1998 Plan is administered by our President.
Awards under the 2004 Plan may be in the form of stock options, stock appreciation rights, restricted stock or restricted stock units, performance share awards, director stock purchase
rights and deferred stock units,
or any combination thereof. The terms of the awards are determined by the Management Development, Compensation and Stock Option Committee, except as otherwise specified in the 2004 Plan.
Stock Options
Options outstanding under the 2004 Plan generally become exercisable at
25%
or
33.3%
per year beginning
one
year after the date of grant and expire
ten
years after the date of grant. All options outstanding under the 1998 Plan are vested and expire ten years from the date of grant. Option prices from options granted under these plans must not be less than
the
fair market value of our stock on the date of grant. We use the Black-Scholes model for determining stock option valuations. The Black-Scholes model requires subjective assumptions, including future stock price volatility and expected time to exercise, which affect the calculated values. The expected term of option exercises is derived from historical data regarding employee exercises and post-vesting employment termination behavior. The risk-free rate of return is based on published U.S. Treasury rates in effect for the corresponding expected term. The expected volatility is based on historical volatility of our stock price. These factors could change in the future, which would affect the stock-based compensation expense in future periods.
We recognized operating expense for non-cash stock-based compensation costs related to stock options in the amount of
$80,000
and
$220,000
during
the three
and six
months ended
December 31, 2016
, respectively.
We recognized operating expense for non-cash stock-based compensation costs related to stock options in the amount of
$168,000
and
$263,000
during
the three
and six
months ended
December 31, 2015
, respectively.
A
s of
December 31
, 2016, the total remaining unrecognized compensation cost related to non-vested stock options amounted to approximately
$570,000
.
We expect to recognize this cost over a weighted average vesting period
of
2.
3
years.
During the three months ended
December 31
, 2016 and 2015, we
granted
100,000
and
187,420
stock options, respectively.
The estimated fair value as of the date options were granted during the periods presented, using the Black-Scholes option-pricing model, is shown in the table below.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
Six Months Ended December 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Weighted average estimated fair value per
|
|
|
|
|
|
|
|
|
|
|
|
share of options granted during the period
|
$
|
3.02
|
|
$
|
3.13
|
|
$
|
3.00
|
|
$
|
3.08
|
Assumptions:
|
|
|
|
|
|
|
|
|
|
|
|
Dividend Yield
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Common Stock Price Volatility
|
|
48.14%
|
|
|
45.43%
|
|
|
48.05%
|
|
|
45.43%
|
Risk Free Rate of Return
|
|
1.94%
|
|
|
1.70%
|
|
|
1.77%
|
|
|
1.60%
|
Expected Option Term (In Years)
|
|
5.4
|
|
|
6.0
|
|
|
5.5
|
|
|
6.0
|
We received approximately
$55,000
and
$56,
000
in cash from option exercises under all share-based pay
ment arrangements for the three and six
months ended
December 31
, 2016, respectively. We received approximately
$23,000
and
$46,000
in cash from option exercises under all share-based pay
ment arrangements for the three and six
months ended
December 31
, 2015
, respectively.
Restricted Stock and Restricted Stock Units
Our restricted stock and restricted stock units under the 2004 Plan
generally
have been awarded by three methods as follows:
(1) Awards that are earned based on an individual’s achievement of performance goals during the initial fiscal year with either a subsequent
one
-
year service vesting period or with a one-third vesting requirement on the
first
,
second
and
third
anniversaries of the issuance, provided the individual’s employment has not terminated prior to the vesting date and are freely transferable after vesting;
(2) Awards that are earned based on achieving certain revenue and operating income results with a subsequent one-third vesting requirement on the
first
,
second
and
third
anniversaries of the issuance provided the individual’s employment has not terminated prior to the vesting date and are freely transferable after vesting; and
(3) Awards to non-management members of our Board of Directors with a subsequent one-third vesting requirement on the
first
,
second
and
third
anniversaries of the issuance provided the service of the non-management member of our Board of Directors has not terminated prior to the vesting date and are freely transferable after vesting.
The grant date fair value associated with granted restricted stock is calculated in accordance with ASC 718
“Compensation – Stock Compensation”
. Compensation expense related to restricted stock awards is based on the closing price of our Common Stock on the grant date authorized by our Board of Directors, multiplied by the number of restricted stock awards expected to be issued and vested and is amortized over the combined performance and service periods. The non-cash stock-based compensation expense recorded for restricted stock and restricted stock unit awards
for the three and six months ended
December 31
, 2016
was
$31,00
0
and
$103,000
, respectively.
The non-cash stock-based compensation expense recorded for restricted stock and restricted stock unit awards
for the three and six months ended
December 31
, 2015 was
$57,000
and
$109,000
, respectively.
As of
December 31
, 2016, the total remaining unrecognized compensation cost related to restricted stock and
restricted stock
unit awards is approximately
$
74,000
. We expect to recognize this cost over a weighted average vesting period of
0.8
years
.
A summary of the status of restricted stock and restricted stock unit awards issued at
December 31
, 2016 is presented in the table below.
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average
|
|
Nonvested
|
|
Grant Date
|
|
Shares
|
|
Fair Value
|
Non-vested at June 30, 2016
|
|
41,141
|
|
$
|
7.82
|
Granted
|
|
-
|
|
|
-
|
Vested
|
|
(28,398)
|
|
|
7.66
|
Forfeited or Expired
|
|
(967)
|
|
|
9.20
|
Non-vested at December 31, 2016
|
|
11,776
|
|
$
|
8.08
|
1
4
.
Earnings Per Share
Basic earnings per share (“EPS”) is calculated by dividing net income by the weighted average number of common shares outstanding during the period. Other obligations, such as stock options
and restricted stock awards,
are considered to be potentially dilutive common shares. Diluted EPS assumes the issuance of potential dilutive common shares outstanding during the period and adjusts for any changes in income and the repurchase of common shares that would have occurred from the assumed issuance, unless such effect is anti-dilutive. The calculation of diluted shares also takes into effect the average unrecognized non-cash stock-based compensation expense and additional adjustments for tax benefits related to non-cash stock-based compensation expense.
Furthermore, we exclude all outstanding options to purchase common stock from the computation of diluted EPS in periods of net losses because the effect is anti-dilutive.
Options to
purchase
387,774
and
709,634
shares of common stock outstanding in the three months ended
December 31
, 2016 and 2015, respectively, were not included in the computation of diluted EPS because the effect would have been anti-dilutive. Options to purchase
479,397
and
449,464
shares of commo
n stock outstanding in the six
months ended
December 31
, 2016 and 2015, respectively, were not included in the computation of diluted EPS because the effect would have been anti-dilutive.
1
5
.
C
ommitments and Contingencies
We
may, from time to time, be subject to litigation and other claim
s in the ordinary course of our
business.
We accrue
for estimated losses arising from such litigation or claims if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. To estimate whether a loss contingency should be accrued by a charge to income,
we
e
valuate
, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of the loss. Since the outcome of litigation and claims is subject to significant uncertainty, changes in the factors used in
our
evalua
tion could materially impact
our
financial position or results of operations.
We are
currently unaware of any significant pending litigation affecting
us
other than the matters set forth below.
We are
a party to a civil suit filed by 3CEMS, a Cayman Islands and People’s Republic of China corporation, in the U.S. District Court for the Eastern District of Michigan
(the “Court”)
and served on
us
on or about January 7, 2015. The suit alleges that
we
breached
our
contractual obligations by failing to pay for component parts to be used to manufacture optical video scopes for
our
discontinued Commercial Products Business Unit. 3CEMS alleged that it purchased the component parts in advanc
e of the receipt of orders
based upon instructions they claimed to have received from
us
. The suit alleged damages of not less than
$4.0
million.
In December 2016, the Court issued a non-final summary judgement order in favor of 3CEMS, finding that, as a matter of law, we breached our contractual obligations to 3CEMS and that the only issue of material fact is the amount of damages. We have filed a motion for reconsideration of the Court’s order, which is currently pending. The Court’s order may be appealed by the parties at the conclusion of the trial process. We intend
to vigorously def
end against 3CEMS’ claims.
Because of the inherent uncertainty of litigation and claims such as the 3CEMS
m
atter,
we are
unable to reasonably estimate a possible loss or range of loss relating to the 3CEMS
m
atter.
As part of
our
routine evaluation procedures,
we
identified a potential concern regarding the employment status and withholding for several individuals in one of
our
foreign jurisdictions. During fiscal 2015,
we
estimated a range of the potential financial liability related to this matter of
€486,000
to
€1
million
.
We were
not able to reasonably estimate the amount within this range that
we
would be required to pay for this matter. As a result,
in fiscal 2015, we
recorded a reserve of
€486,000
(equivalent to approximately
$512,000
) representing the minimum amount
we
estimated would be paid.
In the fourth quarter of fiscal 2016, we received the final notice regarding this issue, and as a result, we recorded an additional accrual of
€227,000
(equivalent to approximately
$239,000
). We currently expect to remit all funds due by the end of our fiscal 2018.
16.
Subsequent Events
We
perform review procedures for
subsequent events and determine
any necessary disclosures that arise from such evaluation, up to the date of issuance of our annual and interim reports.
ITEM 2.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
SAFE HARBOR STATEMENT
Certain statements in this report, including statements made in this Management’s Discussion and Analysis of Financial Condition and Results of Operations, may be “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, including our expectation as to our fiscal year 2017 and future results, cost savings from our financial improvement plan, operating data, new order bookings, revenue, expenses, net income and backlog levels, trends affecting our future revenue levels, the rate of new orders, the timing of revenue and net income increases from new products which we have recently released or have not yet released, the timing of the introduction of new products and our ability to fund our fiscal year 2017 and future cash flow requirements.
We may also make forward-looking statements in our press releases or other public or shareholder communications. Whenever possible, we have identified these forward-looking statements by words such as “target,” “will,” “should,”
“could,”
“believes,” “expects,” “anticipates,” “estimates,” “prospects,” “outlook” or similar expressions. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all of our forward-looking statements. While we believe that our forward-looking statements are reasonable, you should not place undue reliance on any such forward-looking statements, which speak only as of the date made. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual results could be materially different. Factors that might cause such a difference include, without limitation, disruptions to our operations due to our financial improvement plan and related headcount reductions and position eliminations, risks associated with changes in our sales strategy and structure, including the impact of such changes on booking and revenue levels and customer purchase decisions, the risk that actual charges from the financial improvement plan differ from the assumptions used in estimating the charges and the risks and uncertainties discussed from time to time in our periodic reports filed with the Securities and Exchange Commission, including those listed in “Item 1A – Risk Factors” of our Annual Report on Form 10-K for fiscal 2016. Except as required by applicable law, we do not undertake, and expressly disclaim, any obligation to publicly update or alter our statements whether as a result of new information, events or circumstances occurring after the date of this report or otherwise.
EXECUTIVE SUMMARY
Perceptron, Inc. (“Perceptron”, “we”, “us” or “our”) develops, produces and sells a comprehensive range of automated industrial metrology products and solutions to manufacturing organizations for dimensional gauging, dimensional inspection and 3D scanning. Our primary operations are in North America, Europe and Asia. We have one operating segment, because all of our products rely on our core laser technology. However, our products are divided into the following:
|
·
|
|
In-Line and Near-Line Measurement Solutions - engineered metrology systems for industrial automated process control and assembly using fixed and robot mounted laser scanners. We also provide Value Added Services including training, field service, calibration, launch support services, consulting services, maintenance agreements and repairs related to our In-Line and Near-Line Measurement Solutions.
|
|
·
|
|
Off-Line Measurement Solutions - tailored metrology products for industrial gauging and dimensional inspection using
standalone
robot-mounted laser scanners and Coordinate Measuring Machines (“CMM”). We also provide Value Added Services including training, calibration, maintenance agreements and repairs related to our Off-Line Measurement Solutions.
|
|
·
|
|
3D Scanning Solutions - laser scanner products that target the digitizing, reverse engineering, inspection and original equipment manufacturers wheel alignment markets.
|
The largest end-use market we serve is the automotive industry. New automotive tooling programs represent the most important selling opportunity for our In-Line and Near-Line Measurement Solutions. The number and timing of new vehicle tooling programs varies based on the plans of the individual automotive manufacturers. The existing installed base of In-Line and Near-Line Measurement Solutions also provides a continuous revenue stream in the form of system additions, upgrades and modifications as well as Value Added Services such as customer training and support.
Our Off-Line Measurement and 3D Scanning Solutions are used by and targeted to a wide variety of industrial customers, with the automotive industry representing the largest market for industrial metrology products.
RESULTS OF OPERATIONS
Three Months Ended December 31, 2016 Compared to Three Months Ended December 31, 2015
Overview
– We reported net income
of $2.
5 million, or $0.27 per diluted share, for our
second quarter of fiscal 2017 compared with a net loss of $1.5 million, or ($0.17) per diluted share, for
our
second quarter of fiscal 2016.
Our quarterly results vary from quarter to quarter and are dependent upon delivery and installation schedules determined by our customers. These schedules are subject to change by the customer and are not controlled by us.
Bookings
– Bookings represent new orders received from our customers. We expect the level of new orders to fluctuate from quarter to quarter and do not believe new order bookings during any particular period are indicative of our future operating performance.
Bookings by geographic location were (in millions):
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|
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|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
|
Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
8.5
|
|
40.7%
|
|
$
|
7.4
|
|
36.8%
|
|
$
|
1.1
|
|
14.9%
|
|
Europe
|
|
|
8.6
|
|
41.1%
|
|
|
8.3
|
|
41.3%
|
|
|
0.3
|
|
3.6%
|
|
Asia
|
|
|
3.8
|
|
18.2%
|
|
|
4.4
|
|
21.9%
|
|
|
(0.6)
|
|
(13.6%)
|
|
Totals
|
|
$
|
20.9
|
|
100.0%
|
|
$
|
20.1
|
|
100.0%
|
|
$
|
0.8
|
|
4.0%
|
|
Prior Reported Bookings
|
|
|
|
|
|
|
$
|
20.6
|
|
|
|
|
|
|
|
|
Prior Year’s Bookings has been updated to reflect corrections to prior calculations
.
The increase in bookings in the second quarter of fiscal 2017 as compared to the second quarter of fiscal 2016 of $
0.8
million, including
an unfavorable currency impact of
$0.7
million,
is primarily due to an increase of $1.
1
million in our 3D Scanning Solutions and an increase of $0.2 million in our Value Added Services, partially offset by a decrease of $0.
3
million in our Off-Line Measurement Solutions and a $0.
2
million decrease in our In-Line and Near-Line Measurement Solutions. On a geographic basis, the $1.1 million increase in the Americas region is primarily due to an increase of $1.2 million in our In-Line and Near-Line Measurement Solutions, an increase of $0.6 million in our 3D Scanning Solutions and an increase of $0.1 million in our Value Added Services, partially offset by a decrease of $0.8 million in our Off-Line Measurement Solutions. The $0.
3
million increase in Europe is primarily due to an increase of $0.
3
milli
on in our 3D Scanning Solutions
and
an increase of $0.2 million in our Value Added Services, partially offset by a decrease of $0.
2
million in our Off-Line Measurement Solutions. The $0.6 million decrease in our Asia region is primarily due to a decrease of $1.4 million in our In-Line and Near-Line Measurement Solutions and a decrease of $0.1 million in our Value Added Services, partially offset by an increase of $0.7 million in our Off-Line Measurement Solutions and an increase of $0.2 million in our 3D Scanning Solutions.
Backlog
–
Backlog represents orders or bookings we have received but have not yet been filled.
We believe that the level of backlog during any particular period is not necessarily indicative of our future operating performance. Although most of the backlog is subject to cancellation by our customer
s
, we expect to fill substantially all of the orders in our backlog during the next twelve months.
Backlog by geographic location was (in millions):
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|
As of December 31,
|
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|
|
|
|
|
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
15.6
|
|
37.4%
|
|
$
|
13.0
|
|
32.5%
|
|
$
|
2.6
|
|
20.0%
|
Europe
|
|
|
16.2
|
|
38.8%
|
|
|
15.4
|
|
38.5%
|
|
|
0.8
|
|
5.2%
|
Asia
|
|
|
9.9
|
|
23.8%
|
|
|
11.6
|
|
29.0%
|
|
|
(1.7)
|
|
(14.7%)
|
Totals
|
|
$
|
41.7
|
|
100.0%
|
|
$
|
40.0
|
|
100.0%
|
|
$
|
1.7
|
|
4.3%
|
Prior Reported Backlog
|
|
|
|
|
|
|
$
|
40.4
|
|
|
|
|
|
|
|
Prior Year’s Backlog has been updated to reflect corrections to prior calculations.
The current quarter ending backlog increased by $1.
7
million compared to the ending backlog at December 31
, 2015
. The increase in our backlog was primarily due to an increase of $1.5 million in our Value Add
ed Services and an increase of $0.9
mil
lion in our 3D Scanning Solutions
, partially offset by a decrease of $0.4 million in our Off-Line Measurement Solutions and a decrease of $0.3 million in our In-Line and Near-Line Measurement Solutions. On a geographic basis, the $2.6 million increase in our Americas region is primarily due to an increase of $1
.
8 million in our In-Line and Near-Line Measurement Solutions, an increase of $1.4 million in our Value Added Services and an increase of $0.5 million related to our 3D Scanning Solutions, partially offset by a decrease of $1.1 million in our Off-Line Measur
ement Solutions. The $0.8
million increase in our Europe region is primarily due to an increase of $1.2 million in our In-Line and Near-Line Measureme
nt Solutions, an increase of $0.3
million in our 3D Scanning Solutions and an increase of $0.1
million in our Value Added Services, partially offset by a decrease of $0.8 million in our Off-Line Measurement Solutions. The $1.7 million decrease in our Asia region is primarily due to a decrease of $3.3 million in our In-Line and Near-Line, partially offset by an increase of $1.5 million in our Off-Line Measurement Solutions and an increase of $0.1 million in our 3D Scanning Solutions.
A summary of our operating results is shown below
(in millions)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
2016
|
|
|
% of Sales
|
|
2015
|
|
|
% of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas Sales
|
|
$
|
9.1
|
|
|
41.7%
|
|
$
|
4.3
|
|
|
25.0%
|
Europe Sales
|
|
|
7.7
|
|
|
35.4%
|
|
|
8.0
|
|
|
46.5%
|
Asia Sales
|
|
|
5.0
|
|
|
22.9%
|
|
|
4.9
|
|
|
28.5%
|
Net Sales
|
|
$
|
21.8
|
|
|
100.0%
|
|
$
|
17.2
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales
|
|
|
12.4
|
|
|
56.9%
|
|
|
12.1
|
|
|
70.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
9.4
|
|
|
43.1%
|
|
|
5.1
|
|
|
29.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative
|
|
|
4.4
|
|
|
20.2%
|
|
|
5.4
|
|
|
31.4%
|
Engineering, Research and Development
|
|
|
1.6
|
|
|
7.3%
|
|
|
2.0
|
|
|
11.6%
|
Severance, Impairment and Other Charges
|
|
|
0.1
|
|
|
0.5%
|
|
|
-
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
3.3
|
|
|
15.1%
|
|
|
(2.3)
|
|
|
(13.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income and (Expenses), net
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, net
|
|
|
(0.1)
|
|
|
(0.5%)
|
|
|
-
|
|
|
0.0%
|
Foreign Currency Gain (Loss), net
|
|
|
(0.4)
|
|
|
(1.8%)
|
|
|
0.1
|
|
|
0.6%
|
Other Income, net
|
|
|
-
|
|
|
0.0%
|
|
|
0.1
|
|
|
0.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes
|
|
|
2.8
|
|
|
12.8%
|
|
|
(2.1)
|
|
|
(12.2%)
|
Income Tax (Expense) Benefit
|
|
|
(0.3)
|
|
|
(1.3%)
|
|
|
0.6
|
|
|
3.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
2.5
|
|
|
11.5%
|
|
$
|
(1.5)
|
|
|
(8.7%)
|
Sales
– Sales of $
21.8
million for the first quarter of fiscal 2017 increased $
4.6
million, or
26.7
%,
including a favorable currency impact of $0.3 million, when compared to the same period a year ago. The increase is primarily due to an increase of $
4.9
million in our In-Line and
Near-Line Measurement Solutions and
an increase of $0.
2
million in our 3D Scanning Solutions, partially offset by a decrease of
$0.4 million in our Off-Line Measurement Solutions and a decrease of
$0.1 million in our Value Added Services. On a geographic basis, the $4.8 million increase in our Americas region is primarily due to an increase of $4.
6
million in our In-Line and Near-Line Measurement Solutions and an increase of $0.
4
million in our 3D Scanning Solutions
, partially offset by a decrease of $0.2 million in our Off-Line Measurement Solutions
. The increase of $
0.1
million in our
Asia
region is primarily due to an increase of $
0
.4 million in our
Off-Line Measurement Solutions
, partially offset by a decrease of $0.
2
million in our 3D Scanning Solutions and a decrease of $0.
1
million in our In-Line and Near-Line
Measurement
Solutions. The decrease of $0.
3
million in our
Europe
region is primarily due to a decrease of
$0.6 million in our Off-Line Measurement Solutions and a decrease of
$0.
1
million in our
Value Added Services, partially offset by
a
n in
crease of $0.
4
million in our In-Line and Near-Line
Measurement
Solutions.
Gross Profit
–Gross profit percentage was
43.1
% in the
second
quarter of fiscal 2017 compared to 29.
6
% in the sam
e quarter a year ago. The higher
gross profit percentage in the second
quarter of fiscal 2017
was
primarily due to the mix of our revenue, the timing of certain expenses in our cost of goods sold as well as lower employee-related operating costs
resulting from
our previously announced financial improvement plan.
Selling, General and Administrative (SG&A)
Expenses
– SG&A expenses were approximately $4.
4
million in the
second
quarter of fiscal 2017, a decrease of $1.0 million compared to the
second
quarter a year ago.
The decrease is primarily due to cost savings from the reduction in force related to our previously announced financial improvement plan including declines in employee-related costs of $0.7 million and contractor services of $0.1 million. Other decreases in SG&A include lower legal and audit fees of $0.2 million and lower advertising and marketing costs of $0.2 million.
Engineering, Research and Development (R&D) Expenses
– Engineering, research and development expenses were app
roximately $1.6 million in the second
quarter of fiscal 2017, compared to $2.
0
million in the
second
quarter of
fiscal
2016. The decrease is primarily due to cost savings from a reduction in force related to the previously announced financial improvement plan.
Severance, Impairments and Other Charges
– Severance, impairments and other charges for the
second
quarter of fiscal 2017 were approximately $0.
1
million
, which
was primarily related to
additional severance
at our U.S
. location
.
We have incurred $3.5 million of expense since the financial improvement plan commenced in March 2016.
Interest Expense, net
– Net interest expense was $0.1 million in the
second
quarter of fiscal 2017 compared with an immaterial amount of net interest
expense
in the
second
quarter of fiscal 2016. This change was due t
o a decrease in interest income
because of lower invested cash balances in
fiscal
2017 compared to
fiscal
2016, as well as the addition of interest expense on Coord3
’s
purchase of their current manufacturing facility
and the
utilization of
the U.S. credit facility
during the second quarter of fiscal 2017
.
Foreign Currency
Gain (Loss), net
– Foreign Currency
Gain (Loss)
, net in the
second
quarter of fiscal 2017 was a net
loss
of $0.
4
million compared to
a
net gain
of $0.1 million in the second
quarter of fiscal 2016. The
un
favorable change was primarily related to the Japanese Yen in the
second
quarter of fiscal 2017.
Other Income
– Other i
ncome in the second
quarter of fiscal 2016 was primarily dividen
d income received from our long-
term investment.
Income Taxes
–
Our effective tax rate for the
second
quarter
of fiscal year 2017 was 10.7%
compared to
27.8
% in the
second
quarter of fiscal year 2016.
W
e
have previously established
full valuation allowance
s
against our U.S. Federal, Germany
, Japan, Singapore
and B
razil net deferred tax assets.
The effective tax rate in the
second
quarter of fiscal 2017 is impacted by not
recognizing
tax benefits on pre-tax losses in these jurisdictions. The effective tax rate in the
second
quarter of fiscal 2016 primarily reflects the effect of the mix of pre-tax income and loss
es
across our various tax jurisdictions and their respective tax rates.
Six Months Ended December 31, 2016 Compared to Six Months Ended December 31, 2015
Overview
– We reported net income
of
$0.1 million, or $0.02
per diluted share, for the first half of fiscal 2017 compared with a net loss of $
3.7
million, or ($0.
39
) per diluted share, for the first half of fiscal 2016.
Bookings
– Bookings represent new orders received from our customers. We expect the level of new orders to fluctuate from quarter to quarter and do not believe new order bookings during any particular period are indicative of our future operating performance.
Bookings by geographic location were (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31,
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Increase/(Decrease)
|
Geographic Region
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
$
|
19.3
|
|
45.2%
|
|
$
|
12.2
|
|
36.6%
|
|
$
|
7.1
|
58.2%
|
Europe
|
|
|
14.8
|
|
34.7%
|
|
|
14.9
|
|
44.8%
|
|
|
(0.1)
|
(0.7%)
|
Asia
|
|
|
8.6
|
|
20.1%
|
|
|
6.2
|
|
18.6%
|
|
|
2.4
|
38.7%
|
Totals
|
|
$
|
42.7
|
|
100.0%
|
|
$
|
33.3
|
|
100.0%
|
|
$
|
9.4
|
28.2%
|
Prior Reported Bookings
|
|
|
|
|
|
|
$
|
33.8
|
|
|
|
|
|
|
The
increase in bookings
for
the
first half
of fiscal 2017 as compared to the
first half
of fiscal 2016 of $9.
4
million
,
including
an unfavorable currency impact of $0.
5
million
,
is primarily due to an increase of $8.
4
million in our In-Line and Near-Line Measurement Solutions and an increase of $1.
8
million in our 3D Scanning Solutions, partially offset by a decrease of $0.
7
million in our Off-Line Measurement Solutions and a $0.1 million decrease in our Value Added Services. On a geographic basis, the $7.1 million increase in the Americas region is primarily due to an increase of $7.2 million in our In-Line and Near-Line Measurement Solutions, an increase of $1.0 million in our 3D Scanning Solutions and an increase of $0.1 million in our Value Added Services, partially offset by a decrease of $1.2 million in our Off-Line Measurement Solutions.
The $2.4 million increase in our Asia region is primarily due to an increase of $1.5 million in our Off-Line Measurement Solutions, an increase of $0.8 million in our In-Line and Near-Line Measurement Solutions and an increase of $0.3 million in our 3D Scanning Solutions, partially offset by a decrease of $0.
2
million in our Value Added Services. The $0.
1
million
de
crease in Europe is primarily due to
a decrease of $
1.0
million in our Off-Line Measurement Solutions
, partially offset by
an increase of $0.
5
million in our 3D Scanning Solutions and an increase
of
$0.
4
million in our In-Line and Near-Line Measurement Solutions.
A summary of our operating results is shown below
(in millions)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended December 31,
|
|
|
2016
|
|
|
% of Sales
|
|
2015
|
|
|
% of Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas Sales
|
|
$
|
14.3
|
|
|
36.4%
|
|
$
|
9.5
|
|
|
29.4%
|
Europe Sales
|
|
|
17.7
|
|
|
45.0%
|
|
|
15.1
|
|
|
46.8%
|
Asia Sales
|
|
|
7.3
|
|
|
18.6%
|
|
|
7.7
|
|
|
23.8%
|
Net Sales
|
|
$
|
39.3
|
|
|
100.0%
|
|
$
|
32.3
|
|
|
100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales
|
|
|
25.3
|
|
|
64.4%
|
|
|
22.8
|
|
|
70.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
14.0
|
|
|
35.6%
|
|
|
9.5
|
|
|
29.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, General and Administrative
|
|
|
8.7
|
|
|
22.2%
|
|
|
10.6
|
|
|
32.9%
|
Engineering, Research and Development
|
|
|
3.2
|
|
|
8.1%
|
|
|
4.2
|
|
|
13.0%
|
Severance, Impairment and Other Charges
|
|
|
0.8
|
|
|
2.0%
|
|
|
-
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income (Loss)
|
|
|
1.3
|
|
|
3.3%
|
|
|
(5.3)
|
|
|
(16.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income and (Expenses), net
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Expense, net
|
|
|
(0.2)
|
|
|
(0.5%)
|
|
|
-
|
|
|
0.0%
|
Foreign Currency Gain (Loss), net
|
|
|
(0.3)
|
|
|
(0.8%)
|
|
|
0.1
|
|
|
0.3%
|
Other Income, net
|
|
|
-
|
|
|
0.0%
|
|
|
-
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) Before Income Taxes
|
|
|
0.8
|
|
|
2.0%
|
|
|
(5.2)
|
|
|
(16.1%)
|
Income Tax (Expense) Benefit
|
|
|
(0.7)
|
|
|
(1.8%)
|
|
|
1.5
|
|
|
4.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
$
|
0.1
|
|
|
0.2%
|
|
$
|
(3.7)
|
|
|
(11.5%)
|
Sales
– Sales of $
39.3
million in the first six months of fiscal 2017 increased $
7.0
million, or
21.7
%, including a favorable currency impact of $0.5 million, when compared to the same period a year ago.
The increase is primarily due to an increase of $6.8 million in our In-Line and Near-Line Measurement Solutions, an increase of $0.3 million in our 3D Scanning Solutions, partially offset by a $0.1 million decrease in our Off-Line Measurement Solutions. On a geographic basis, the $4.8 million increase in our Americas region is primarily due to an increase of $4.1 million in our In-Line and Near-Line Measurement Solutions and an increase of $0.7 million in our 3D Scanning Solutions. The increase of $2.6 million in our Europe region is primarily due to an increase of $3.4 million in our In-Line and Near-Line Measurement Solutions, partially offset by a decrease of $0.6 million in our Off-Line Measurement Solutions and a decrease of $0.2 million in our 3D Scanning Solutions. The decrease of $0.4 million in our Asia region is primarily due to a decrease of $0.7 million in our In-Line and Near-Line Measurement solutions and a decrease of $0.2 million in our 3D Scanning Solutions, partially offset by an increase of $0.5 million in our Off-Line Measurement Solutions.
Gross Profit
–Gross profit percentage was
35.6
% in the first half of fiscal 2017 compared to 29.
5
% in the same period a year ago.
The higher gross profit percentage in the first half of fiscal 2017 was primarily due to the mix of our revenue, the timing of certain expenses in our cost of goods sold as well as lower employee-related operating costs
resulting from
our previously announced financial improvement plan.
Selling, General and Administrative (SG&A)
Expenses
– SG&A expenses were approximately $
8.7
million in the first half of fiscal 2017, a decrease of $1.
9
million compared to the same period a year ago
. The decrease is primarily due to cost savings from the reduction in force related to our previously announced financial improvement plan including declines in employee-related costs of $1.1 million, contractor services of $0.3 million and lower Board of Director fees of $0.1 million. Other decreases in SG&A include lower legal and audit fees of $0.4 million and lower advertising and marketing costs of $0.3 million.
Engineering, Research and Development (R&D) Expenses
– Engineering, research and development expenses were approximately $
3.2
million in the first half of fiscal 2017, compared to $
4
.2 million in the first half of 2016. The decrease is primarily due to cost savings from a reduction in force related to the previously announced financial improvement plan.
Severance, Impairments and Other Charges
– Severance, impairments and other charges for the first half of fiscal 2017 were approximately $0.
8
million. A charge of $0.
2
million was primarily related to finalizing severance agreements at our U.S., China and German locations. In addition, during the first half of fiscal 2017, we decided to terminate the production and marketing of a specific product line due to limitations in its design. As a result of this decision, we wrote-off related inventory of $0.4 million and impaired certain customer receivable balances in the amount of $0.2 million. We now expect that the total expenses incurred related to the financial improvement plan announced in our third quarter of fiscal 2016 as well as the terminated product line to total approximately $4.0 million.
We have incurred $3.5 million of expense since the financial improvement plan commenced in March 2016.
Interest Expense, net
– Net interest expense was $0.
2
million in the first half of fiscal 2017 compared with an immaterial amou
nt of net interest expense
in the first half of fiscal 2016. This change was due to a decrease in interest income, because of lower invested cash balances in 2017 compared to 2016, as well as t
he addition of
interest expense on Coord3
’s
purchase of their current manufacturing facility
and the
utilization of
the U.S. credit facility
during the first half of fiscal 2017
.
Foreign Currency
Gain (Loss), net
– Foreign Currency
Gain (Loss)
, net in the
first half
of fiscal 2017 was a net
loss
of $0.
3
million compared to
a
net gain
of $0.1 million in the first half
of fiscal 2016. The
un
favorable change was primarily related to the Japanese Yen
and the Brazilian Real
in the
first half
of fiscal 2017.
Other Income
– Other income in the first half of fiscal 2016 was primarily dividend income received from our long term investment.
Income Taxes
–
Our effective tax rate for the first six months of fiscal year 2017 was
87.5%
compared to
29.4
% in the first six months of fiscal year 2016.
W
e
have established
full valuation allowance
s
against our U.S. Federal, Germany
, Japan, Singapore
and Brazil net deferred tax assets. The effective tax rate in the first half of fiscal 2017 is impacted by not being able to recognize tax benefits on pre-tax losses in these jurisdictions. The effective tax rate in the first half of fiscal 2016 primarily reflects the effect of the mix of pre-tax income and loss
es
across our various tax jurisdictions and their respective tax rates.
LIQUIDITY AND CAPITAL RESOURCES
Our primary liquidity needs are to fund capital expenditures
and product development
, support working capital requirements, and, when needed, fund operating losses. In general, our principal sources of liquidity are cash and cash equivalents on hand, cash flows fr
om operating activities
and
borrowings under available credit facilities.
Cash on Hand.
Our
cash and cash equivalents were
$
5.7
million at
December 31
, 201
6
, compared to $
6.8
million at
June
30, 201
6
. The
$
1.1
million decrease in cash primarily related to $
3.0
million of cash used for operations
and $0.3 million impact from changes in exchange rates, partially offset by
$0.
8
million of cash
provided from investing activities and
$
1.4
million
cash
provided
from
financing activities
.
Cash Flow.
Cash used for operations resulted f
rom
a use of cash related to w
orking capital changes of $5.4
million
, partially offset by $2.3 million in adjustments from non-cash items and net income of $0.1 million
.
Cash changes in working capital items resulted from
cash used from accounts receivable of $4.5 million, accounts payable of $0.5 million and other current assets
and liabilities
of $1.5
million
,
partially offset
by
cash provided from
inventory
of $1.1 million.
The
decrease
in inventory
is primarily due to careful monitoring of our working capital levels as well as increased shipments towards the end of our second quarter of fiscal 2017, while
t
he
decrease
in accounts payable represents fluctuations in the timing of
receipts of goods and the related
payments
. The increase in accounts receivable
relates to the timing of
our cash collections as well as higher sales levels in the second quarter of fiscal 2017 compared to the fourth quarter of fiscal 2016. Finally, t
he change in other current assets and liabilities relates primarily to the timing of
revenue recognition as well as
payments on
the restructuring reserve related to the previously anno
unced financial improvement plan
.
Working Capital Reserves.
We provide
a reserve for obsolescence to recognize inventory impairment for the effects of
engineering change orders as well as the age and usage
of inventory that affect the value of the inventory. The reserve for obsolescence creates a new cost basis for the impaired inventory. When inventory that has previously been
impaired is sold or disposed
, the related obsolescence reserve is reduced resulting in the reduced cost basis being reflected in cost of goods sold. A detailed review of the inventory is performed annually with quarterly updates for known changes that have occurred since the annual review. During the
six
-month period ended
December 31
, 201
6
,
we
increased ou
r reserve for obsolescence by $0.3 million, primarily due to the decision to cease production and marketing of a specific product line due to limitations in its design
.
We determine
our
allowance for doubtful accounts by considering a number of factors, including the length of time trade accounts receivable are past due,
our
previous loss history,
our
custo
mer’s current ability to pay their
outstanding balance due to us
and the condition of the general economy and the industry as a whole.
We write
-off accounts receivable
balances when they become uncollectible. Any p
ayments subsequently received on such receivables
increase our
allowance for doubtful accounts
balance
.
O
ur allowance for doubtful accounts
is flat at December 31, 2016 compared to June 30, 2016.
Investments.
At
December 31
, 2016, we had short-term investments totaling
$0.6 million and
a long-term investment recorded at
$0.7
million compared to short-term investments totaling $
1.5
million, a long-term investment recorded at $0.7 million and long-term time deposits of $0.1 million at June 30, 201
6
. See Note
6
, of the Notes to the Consolidated Financial Statements, “Short-
Term and Long-Term Investments”
contained in this
Quarterly
Report on Form 10-
Q
for further information on our investments and their current valuation. The market for our long-term investment is currently illiquid.
In our short-term investments,
$0.3
million serve as collateral for bank guarantees that provide financial assurance that we will fulfill certain customer obligations in China. The cash is restricted as
to withdrawal or use while the related bank guarantee is outstanding. Interest is earned on the restricted cash and recorded as interest income.
Credit Facilities
. W
e
had approximately
$1
.6 million
and
$0.2 million in short-term
notes payable outstanding at
December 31
, 2016 and June 30, 201
6
, respectively.
In addition, we had approximately $0.3 million and $0.4 million in long-term debt outstanding included in ‘Other Long-Term Liabilities’ at December 31, 2016 and June 30, 2016, respectively on our Consolidated Balance Sheet.
At December 31, 2016
,
we
were a party to an
Amended and Restated Credit Agreement with Comerica Bank (“
Credit Agreement”). The Credit Agreement is
an on-demand line of credit
. The
Credit Agreement is cancelable at any time by either Perceptron or Comerica and any amounts outstanding would be immediately due and payable. The maximum permitted borrowings
are
$10.0 million. The borrowing base
i
s equal to the lesser of 50% of eligible inventory or $4.0 million
and
the lesser of $6.0 million or 80% of eligible
receivables. At
December 31
, 2016,
our
additional available
borrowing under this facility was approximately
$4.9
million. Proceeds under the Credit Agreement may be used for working capital and capital
expenditures. Security for the Credit Agreement is substantially all of our assets held in the United States. Borrowings are designated as a Libor-based Advance or as a Prime-based Advance if the Libor-based Advance is not available. Interest on Libor
-based Advances is calculated at
2.35%
above the Libor Rate offered at the time for the period chosen, and is payable on the last day of the applicable period.
We are
required to maintain a Tangible Net Worth of at least
$29.0
million.
We
were
not
in compliance
with the Tangible Net Worth financial covenant at
December 31
, 2016
, however a waiver was obtained from Comerica Bank on February
3
, 2017
.
We are not allowed to pay cash dividends under the Credit Agreement. We are also required to have no advances outstanding under the Credit Agreement
for
30
days (which need not be consecutive) during
each calendar year. We had $1.4 million and zero in
borrowings outstanding under the Credit Agreement
at December 31
,
and June 30,
2016
, respectively.
At December 31
, 2
016
,
our
German subsidiary (“GmbH”) had an unsecured credit facility totaling
€
0.4 million
(equivalent to approximately $
0.4 million
). The facility allows
€
0.1 million
to be used to finance working capital needs and equipment purchases or capital leases. The facility allows up to
€
0.3 million
to be used for providing bank guarantees. The interest rate on any borrowings for working capital needs is
3.73
%
.
Amounts exceeding the limit of
€
0.1 million will bear interest at 6.63%.
Any outstanding bank guarantees bear a
2.0%
interest rate. The
GmbH credit facility is cancelable at any time by either GmbH or the bank and any amounts then outstanding would become immediate
ly due and payable. At December 31, 2016 and June 30, 2016
, GmbH had
no
borrowings or bank guarantees outstanding
.
During the third quarter of fiscal 2016,
our Italian subsidiary (“
Coord3
”)
exercised an option to purchase th
eir current manufacturing facility
. The total remaining
principal
payments of
€
0.4 million
(equivalent to approximately
$
0.4 million
)
payable
over the following
28
months
at
a
7.0%
annual
interest rate are recorded in ‘
Short-term notes payable’
and ‘Other Long-Term Liabilities’ on our
Consol
idated Balance Sheet at December 31
, 2016.
Our Brazilian subsidiary (“Brazil”) has several credit line and overdraft facilities with their current local bank. Brazil can borrow a total of B$0.2 million (equivalent to approximately $0.1 million). The Brazil facilities are cancelable at any time by either Brazil or the bank and any amounts then outstanding would become immediately due and payable. The monthly interest rates for these facilities range from 2.44% to 12.64%. We had less than $0.1 million and zero in borrowings under these facilities at December 31, and June 30, 2016, respectively.
Commitments and Contingencies
. A
s part of
our
routine evaluation procedures,
we
identified a potential concern regarding the employment status and withholding for several individuals in one of
our
foreign jurisdictions. During fiscal 2015,
we
estimated a range of the potential financial liability related to this matter of
€
0.5 million
to
€
1
.0
million
.
We were
not able to reasonably estimate the amount within this range that
we
would be required to pay for this matter. As a result,
in fiscal 2015, we
recorded a reserve of
€
0.5 million
(equivalent to approximately
$
0.5 million
) representing the minimum amount
we
estimated would be paid.
In the fourth quarter of fiscal 2016, we received the final notice regarding this issue, and as a result, we recorded an additional accrual of
€
0.2 million (equivalent to
approximately $0.
2 million). We currently expect to remit all funds due by the end of our fiscal 2018.
See
Item 1 “Legal Proceedings” and
Note 1
5
to the Consolidated Financial Statements, “Commitments and Contingencies”, contained in this Qu
arterly Report on Form 10-Q, as well as
Item 3, “Legal Proceedings” and Note 6 to the Consolidated Financial Statements, “Contingencies”, of
our
Annual Report on Form 10-K for fiscal year 201
6
for a discussion of certain other contingencies relating to
our
liquidity, financial position and results of operations. See also, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies - Litigation and Other Contingencies” of
our
Annual Report on Form 10-K for fiscal year 201
6
.
Capital Spending.
We spent
$0.2 million
on capi
tal equipment in the first six
months of fiscal year 2017
compared to $1.3 million in the first six months of fiscal 2016 as we are currently closely scrutinizing all potential capital projects compared to our current cash balances.
Capital Resources and Outlook.
Information in this “Outlook” section should be read in conjunction with the
“Safe Harbor Statement,” cautionary statements
and discussion of risk factors included elsewhere in this report and in our Annual Report on Form 10-K for the
fiscal
year ended
June 30, 2016
.
At
December 31
, 201
6
,
we
had
$
6.3
million in cash, cash equivalents and short-term investm
ents of which $5.9 million, or
approximately 9
5
%,
was held in foreign bank accounts.
We do not typically repatriate our foreign earnings.
Our current outlook for the remainder of fiscal 2017 is based on our internal projections about the market and related economic conditions, estimated foreign currency exchange rate effects, as well as our understanding of our key customers’ plans for their retooling projects. If our key customers’ plans differ from our understanding, this could have an adverse impact on our outlook.
Sales in the second quarter of fiscal 2017 increased by 26.7% to $21.8 million, when compared to the same period a year ago. We believe our sales for the third quarter of fiscal 2017 will be in the range of $16.0 million to $19.0 million. For our full fiscal year, we expect
revenue growth in the high single digits
compared to fiscal 2016
as we anticipate a return to an imp
roving long-term revenue trend.
After giving recognition to the factors discussed above, we expect that the full fiscal year of 2017 operating income (loss) could improve compared to fiscal 2016, if we are successful at completing our previously announced financial improvement plan and other cost reductions as well as continue to progress with our long-term growth strategy and diversification program.
Based on our business plan, we believe our level of cash, cash equivalents, short-term investments, credit facilities and expected cash flows in each jurisdiction is sufficient to fund our
fiscal
2017 cash flow requirements.
We continue to expect capital spending
to
be
approximately $0.8 million during fiscal 2017 for capital expenditures, although there is no binding commitment to do so.
Furthermore, the level of our capital spending is dependent on our financial results.
We
will
evaluate
bus
iness opportunities that fit our
strategic plans. There can be no assurance that
we
will identify
opportunities that fit our
strategic plans or
that we
will be able to enter into agreements with identified business opportunities on terms acceptable to
us
.
We anticipate
that
we
would finance any such business opportunities from available cash on hand, issu
ance of additional shares of our
stock or additional sources of financing
, as circumstances warrant
.
CRITICAL ACCOUNTING POLICIES
A summary of critical accounting policies is presented in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” of
our
Annual Report on Form 10-K for fiscal year 201
6
.
NEW ACCOUNTING PRONOUNCEMENTS
For a discussion of new accounting pronouncements, see Note 2 to the Consolidated Financial Statements, “New Accounting Pronouncements”
contained in this
Quarterly
Report on Form 10-
Q
.
MARKET RISK INFORMATION
Our
primary market risk is related to foreign exchange rates. The foreign exchange risk is derived from the operations
outside the U.S.
, which are prima
rily located in Germany, Italy and
China
.
We
may
,
from time to time
,
have interest rate risk in connection with the investment of
our available cash balances or outstanding variable credit facilities
.
Foreign Currency Risk
We have foreign currency exchange risk in our international o
perations arising from the time-
period between sales commitment and delivery for contracts entered into in currencies other than the U.S. Dollar. For sales backlog entered into in currencies other than the U.S. Dollar, the currency rate risk exposure is predominantly less than one year with the majority in the 120
to 150-day range. At December 31
, 2016, our backlog in currencies other than the U.
S. Dollar was approximately 64% or $26.7
million, compared to
68% or $27.0
million at December 31, 2015. We are most vulnerable to changes in U.S. Dollar/Euro, U.S. Dollar/Chinese Yuan and U.S. Dollar/Japanese Yen exchange rates.
Our potential loss in net income that would result from a hypothetical 10% adverse change in quoted foreign currency exchange rates related to the translation of foreign denominated revenues and expenses into U.S. Dollars for the three months and six months ended December 31, 2016, wo
uld have been approximately $108,000 and $82
,000, respectively. This sensitivity analysis assumes there are no changes other than the exchange rates. This analysis has inherent limitations, including that it disregards the possibility that (i) the exchange rates of multiple foreign currencies may not always move in the same direction or percentage amount relative to the value of the U.S. Dollar and (ii) changes in exchange rates may impact the volume of sales.
Interest Rate Risk
We invest our
cash and cash equivalents in high
quality, short-term investments,
primarily
with
term
s
of three months or less. Based on our outstanding
credit facilities
and invested cash balances at
December 31
, 2016, a 1% increase in interest rates would have an
immaterial impact on our interest expense
and a 1% decrease in interest rates would have an immaterial effect on our
interest income
. As a result,
we do
not currently hedge these interest rate exposures.
Uncertainties in Credit Markets
At
December 31, 2016
,
we hold
a long-term investment in preferred stock that is not registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Our
long-term investment is subject to risk due to a decline in value of the investment. The investment is currently recorded at $
0.7 million,
after consideration of impairment charges recorded in fiscal years 2008 and 2009.
Based on
our
current business plan, cash
and cash equivalents
and
our
short-term investments of
$
6.3
million at
December 31, 2016
as well as the
existing
availability on our
credit facilities,
we do
not currently anticipate t
hat the lack of liquidity in this
long-term investment will affect
our ability to operate or fund our
currently anticipated fiscal 201
7
cash flow requirements.
ITEM 3.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required pursuant to this item is incorporated by reference herein from Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Market Risk Information.”
ITEM 4.
CONTROLS AND PROCEDURES
We
carried out an evaluation, under the supervision and with the participation of
our
management, including
our
Chief Executive
Officer and Chief Financial
Officer, of the effectiveness of the design and operation of
our
disclosure controls and procedures pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “1934 Act”). Based upon that evaluation,
our
Chief Executive
Officer and Chief Financial Officer
concluded that, as of
December 31
, 201
6
,
our
disclosure controls and procedures were effective. Rule 13a-15(e) of the 1934 Act defines “disclosure controls and procedures” as controls and other procedures that are designed to ensure that information required to be disclosed by
us
in the reports that
we file or submit
under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by
us
in the reports that
we file or submit
under the 1934 Act is accumulated and communicated to
our
management, including
our
Chief Executive
Officer and Chief Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
There have been no changes in
our
internal controls over financial reporting during the quarter ended
December 31
, 201
6
identified in connection with
our
evaluation that has materially affected, or is reasonably likely to materially affect,
our
internal controls over financial reporting.
PART II.
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
We are a party to a civil suit filed by 3CEMS, a Cayman Islands and People’s Republic of China corporation, in the U.S. District Court for the Eastern District of Michigan (the “Court”) and served on us on or about January 7, 2015. The suit alleges that we breached our contractual obligations by failing to pay for component parts to be used to manufacture optical video scopes for our discontinued Commercial Products Business Unit. 3CEMS alleged that it purchased the component parts in advance of the receipt of orders based upon instructions they claimed to have received from us. The suit alleged damages of not less than $4.0 million. In December 2016, the Court issued a non-final summary judgment order in favor of 3CEMS, finding that, as a matter of law, we breached our contractual obligations to 3CEMS and that the only issue of material fact is the amount of damages. We have filed a motion for reconsideration of the Court’s order, which is currently pending. The Court’s order may be appealed by the parties at the conclusion of the trial process. We intend to vigorously defend against 3CEMS’ claims.
See Note 15 to the Consolidated Financial Statements, “Commitments and Contingencies”, contained in this Quarterly Report on Form 10-Q.
ITEM 1A.
RISK FACTORS
There have been no material changes made to the risk factors listed in “Item 1A – Risk Factors” of our Annual Report on Form 10-K for fiscal year 2016.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Our purchases
of our Common Stock during the second quarter of fiscal 2017 were as follows:
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Period
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Total Number of Share/Units Purchased
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Average Price Paid Per Share/Unit
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Total Number of Shares/Units Purchased as Part of Publicly Announced Plans or Programs (1)
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Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (1)
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October 1 to October 31
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615
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$
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6.22
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-
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-
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November 1 to November 30
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-
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$
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-
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-
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-
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December 1 to December 31
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-
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$
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(1)
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During the second quarter of fiscal 201
7
,
we
withheld these shares from restricted stock grants under the
our
2004 Stock Incentive Plan (the “Plan”) to satisfy the
individual
’s tax withholding obligations upon the vesting of the related restricted stock grants, as provided for in the Plan.
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ITEM 6.
EXH
IBI
TS
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4.20*
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Waiver Letter,
dated February 3, 2017
,
from Comerica Bank.
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10.49
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First Amendment to Standstill Agreement, dated November 17, 2016, between the Company, Harbert Discovery Fund LP, Harbert Discovery Fund GP, LLC, Harbert Fund Advisors Inc. and Harbert Management Corporation.
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10.50
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First Amendment to Voting Agreement, dated November 17, 2016, between the Company, Moab Partners, L.P. and Moab Capital Partners, LLC.
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10.51
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Offer Letter, dated November 17, 2016, between David L. Watza and the Company.
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10.52
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First Amendment to Severance Agreement, dated November 17, 2016, between David L. Watza and the Company.
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31.1*
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Certification by the Chief Executive
Officer and Chief Financial
Officer of the Company pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934.
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32
.1
*
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Certification
by the Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350 and Rule 13a – 14(b) of the Securities Exchange Act of 1934.
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101.INS*
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XBRL Instance Document
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101.SCH*
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Taxonomy Extension Schema
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101.CAL*
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Taxonomy Extension Calculation Linkbase
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase
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* Filed Herewith
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.
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Perceptron, Inc.
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(Registrant)
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Date: February 6, 2017
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By:
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/s/ David L. Watza
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David L. Watza
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President, Chief Executive Officer
and Chief Financial Officer
(Principal Financial Officer)
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Date: February 6, 2017
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By:
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/s/
Michelle O. Wright
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Michelle O. Wright
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Corporate Controller and Chief Accounting Officer
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(Principal Accounting Officer)
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