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Section 1: 10-Q (10-Q)

prcp-10q_20190930.htm
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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 September 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number:  0-20206

 

PERCEPTRON, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

 

Michigan

(State or Other Jurisdiction of

Incorporation or Organization)

 

38-2381442

(I.R.S. Employer

Identification No.)

47827 Halyard Drive, Plymouth, Michigan

(Address of Principal Executive Offices)

 

48170-2461

(Zip Code)

 

(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)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

PRCP

NASDAQ Global Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes

No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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  such files).

 

Yes

No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.:

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

 

 

If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

 

Yes

No

 

 

 

 

As of November 7, 2019, there were 9,692,378 shares of common stock ($0.01 par value per share) are outstanding.

1


PERCEPTRON, INC. AND SUBSIDIARIES

INDEX TO FORM 10-Q

For the Quarter Ended September 30, 2019

 

 

 

Page

Number

COVER

 

1

 

 

 

INDEX

 

2

 

 

 

PART I.  FINANCIAL INFORMATION

 

 

Item 1.  Financial Statements

 

3

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

22

Item 4.  Controls and Procedures

 

28

 

 

 

PART II.  OTHER INFORMATION

 

 

Item 1A. Risk Factors

 

29

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

29

Item 6. Exhibits

 

30

 

 

 

SIGNATURES

 

31

 

2


PERCEPTRON, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

September 30,

 

 

June 30,

 

(In Thousands, Except Per Share Amount)

 

2019

 

 

2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,998

 

 

$

4,585

 

Short-term investments

 

 

722

 

 

 

1,431

 

Receivables:

 

 

 

 

 

 

 

 

Billed receivables, net of allowance for doubtful accounts of $509 and $541, respectively

 

 

26,541

 

 

 

27,449

 

Unbilled receivables, net

 

 

8,339

 

 

 

5,394

 

Other receivables

 

 

256

 

 

 

200

 

Inventories, net of reserves of $1,814 and $1,778 respectively

 

 

10,056

 

 

 

10,810

 

Other current assets

 

 

2,304

 

 

 

1,529

 

Total current assets

 

 

52,216

 

 

 

51,398

 

 

 

 

 

 

 

 

 

 

Property and Equipment, Net

 

 

6,457

 

 

 

6,538

 

Goodwill

 

 

1,675

 

 

 

1,741

 

Intangible Assets, Net

 

 

1,812

 

 

 

1,816

 

Right of Use Assets

 

 

3,850

 

 

 

-

 

Long-Term Investment

 

 

725

 

 

 

725

 

Other Long-Term Assets

 

 

85

 

 

 

-

 

Long-Term Deferred Income Tax Assets

 

 

424

 

 

 

620

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

67,244

 

 

$

62,838

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

 

7,248

 

 

 

7,397

 

Accrued liabilities and expenses

 

 

3,355

 

 

 

3,609

 

Accrued compensation

 

 

2,033

 

 

 

1,646

 

Current portion of taxes payable

 

 

252

 

 

 

320

 

Income taxes payable

 

 

621

 

 

 

536

 

Short-term operating lease liability

 

 

514

 

 

 

-

 

Reserves for restructuring and other charges

 

 

-

 

 

 

44

 

Deferred revenue

 

 

7,305

 

 

 

6,649

 

Total current liabilities

 

 

21,328

 

 

 

20,201

 

 

 

 

 

 

 

 

 

 

Long-Term Taxes Payable

 

 

44

 

 

 

114

 

Long-Term Deferred Income Tax Liability

 

 

35

 

 

 

41

 

Long-Term Operating Lease Liability

 

 

3,384

 

 

 

-

 

Other Long-Term Liabilities

 

 

541

 

 

 

556

 

Total Liabilities

 

$

25,332

 

 

$

20,912

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

Preferred stock, no par value, authorized 1,000 shares, issued none

 

 

-

 

 

 

-

 

Common stock, $0.01 par value, 19,000 shares authorized; 9,667 issued and 9,658 outstanding at September 30, 2019

 

 

97

 

 

 

97

 

Accumulated other comprehensive loss

 

 

(3,937

)

 

 

(3,079

)

Additional paid-in capital

 

 

49,301

 

 

 

49,083

 

Retained deficit

 

 

(3,549

)

 

 

(4,175

)

Total Shareholders' Equity

 

$

41,912

 

 

$

41,926

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

67,244

 

 

$

62,838

 

The notes to the consolidated financial statements are an integral part of these statements.

3


PERCEPTRON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

September 30,

 

(In Thousands, Except Per Share Amounts)

 

2019

 

 

2018

 

 

 

 

 

 

 

(As Revised)

 

Net Sales

 

$

17,850

 

 

$

21,442

 

Cost of Sales

 

 

10,808

 

 

 

13,150

 

Gross Profit

 

 

7,042

 

 

 

8,292

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

4,243

 

 

 

4,635

 

Engineering, research and development

 

 

1,828

 

 

 

2,198

 

Total operating expenses

 

 

6,071

 

 

 

6,833

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

971

 

 

 

1,459

 

 

 

 

 

 

 

 

 

 

Other Income and (Expenses)

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(24

)

 

 

(27

)

Foreign currency (loss) gain, net

 

 

(211

)

 

 

(202

)

Other income, net

 

 

33

 

 

 

-

 

Total other income and (expense)

 

 

(202

)

 

 

(229

)

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

769

 

 

 

1,230

 

 

 

 

 

 

 

 

 

 

Income Tax Expense

 

 

(143

)

 

 

(276

)

 

 

 

 

 

 

 

 

 

Net Income

 

$

626

 

 

$

954

 

 

 

 

 

 

 

 

 

 

Income Per Common Share

 

 

 

 

 

 

 

 

Basic

 

$

0.06

 

 

$

0.10

 

Diluted

 

$

0.06

 

 

$

0.10

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

 

 

Basic

 

 

9,661

 

 

 

9,560

 

Dilutive effect of stock options

 

 

3

 

 

 

212

 

Diluted

 

 

9,664

 

 

 

9,772

 

 

The notes to the consolidated financial statements are an integral part of these statements.


4


PERCEPTRON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

September 30,

 

(In Thousands)

 

2019

 

 

2018

 

 

 

 

 

 

 

(As Revised)

 

Net Income

 

$

626

 

 

$

954

 

Other Comprehensive (Loss) Income:

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

(858

)

 

 

(397

)

 

 

 

 

 

 

 

 

 

Comprehensive (Loss) Income

 

$

(232

)

 

$

557

 

 

The notes to the consolidated financial statements are an integral part of these statements.

5


PERCEPTRON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

September 30,

 

(In Thousands)

 

2019

 

 

2018

 

 

 

 

 

 

 

(As Revised)

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

626

 

 

$

954

 

Adjustments to reconcile net income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization, includes $116 amortization of ROU assets (imputed)

 

 

480

 

 

 

567

 

Stock compensation expense

 

 

214

 

 

 

211

 

Non-cash lease expense

 

 

2

 

 

 

-

 

Deferred income taxes

 

 

171

 

 

 

(194

)

Loss (gain) on disposal of assets

 

 

8

 

 

 

(15

)

Allowance for doubtful accounts

 

 

(32

)

 

 

(6

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

(3,130

)

 

 

(243

)

Inventories

 

 

524

 

 

 

700

 

Accounts payable

 

 

67

 

 

 

229

 

Accrued liabilities and expenses

 

 

316

 

 

 

(657

)

Deferred revenue

 

 

841

 

 

 

498

 

Other assets and liabilities

 

 

(880

)

 

 

(240

)

Net cash (used for) provided by operating activities

 

 

(793

)

 

 

1,804

 

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(607

)

 

 

(669

)

Sales of short-term investments

 

 

1,245

 

 

 

988

 

Capital expenditures

 

 

(249

)

 

 

(502

)

Capital expenditures - intangibles

 

 

(125

)

 

 

(93

)

Net cash provided by (used for) investing activities

 

 

264

 

 

 

(276

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Payments on lines of credit and short-term borrowings, net

 

 

-

 

 

 

(53

)

Proceeds from stock plans

 

 

1

 

 

 

201

 

Cash payment for shares surrendered upon vesting of RSU's to cover taxes

 

 

-

 

 

 

(15

)

Net cash provided by financing activities

 

 

1

 

 

 

133

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

 

(89

)

 

 

(54

)

 

 

 

 

 

 

 

 

 

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash

 

 

(617

)

 

 

1,607

 

Cash, Cash Equivalents and Restricted Cash, July 1

 

 

4,843

 

 

 

5,996

 

Cash, Cash Equivalents and Restricted Cash, September 30

 

$

4,226

 

 

$

7,603

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

24

 

 

$

29

 

Cash paid during the period for income taxes

 

$

104

 

 

$

277

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2019

 

 

June 30, 2019

 

Cash and Cash Equivalents

 

$

3,998

 

 

$

4,585

 

Restricted Cash included in Short-term Investments

 

 

228

 

 

 

258

 

Total Cash, Cash Equivalents and Restricted Cash

 

$

4,226

 

 

$

4,843

 

 

 

 

 

 

 

 

 

 

The notes to the consolidated financial statements are an integral part of these statements.

 

 

6


PERCEPTRON, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(UNAUDITED)

 

 

 

Three Months Ended

 

 

 

September 30,

 

(In Thousands)

 

2019

 

 

2018

 

Common Stock

 

 

 

 

 

(As Revised)

 

Beginning balance

 

$

97

 

 

$

96

 

Issued

 

 

-

 

 

 

-

 

Ending balance

 

 

97

 

 

 

96

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Loss

 

 

 

 

 

 

 

 

Beginning balance

 

 

(3,079

)

 

 

(2,096

)

Other comprehensive loss

 

 

(858

)

 

 

(397

)

Ending balance

 

 

(3,937

)

 

 

(2,493

)

 

 

 

 

 

 

 

 

 

Additional Paid-In Capital

 

 

 

 

 

 

 

 

Beginning balance

 

 

49,083

 

 

 

48,110

 

Stock-based compensation

 

 

172

 

 

 

211

 

Stock plans

 

 

46

 

 

 

186

 

Ending balance

 

 

49,301

 

 

 

48,507

 

 

 

 

 

 

 

 

 

 

Retained Earnings (Deficit)

 

 

 

 

 

 

 

 

Beginning balance

 

 

(4,175

)

 

 

567

 

Adoption of ASC 606 - modified

   retrospective transition method

 

 

-

 

 

 

2,049

 

Net income

 

 

626

 

 

 

954

 

Ending balance

 

 

(3,549

)

 

 

3,570

 

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

41,912

 

 

$

49,680

 

 

The notes to the consolidated financial statements are an integral part of these statements.

7


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 manufacturers for dimensional gauging, dimensional 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 value added services such as training and customer support.

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.  The 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 2019 Annual Report on Form 10-K for the fiscal year ended June 30, 2019.

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.

Revision of Previously Issued Financial Statements

During the fourth quarter of fiscal 2019, an error was identified related to the accounting for our deferred tax liabilities associated with certain amortizable intangible assets acquired in 2015.  The error relates to not appropriately reducing the associated deferred tax liabilities for the tax effect of amortization on the intangible assets since 2016.  The error was immaterial to our previously issued financial statements, but the cumulative correction would have had a material effect on the 2019 financial statements.  Accordingly, the results for the quarter ended September 30, 2018 have been adjusted to incorporate the revised amounts, where applicable.  See Note 1, of the Notes to the Consolidated Financial Statements, “Summary of Significant Accounting Policies - Revision of Previously Issued Financial Statements” contained in Item 8 of our Annual Report on Form 10-K for further discussion.

8


 

 

Three Months ended September 30, 2018

 

 

Three Months ended September 30, 2017

 

 

 

(In Thousands Except Per Share Amounts)

 

 

(In Thousands Except Per Share Amounts)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As Previously

 

 

 

 

 

As

 

 

As Previously

 

 

 

 

As

 

 

 

Reported

 

Adjustment

 

 

Revised

 

 

Reported

 

Adjustment

 

Revised

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

21,442

 

$

-

 

 

$

21,442

 

 

$

19,269

 

$

-

 

$

19,269

 

Cost of Sales

 

 

13,150

 

 

-

 

 

 

13,150

 

 

 

11,619

 

 

-

 

 

11,619

 

Gross Profit

 

 

8,292

 

 

-

 

 

 

8,292

 

 

 

7,650

 

 

-

 

 

7,650

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

6,833

 

 

-

 

 

 

6,833

 

 

 

6,105

 

 

-

 

 

6,105

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income

 

 

1,459

 

 

-

 

 

 

1,459

 

 

 

1,545

 

 

-

 

 

1,545

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income and (Expense)

 

 

(229

)

 

-

 

 

 

(229

)

 

 

(34

)

 

-

 

 

(34

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

1,230

 

 

-

 

 

 

1,230

 

 

 

1,511

 

 

-

 

 

1,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Tax Benefit (Expense)

 

 

(338

)

 

62

 

 

 

(276

)

 

 

47

 

 

62

 

 

109

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

$

892

 

$

62

 

 

$

954

 

 

$

1,558

 

$

62

 

$

1,620

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Per Common Share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.09

 

$

0.01

 

 

$

0.10

 

 

$

0.16

 

$

0.01

 

$

0.17

 

Diluted

 

$

0.09

 

$

0.01

 

 

$

0.10

 

 

$

0.16

 

$

0.01

 

$

0.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

9,560

 

 

-

 

 

 

9,560

 

 

 

9,453

 

 

-

 

 

9,453

 

Dilutive effect of stock options

 

 

212

 

 

-

 

 

 

212

 

 

 

49

 

 

-