Company Quick10K Filing
Perceptron
Price5.17 EPS-1
Shares10 P/E-7
MCap50 P/FCF-22
Net Debt-4 EBIT-7
TEV46 TEV/EBIT-7
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-16
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10-K 2016-06-30 Filed 2016-09-09
10-Q 2016-03-31 Filed 2016-05-09
10-Q 2015-12-31 Filed 2016-02-09
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10-K 2015-06-30 Filed 2015-09-14
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10-Q 2014-12-31 Filed 2015-02-09
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10-K 2014-06-30 Filed 2014-09-15
10-Q 2014-03-31 Filed 2014-05-15
10-Q 2013-12-31 Filed 2014-02-14
10-Q 2013-09-30 Filed 2013-11-14
10-K 2013-06-30 Filed 2013-09-27
10-Q 2013-03-31 Filed 2013-05-15
10-Q 2012-12-31 Filed 2013-02-14
10-Q 2012-09-30 Filed 2012-11-13
10-K 2012-06-30 Filed 2012-09-28
10-Q 2012-03-31 Filed 2012-05-15
10-Q 2011-12-31 Filed 2012-02-13
10-Q 2011-09-30 Filed 2011-11-14
10-K 2011-06-30 Filed 2011-09-26
10-Q 2011-03-31 Filed 2011-05-16
10-Q 2010-12-31 Filed 2011-02-11
10-Q 2010-09-30 Filed 2010-11-15
10-K 2010-06-30 Filed 2010-09-27
10-Q 2010-03-31 Filed 2010-05-14
10-Q 2009-12-31 Filed 2010-02-16
8-K 2020-11-16
8-K 2020-09-28
8-K 2020-09-27
8-K 2020-09-01
8-K 2020-06-05
8-K 2020-05-28
8-K 2020-05-04
8-K 2020-04-16
8-K 2020-02-24
8-K 2020-02-04
8-K 2020-01-07
8-K 2019-12-19
8-K 2019-11-22
8-K 2019-11-18
8-K 2019-11-11
8-K 2019-11-11
8-K 2019-09-16
8-K 2019-09-16
8-K 2019-09-04
8-K 2019-09-04
8-K 2019-08-09
8-K 2019-07-25
8-K 2019-06-13
8-K 2019-05-16
8-K 2019-05-09
8-K 2019-02-11
8-K 2018-12-20
8-K 2018-12-07
8-K 2018-10-25
8-K 2018-08-29
8-K 2018-08-20
8-K 2018-08-09
8-K 2018-06-21
8-K 2018-05-07
8-K 2018-04-04
8-K 2018-02-05

PRCP 10Q Quarterly Report

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
Item 6. Exhibits
EX-31.1 prcp-ex311_6.htm
EX-31.2 prcp-ex312_75.htm
EX-32.1 prcp-ex321_76.htm

Perceptron Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
957657381902012201420172020
Assets, Equity
25167-2-11-202012201420172020
Rev, G Profit, Net Income
4.32.50.7-1.1-2.9-4.72012201420172020
Ops, Inv, Fin

prcp-10q_20200930.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, 2020

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                 Rights to Purchase Preferred Stock

PRCP

The Nasdaq Stock Market LLC                     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 10, 2020, there were 9,779,547 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, 2020

 

 

 

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

 

21

Item 4.  Controls and Procedures

 

27

 

 

 

PART II.  OTHER INFORMATION

 

 

Item 1A. Risk Factors

 

28

Item 6. Exhibits

 

29

 

 

 

SIGNATURES

 

30

 

2


PERCEPTRON, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

September 30,

 

 

June 30,

 

(In Thousands, Except Per Share Amount)

 

2020

 

 

2020

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,868

 

 

$

10,621

 

Short-term investments

 

 

427

 

 

 

355

 

Receivables:

 

 

 

 

 

 

 

 

Billed receivables, net of allowance for doubtful accounts of $620 and $586, respectively

 

 

21,996

 

 

 

25,465

 

Unbilled receivables, net

 

 

6,386

 

 

 

4,784

 

Other receivables

 

 

511

 

 

 

404

 

Inventories, net of reserves of $2,019 and $1,929 respectively

 

 

10,280

 

 

 

10,387

 

Other current assets

 

 

3,355

 

 

 

1,854

 

Total current assets

 

 

55,823

 

 

 

53,870

 

 

 

 

 

 

 

 

 

 

Property and Equipment, Net

 

 

5,677

 

 

 

5,750

 

Intangible Assets, Net

 

 

978

 

 

 

1,100

 

Right of Use Assets

 

 

3,823

 

 

 

3,668

 

Long-Term Investment

 

 

725

 

 

 

725

 

Long-Term Deferred Income Tax Assets

 

 

595

 

 

 

469

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

67,621

 

 

$

65,582

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Line of credit and current portion of long-term debt

 

$

3,083

 

 

$

2,808

 

Accounts payable

 

 

6,337

 

 

 

6,667

 

Accrued liabilities and expenses

 

 

3,433

 

 

 

3,368

 

Accrued compensation

 

 

1,854

 

 

 

1,314

 

Current portion of taxes payable

 

 

47

 

 

 

113

 

Income taxes payable

 

 

463

 

 

 

462

 

Short-term operating lease liability

 

 

500

 

 

 

475

 

Reserves for restructuring and other charges

 

 

59

 

 

 

148

 

Deferred revenue

 

 

7,294

 

 

 

6,032

 

Total current liabilities

 

 

23,070

 

 

 

21,387

 

 

 

 

 

 

 

 

 

 

Long-Term Deferred Income Tax Liability

 

 

10

 

 

 

3

 

Long-Term Operating Lease Liability

 

 

3,376

 

 

 

3,245

 

Long-Term Deferred Revenue

 

 

181

 

 

 

214

 

Long-Term Debt, Less Current Portion

 

 

1,701

 

 

 

1,983

 

Other Long-Term Liabilities

 

 

443

 

 

 

449

 

Total Liabilities

 

$

28,781

 

 

$

27,281

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

 

 

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

 

 

-

 

 

 

-

 

Common stock, $0.01 par value, 19,000 shares authorized; issued and outstanding 9,764 and 9,744, respectively

 

 

98

 

 

 

97

 

Accumulated other comprehensive loss

 

 

(2,550

)

 

 

(3,371

)

Additional paid-in capital

 

 

49,845

 

 

 

49,721

 

Retained deficit

 

 

(8,553

)

 

 

(8,146

)

Total Shareholders' Equity

 

$

38,840

 

 

$

38,301

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$

67,621

 

 

$

65,582

 

 

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)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

Net Sales

 

$

13,933

 

 

$

17,850

 

Cost of Sales

 

 

9,537

 

 

 

10,808

 

Gross Profit

 

 

4,396

 

 

 

7,042

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

3,769

 

 

 

4,243

 

Engineering, research and development

 

 

1,324

 

 

 

1,828

 

Total operating expenses

 

 

5,093

 

 

 

6,071

 

 

 

 

 

 

 

 

 

 

Operating (Loss) Income

 

 

(697

)

 

 

971

 

 

 

 

 

 

 

 

 

 

Other Income and (Expenses)

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(42

)

 

 

(24

)

Foreign currency (loss) gain, net

 

 

233

 

 

 

(211

)

Other income (expense), net

 

 

(56

)

 

 

33

 

Total other income and (expense)

 

 

135

 

 

 

(202

)

 

 

 

 

 

 

 

 

 

(Loss) Income Before Income Taxes

 

 

(562

)

 

 

769

 

 

 

 

 

 

 

 

 

 

Income Tax (Expense) Benefit

 

 

155

 

 

 

(143

)

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

$

(407

)

 

$

626

 

 

 

 

 

 

 

 

 

 

(Loss) Income Per Common Share

 

 

 

 

 

 

 

 

Basic and Diluted

 

$

(0.04

)

 

$

0.06

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding

 

 

 

 

 

 

 

 

Basic

 

 

9,750

 

 

 

9,661

 

Dilutive effect of stock options

 

 

-

 

 

 

3

 

Diluted

 

 

9,750

 

 

 

9,664

 

 

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)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

Net (Loss) Income

 

$

(407

)

 

$

626

 

Other Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

821

 

 

 

(858

)

 

 

 

 

 

 

 

 

 

Comprehensive Income (Loss)

 

$

414

 

 

$

(232

)

 

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)

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

Cash Flows from Operating Activities

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(407

)

 

$

626

 

Adjustments to reconcile net (loss) income to net cash provided by

   operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization, includes $158 and $116 amortization of ROU assets (imputed) for 2020 and 2019, respectively

 

 

508

 

 

 

480

 

Stock compensation expense

 

 

125

 

 

 

214

 

Non-cash lease expense

 

 

-

 

 

 

2

 

Deferred income taxes

 

 

(102

)

 

 

171

 

Loss on disposal of assets

 

 

-

 

 

 

8

 

Allowance for doubtful accounts

 

 

34

 

 

 

(32

)

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Receivables

 

 

2,769

 

 

 

(3,130

)

Inventories

 

 

351

 

 

 

524

 

Accounts payable

 

 

(542

)

 

 

67

 

Accrued liabilities and expenses

 

 

(329

)

 

 

316

 

Deferred revenue

 

 

1,060

 

 

 

841

 

Other assets and liabilities

 

 

(1,280

)

 

 

(880

)

Net cash (used for) provided by operating activities

 

 

2,187

 

 

 

(793

)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Purchases of short-term investments

 

 

(219

)

 

 

(607

)

Sales of short-term investments

 

 

233

 

 

 

1,245

 

Capital expenditures

 

 

(94

)

 

 

(249

)

Capital expenditures - intangibles

 

 

-

 

 

 

(125

)

Net cash provided by (used for) investing activities

 

 

(80

)

 

 

264

 

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

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

 

 

(6

)

 

 

-

 

Proceeds from stock plans

 

 

-

 

 

 

1

 

Net cash provided by (used for) financing activities

 

 

(6

)

 

 

1

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

 

218

 

 

 

(89

)

 

 

 

 

 

 

 

 

 

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

 

 

2,319

 

 

 

(617

)

Cash, Cash Equivalents and Restricted Cash, July 1

 

 

10,976

 

 

 

4,843

 

Cash, Cash Equivalents and Restricted Cash, September 30

 

$

13,295

 

 

$

4,226

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

 

Cash paid during the period for interest

 

$

19

 

 

$

24

 

Cash paid during the period for income taxes

 

$

90

 

 

$

104

 

 

 

September 30, 2020

 

 

June 30, 2020

 

Cash and Cash Equivalents

 

$

12,868

 

 

$

10,621

 

Restricted Cash included in Short-term Investments

 

 

427

 

 

 

355

 

Total Cash, Cash Equivalents and Restricted Cash

 

$

13,295

 

 

$

10,976

 

 

 

 

 

 

 

 

 

 

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)

 

2020

 

 

2019

 

Common Stock

 

 

 

 

 

 

 

 

Beginning balance

 

$

97

 

 

$

97

 

Issued

 

 

1

 

 

 

-

 

Ending balance

 

 

98

 

 

 

97

 

 

 

 

 

 

 

 

 

 

Accumulated Other Comprehensive Loss

 

 

 

 

 

 

 

 

Beginning balance

 

 

(3,371

)

 

 

(3,079

)

Other comprehensive income (loss)

 

 

821

 

 

 

(858

)

Ending balance

 

 

(2,550

)

 

 

(3,937

)

 

 

 

 

 

 

 

 

 

Additional Paid-In Capital

 

 

 

 

 

 

 

 

Beginning balance

 

 

49,721

 

 

 

49,083

 

Stock-based compensation

 

 

40

 

 

 

172

 

Stock plans

 

 

84

 

 

 

46

 

Ending balance

 

 

49,845

 

 

 

49,301

 

 

 

 

 

 

 

 

 

 

Retained Earnings (Deficit)

 

 

 

 

 

 

 

 

Beginning balance

 

 

(8,146

)

 

 

(4,175

)

Net (loss) income

 

 

(407

)

 

 

626

 

Ending balance

 

 

(8,553

)

 

 

(3,549

)

 

 

 

 

 

 

 

 

 

Total Shareholders' Equity

 

$

38,840

 

 

$

41,912

 

 

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. (the “Company”) develops, produces and sells a comprehensive range of automated industrial metrology products and solutions to manufacturers for dimensional gauging, dimensional inspection and 3D scanning.  The Company’s products provide solutions for manufacturing process control as well as sensor and software technologies for non-contact measurement, scanning and inspection applications.  The Company 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.  The Consolidated Financial Statements include accounts of the Company and wholly-owned subsidiaries.  All significant intercompany accounts and transactions have been eliminated in consolidation.  In the Company’s 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 the Company’s audited Consolidated Financial Statements in Form 10-K for the fiscal year ended June 30, 2020.

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.

In particular, management has made estimates and assumptions related to the impact of the novel coronavirus ("COVID-19") on its business. COVID-19 was characterized as a pandemic by the World Health Organization on March 11, 2020. To help lessen its spread, many countries have implemented travel restrictions and/or required companies to limit or suspend business operations. These actions have disrupted supply chains and company operations around the world. The current environment resulting from COVID-19 is unprecedented and comes with a great deal of uncertainty. See Note 18 “COVID-19 Pandemic” of the Notes to the Consolidated Financial Statements, contained in this Quarterly Report on Form 10-Q for a discussion of the impact of COVID-19 on the Company’s business.

2.New Accounting Pronouncements  

Recently Issued Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“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.  In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments – Credit Losses (ASU 2018-19).  ASU 2018-19 clarifies that receivables arising from operating leases are not within the scope of ASU 2016-13.  ASU 2016-13, as amended, is effective for the Company on July 1, 2023, with early adoption permitted.  The Company does not expect the impact of the adoption of ASU 2016-13 to be material on its consolidated financial statements.

In November 2019, the FASB issued Accounting Standards Update No. 2019-11—Codification Improvements to Topic 326, Financial Instruments—Credit Losses (ASU 2019-11). The amendments in this Update represent changes to clarify, correct errors in, or improve the Codification. The amendments make the Codification easier to understand and easier to apply by eliminating inconsistencies and providing clarifications. The effective dates and transition requirements for ASU 2019-11 are the same as ASU 2016-13. ASU 2019-11 is effective for the Company on July 1, 2023. The Company does not expect the impact of the adoption of ASU 2019-11 to be material on its consolidated financial statements.

8


In December 2019, the FASB issued Accounting Standards Update No. 2019-12—Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (ASU 2019-12). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. ASU 2019-12 is effective for the Company on July 1, 2021. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

In January 2020, the FASB issued Accounting Standards Update No. 2020-01—Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint  Ventures (Topic 323), and Derivatives and Hedging (Topic 815)—Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force) (ASU 2020-01). The amendments in this ASU clarify certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with Topic 825, Financial Instruments. These amendments improve current GAAP by reducing diversity in practice and increasing comparability of the accounting for these interactions. ASU 2020-01 is effective for the Company on July 1, 2021. The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

In August 2018, the FASB issued Accounting Standards Update No. 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirement for Fair Value Measurement (ASU 2018-13), which changes the disclosures related to, among other aspects of fair value, unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurement and the narrative description of measurement uncertainty.  ASU 2018-13 is effective for the Company on July 1, 2021.  The Company is currently evaluating the impact of this standard on its consolidated financial statements and disclosures.

Recently Adopted Accounting Pronouncements

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.  The Company adopted this guidance on July 1, 2019, using the modified retrospective approach.  

The adoption of the standard resulted in the recognition of net operating lease right-of-use assets of $4.0 million and operating lease liabilities of $3.9 million on the consolidated balance sheet as of July 1, 2019 primarily related to the Company’s real estate operating leases.  The operating lease right-of-use asset includes the impact of deferred rent.  The Company does not have any finance leases.  

The Company elected to apply the package of practical expedients upon transition, which includes no reassessment of whether existing contracts are or contain leases and allowed for the lease classification for existing leases to be retained. The Company did not elect the practical expedient to use hindsight, and accordingly the initial lease term did not differ under the new standard versus prior accounting practice.  After transition, in certain instances, the cost of renewal options will be recognized earlier in the term of the lease than under the previous lease accounting rules.  The Company has selected as its accounting policy to keep leases with a term of twelve months or less off the balance sheet and recognize these lease payments on a straight-line basis over the lease term.

In February 2018, the FASB issued Accounting Standards Update 2018-02—Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income (ASU 2018-02), which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.  ASU 2018-02 was adopted on July 1, 2019 and did not have a significant impact on the Company’s consolidated financial statements or disclosures.   

In August 2018, the FASB issued Accounting Standards Update No. 2018-15 – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (ASU 2018-15), which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing costs incurred to develop or obtain internal use software.  ASU 2018-15 is effective for the Company on July 1, 2020.  ASU 2018-15 was adopted on July 1, 2020 and did not have significant impact on the Company’s consolidated financial statements and disclosures.

 

9


3.Intangible Assets

The Company acquired intangible assets consisting of a Trade Name and Customer/Distributor Relationships in addition to goodwill in connection with the acquisitions of Coord3 and NMS in the third quarter of fiscal 2015 which is considered the Company’s CMM reporting unit.  The customer/distributor relationships were written off via an impairment charge in fiscal 2019.  The goodwill and trade name were written off via impairment charges in fiscal 2019 and 2020.  Furthermore, the Company continues to develop intangibles, primarily software. Intangible 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.  The amortization periods for software is five years.      

 

At September 30, 2020, there are no indications of potential impairment of the Company’s software.

The Company’s intangible assets are as follows (in thousands):

 

 

 

September 30, 2020

 

 

June 30, 2020

 

 

 

Gross

 

 

 

 

 

 

Net

 

 

Gross

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

Carrying

 

 

Accumulated

 

 

Carrying

 

 

Carrying

 

 

Impairments

 

 

Accumulated

 

 

Carrying

 

 

 

Amount

 

 

Amortization

 

 

Amount

 

 

Amount

 

 

 

 

 

 

Amortization

 

 

Amount

 

Trade Name

 

$

-

 

 

$

-

 

 

$

-

 

 

$

1,674

 

 

$

(558

)

 

$

(1,116

)

 

$

-

 

Software

 

 

2,104

 

 

 

(1,126

)

 

 

978

 

 

 

2,104

 

 

 

-

 

 

 

(1,004

)

 

 

1,100

 

Total

 

$

2,104

 

 

$

(1,126

)

 

$

978

 

 

$

3,778

 

 

$

(558

)

 

$

(2,120

)

 

$

1,100

 

 

Amortization expense was $122,000 and $104,000 for the three months ended September 30, 2020 and 2019, respectively.    

The estimated amortization of the remaining intangible assets by year is as follows (in thousands):

 

Years Ending June 30,

 

Amount

 

2021 (excluding the three months ended September 30, 2020)

 

 

262

 

2022

 

 

368

 

2023

 

 

273

 

2024

 

 

75

 

2025

 

 

-

 

after 2025

 

 

-

 

 

 

$

978

 

 

4.Revenue from Contracts with Customers

Disaggregated Revenue

The following tables summarizes the Company’s disaggregated revenue, based on its shipping location (in thousands):

 

 

 

Three Months Ended September 30,

 

Geographic Region:

 

2020

 

2019

 

Americas Sales

 

$

3,627

 

$

6,167

 

Europe Sales

 

 

6,910

 

 

7,120

 

Asia Sales

 

 

3,396

 

 

4,563

 

Total Net Sales

 

$

13,933

 

$

17,850

 

Sales by product lines are as follows (in thousands):

 

 

 

Three Months Ended September 30,

 

Product Lines

 

2020

 

2019

 

Measurement Solutions

 

$

13,289

 

$

16,168

 

3D Scanning Solutions

 

 

94