UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
Commission file number: 000-21377
ROFIN-SINAR TECHNOLOGIES INC.
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(Exact name of registrant as specified in its charter)
Delaware 38-3306461
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
40984 Concept Drive, Plymouth, MI 48170
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(Address of principal executive offices) (Zip Code)
(734) 455-5400
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(Registrant's telephone number, including area code)
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(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. Yes [X] / No [ ]
11,551,800 shares of the registrant's common stock, par value $0.01 per
share, were outstanding as of August 14, 2002.
ROFIN-SINAR TECHNOLOGIES INC.
INDEX
PART I FINANCIAL INFORMATION Page No.
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Item 1
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Condensed Consolidated Balance Sheets
June 30, 2002 and September 30, 2001 3
Condensed Consolidated Statements of Operations
Three months and nine months ended
June 30, 2002 and 2001 5
Condensed Consolidated Statement of Stockholders Equity
and Comprehensive Income
Nine months ended June 30, 2002 and 2001 6
Condensed Consolidated Statements of Cash Flows
Nine months ended June 30, 2002 and 2001 7
Notes to Condensed Consolidated Financial Statements 8
Item 2
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Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3
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Quantitative and Qualitative Disclosures about
Market Risk 16
PART II OTHER INFORMATION 17
SIGNATURES 18
PART I. FINANCIAL INFORMATION
Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(dollars in thousands)
June 30, September 30,
2002 2001
(Unaudited) (Audited)
----------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 20,465 $ 13,487
Accounts receivable, trade, net 54,221 55,412
Inventories (Note 3) 76,688 70,328
Other current assets and prepaid expenses 8,716 8,870
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Total current assets 160,090 148,097
Property and equipment, net 25,326 22,846
Goodwill, net 51,347 51,445
Other assets 1,363 2,362
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Total assets $ 238,126 $ 224,750
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit and short term borrowings $ 24,226 $ 27,528
Accounts payable, trade 14,044 12,325
Accounts payable to related party 7,814 6,349
Accrued liabilities 36,239 36,486
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Total current liabilities 82,323 82,688
Long-term debt 41,357 36,784
Pension obligations 6,120 5,120
Minority interests 1,047 859
Other long-term liabilities 272 248
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Total liabilities 131,119 125,699
- 3 -
Stockholders' equity
Preferred stock, 5,000,000 shares authorized,
none issued or outstanding 0 0
Common stock, $0.01 par value, 50,000,000 shares
authorized, 11,550,300 (11,546,500 at
September 30, 2001) issued and outstanding 115 115
Additional paid-in-capital 76,147 76,123
Retained earnings 36,994 34,360
Accumulated other comprehensive loss ( 6,249) ( 11,547)
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Total stockholders' equity 107,007 99,051
Total liabilities and stockholders' equity $ 238,126 $ 224,750
=========== ==========
See accompanying notes to condensed consolidated financial statements
- 4 -
Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (Unaudited)
Periods Ended June 30, 2002 and 2001
(dollars in thousands, except per share amounts)
Three Months Nine Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Net sales $ 55,569 $ 54,124 $ 157,738 $ 166,200
Cost of goods sold 37,630 33,145 101,860 101,182
---------- ---------- ---------- ----------
Gross profit 17,939 20,979 55,878 65,018
Selling, general, and
administrative expenses 11,117 10,689 33,179 30,463
Research and development expenses 3,699 3,530 9,935 11,215
Special charge (Note 2) -- 700 -- 700
Goodwill amortization 956 899 2,773 2,700
---------- ---------- ---------- ----------
Income from operations 2,167 5,161 9,991 19,940
Other expense (income):
Interest income ( 90) ( 317) ( 248) ( 999)
Interest expense 727 1,023 2,831 3,426
Other expenses (income) ( 1,370) 564 ( 1,203) 319
---------- ---------- ---------- ----------
Income before income taxes
and minority interest 2,900 3,891 8,611 17,194
Income tax expense 1,586 1,298 5,376 7,948
---------- ---------- ---------- ----------
Income before
minority interest 1,314 2,593 3,235 9,246
Minority interest 58 161 601 690
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Net income $ 1,256 $ 2,432 $ 2,634 $ 8,556
========== ========== ========== ==========
Net income per common
share (Note 4):
Basic $ 0.11 $ 0.21 $ 0.23 $ 0.74
Diluted $ 0.11 $ 0.21 $ 0.23 $ 0.74
========== ========== ========== ==========
Weighted average shares
used in computing net
income per share (Note 4):
Basic 11,551,800 11,542,700 11,551,800 11,542,700
Diluted 11,619,614 11,657,712 11,599,403 11,596,340
========== ========== ========== ==========
See accompanying notes to condensed consolidated financial statements
- 5 -
Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements Of Stockholders' Equity and
Comprehensive Income (Unaudited)
Nine months ended June 30, 2002 and 2001
(dollars in thousands)
Accumulated
Common Additional Other Total
Stock Paid-in Retained Comprehensive Stockholders'
Par Value Capital Earnings Income(loss) Equity
------------ ------------ ------------ ------------ ------------
BALANCES at September 30, 2001 $ 115 $ 76,123 $ 34,360 $( 11,547) $ 99,051
Comprehensive income:
Foreign currency translation adjustment -- -- -- 5,032 5,032
Change in fair value of cash flow hedges
net of taxes -- -- -- 266 266
Net income -- -- 2,634 -- 2,634
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Total comprehensive income 7,932
Common stock issued -- 24 -- -- 24
------------ ------------ ------------ ----------- ------------
BALANCES at June 30, 2002 $ 115 $ 76,147 $ 36,994 $ ( 6,249) $ 107,007
============ ============ ============ ============ ============
BALANCES at September 30, 2000 $ 115 $ 76,049 $ 27,145 $( 12,590) $ 90,719
Comprehensive income:
Foreign currency translation adjustment -- -- -- ( 1,752) ( 1,752)
Change in fair value of cash flow hedges
net of taxes -- -- -- ( 874) ( 874)
Net income -- -- 8,556 -- 8,556
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Total comprehensive income 5,930
Common stock issued -- 43 -- -- 43
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BALANCES at June 30, 2001 $ 115 $ 76,092 $ 35,701 $( 15,216) $ 96,692
============ ============ ============ ============ ============
See accompanying notes to condensed consolidated financial statements
- 6 -
Rofin-Sinar Technologies Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended June 30, 2002 and 2001
(dollars in thousands)
Nine Months
Ended June 30,
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2002 2001
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,634 $ 8,556
Adjustments to reconcile net income to net
cash provided by operating activities:
Changes in operating assets and liabilities 5,827 ( 9,607)
Other adjustments 4,940 5,242
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Net cash provided by operating activities 13,401 4,191
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from the sale of property and equipment 133 92
Additions to property and equipment ( 3,370) ( 3,378)
Acquisition of business, net of cash acquired -- ( 2,565)
Cash proceeds from sale of medical laser business 938 --
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Net cash used in investing activities ( 2,299) ( 5,851)
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CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from banks 5,503 52,852
Repayment to banks ( 4,416) ( 53,555)
Net repayments on line of credit ( 5,114) ( 13,812)
Other ( 429) ( 565)
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Net cash used in financing activities ( 4,456) ( 15,080)
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Effect of foreign currency translation on cash
and cash equivalents 332 ( 1,080)
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Net increase (decrease) in cash and cash equivalents 6,978 ( 17,820)
Cash and cash equivalents at beginning of period 13,487 28,973
---------- ----------
Cash and cash equivalents at end of period $ 20,465 $ 11,153
========== ==========
See accompanying notes to condensed consolidated financial statements
- 7 -
Rofin-Sinar Technologies Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (Unaudited)
(dollars in thousands)
1. Summary of Accounting Policies
The accompanying consolidated condensed financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America, consistent with those reflected in the Company's
annual report to stockholders for the year ended September 30, 2001. All
adjustments necessary for a fair presentation have been made which comprise
only normal recurring adjustments; however, interim results of operations are
not necessarily indicative of results to be expected for the year. September
30, 2001 balances are derived from audited financial statements; however,
interim period amounts have not been audited.
Certain prior period amounts have been reclassified to conform to the current
year presentation. These reclassifications had no impact on net income or
stockholders equity for the periods presented.
2. Dispositions
On October 5, 2001, the Company sold the assets of its medical laser business
resulting in a gain of $0.7 million. As part of the proceeds from the sale,
the Company received marketable equity securities which have been classified
as trading securities, under "other current assets and prepaid expenses" in
the accompanying balance sheet, as the Company intends to sell these
securities in the near term. During the nine months ended June 30, 2002, the
Company recorded an unrealized gain of $0.1 million related to such
securities.
3. Inventories:
Inventories are stated at the lower of cost or market, after provisions for
excess and obsolete inventory salable at prices below cost. Costs are
determined using the first in, first out and weighted average cost methods
and are summarized as follows:
June 30, September 30,
2002 2001
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Raw materials and supplies $ 20,415 $ 18,430
Work in progress 23,433 19,975
Service parts 15,845 14,986
Finished goods 9,546 7,612
Demonstration inventory 7,449 9,325
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Total inventories, net $ 76,688 $ 70,328
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- 8 -
4. Net Income Per Common Share
Basic earnings per common share is computed by dividing net income by the
weighted average number of common shares outstanding during the period.
Diluted earnings per common share reflects the potential dilution from common
stock equivalents (stock options). The calculation of the weighted average
number of common shares outstanding for each period is as follows:
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------- ----------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------
Weighted average number of
shares for BASIC net income
per common share 11,551,800 11,542,700 11,551,800 11,542,700
Potential additional shares
due to outstanding dilutive
stock options 67,814 115,012 47,603 53,640
---------- ---------- ---------- ----------
Weighted average number of
shares for DILUTED net
income per common share 11,619,614 11,657,712 11,599,403 11,596,340
========== ========== ========== ==========
Excluded from the calculation of diluted EPS for the three months ended June,
30, 2002, and June 30, 2001, were 421,000 and 213,000 outstanding stock
options, respectively. These could potentially dilute future EPS
calculations but were not included in the current period because their effect
was antidilutive.
- 9 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q constitute forward-
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 (the "Reform Act"). Forward-looking statements include
all statements that do not relate solely to historical or current facts, and
can be identified by the use of words such as "may", "believe", "will",
"expect", "project", "anticipate", "estimate", "plan" or "continue". These
forward looking statements are based on the current plans and expectations of
our management and are subject to a number of uncertainties and risks that
could significantly affect our current plans and expectations, as well as
future results of operations and financial condition. In making these
forward-looking statements, we claim the protection of the safe-harbor for
forward-looking statements contained in the Reform Act. We do not assume any
obligation to update these forward-looking statements to reflect actual
results, changes in assumptions, or changes in other factors affecting such
forward-looking statements.
Overview
Rofin-Sinar Technologies Inc. (herein also referred to as "Rofin-Sinar", or
the "Company" or "we", "us" or "our") is a leader in the design, development,
engineering, manufacture and marketing of laser-based products used for
cutting, welding and marking a wide range of materials.
During the third quarter of fiscal years 2002 and 2001, respectively, we
realized approximately 53% and 51% of revenues from the sale and servicing of
laser products for macro applications and approximately 47% and 49% from the
sale and servicing of laser products for marking and micro-machining
applications.
Management believes that future growth in the Company's macro business will
become more difficult in the current market environment for investment in
capital goods. In the Company's marking and micro business management sees
some positive developments from the semiconductor and electronics market
which should lead to increased sales in the coming quarters. Our diode laser
products, which are sold primarily in our macro business, have experienced
quality issues that have affected the performance of certain units in the
field. As a result, during the periods reported in this quarterly report on
Form 10-Q, the Company has incurred additional costs that were higher than
anticipated, which had an adverse impact on our gross margin, and therefore
our profitability, in these periods. Management expects to achieve
improvements on these quality-related issues in its diode laser product line
during the next two quarters, and has established reserves for the associated
costs estimated to be incurred during such period. Management believes that
the Company's profitability will continue to be affected in the near term as
these issues are resolved.
- 10 -
Through our global manufacturing, distribution and service network, we are
providing a comprehensive range of laser sources and laser based system
solutions to three principal target markets: the machine tool, automotive and
semiconductor/electronics industries. We sell our products directly to end-
users, to original equipment manufacturers ("OEMs") (principally in the
machine tool industry) that integrate Rofin-Sinar's laser sources with other
system components, and to distributors. Many of our customers are among the
largest global participants in their respective industries.
At June 30, 2002, Rofin-Sinar had 1,164 employees compared to 1,132 employees
at June 30, 2001.
Results of Operations
For the periods indicated, the following table sets forth the percentage of
net sales represented by the respective line items in the Company's
consolidated statements of operations.
Three Months Nine Months
Ended June 30, Ended June 30,
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2002 2001 2002 2001
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Net sales 100% 100% 100% 100%
Cost of goods sold 68% 61% 65% 61%
Gross profit 32% 39% 35% 39%
Selling, general and
administrative expenses 20% 20% 21% 18%
Research and development expenses 6% 7% 6% 7%
Special charge -- 1% -- --
Goodwill amortization 2% 2% 2% 2%
Income from operations 4% 9% 6% 12%
Income before income taxes
and minority interest 5% 7% 5% 10%
Net income 2% 4% 2% 5%
Net Sales - Net sales of $55.6 million and $157.7 million represent an
increase of $1.5 million (3%) and a decrease of $8.5 million (5%) for the
three months and nine months ended June 31, 2002, as compared to the
corresponding periods of fiscal 2001. The decrease in the nine months ended
June 30, 2002 resulted from a net sales decrease of $18.9 million, or 14%, in
Europe/Asia partially offset by an increase of $10.4 million, or 31%, in the
United States, compared to the corresponding period in fiscal 2001.
Fluctuations in the U.S. dollar against foreign currencies, primarily against
the Euro, had a favorable effect on net sales of $2.9 million and $1.3
million for the three and nine month periods ended June 30, 2002. Net sales
of laser products for macro applications for the three-month period increased
by 7% to $29.5 million and for the nine-month period net sales increased by
11% to $86.9 million as compared to the corresponding periods of fiscal 2001.
This increase was primarily due to higher demand for the Company's lasers for
macro applications from the automotive and machine tool industries. Net
sales of lasers for marking and micro-machining applications decreased by 2%
to $26.0
- 11 -
million for the three months ended June 30, 2002 and by 19% to $70.8 million
for the nine months ended June 30, 2002, as compared to the corresponding
periods in fiscal 2001. This decrease can be attributed primarily to lower
demand for the Company's lasers for marking and micro applications from the
semiconductor, electronic and smart card industries.
Gross Profit - Our gross profit of $17.9 million and $55.9 million for the
three-months and nine-months ended June 30, 2002 represents decreases of $3.0
million (14%) and $9.1 million (14%) from the corresponding periods of fiscal
year 2001. As a percentage of sales compared to the corresponding three -
month and nine-month periods of fiscal year 2001, gross profit decreased from
39% to 32% and from 39% to 35%, respectively. The lower percentage margin
was primarily a result of unfavorable product mix, caused by lower laser
sales to the semiconductor and electronics industry, as well as the increased
material and warranty costs discussed above associated with our diode laser
products. In addition, gross profit was favorably affected by $0.5 million
for the three-month period ended June 30, 2002 and unfavorably affected by
$0.2 million for the nine-month period ended June 30, 2002 due to the
fluctuations of the U.S. dollar against foreign currencies, primarily against
the Euro.
Selling, General and Administrative Expenses - Selling, general and
administrative expenses of $11.1 million and $33.2 million increased $0.4
million (4%) and $2.7 million (9%) for the three-month and nine-month periods
ended June 30, 2002, compared to the corresponding periods of fiscal 2001
primarily as a result of investments in the sales force of the Rofin group,
increased costs in connection with the implementation of a new EDP system in
Germany and higher average legal expenses in connection with a pending patent
infringement case against the Company's subsidiaries Rofin-Baasel, Inc. and
Carl Baasel Lasertechnik GmbH & Co. KG, as described in the Company's annual
report on Form 10-K for the fiscal year ended September 30, 2001 and the
related antitrust action described in Part II, Item 1 of this quarterly
report. SG&A, a significant portion of which is incurred in foreign
currencies, was unfavorably affected by $0.6 million and $0.3 million for the
three-month and nine-month periods ended June 30, 2002 due to the
fluctuations of the U.S. dollar against foreign currencies, primarily the
Euro.
Research and Development - The Company spent net $3.7 million and $9.9
million on research and development during the three-month and nine-month
periods of the current fiscal year. This represents an increase of 5% and a
decrease of 11% for the three-month and nine-month periods ended June 30,
2002, respectively, compared to the corresponding periods of the prior year.
Gross research and development expenses for the three month period ended June
30, 2002 and 2001 were $3.8 million and $3.9 million, respectively, and were
reduced by $0.1 million and $0.4 million of government grants in the
respective periods. Gross research and development expenses for the nine
month period ended June 30, 2002 and 2001 were $10.5 million and $12.1
million, respectively and were reduced by $0.6 million and $0.9 million of
government grants in each respective period. R&D, a significant portion of
which is conducted in Europe, and therefore incurred in foreign currencies,
was unfavorably affected by $0.3 million and $0.2 million for the three-month
and nine-month periods in fiscal 2002, due to the fluctuations of the U.S.
dollar against foreign currencies, primarily the Euro.
- 12 -
Special Charge - During the three-month and nine-month periods ended June 30,
2002, no special charges were included compared to the corresponding periods
in fiscal 2001 during which $0.7 million of expenses were incurred in
connection with the secondary listing of the Company's shares of common stock
on the German Neuer Markt of the Frankfurt Stock Exchange.
Goodwill amortization - The Company recorded $0.9 million during the three
month periods of the current and the previous fiscal years and $2.8 million
and $2.7 million during the nine-month periods of the current and previous
fiscal years as goodwill amortization.
Other Expense (Income) - Net other income of $0.7 million for the three-month
period ended June 30, 2002 represents a change of $2.0 million compared to
net other expense of $1.3 million in the corresponding period of the prior
year. Net other expense of $1.4 million for the nine-month period ended June
30, 2002 represents a change of $1.3 million compared to net other expense of
$2.7 million in the corresponding prior year period. The fluctuations in
both the three and nine month periods are primarily attributed to unrealized
exchange gains resulting from certain intercompany indebtedness denominated
in currencies other than the borrowing companies functional currency.
Additionally, during the nine-month period ended June 30, 2002, a gain of
$0.5 million was recorded related to the sale of the medical laser business,
which did not exist in the corresponding prior year period.
Income Tax Expense - Income tax expense of $1.6 million and $5.4 million for
the three-month and nine-month periods ended June 30, 2002 represents
effective tax rates of 55% and 62%, respectively compared to the effective
tax rates of 33% and 46% for the corresponding periods in the prior fiscal
year. These increases in effective tax rates are due primarily to lower
taxable income and higher amounts of nondeductible goodwill amortization and
losses in certain countries where tax benefits cannot be used as offsets.
Net Income - As a result of the foregoing factors, the Company realized
consolidated net income of $1.3 million and $2.6 million for the three and
nine months ended June 30, 2002, which represents decreases of $1.1 million
and $6.0 million from the corresponding periods in fiscal 2001. For the
three-months ended June 30, 2002, both basic and diluted earnings per share
equaled $0.11 based upon 11.6 million common shares outstanding, as compared
to basic and diluted earnings per share of $0.21 for the same period in
fiscal 2001, based on 11.5 and 11.7 million common shares outstanding. For
the nine-month period ended June 30, 2002, both basic and diluted earnings
per share equaled $0.23 based upon 11.6 million common shares outstanding, as
compared to basic and diluted earnings per share of $0.74 for the same period
in fiscal 2001, based upon 11.5 and 11.6 million common shares outstanding,
respectively.
- 13 -
Liquidity and Capital Resources
The Company's primary sources of liquidity at June 30, 2002 were cash and
cash equivalents of $20.5 million, an annually renewable $25.0 million line
of credit with Deutsche Bank AG, and several other lines of credit to support
foreign subsidiaries in their local currencies in an aggregate amount of
$29.4 million (translated at the applicable exchange rate at June 30, 2002).
At June 30, 2002, borrowings of $15.0 million were outstanding under the
Deutsche Bank facility and an aggregate of $11.1 million was outstanding
under such other lines of credit, leaving $28.3 million of unused and
available borrowing capacity under our Deutsche Bank facility and lines of
credit.
Additionally, the Company has outstanding long-term debt with a German bank,
which was used to finance part of the acquisition, and to refinance the
existing debt, of Baasel Lasertech. At June 30, 2002, $39.5 million was
outstanding under this credit agreement.
Cash and cash equivalents increased by $7.0 million during the nine-months
ended June 30, 2002. Approximately $13.4 million in cash and cash
equivalents were provided by operating activities, primarily as the result of
net income before depreciation and amortization and a decrease in trade
receivables.
Uses of cash from investing activities totaled $2.3 million for the nine-
months ended June 30, 2002 and related primarily to the acquisition of
various additions to property and equipment in connection with the expansion
of the Company's operations ($3.4 million) partially offset by the cash
proceeds of the sale of the medical laser business ($0.9 million).
Net cash used in financing activities totaled $4.5 million and was primarily
related to current period repayments of bank debt.
Management believes that the cash flow from operations, along with existing
cash and cash equivalents and availability under our credit facilities and
lines of credit, will provide adequate resources to meet our capital
requirements and operational needs for the foreseeable future.
Currency Exchange Rate Fluctuations
Although we report our consolidated financial statements in U.S. dollars,
approximately 67% of our sales are denominated in other currencies, primarily
the Euro, as well as British pounds, Singapore dollars, and Japanese yen. Net
sales and costs and related assets and liabilities are generally denominated
in the functional currencies of the operations, thereby serving to reduce our
exposure to exchange gains and losses.
Exchange differences upon translation from each operation's functional
currency to U.S. dollars are accumulated as a separate component of equity.
The currency translation adjustment component of stockholders' equity had the
effect of decreasing total equity by $5.5 million at June 30, 2002 as
compared to $10.6 million at September 30, 2001.
- 14 -
The fluctuation of the Euro and the other relevant functional currencies
against the U.S. dollar has had the effect of increasing and decreasing (as
applicable) reported net sales as well as cost of goods sold and gross margin
and selling, general and administrative expenses, denominated in such foreign
currencies when translated into U.S. dollars as compared to prior periods.
Critical Accounting Policies
The preparation of these financial statements are made in accordance with
accounting principles generally accepted in the United States of America
(GAAP). This requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
Such estimates include allowances for doubtful accounts, inventory valuation,
and warranty reserves. Actual results could differ from those estimates.
The Company believes the following represent its critical accounting
policies:
Allowance for Doubtful Accounts
The Company records allowances for customer accounts receivable
balances which are determined to be uncollectible due to the customer's
inability to make required payments. Such determination is made based
on an assessment of the customer's financial condition and liquidity.
If the financial condition of the Company's customers were to
deteriorate, additional allowances may be required.
Inventory Valuation
The Company writes down inventory for estimated obsolescence or
unmarketable inventory equal to the difference between the cost of
inventory and the estimated market value based upon assumptions about
future demand, market conditions, and the salability of the existing
inventory. If actual market conditions are less favorable than those
projected by management, or the salability of inventory is impacted due
to unexpected obsolete or damaged inventory, additional inventory write-
downs may be required.
Warranty Reserves
The Company provides for the estimated costs of product warranties
when revenue is recognized. Our estimate of costs to fulfill our
warranty obligations is based on historical experience and expectation
of future conditions. To the extent we experience increased warranty
claim activity or increased costs associated with servicing those
claims, revisions to the estimated warranty liability would be required.
- 15 -
Recently Issued Accounting Standards
In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement No. 141, "Business Combinations", which requires the use of the
purchase method of accounting for business combinations after June 30, 2001.
It defines the methodology to be used in measuring goodwill and other
intangible assets and defines certain disclosure requirements for business
combinations. The Company has historically accounted for its acquisitions
under the purchase method.
On the same date, the FASB also issued Statement No. 142, "Goodwill and Other
Intangible Assets". Under Statement No. 142, goodwill and intangible assets
having indefinite useful lives, will no longer be subject to amortization,
but will be subject to annual impairment tests. Intangible assets that have
finite useful lives will continue to be amortized over their useful lives.
Additionally, intangible assets that are not deemed to have an indefinite
life will continue to be amortized over their useful lives.
The Company is required to adopt Statement 142 on October 1, 2002. During
fiscal 2002, the Company will determine the impact of this new standard on
its financial position and results of operations.
Ownership of Common Stock By Directors
The following table sets forth information as of June 30, 2002, with respect
to beneficial ownership of the Company's Common Stock and exercisable options
by each director.
Number of Total Number of
Shares of Number of Exercisable
Common Stock Stock Options Stock Options
Beneficially Owned at Owned at
Name Owned June 30, 2002 June 30, 2002
- ---------------- -------------- ----------------- -----------------
Peter Wirth 3,300 202,000 108,000
Gunther Braun 6,000 136,000 66,000
Carl F. Baasel 42,000 25,000 2,000
William R. Hoover (1) 39,000 -- --
Ralph E. Reins (1) 14,000 -- --
Gary K. Willis (1) 12,500 -- --
(1) Outside, non-executive directors
Item 3. Quantitative and Qualitative Disclosures about Market Risk
For the period ended June 30, 2002, we did not experience any material change
in market risk exposures affecting the quantitative and qualitative
disclosures as presented in our Annual Report on Form 10-K for the year ended
September 30, 2001.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For the period ended June 30, 2002, we did not experience
any material developments in the legal proceedings as disclosed
under the heading "Intellectual Property" in our Annual Report on
Form 10-K for the year ended September 30, 2001, except as described
below.
In respect of the pending patent infringement actions in the U.S.
federal district court in Detroit, Michigan against Rofin-Baasel,
Inc. ("Rofin-Baasel") and Carl Baasel Lasertechnik GmbH & Co.
KG ("Baasel Lasertech") alleging infringement of a U.S. patent
expiring in 2004 concerning a method of marking semiconductor
material, Rofin-Baasel and Baasel Lasertech have filed a motion for
summary judgment in the actions, which, if granted, may be
dispositive of this case. These actions are expected to go to
trial in the first quarter of fiscal 2003. In addition, in May
2002, Rofin-Baasel and Baasel Lasertech filed an action in the U.S.
federal district court in Boston, Massachusetts against the party
that is the plaintiff in the patent infringement case for antitrust
violations concerning its enforcement of the patent. In the
antitrust case, Rofin-Baasel and Baasel Lasertech seek: (i) a ruling
that such party's acquisition of the patent was unlawful, that the
patent is unenforceable, and that such party's enforcement of the
patent is misuse; (ii) an injunction against enforcement of the
patent; (iii) damages in the amount of the attorney fees and
expenses incurred in defending the patent infringement case,
trebled; and (iv) attorney fees and expenses incurred in the
antitrust case. On July 25, 2002, a hearing was held on the
defendant's motion to dismiss the antitrust case, which has not yet
been decided.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
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Item 6. Exhibits and Reports on Form 8-K
(a) Reports on Form 8-K
The Registrant did not file any Current Reports on Form 8-K
during the quarter ended June 30, 2002.
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.
Rofin-Sinar Technologies Inc.
---------------------------------
(Registrant)
Date: August 14, 2002 /S/ Gunther Braun
---------------------------------
Gunther Braun
Executive Vice President,
Finance and Administration, and
Chief Financial Officer
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