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Minnesota
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41-1472057
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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5900 Golden Hills Drive
MINNEAPOLIS, MINNESOTA
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55416
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(Address of principal executive offices)
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(Zip Code)
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(763) 542-5000
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(Registrant’s telephone number, including area code)
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Large accelerated filer
o
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Accelerated filer
þ
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Non-accelerated filer
o
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Smaller Reporting Company
o
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PART I
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ITEM 1.
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DESCRIPTION OF BUSINESS
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3
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ITEM 1A.
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RISK FACTORS
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15
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ITEM 1B.
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UNRESOLVED STAFF COMMENTS
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21
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ITEM 2.
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PROPERTIES
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21
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ITEM 3.
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LEGAL PROCEEDINGS
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21
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ITEM 4.
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MINE SAFETY DISCLOSURES
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21
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PART II
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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22
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ITEM 6.
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SELECTED FINANCIAL DATA (Not Applicable)
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22
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ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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23
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ITEM 7A.
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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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30
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ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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31
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ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
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60
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ITEM 9A.
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CONTROLS AND PROCEDURES
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60
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ITEM 9B.
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OTHER INFORMATION
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60
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PART III
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ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE MATTERS
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61
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ITEM 11.
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EXECUTIVE COMPENSATION
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61
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ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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61
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ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
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61
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ITEM 14.
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PRINCIPAL ACCOUNTANT FEES AND SERVICES
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61
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PART IV
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ITEM 15.
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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
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62
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SIGNATURES
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64
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December 31,
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2016
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2015
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Asia
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52
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%
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39
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%
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Europe
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26
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%
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29
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%
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Other export sales (1)
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3
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%
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4
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%
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•
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Development of new high precision 3D sensors based on our proprietary MRS technology. MRS is a high speed metrology grade 3D measurement technology using commercially available components and proprietary algorithms that solves many of the reflecting issues impacting all triangulation sensor technologies.
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•
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We have significantly advanced our MRS-enabled 3D sensor technology as part of a research initiative aimed at applying our 3D MRS technology to front-end semiconductor inspection. Features of 50 microns, including devices with mirror-like finishes, are now being measured in our research lab, and progress is being made toward measuring sub-50 micron features. This is an important milestone in our effort to make MRS-enabled 3D sensor technology applicable to front-end semiconductor inspection in the next two to four years.
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•
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Continued development of our first 3D AOI system, the SQ3000. This system is designed to expand our presence in markets requiring high precision measurement and inspection. Identifying defects on circuit boards has become highly challenging and critical due to smaller electronics packaging and increasing component density, combined with smaller and more complex solder joints. We believe the combination of our MRS technology and sophisticated 3D fusing algorithms offers microscopic image quality at production speeds. Due to the competitive advantages offered by our MRS technology, we believe the future sales potential of the SQ3000 is significant.
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•
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Continued development of our system for post-singulation inspection of memory modules, the MX600. This system is based on our 2D SIM sensor technology and Ai
2
image recognition software. The inspection requirements for this system are similar to AOI requirements for circuit board production. In 2016, we recognized $5.7 million of revenue from sales of this product to one of the world’s top four memory manufacturers. We believe the
MX600 system offers
superior speed, inspection performance and a low level of false calls.
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•
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We have incorporated our MRS technology into a new 3D scanning system, CyberGage®360, which we believe will serve a wide range of inspection applications in the general purpose 3D metrology market. We sold our first two CyberGage360 units in the fourth quarter of 2016. Most customers are taking longer than originally anticipated to evaluate the functionality and benefits of CyberGage360 before adopting it for their engineering and quality assurance programs. After starting slowly in the first half of 2017, we anticipate steadily increasing sales of CyberGage360 by the end of 2017. We believe that the unique performance characteristics of our MRS technology, which inhibit reflections and enable very accurate measurements at fast speeds, combined with ease of use, will give CyberGage360 a competitive advantage in the marketplace for 3D scanning systems.
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Continued development of our WaferSense/ReticleSense line of products.
We recently announced new offerings for advanced particle measurement and a line of multi-purpose sensors
that measure leveling, vibration and humidity in an all-in-one wireless real-time device. Humidity measurements are becoming more important as the use of Fin Field Effect Transistor technology increases among semiconductor manufacturers.
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We have recently introduced or are in the process of introducing a number of products based upon our new 3D MRS technology and the failure of this technology to perform up to our expectations would materially adversely affect our anticipated operating results.
We believe our MRS technology is unique in the marketplace based upon its ability to inhibit reflections and offer microscopic quality images at production line speeds, and we have high expectations about the prospect for longer-term sales of products based on this technology. We have incorporated the MRS technology into various new products that we have recently introduced, including our 3D AOI offering, the SQ3000, the CyberGage®360 3D scanner and new products for OEM customers, including KLA-Tencor, Nordson-YESTECH and others. We also expect to use this technology in other new products, including next generation inspection systems and in products for new applications. If the performance of the MRS technology does not meet our expectations, if the products we have introduced or are about to introduce based upon the MRS technology do not operate up to specifications, if the market otherwise does not find this technology attractive, or if we are unable to efficiently identify new customers and new applications for this technology given our current sales channels, our operating results for 2017, and our expectations for longer term growth in revenue, would be materially adversely affected.
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Our business has been and will continue to be significantly impacted by the global economy and uncertainty in the outlook for the global economy makes it more likely that our actual results will differ materially from expectations
. In 2009, the world economy experienced the worst economic recession since the great depression of the 1930’s. The severe economic conditions were brought about by extreme disruptions in global credit and financial markets, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, and uncertainty about economic stability. These economic uncertainties affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. Further political instability or uncertainty could cause new tightening of credit in financial markets, may lead consumers and businesses to postpone spending, and may cause our customers to cancel, decrease or delay their existing and future orders with us. In addition, financial difficulties experienced by our suppliers, distributors or customers could result in product delays, increased accounts receivable defaults and inventory challenges. The OEMs and semiconductor manufacturers that purchase our sensors and the circuit board manufacturers and others that purchase our SMT inspection system products are largely dependent on continued demand for consumer and commercial electronics, including smart phones, tablets and computers. Demand for electronics is a function of the health of the economies in the United States and around the world. Sales of our 3D scanning solutions and services are also dependent upon the health of the global economy. Our results would be adversely affected in the future, if these economies were to experience recessions.
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World events beyond our control may affect our operations.
Our operations and markets could be negatively affected by world events that effect economies and commerce in the specific countries, such as China, Singapore and Japan, in which we do business. Natural disasters, such as the tsunami and earthquake that hit Japan and the floods that hit Thailand in 2011, have affected travel patterns and accessibility in these countries in the past and other natural occurrences, such as a bird flu outbreak, could affect the business we do in these countries in the future. Terrorist activity or other armed conflicts that could occur in countries in which we do business, labor disputes that impact complex international shipping arrangements, or other unanticipated actions by local populations could affect our ability to do business in specific geographies. Many of the countries in which we do business can be affected by economic forces that are different from the forces that affect the United States and change the amount of business we conduct.
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Our operating results have varied, and will likely continue to vary significantly, from quarter to quarter.
Our quarterly operating results have varied in the past and will likely continue to vary significantly from quarter to quarter. Some of the factors that may influence our operating results include the following: changes in customer demand for our sensors, inspection systems and 3D scanning solutions, which is influenced by economic conditions in these industries and the overall health of the global economy; demand for products that use circuit boards and semiconductors; market acceptance of our products and those developed by our customers; competition; seasonal variations in customer demand; the timing, cancellation or delay of customer orders, shipments and acceptances; and product development costs, including increased research, development, engineering and marketing expenses associated with our introduction of new products and product enhancements.
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The markets for capital equipment in the electronics assembly and semiconductor industries in which we operate are cyclical and we cannot predict with precision when market downturns will occur.
We operate in cyclical markets–the electronics assembly and semiconductor capital equipment markets–that periodically adjusts independent of global economic conditions. We have been unable to predict with accuracy the timing or magnitude of periodic downturns in this market. These downturns, particularly the severe downturns in electronics production markets from 2001 through 2003, and from 2008 through 2009, severely affected our operations and generated several years of unprofitable operations. Ultimately, we have difficulty determining the duration or severity of any market downturns, the strength of any subsequent recoveries, and the long-term impact that the market may have on our business.
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Our operating results and financial position could be negatively affected by acquisitions.
We may be unable to successfully integrate businesses that we may choose to acquire in the future in a cost-effective and non-disruptive manner. Business acquisitions present a number of risks, including:
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diversion of management’s attention from daily operational matters, current products and customers;
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lack of synergy, or the inability to realize expected synergies;
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failure to commercialize or meet the expected performance of the new technology or business;
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failure to retain key employees and customer or supplier relationships;
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lower-than-expected market opportunities or market acceptance of any new products; and
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unexpected reduction of sales of existing products by new products.
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Sales of SMT and high precision 3D sensors to four OEM customers constituted 26% of our revenue in
2016
, and the loss of any of these customers could have a materially adverse impact on our results of operations.
Although we anticipate that our future revenue and operations will be less dependent on any particular customer, given recent success with new products based on our high precision 3D MRS sensor technology, and the anticipated future revenue potential of our new CyberGage®360 3D scanning system, if the order rates from these four OEM customers are negatively impacted by global economic events beyond their control or competitive factors, if they choose sensors manufactured by other suppliers, or otherwise terminate their relationships with us, our results of operations could be adversely affected.
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We generate over 80% of our revenue from export sales that are subject to risks of international operations
. Our export sales are subject to many of the risks of international operations, including:
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currency controls and fluctuations in currency exchange rates;
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changes in local market business requirements and increased cost and development time required to modify and translate our products for local markets;
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inability to recruit qualified personnel in a specific country or region;
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difficulty in establishing and maintaining relationships with local vendors;
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differing foreign technical standards;
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differing regulatory requirements;
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export restrictions and controls, tariffs and other trade barriers;
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reduced protection for intellectual property rights;
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•
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changes in political and economic conditions;
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potentially adverse tax assessments; and
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terrorism, disease, or other events that may affect local economies and access.
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Our development and assembly operations in Singapore, and our sales operations in Asia, are subject to unique risks because of the remote nature of the operations.
Our Singapore development and manufacturing operations, and our Asian sales operations, present a number of risks related to the retention of personnel, management of product development and operations, management and access to customer and distributor interactions, control over administrative and business processes, regulatory and legal issues we may encounter and other matters relating to foreign operations. We cannot be certain that we will be able to retain software development and management personnel in Singapore, and sales personnel in other territories, who are reliable and who will accept employment terms that are attractive. Although most components for our system products are available in Singapore, some of the critical hardware components used in our system products necessary for manufacture in Singapore may be difficult to import at satisfactory prices. Our financial performance, ability to serve our customers and ability to manufacture and sell products could be negatively impacted if we are unable to retain our Asian based employees, if it costs more than expected to retain these employees or hire other experienced employees in a timely manner, if we are unable to manage these employees appropriately, or if we are unable to locate suitable sources of supply for our products manufactured in Asia.
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We price our products in U.S. dollars, and as a result, our products may have difficulty competing in periods of increasing strength of the dollar.
Most of our international export sales are negotiated, invoiced and paid in U.S. dollars, and accordingly, currency fluctuations do not affect our revenue per unit. However, significant fluctuations in the value of the U.S. dollar relative to other currencies could have an impact on the price competitiveness of our products relative to foreign competitors, which could impact the willingness of customers to purchase our products and have an impact on our results of operations.
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Because of our significant operations in Singapore, our costs are negatively impacted when the U.S. dollar weakens relative to the Singapore dollar.
A significant portion of our cost of revenues, research and development and sales and marketing costs are denominated in the Singapore dollar. In addition, other sales and marketing costs are denominated in British Pounds Sterling and the Chinese Yuan, resulting from our sales offices located in the UK and China. Our costs will increase, and our results will be negatively impacted in future periods, if the U.S. dollar weakens relative to the currencies of these countries. The ultimate impact of any fluctuation in the relationship between the U.S. dollar and the currencies of other geographies is dependent on the level of cash flows denominated in foreign currencies in future periods.
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Our products could become obsolete.
Our current products, as well as the products we have under development, are designed to operate with the technology that we believe currently exists or may exist for electronic components, printed circuit boards, memory modules and semiconductor manufacturing markets, and other adjacent markets, including general purpose metrology. The products we develop to meet customer needs and requirements are subject to rapid technological change, and because it takes considerable time to develop new products, we must anticipate industry trends, as well as technological developments, in order to effectively compete. Further, because we do not have unlimited development resources, we might choose to forgo the pursuit of what becomes a leading technology or market and devote our resources to technologies and markets that are less successful. If we incorrectly anticipate technology developments or market trends, or have inadequate resources to develop our products to deal with changes in technology and markets, our products could become obsolete.
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Advances in the SMT electronics assembly alignment sensor market have eliminated some of the advantages of our sensors
. Our SMT electronic assembly alignment sensor products compete with products made by larger machine vision companies and other optical sensor companies, and with solutions internally developed by our customers. Advances in machine vision technology in recent years have eliminated some, but not all, of the advantages that have differentiated our products from some of these competitors, and advances in other technologies could eliminate other advantages, thereby making our products less attractive to customers.
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The market for most surface mount capital equipment has become more mature and price competitive, negatively impacting our margins.
The electronics capital equipment market for surface mount technologies is becoming more mature, resulting in increased price pressure on suppliers of equipment. Consequently, our SMT electronic assembly inspection systems and alignment sensor products have become subject to increased levels of price competition and competition from other suppliers and technologies, including lower cost Asian based suppliers.
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Because of the high cost of changing equipment, customers in our markets are sometimes resistant to purchasing our products even if they are superior
. We believe that, because of the high cost of installation and integration of new inspection equipment into production lines, once an SMT customer has selected a vendor’s capital equipment, the customer generally relies upon that capital equipment and, to the extent possible, subsequent generations of the same vendor’s equipment. Accordingly, unless our systems offer performance or cost advantages that outweigh the expense of installing and integrating new systems, it may be difficult for us to achieve significant sales to a customer that currently uses a competitor’s equipment.
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Our ability to compete in the markets for SMT inspection systems and 3D scanners is dependent upon the sales skills of our channel of independent sales representatives, value added resellers and distributors.
Our ability to successfully compete in the market for SMT inspection systems and 3D scanners is dependent upon the ability of our channel partners to sell our products. To the extent our competitors have relationships with stronger channel partners, it may be difficult for us to achieve significant sales, even if our products are technologically superior.
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The future success of CyberGage®360 is dependent on our ability to recruit new capable channel partners.
The current size and capability of the sale channels for our 3D scanner products is limited. In order to generate significant CyberGage360 sales in the future, we need to greatly expand the capability of our sales channels by recruiting new, high quality independent sales representatives, value added resellers and distributors for CyberGage360. If we are unable to successfully improve the capability of our sales channels for CyberGage360, our future sales of this product will be negatively impacted.
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Competitors in Asia may be able to compete favorably with us based on lower production and employee costs, and in some cases, governmental support
. We compete with large multinational companies when selling our inspection system products, many of which are able to take advantage of greater financial resources and larger sales distribution networks. We also compete with new Asian based suppliers, many of which may have lower overall production and employee costs and are willing to offer their products at lower selling prices to customers. Further, we believe some competitors receive government sponsored research and manufacturing assistance that can cause their relative cost of development of new products to be lower. These competitors may also be under less market pressure to forgo the short-term negative financial impact of concentrated investment in research and development.
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We are exposed to credit risk through sales to our OEM customers and distributors of our SMT inspection systems and 3D scanner products.
We sell our products through key OEM customers, and usually have significant credit exposure with respect to these customers. In addition, we sell our SMT inspection system and 3D scanner products through a network of international distributors. These distributors tend to be small and have limited financial resources and access to capital. Although these distributors do not hold our products in inventory for re-sale, we are exposed to credit risk and would incur losses if they are unable to pay for the products they have purchased from us.
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We are dependent upon outside suppliers for components of our products, and delays in or unavailability of those components would adversely affect our results.
We use outside contractors to manufacture the components used in many of our products and some of the components we order require significant lead times that could affect our ability to sell our products if the components are not available. In addition, if these components do not meet stringent quality requirements or become obsolete, there could be delays in the availability of our products, and we could be required to make significant investments in designing replacement components.
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Breaches of our network security could expose us to losses.
We manage and store on our network systems various proprietary information and sensitive or confidential data relating to our operations. There has been an increasing incidence of unauthorized access to the computer networks of various technology companies, and we are not immune to attempted unauthorized access. Computer programmers and hackers may be able to gain unauthorized access to our network system and steal proprietary information, compromise confidential information, create system disruptions, or cause shutdowns. These parties may also be able to develop and deploy viruses, worms, and other malicious software programs that disrupt our operations and create security vulnerabilities. Attacks on our network systems could result in significant losses, compromise our competitive advantages and damage our reputation with customers.
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Our efforts to protect our intellectual property may be less effective in certain foreign countries, where intellectual property rights are not as well protected as in the United States.
The laws of some foreign countries do not protect our proprietary rights to as great an extent as do the laws of the U.S., and many U.S. companies have encountered substantial problems in protecting their proprietary rights against infringement abroad. Consequently, there is a risk that we may be unable to adequately protect our proprietary rights in certain foreign countries. If this occurs, it would be easier for our competitors to develop and sell competing products in these countries.
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We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage.
Our future success and competitive position depend in part upon our ability to obtain and maintain proprietary technology for our principal product families, and we rely, in part, on patent and trade secret law and confidentiality agreements to protect that technology. If we fail to adequately protect our intellectual property, our competitors may be able to duplicate and enhance the products we have developed. We own or have licensed a number of patents, and have filed applications for additional patents. Any of our pending patent applications may be rejected, and we may be unable to develop additional proprietary technology that is patentable in the future. In addition, the patents that we do own or that have been issued or licensed to us may not provide us with competitive advantages and may be challenged by third parties. Further, third parties may also design around these patents. In addition to patent protection, we rely upon trade secret protection for our confidential and proprietary information and technology. We routinely enter into confidentiality agreements with our employees and other third parties. Even though these agreements are in place, there can be no assurance that trade secrets and proprietary information will not be disclosed, that others will not independently develop technology substantially equivalent to our proprietary technology or otherwise gain access to our trade secrets, or that we can fully protect our trade secrets and proprietary information. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm our competitive position and cause our sales and operating results to decline as a result of increased competition. Costly and time-consuming litigation might be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection might adversely affect our ability to continue our research or bring products to market.
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Protection of our intellectual property rights, or the efforts of third parties to enforce their own intellectual property rights against us, may result in costly and time-consuming litigation, substantial damages, lost product sales and/or the loss of important intellectual property rights.
We may be required to initiate litigation in order to enforce any patents issued to or licensed by us, or to determine the scope or validity of a third party’s patent or other proprietary rights. Any litigation, regardless of outcome, could be expensive and time consuming, and could subject us to significant liabilities or require us to re-engineer our products or obtain expensive licenses from third parties. There can be no assurance that any patents issued to or licensed by us will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide us with a competitive advantage. In addition, our commercial success depends in part on our ability to avoid infringing or misappropriating patents or other proprietary rights owned by third parties. From time to time, we may receive communications from third parties asserting that our products infringe, or may infringe, the proprietary rights of these third parties. These claims of infringement may lead to protracted and costly litigation, which could require us to pay substantial damages or have the sale of our products stopped by an injunction. Infringement claims could also cause product delays or require us to redesign our products and these delays could result in the loss of substantial revenues. We may also be required to obtain a license from the third party or cease activities utilizing the third party’s proprietary rights. We may not be able to enter into such a license or such a license may not be available on commercially reasonable terms. Accordingly, the loss of important intellectual property rights could hinder our ability to sell our products, or make the sale of these products more expensive.
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•
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We have significant deferred tax assets recorded on our balance sheet based on the income tax laws and income tax rates currently in effect. Our ability to utilize these deferred tax assets is dependent on our ability to generate sufficient profits in future periods.
The deferred tax assets recorded on our balance sheet are based on the income tax laws and income tax rates currently in effect. A change in income tax laws or a reduction in income tax rates in the future could require us to write-down the value of our deferred tax assets. The amount of any write-down could be large and may result in a significant charge against future earnings. Our ability to utilize our deferred tax assets and realize their value is dependent upon our ability to generate sufficient levels of profitability and taxable income in future periods. If we do not generate sufficient profits and taxable income in future periods, we most likely would be required to record a valuation allowance against our deferred tax assets, resulting in a significant charge against earnings.
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Our stock price is highly volatile.
The trading price of our common stock fluctuates significantly in response to, among other risks, the risks described elsewhere in this Annual Report on Form 10-K, as well as:
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conditions or trends in the industry in which we operate;
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quarterly variations in our operating results;
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fluctuations in the stock market in general and market prices for the stock of companies that provide sensing technology solutions in particular;
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changes in financial estimates by us or securities analysts and recommendations by securities analysts;
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changes in capital structure, including issuance of additional debt or equity to the public; and
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•
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transactions in our common stock by major investors and certain analyst reports, news and speculation.
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•
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The absence of significant market liquidity in our common stock could impact the ability of our shareholders to purchase and sell larger blocks, the attractiveness of our stock to institutional shareholders, and the market value of our common stock.
There were 6,901,887 shares of our common stock outstanding as of December 31, 2016. Although our common stock is traded in the NASDAQ Global Market, in part because of the number of shares we have outstanding and available for trading, the daily trading volume in our stock is low, averaging less than 150,000 shares per day. Shareholders wishing to purchase or sell larger blocks of stock may not be able to do so quickly, and disposal by any shareholder of a significant block of stock could adversely affect the sale price in the marketplace. Further, institutional investors often have policies against investment in stock that is illiquid, and many institutional investors may elect not to purchase or hold our stock because of the inability to dispose of it. Lack of institutional interest in our common stock can negatively impact its market price and liquidity.
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We are dependent on our President and Chief Executive Officer, Dr. Subodh Kulkarni, for new product innovation and much of the sales, marketing and business development activities related to our markets, particularly our MRS sensors.
Dr. Kulkarni performs a critical role at CyberOptics with respect to product strategy and new product development and innovation. Also, he has been instrumental in development and expansion of our relationships with key OEM customers, including KLA-Tencor and Nordson-YESTECH. In addition, Dr. Kulkarni has significant responsibility for identifying potential new applications and developing new customers for our MRS sensor technology. If Dr. Kulkarni's employment with CyberOptics were to end for any reason, our ability to develop innovative products and achieve sustained long term revenue growth would be negatively impacted in a significant way.
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2016
|
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2015
|
||||||||||||
Quarter
|
|
High
|
|
Low
|
|
High
|
|
Low
|
||||||||
First
|
|
$
|
17.99
|
|
|
$
|
8.12
|
|
|
$
|
11.75
|
|
|
$
|
9.01
|
|
Second
|
|
$
|
19.45
|
|
|
$
|
13.28
|
|
|
$
|
11.24
|
|
|
$
|
9.77
|
|
Third
|
|
$
|
26.40
|
|
|
$
|
16.41
|
|
|
$
|
10.46
|
|
|
$
|
4.80
|
|
Fourth
|
|
$
|
40.69
|
|
|
$
|
23.50
|
|
|
$
|
8.48
|
|
|
$
|
5.86
|
|
(In thousands)
|
|
2016
|
|
2015
|
|
2014
|
||||||
SMT and High Precision 3D OEM Sensors
|
|
$
|
18,797
|
|
|
$
|
13,022
|
|
|
$
|
15,493
|
|
Semiconductor Sensors
|
|
10,061
|
|
|
7,677
|
|
|
7,595
|
|
|||
SMT Inspection Systems
|
|
28,680
|
|
|
13,578
|
|
|
18,089
|
|
|||
3D Scanning Solutions and Services
|
|
8,702
|
|
6,853
|
|
5,306
|
|
|||||
Total
|
|
$
|
66,240
|
|
|
$
|
41,130
|
|
|
$
|
46,483
|
|
•
|
Significant under-performance relative to expected historical or projected future operating results.
|
•
|
Significant changes in the manner of our use of the acquired assets or the strategy for our overall business.
|
•
|
Significant negative industry or economic trends.
|
•
|
Significant decline in our stock price for a sustained period, and the size of our market capitalization relative to our net book value.
|
•
|
For intangible and long-lived assets, if the carrying value exceeds the un-discounted cash flows from such asset.
|
•
|
For goodwill, if the carrying value of our net assets (net book value) exceeds fair value.
|
|
|
December 31,
|
|
December 31,
|
||||
(In thousands, except share information)
|
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
|
|
|
||
Cash and cash equivalents
|
|
$
|
10,640
|
|
|
$
|
4,274
|
|
Marketable securities
|
|
6,493
|
|
|
5,249
|
|
||
Accounts receivable, less allowance for doubtful accounts of $547 at December 31, 2016 and $521 at December 31, 2015
|
|
10,895
|
|
|
8,150
|
|
||
Inventories
|
|
11,531
|
|
|
13,265
|
|
||
Other current assets
|
|
1,535
|
|
|
1,190
|
|
||
Total current assets
|
|
41,094
|
|
|
32,128
|
|
||
|
|
|
|
|
||||
Marketable securities, long-term
|
|
8,728
|
|
|
8,084
|
|
||
Equipment and leasehold improvements, net
|
|
2,438
|
|
|
2,368
|
|
||
Intangibles, net
|
|
438
|
|
|
549
|
|
||
Goodwill
|
|
1,366
|
|
|
1,366
|
|
||
Other assets
|
|
193
|
|
|
186
|
|
||
Deferred tax assets
|
|
5,323
|
|
|
58
|
|
||
Total assets
|
|
$
|
59,580
|
|
|
$
|
44,739
|
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
||
Accounts payable
|
|
$
|
6,217
|
|
|
$
|
5,778
|
|
Advance customer payments
|
|
328
|
|
|
481
|
|
||
Accrued expenses
|
|
3,756
|
|
|
1,959
|
|
||
Total current liabilities
|
|
10,301
|
|
|
8,218
|
|
||
|
|
|
|
|
||||
Other liabilities
|
|
250
|
|
|
268
|
|
||
Deferred tax liability
|
|
—
|
|
|
69
|
|
||
Reserve for income taxes
|
|
131
|
|
|
126
|
|
||
Total liabilities
|
|
10,682
|
|
|
8,681
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
|
||
Preferred stock, no par value, 5,000,000 shares authorized, none outstanding
|
|
—
|
|
|
—
|
|
||
Common stock, no par value, 25,000,000 shares authorized, 6,901,887 shares issued and outstanding at December 31, 2016 and 6,771,668 shares issued and outstanding at December 31, 2015
|
|
32,801
|
|
|
31,292
|
|
||
Accumulated other comprehensive loss
|
|
(1,940
|
)
|
|
(1,709
|
)
|
||
Retained earnings
|
|
18,037
|
|
|
6,475
|
|
||
Total stockholders’ equity
|
|
48,898
|
|
|
36,058
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
59,580
|
|
|
$
|
44,739
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands, except per share amounts)
|
|
2016
|
|
2015
|
||||
Revenues
|
|
$
|
66,240
|
|
|
$
|
41,130
|
|
Cost of revenues
|
|
37,185
|
|
|
22,989
|
|
||
|
|
|
|
|
||||
Gross margin
|
|
29,055
|
|
|
18,141
|
|
||
|
|
|
|
|
||||
Research and development expenses
|
|
8,040
|
|
|
7,602
|
|
||
Selling, general and administrative expenses
|
|
14,796
|
|
|
12,635
|
|
||
Amortization of intangibles
|
|
66
|
|
|
67
|
|
||
|
|
|
|
|
||||
Income (loss) from operations
|
|
6,153
|
|
|
(2,163
|
)
|
||
|
|
|
|
|
||||
Interest income and other
|
|
238
|
|
|
102
|
|
||
|
|
|
|
|
||||
Income (loss) before income taxes
|
|
6,391
|
|
|
(2,061
|
)
|
||
|
|
|
|
|
||||
Income tax provision (benefit)
|
|
(5,171
|
)
|
|
28
|
|
||
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
11,562
|
|
|
$
|
(2,089
|
)
|
|
|
|
|
|
||||
Net income (loss) per share – Basic
|
|
$
|
1.69
|
|
|
$
|
(0.31
|
)
|
Net income (loss) per share – Diluted
|
|
$
|
1.64
|
|
|
$
|
(0.31
|
)
|
|
|
|
|
|
||||
Weighted average shares outstanding – Basic
|
|
6,832
|
|
|
6,706
|
|
||
Weighted average shares outstanding – Diluted
|
|
7,049
|
|
|
6,706
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Net income (loss)
|
|
$
|
11,562
|
|
|
$
|
(2,089
|
)
|
|
|
|
|
|
||||
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
|
||
Foreign currency translation adjustments
|
|
(383
|
)
|
|
(625
|
)
|
||
|
|
|
|
|
||||
Unrealized losses on available-for-sale securities:
|
|
|
|
|
|
|
||
Unrealized losses
|
|
(8
|
)
|
|
(78
|
)
|
||
Total unrealized losses on available-for-sales securities
|
|
(8
|
)
|
|
(78
|
)
|
||
|
|
|
|
|
||||
Unrealized gains (losses) on foreign exchange forward contracts:
|
|
|
|
|
||||
Unrealized gains (losses)
|
|
53
|
|
|
(298
|
)
|
||
Reclassification adjustment for losses included in net income (loss)
|
|
36
|
|
|
563
|
|
||
Total unrealized gains on foreign exchange forward contracts
|
|
89
|
|
|
265
|
|
||
|
|
|
|
|
||||
Other comprehensive loss, before tax
|
|
(302
|
)
|
|
(438
|
)
|
||
Income tax benefit related to items of other comprehensive loss
|
|
(71
|
)
|
|
—
|
|
||
Other comprehensive loss, net of tax
|
|
(231
|
)
|
|
(438
|
)
|
||
Total comprehensive income (loss)
|
|
$
|
11,331
|
|
|
$
|
(2,527
|
)
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
11,562
|
|
|
$
|
(2,089
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
2,086
|
|
|
1,968
|
|
||
Provision for (recovery of) doubtful accounts
|
|
24
|
|
|
(44
|
)
|
||
Deferred taxes
|
|
(5,269
|
)
|
|
38
|
|
||
Foreign currency transaction gains
|
|
(341
|
)
|
|
(225
|
)
|
||
Stock-based compensation
|
|
863
|
|
|
511
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(2,769
|
)
|
|
(161
|
)
|
||
Inventories
|
|
1,029
|
|
|
(2,489
|
)
|
||
Other assets
|
|
(346
|
)
|
|
(24
|
)
|
||
Accounts payable
|
|
550
|
|
|
1,146
|
|
||
Advance customer payments
|
|
(153
|
)
|
|
(9
|
)
|
||
Accrued expenses
|
|
1,888
|
|
|
(1,011
|
)
|
||
Net cash provided by (used in) operating activities
|
|
9,124
|
|
|
(2,389
|
)
|
||
|
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from maturities of available-for-sale marketable securities
|
|
4,690
|
|
|
5,167
|
|
||
Proceeds from sales of available-for-sale marketable securities
|
|
1,502
|
|
|
1,518
|
|
||
Purchases of available-for-sale marketable securities
|
|
(8,127
|
)
|
|
(4,934
|
)
|
||
Additions to equipment and leasehold improvements
|
|
(1,363
|
)
|
|
(691
|
)
|
||
Additions to patents
|
|
(71
|
)
|
|
(106
|
)
|
||
Net cash provided by (used in) investing activities
|
|
(3,369
|
)
|
|
954
|
|
||
|
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
||||
Proceeds from exercise of stock options
|
|
465
|
|
|
458
|
|
||
Proceeds from issuance of common stock under employee stock purchase plan
|
|
181
|
|
|
178
|
|
||
Net cash provided by financing activities
|
|
646
|
|
|
636
|
|
||
|
|
|
|
|
||||
Effects of exchange rate changes on cash and cash equivalents
|
|
(35
|
)
|
|
(98
|
)
|
||
|
|
|
|
|
||||
Net increase (decrease) in cash and cash equivalents
|
|
6,366
|
|
|
(897
|
)
|
||
|
|
|
|
|
||||
Cash and cash equivalents – beginning of period
|
|
4,274
|
|
|
5,171
|
|
||
Cash and cash equivalents – end of period
|
|
$
|
10,640
|
|
|
$
|
4,274
|
|
|
|
Common Stock
|
|
Accumulated Other Comprehensive Loss
|
|
Retained Earnings
|
|
Total Stockholders’ Equity
|
|||||||||||
(In thousands)
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||
BALANCE, DECEMBER 31, 2014
|
|
6,644
|
|
|
$
|
30,145
|
|
|
$
|
(1,271
|
)
|
|
$
|
8,564
|
|
|
$
|
37,438
|
|
Exercise of stock options, vesting of restricted stock units, net of shares exchanged as payment
|
|
88
|
|
|
458
|
|
|
—
|
|
|
—
|
|
|
458
|
|
||||
Share issuances for compensation purposes
|
|
4
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||
Stock-based compensation
|
|
—
|
|
|
470
|
|
|
—
|
|
|
—
|
|
|
470
|
|
||||
Issuance of common stock under Employee Stock Purchase Plan
|
|
36
|
|
|
178
|
|
|
—
|
|
|
—
|
|
|
178
|
|
||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
(438
|
)
|
|
—
|
|
|
(438
|
)
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,089
|
)
|
|
(2,089
|
)
|
||||
BALANCE, DECEMBER 31, 2015
|
|
6,772
|
|
|
31,292
|
|
|
(1,709
|
)
|
|
6,475
|
|
|
36,058
|
|
||||
Exercise of stock options, vesting of restricted stock units, net of shares exchanged as payment
|
|
86
|
|
|
465
|
|
|
—
|
|
|
—
|
|
|
465
|
|
||||
Share issuances for compensation purposes
|
|
8
|
|
|
136
|
|
|
—
|
|
|
—
|
|
|
136
|
|
||||
Stock-based compensation
|
|
—
|
|
|
727
|
|
|
—
|
|
|
—
|
|
|
727
|
|
||||
Issuance of common stock under Employee Stock Purchase Plan
|
|
36
|
|
|
181
|
|
|
—
|
|
|
—
|
|
|
181
|
|
||||
Other comprehensive loss, net of tax
|
|
—
|
|
|
—
|
|
|
(231
|
)
|
|
—
|
|
|
(231
|
)
|
||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,562
|
|
|
11,562
|
|
||||
BALANCE, DECEMBER 31, 2016
|
|
6,902
|
|
|
$
|
32,801
|
|
|
$
|
(1,940
|
)
|
|
$
|
18,037
|
|
|
$
|
48,898
|
|
|
|
December 31, 2016
|
||||||||||||||
(In thousands)
|
|
Cost
|
|
Unrealized
Gains |
|
Unrealized
Losses |
|
Fair Value
|
||||||||
Short-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency obligations
|
|
$
|
5,005
|
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
5,008
|
|
Corporate debt securities and certificates of deposit
|
|
1,476
|
|
|
1
|
|
|
(1
|
)
|
|
1,476
|
|
||||
Asset backed securities
|
|
9
|
|
|
—
|
|
|
—
|
|
|
9
|
|
||||
Marketable securities – short-term
|
|
$
|
6,490
|
|
|
$
|
5
|
|
|
$
|
(2
|
)
|
|
$
|
6,493
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency obligations
|
|
$
|
4,815
|
|
|
$
|
1
|
|
|
$
|
(12
|
)
|
|
$
|
4,804
|
|
Corporate debt securities and certificates of deposit
|
|
2,161
|
|
|
—
|
|
|
(17
|
)
|
|
2,144
|
|
||||
Asset backed securities
|
|
1,732
|
|
|
—
|
|
|
(5
|
)
|
|
1,727
|
|
||||
Equity security
|
|
42
|
|
|
11
|
|
|
—
|
|
|
53
|
|
||||
Marketable securities – long-term
|
|
$
|
8,750
|
|
|
$
|
12
|
|
|
$
|
(34
|
)
|
|
$
|
8,728
|
|
|
|
December 31, 2015
|
||||||||||||||
(In thousands)
|
|
Cost
|
|
Unrealized
Gains |
|
Unrealized
Losses |
|
Fair Value
|
||||||||
Short-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency obligations
|
|
$
|
3,806
|
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
3,804
|
|
Corporate debt securities and certificates of deposit
|
|
1,440
|
|
|
—
|
|
|
(1
|
)
|
|
1,439
|
|
||||
Asset backed securities
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Marketable securities – short-term
|
|
$
|
5,252
|
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
5,249
|
|
Long-Term
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency obligations
|
|
$
|
6,681
|
|
|
$
|
1
|
|
|
$
|
(18
|
)
|
|
$
|
6,664
|
|
Corporate debt securities and certificates of deposit
|
|
675
|
|
|
—
|
|
|
(1
|
)
|
|
674
|
|
||||
Asset backed securities
|
|
694
|
|
|
—
|
|
|
(1
|
)
|
|
693
|
|
||||
Equity security
|
|
42
|
|
|
11
|
|
|
—
|
|
|
53
|
|
||||
Marketable securities – long-term
|
|
$
|
8,092
|
|
|
$
|
12
|
|
|
$
|
(20
|
)
|
|
$
|
8,084
|
|
|
|
December 31, 2016
|
||||||||||||||
(In thousands)
|
|
Cost
|
|
Unrealized
Gains |
|
Unrealized
Losses |
|
Recorded
Basis |
||||||||
Corporate debt securities and certificates of deposit
|
|
$
|
5,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,195
|
|
|
|
$
|
5,195
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,195
|
|
|
|
December 31, 2015
|
||||||||||||||
(In thousands)
|
|
Cost
|
|
Unrealized
Gains |
|
Unrealized
Losses |
|
Recorded
Basis |
||||||||
Corporate debt securities and certificates of deposit
|
|
$
|
791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
791
|
|
|
|
$
|
791
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
791
|
|
|
|
Year Ended December 31, 2016
|
||||||
(In thousands)
|
|
Pretax Gain Recognized
in Other Comprehensive Income (Loss) on Effective Portion of Derivative |
|
Pretax Loss Recognized
in Earnings on Effective Portion of Derivative as a Result of Reclassification from Accumulated Other Comprehensive Loss |
||||
Cost of revenues
|
|
$
|
32
|
|
|
$
|
(27
|
)
|
Research and development
|
|
14
|
|
|
(6
|
)
|
||
Selling, general and administrative
|
|
7
|
|
|
(3
|
)
|
||
Total
|
|
$
|
53
|
|
|
$
|
(36
|
)
|
|
|
Year Ended December 31, 2015
|
||||||
(In thousands)
|
|
Pretax Loss Recognized
in Other Comprehensive Income (Loss) on Effective Portion of Derivative |
|
Pretax Loss Recognized
in Earnings on Effective Portion of Derivative as a Result of Reclassification from Accumulated Other Comprehensive Loss |
||||
Cost of revenues
|
|
$
|
(185
|
)
|
|
$
|
(352
|
)
|
Research and development
|
|
(71
|
)
|
|
(118
|
)
|
||
Selling, general and administrative
|
|
(42
|
)
|
|
(93
|
)
|
||
Total
|
|
$
|
(298
|
)
|
|
$
|
(563
|
)
|
|
|
Year Ended December 31, 2016
|
|
Year Ended December 31, 2015
|
||||||||||||||||||||
(In thousands)
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax Amount
|
|
Before Tax
|
|
Tax Effect
|
|
Net of Tax Amount
|
||||||||||||
Foreign currency translation adjustments
|
|
$
|
(383
|
)
|
|
$
|
—
|
|
|
$
|
(383
|
)
|
|
$
|
(625
|
)
|
|
$
|
—
|
|
|
$
|
(625
|
)
|
Net changes related to available-for-sale securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unrealized gains (losses)
|
|
(8
|
)
|
|
7
|
|
|
(1
|
)
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
||||||
Reclassification adjustment for losses included in interest income and other
|
|
—
|
|
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Total net changes related to available-for-sale securities
|
|
(8
|
)
|
|
13
|
|
|
5
|
|
|
(78
|
)
|
|
—
|
|
|
(78
|
)
|
||||||
Net changes related to foreign exchange forward contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unrealized gains (losses)
|
|
53
|
|
|
—
|
|
|
53
|
|
|
(298
|
)
|
|
—
|
|
|
(298
|
)
|
||||||
Reclassification adjustment for losses included in net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of revenues
|
|
27
|
|
|
41
|
|
|
68
|
|
|
352
|
|
|
—
|
|
|
352
|
|
||||||
Research and development expenses
|
|
6
|
|
|
10
|
|
|
16
|
|
|
118
|
|
|
—
|
|
|
118
|
|
||||||
Selling, general and administrative expenses
|
|
3
|
|
|
7
|
|
|
10
|
|
|
93
|
|
|
—
|
|
|
93
|
|
||||||
Total net changes related to foreign exchange forward contracts
|
|
89
|
|
|
58
|
|
|
147
|
|
|
265
|
|
|
—
|
|
|
265
|
|
||||||
Other comprehensive loss
|
|
$
|
(302
|
)
|
|
$
|
71
|
|
|
$
|
(231
|
)
|
|
$
|
(438
|
)
|
|
$
|
—
|
|
|
$
|
(438
|
)
|
(In thousands)
|
|
Foreign
Currency Translation Adjustments |
|
Available-
for-Sale Securities |
|
Foreign
Exchange Forward Contracts |
|
Accumulated
Other Comprehensive Loss |
||||||||
Balances at December 31, 2014
|
|
$
|
(920
|
)
|
|
$
|
61
|
|
|
$
|
(412
|
)
|
|
$
|
(1,271
|
)
|
Other comprehensive loss before reclassifications
|
|
(625
|
)
|
|
(78
|
)
|
|
(298
|
)
|
|
(1,001
|
)
|
||||
Reclassifications from accumulated other comprehensive loss
|
|
—
|
|
|
—
|
|
|
563
|
|
|
563
|
|
||||
Net current period other comprehensive income (loss)
|
|
(625
|
)
|
|
(78
|
)
|
|
265
|
|
|
(438
|
)
|
||||
Balances at December 31, 2015
|
|
$
|
(1,545
|
)
|
|
$
|
(17
|
)
|
|
$
|
(147
|
)
|
|
$
|
(1,709
|
)
|
Other comprehensive income (loss) before reclassifications
|
|
(383
|
)
|
|
(1
|
)
|
|
53
|
|
|
(331
|
)
|
||||
Reclassifications from accumulated other comprehensive loss
|
|
—
|
|
|
6
|
|
|
94
|
|
|
100
|
|
||||
Net current period other comprehensive income (loss)
|
|
(383
|
)
|
|
5
|
|
|
147
|
|
|
(231
|
)
|
||||
Balances at December 31, 2016
|
|
$
|
(1,928
|
)
|
|
$
|
(12
|
)
|
|
$
|
—
|
|
|
$
|
(1,940
|
)
|
|
|
Fair Value Measurements at
December 31, 2016 Using |
||||||||||||||
(In thousands)
|
|
Balance
December 31, 2016 |
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency obligations
|
|
$
|
9,812
|
|
|
$
|
—
|
|
|
$
|
9,812
|
|
|
$
|
—
|
|
Corporate debt securities and certificates of deposit
|
|
3,620
|
|
|
—
|
|
|
3,620
|
|
|
—
|
|
||||
Asset backed securities
|
|
1,736
|
|
|
—
|
|
|
1,736
|
|
|
—
|
|
||||
Equity security
|
|
53
|
|
|
53
|
|
|
—
|
|
|
—
|
|
||||
Total marketable securities
|
|
$
|
15,221
|
|
|
$
|
53
|
|
|
$
|
15,168
|
|
|
$
|
—
|
|
Derivative instruments-liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Fair Value Measurements at
December 31, 2015 Using |
||||||||||||||
(In thousands)
|
|
Balance
December 31, 2015 |
|
Quoted Prices
in Active Markets for Identical Assets (Level 1) |
|
Significant
Other Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and agency obligations
|
|
$
|
10,468
|
|
|
$
|
—
|
|
|
$
|
10,468
|
|
|
$
|
—
|
|
Corporate debt securities and certificates of deposit
|
|
2,113
|
|
|
—
|
|
|
2,113
|
|
|
—
|
|
||||
Asset backed securities
|
|
699
|
|
|
—
|
|
|
699
|
|
|
—
|
|
||||
Equity security
|
|
53
|
|
|
53
|
|
|
—
|
|
|
—
|
|
||||
Total marketable securities
|
|
$
|
13,333
|
|
|
$
|
53
|
|
|
$
|
13,280
|
|
|
$
|
—
|
|
Derivative instruments-liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
$
|
78
|
|
|
$
|
—
|
|
|
$
|
78
|
|
|
$
|
—
|
|
|
|
Options Outstanding
|
|
Weighted Average Exercise
Price Per Share |
|||
Outstanding, December 31, 2015
|
|
570,500
|
|
|
$
|
8.00
|
|
Granted
|
|
58,000
|
|
|
22.34
|
|
|
Exercised
|
|
(80,875
|
)
|
|
8.87
|
|
|
Expired
|
|
—
|
|
|
—
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Outstanding, December 31, 2016
|
|
547,625
|
|
|
$
|
9.39
|
|
Exercisable, December 31, 2016
|
|
248,313
|
|
|
$
|
8.53
|
|
|
|
2016
|
|
2015
|
Risk-free interest rates
|
|
1.24% - 1.89%
|
|
1.56%
|
Expected life in years
|
|
5.09 - 7.50
|
|
5.01 - 5.11
|
Expected volatility
|
|
42.22% - 46.67%
|
|
40.82%
|
Dividend yield
|
|
0.00%
|
|
0.00%
|
Weighted average fair value on grant date
|
|
$9.88
|
|
$2.73
|
Non-vested restricted stock units
|
|
Shares
|
|
Weighted Average Grant Date
Fair Value |
|||
Non-vested at December 31, 2015
|
|
54,315
|
|
|
$
|
7.43
|
|
Granted
|
|
10,700
|
|
|
26.40
|
|
|
Vested
|
|
(19,466
|
)
|
|
7.32
|
|
|
Forfeited
|
|
—
|
|
|
—
|
|
|
Non-vested at December 31, 2016
|
|
45,549
|
|
|
$
|
11.93
|
|
(In thousands)
|
|
2016
|
|
2015
|
||||
Pre-tax stock-based compensation expense
|
|
$
|
863
|
|
|
$
|
511
|
|
Income tax benefits related to stock-based compensation
|
|
$
|
428
|
|
|
$
|
—
|
|
(In thousands except per share amounts)
|
|
Net Income
|
|
Weighted Average Shares Outstanding
|
|
Per Share Amount
|
|||||
Year Ended 12/31/2016:
|
|
|
|
|
|
|
|
|
|
||
Basic
|
|
$
|
11,562
|
|
|
6,832
|
|
|
$
|
1.69
|
|
Dilutive effect of common equivalent shares
|
|
—
|
|
|
217
|
|
|
(0.05
|
)
|
||
Dilutive
|
|
$
|
11,562
|
|
|
7,049
|
|
|
$
|
1.64
|
|
(In thousands except per share amounts)
|
|
Net Loss
|
|
Weighted Average Shares Outstanding
|
|
Per Share Amount
|
|||||
Year Ended 12/31/2015:
|
|
|
|
|
|
|
|
|
|
||
Basic
|
|
$
|
(2,089
|
)
|
|
6,706
|
|
|
$
|
(0.31
|
)
|
Dilutive effect of common equivalent shares
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Dilutive
|
|
$
|
(2,089
|
)
|
|
6,706
|
|
|
$
|
(0.31
|
)
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Raw materials and purchased parts
|
|
$
|
6,475
|
|
|
$
|
6,787
|
|
Work in process
|
|
826
|
|
|
508
|
|
||
Finished goods
|
|
4,230
|
|
|
5,970
|
|
||
Total inventories
|
|
$
|
11,531
|
|
|
$
|
13,265
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Equipment
|
|
$
|
13,624
|
|
|
$
|
12,500
|
|
Leasehold improvements
|
|
1,628
|
|
|
1,588
|
|
||
|
|
15,252
|
|
|
14,088
|
|
||
Accumulated depreciation and amortization
|
|
(12,814
|
)
|
|
(11,720
|
)
|
||
|
|
$
|
2,438
|
|
|
$
|
2,368
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
(In thousands)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
Patents
|
|
$
|
2,567
|
|
|
$
|
(2,351
|
)
|
|
$
|
216
|
|
|
$
|
2,513
|
|
|
$
|
(2,253
|
)
|
|
$
|
260
|
|
Software
|
|
206
|
|
(82
|
)
|
|
124
|
|
206
|
|
|
(53
|
)
|
|
153
|
|
||||||||
Marketing assets and customer relationships
|
|
101
|
|
(33
|
)
|
|
68
|
|
101
|
|
|
(21
|
)
|
|
80
|
|
||||||||
Non-compete agreements
|
|
101
|
|
(71
|
)
|
|
30
|
|
101
|
|
|
(45
|
)
|
|
56
|
|
||||||||
|
|
$
|
2,975
|
|
|
$
|
(2,537
|
)
|
|
$
|
438
|
|
|
$
|
2,921
|
|
|
$
|
(2,372
|
)
|
|
$
|
549
|
|
|
|
Year Ended December 31,
|
|
Weighted Avg. Remaining Life-Years at December 31, 2016
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
|
|||||
Patents
|
|
$
|
98
|
|
|
$
|
110
|
|
|
2.5
|
Software
|
|
29
|
|
|
29
|
|
|
4.2
|
||
Marketing assets and customer relationships
|
|
12
|
|
|
12
|
|
|
5.8
|
||
Non-compete agreements
|
|
26
|
|
|
25
|
|
|
1.2
|
||
|
|
$
|
165
|
|
|
$
|
176
|
|
|
|
|
|
December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Deferred rent
|
|
$
|
111
|
|
|
$
|
204
|
|
Warranty liability
|
|
73
|
|
|
61
|
|
||
Deferred warranty revenue
|
|
66
|
|
|
3
|
|
||
|
|
$
|
250
|
|
|
$
|
268
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
|
$
|
645
|
|
|
$
|
839
|
|
Accrual for warranties
|
|
688
|
|
|
441
|
|
||
Warranty revision
|
|
(53
|
)
|
|
(19
|
)
|
||
Settlements made during the period
|
|
(490
|
)
|
|
(616
|
)
|
||
Balance at end of period
|
|
790
|
|
|
645
|
|
||
Current portion of estimated warranty liability
|
|
(717
|
)
|
|
(584
|
)
|
||
Long-term estimated warranty liability
|
|
$
|
73
|
|
|
$
|
61
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Balance at beginning of period
|
|
$
|
199
|
|
|
$
|
475
|
|
Revenue deferrals
|
|
581
|
|
|
353
|
|
||
Amortization of deferred revenue
|
|
(434
|
)
|
|
(629
|
)
|
||
Total deferred warranty revenue
|
|
346
|
|
|
199
|
|
||
Current portion of deferred warranty revenue
|
|
(280
|
)
|
|
(196
|
)
|
||
Long-term deferred warranty revenue
|
|
$
|
66
|
|
|
$
|
3
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Sources of income (loss) before income taxes:
|
|
|
|
|
|
|
||
United States
|
|
$
|
5,135
|
|
|
$
|
(2,994
|
)
|
Foreign
|
|
1,256
|
|
|
933
|
|
||
Total income (loss) before income taxes
|
|
$
|
6,391
|
|
|
$
|
(2,061
|
)
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Current:
|
|
|
|
|
|
|
||
Federal
|
|
$
|
76
|
|
|
$
|
(14
|
)
|
State
|
|
10
|
|
|
4
|
|
||
Foreign
|
|
12
|
|
|
—
|
|
||
Total current
|
|
$
|
98
|
|
|
$
|
(10
|
)
|
Deferred:
|
|
|
|
|
|
|
||
Federal
|
|
$
|
(4,799
|
)
|
|
$
|
(4
|
)
|
State
|
|
—
|
|
|
1
|
|
||
Foreign
|
|
(470
|
)
|
|
41
|
|
||
Total deferred
|
|
$
|
(5,269
|
)
|
|
$
|
38
|
|
Total provision for income taxes
|
|
$
|
(5,171
|
)
|
|
$
|
28
|
|
|
|
Year Ended December 31,
|
||||||
(In thousands)
|
|
2016
|
|
2015
|
||||
Gross UTB balance at beginning of year
|
|
$
|
1,887
|
|
|
$
|
1,508
|
|
Additions based on tax positions related to the current year
|
|
178
|
|
|
186
|
|
||
Additions for tax positions of prior years
|
|
—
|
|
|
289
|
|
||
Reductions for tax positions of prior years
|
|
(96
|
)
|
|
(78
|
)
|
||
Reductions due to lapse of applicable statute of limitations
|
|
(212
|
)
|
|
(18
|
)
|
||
Gross UTB balance at end of year
|
|
$
|
1,757
|
|
|
$
|
1,887
|
|
Net UTB balance at end of year
|
|
$
|
131
|
|
|
$
|
126
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
(In thousands)
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
||||||||
Equipment, leaseholds and intangible amortization, net
|
|
$
|
352
|
|
|
$
|
395
|
|
|
$
|
377
|
|
|
$
|
367
|
|
Inventory allowances
|
|
783
|
|
|
21
|
|
|
797
|
|
|
6
|
|
||||
Accrued expenses
|
|
221
|
|
|
—
|
|
|
286
|
|
|
—
|
|
||||
Warranty accrual
|
|
272
|
|
|
—
|
|
|
222
|
|
|
—
|
|
||||
Deferred revenue
|
|
181
|
|
|
—
|
|
|
686
|
|
|
—
|
|
||||
Accounts receivable allowance
|
|
188
|
|
|
—
|
|
|
179
|
|
|
—
|
|
||||
Federal and state tax credits
|
|
3,624
|
|
|
—
|
|
|
3,319
|
|
|
—
|
|
||||
Federal and state net operating loss carry forwards
|
|
2,801
|
|
|
—
|
|
|
4,379
|
|
|
—
|
|
||||
Foreign net operating loss carry forwards
|
|
463
|
|
|
—
|
|
|
394
|
|
|
—
|
|
||||
Stock based compensation
|
|
381
|
|
|
—
|
|
|
331
|
|
|
—
|
|
||||
Unrealized gains and losses
|
|
7
|
|
|
—
|
|
|
—
|
|
|
35
|
|
||||
Earnings of foreign subsidiary
|
|
—
|
|
|
2,520
|
|
|
—
|
|
|
—
|
|
||||
Other, net
|
|
72
|
|
|
—
|
|
|
73
|
|
|
—
|
|
||||
Subtotal
|
|
9,345
|
|
|
2,936
|
|
|
11,043
|
|
|
408
|
|
||||
Valuation allowance
|
|
(1,086
|
)
|
|
—
|
|
|
(10,644
|
)
|
|
—
|
|
||||
Total deferred tax assets and liabilities
|
|
$
|
8,259
|
|
|
$
|
2,936
|
|
|
$
|
399
|
|
|
$
|
408
|
|
Year ending December 31,
|
(In thousands)
|
||
2017
|
$
|
1,357
|
|
2018
|
1,342
|
|
|
2019
|
411
|
|
|
2020
|
240
|
|
|
Total
|
$
|
3,350
|
|
(In thousands)
|
|
2016
|
|
2015
|
||||
SMT and High Precision 3D OEM Sensors
|
|
$
|
18,797
|
|
|
$
|
13,022
|
|
Semiconductor Sensors
|
|
10,061
|
|
|
7,677
|
|
||
SMT Inspection Systems
|
|
28,680
|
|
|
13,578
|
|
||
3D Scanning Solutions and Services
|
|
8,702
|
|
|
6,853
|
|
||
Total
|
|
$
|
66,240
|
|
|
$
|
41,130
|
|
(In thousands)
|
|
Significant Customer
|
|
Percentage of Revenues
|
|
Year ended December 31, 2016
|
|
B
|
|
12
|
%
|
|
|
C
|
|
11
|
%
|
Year ended December 31, 2015
|
|
A
|
|
10
|
%
|
|
|
B
|
|
11
|
%
|
(In thousands)
|
|
2016
|
|
2015
|
||||
Long-lived assets:
|
|
|
|
|
|
|
||
United States
|
|
$
|
2,721
|
|
|
$
|
2,782
|
|
Europe
|
|
7
|
|
|
2
|
|
||
Asia and other
|
|
148
|
|
|
133
|
|
||
Total long-lived assets
|
|
$
|
2,876
|
|
|
$
|
2,917
|
|
2016
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Revenues
|
|
$
|
19,114
|
|
|
$
|
18,631
|
|
|
$
|
15,040
|
|
|
$
|
13,455
|
|
Gross margin
|
|
7,944
|
|
|
8,145
|
|
|
6,641
|
|
|
6,325
|
|
||||
Income from operations
|
|
2,391
|
|
|
1,987
|
|
|
1,137
|
|
|
638
|
|
||||
Net income
|
|
2,263
|
|
|
2,041
|
|
|
1,172
|
|
|
6,086
|
|
||||
Net income per share - Basic (1)
|
|
0.33
|
|
|
0.30
|
|
|
0.17
|
|
|
0.88
|
|
||||
Net income per share - Diluted (1)
|
|
0.33
|
|
|
0.29
|
|
|
0.16
|
|
|
0.85
|
|
2015
|
|
March 31
|
|
June 30
|
|
September 30
|
|
December 31
|
||||||||
Revenues
|
|
$
|
9,545
|
|
|
$
|
10,254
|
|
|
$
|
9,937
|
|
|
$
|
11,394
|
|
Gross margin
|
|
4,561
|
|
|
4,569
|
|
|
4,239
|
|
|
4,772
|
|
||||
Income (loss) from operations
|
|
(826
|
)
|
|
(655
|
)
|
|
(721
|
)
|
|
39
|
|
||||
Net loss
|
|
(781
|
)
|
|
(761
|
)
|
|
(514
|
)
|
|
(33
|
)
|
||||
Net loss per share - Basic (1)
|
|
(0.12
|
)
|
|
(0.11
|
)
|
|
(0.08
|
)
|
|
0.00
|
|
||||
Net loss per share - Diluted (1)
|
|
(0.12
|
)
|
|
(0.11
|
)
|
|
(0.08
|
)
|
|
0.00
|
|
(1)
|
The summation of quarterly per share amounts may not equal the calculation for the full year, as each quarterly
|
|
|
|
Consolidated Balance Sheets as of December 31, 2016 and 2015.
|
|
Consolidated Statements of Operations for the years ended December 31, 2016 and 2015.
|
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2016 and 2015.
|
|
Consolidated Statements of Cash Flows for the years ended December 31, 2016 and 2015.
|
|
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2016 and 2015.
|
|
Notes to the Consolidated Financial Statements.
|
|
CYBEROPTICS CORPORATION
|
|
|
|
/s/ SUBODH KULKARNI
|
|
By Subodh Kulkarni, President and CEO
|
Name
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ SUBODH KULKARNI
|
|
President and CEO
|
|
March 14, 2017
|
Subodh Kulkarni
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ ALEX B. CIMOCHOWSKI
|
|
Director
|
|
March 14, 2017
|
Alex B. Cimochowski
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ MICHAEL M. SELZER JR.
|
|
Chairman, Director
|
|
March 14, 2017
|
Michael M. Selzer, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ IRENE M. QUALTERS
|
|
Director
|
|
March 14, 2017
|
Irene M. Qualters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ CRAIG D. GATES
|
|
Director
|
|
March 14, 2017
|
Craig D. Gates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ JEFFREY A. BERTELSEN
|
|
Vice President, CFO, and COO
|
|
March 14, 2017
|
Jeffrey A. Bertelsen
|
|
(Principal Financial Officer
|
|
|
|
|
and Principal Accounting Officer)
|
|
|
CLAUSE
|
PAGE
|
|
|
|
|
|
|
1.
|
TERMS AND INTERPRETATION....................................................................................................................
|
3
|
|
|
|
|
|
2.
|
LETTING............................................................................................................................................................
|
3
|
|
|
|
|
|
3.
|
THE TENANT'S COVENANTS........................................................................................................................
|
3
|
|
|
|
|
|
4.
|
THE LANLORD'S COVENANTS.....................................................................................................................
|
14
|
|
|
|
|
|
5.
|
RIGHTS RESERVED BY THE LANDLORD...................................................................................................
|
16
|
|
|
|
|
|
SCHEDULE 1 - INTERPRETATION..................................................................................................................................
|
24
|
|
|
|
|
|
|
SCHEDULE 2 - TERMS AND PARTICULARS OF RENT.................................................................................................
|
28
|
|
|
|
|
|
|
SCHEDULE 3 - SCOPE FOR PROPERTY MANAGEMENT AND MAINTENANCE SERVICE...................................
|
31
|
|
|
|
|
|
|
SCHEDULE 4 - PROHIBITED MATERIAL / ITEMS / ACTIVITEIS ON THE PREMISES, BUILDING OR
|
|
||
PROPERTY (FOR THE PURPOSE OF SHARIAH COMPLIANCE).................................................................................
|
33
|
|
|
|
|
|
|
SCHEDULE 5 - LIST OF LICENCES..................................................................................................................................
|
34
|
|
|
|
|
|
|
ANNEXURE A - PLAN OF PREMISES
|
|
||
|
|
|
(1)
|
The Landlord: As defined in Item 2 of Schedule 2.
|
(2)
|
The Tenant: As defined in Item 3 of Schedule 2.
|
1.
|
T
ERMS
A
ND
I
NTERPRETATION
|
1.2
|
The Schedules form part of this Tenancy Agreement.
|
2.
|
L
ETTING
|
3.
|
T
HE
T
ENANT
'
S
C
OVENANTS
|
(a)
|
The Tenant shall pay the (i) Rent and Service Charge calculated at the Rent Rate and Service Charge rate specified in Items 11(a) and (c) of Schedule 2 respectively on the Floor Area specified in Item 6 of Schedule 2; and (ii) reimbursements and other payments, at the times and in the manner specified in this Tenancy Agreement without any deduction or demand whatsoever and there shall be no abatement of Rent, reimbursements and other payments hereby reserved by reason of any claim by the Landlord against the Tenant whether for non-performance or breach of the Landlord's obligations hereunder or otherwise. For the avoidance of doubt, the Tenant must not exercise any right or claim to withhold the Rent, reimbursements and other payments hereby reserved, or any right or claim to legal or equitable set off.
|
(b)
|
The Tenant shall pay the Rent, Service Charge, reimbursement and other payments hereby reserved to the Landlord by way of GIRO payments through a bank account notified by the Landlord to the Tenant for this purpose. All bank charges levied in respect of any unsuccessful GIRO deductions together with an administrative charge (subject to applicable GST) of Singapore Dollars Twenty (S$20), shall be borne by the Tenant.
|
(c)
|
The first payment of the Rent after the execution of this Tenancy Agreement is payable on or before the Term Commencement Date and shall be paid via GIRO payment through a bank account notified by the Landlord to the Tenant for this purpose and is for the period of one (1) month from the commencement date of the Term. In the event that the Term Commencement Date falls on a day other than the first day of a month, the Tenant shall pay to the Landlord pro-rated Rent calculated from the Term Commencement Date up to the day immediately before the first day of
|
(d)
|
Any sums received by the Landlord from the Tenant towards payment or part payment of the Outstanding Debt may be applied at the Landlord's sole and absolute discretion, in or towards payment of any part of the Outstanding Debt and such application by the Landlord shall override any directions given by the Tenant that such sums be specifically applied in or towards satisfaction of any particular portion or specific items or part thereof of the Outstanding Debt.
|
3.2
|
Payment of the Security Deposit
:
|
(a)
|
On or before the Term Commencement Date, the Tenant shall pay and maintain to the Landlord the amount stated in Item 8 of Schedule 2 by way of Security Deposit which said sum shall be paid by way of cash on or before the Term Commencement Date and maintained throughout the Term as security for the due observance and performance by the Tenant of all and singular the several covenants, conditions, stipulations and agreements on the part of the Tenant herein contained.
|
(b)
|
In the event that the Landlord shall exercise its right of set off against the Security Deposit or any part of the Security Deposit remains outstanding for any reason whatsoever, the Tenant shall immediately pay to the Landlord an amount sufficient to restore the Security Deposit to the amount stated in Item 8 of Schedule 2 or such other amount as may be specified by the Landlord.
|
(c)
|
Further the Landlord reserves the right, at its absolute discretion, to credit any payment made by the Tenant to its account as the Security Deposit until the Security Deposit has been received in full.
|
(d)
|
In addition to and without prejudice to the rights of the Landlord at law, in equity and herein, if the Tenant shall at any time fail to observe or perform any of the terms covenants, conditions and obligations herein contained, the Landlord may, at its option, appropriate and apply all or any part of the Security Deposit held by the Landlord to set off all and any outstanding Rent or to compensate the Landlord for its loss or damage or provide for any contingent liabilities incurred by the Landlord due to any breach of any of the terms covenants, conditions and obligations on the part of the Tenant to be performed and or observed under this Tenancy Agreement. Any appropriation by the Landlord of the Security Deposit shall not be deemed to be a waiver by the Landlord of any non-payment or non- performance on the part of the Tenant and shall not preclude the Landlord from exercising any of its other rights and obligations hereunder. In the event the Landlord appropriates or applies the Security Deposit in accordance with this Clause 3.2, the Tenant shall immediately on demand pay to the Landlord a sufficient amount to restore the Security Deposit to the amount stated in Item 8 of Schedule 2 or such other amount as may be specified by the Landlord.
|
(e)
|
The Security Deposit shall be refunded to the Tenant free of interest after the expiry of the Term provided that the Tenant has duly performed and observed all of its covenants, conditions and obligations and is not in breach of any of the terms contained herein.
|
3.4
|
Insurance
:
|
(a)
|
The Tenant shall keep current at all times during the Term and during any period of holding over an adequate insurance policy for industrial all risks, and in respect of all goods (including machinery and all contents and internal partitions) belonging to or held in trust by the Tenant within the Premises, against all loss and damage including against loss or damage by fire or water.
|
(b)
|
The Tenant shall keep current at all times during the Term in respect of the Premises an adequate public liability insurance policy (including products liability).
|
(c)
|
The Tenant expressly agrees at its own cost, to take out such other insurance policies in such amounts as the Landlord may specify from time to time, having regard to the market practice and after consultation with the Tenant.
|
(d)
|
All insurance policies referred to in this Clause 3.4 shall be taken out with such insurer as shall be approved in advance by the Landlord.
|
(e)
|
Tenant shall furnish to the Landlord on demand all policies taken up and the receipts for payment of premium in respect thereof.
|
(f)
|
The Tenant shall not do or permit or suffer to be done anything whereby any policies of insurance taken up on the Premises for the time being subsisting may be vitiated or rendered void or voidable or whereby the rate of premium on any insurance policy shall be liable to be increased and shall make good all damage suffered by the Landlord and repay to the Landlord all sums paid by the Landlord by way of increased premium and all expenses incurred by the Landlord in or about any renewal of such policy or policies rendered necessary by a breach or non-observance of this covenant.
|
3.5
|
Administrative Fees, Legal Costs and Expenses
:
|
(a)
|
The Tenant agrees to pay the Landlord (on a full indemnity basis):
|
(i)
|
all stamp duties in respect of this Tenancy Agreement;
|
(ii)
|
all the Landlord's legal costs and expenses incurred in enforcing any provision of this Tenancy Agreement in the event of a breach by the Tenant; and
|
(iii)
|
all the Landlord's costs and expenses (including solicitors' costs and costs of the Landlord's architect, engineer or surveyor where applicable, and including any and all subletting and other fees, taxes, or charges by whatever name called in respect or in connection with subletting) incurred in connection with every application made by the Tenant for any consent or approval required under this Tenancy Agreement whether or not such consent or approval shall be granted or given.
|
(b)
|
Each party shall bear their own solicitors' costs incurred in the preparation of this Tenancy Agreement.
|
3.7
|
Keep in Tenantable Repair
:
|
(a)
|
The Tenant shall at all times keep clean and in a good and tenantable repair and condition (fair wear and tear excepted), the Premises (including the structures within), the interior, the flooring, the interior plaster or other surface material or rendering on walls and ceilings, the fixtures, all doors, windows, glass, locks, fastenings, installations and fittings for light and power, the Conducting Media within the Property and serving the Premises, sanitary, water, gas and electrical apparatus and fire detection and fire fighting installations comprised in the Premises. The Tenant's obligations in this Clause 3.7 shall extend to all improvements and additions to the Premises and to all of the Landlord's fixtures, fittings and appurtenances of whatever nature affixed or fastened to the Premises.
|
(b)
|
In addition to and without prejudice to the other provisions of this Tenancy Agreement, the Tenant shall at all times, at the Tenant's cost and expense, comply with the provisions set out in Schedule 3.
|
(c)
|
The Tenant shall be wholly responsible if any damage or injury is caused to the Landlord or to any person whomsoever directly or indirectly on account of the condition of any part of the interior of the Premises (including flooring, walls, ceiling, doors, windows, curtain wall and its related parts including fluoro-carbon coating thereon (if any) and other fixtures) and the Premises and shall fully indemnify the Landlord against all claims, demands, actions and legal proceedings whatsoever made against the Landlord by any person in respect thereof. In the interpretation and application of the provisions of this sub-clause, the decision of the surveyor or architect of the Landlord shall be final and binding upon the Tenant.
|
3.9
|
The Landlord's Right of Inspection and Right Of Repair
:
|
(a)
|
The Tenant shall permit the Landlord and its servants or agents at all reasonable times to enter into, inspect and view the Premises and examine the condition, to ensure that the provisions of this Tenancy Agreement has been observed and also to take a schedule of fixtures in the Premises.
|
(b)
|
Upon notice being given by the Landlord to the Tenant of any breach of covenant, defect, want of repair, removal of fixture or unauthorised alteration or addition or painting work for which the Tenant shall be responsible under the terms,
|
(c)
|
The Tenant shall permit the Landlord or the Head Lessor and its agents and workmen and all others employed by the Landlord or the Head Lessor at all reasonable times, upon giving to the Tenant prior notice (except in any case which the Landlord or Head Lessor considers an emergency in which case no notice is required) to enter upon the Premises to effect or carry out any maintenance, repairs, alterations or additions or other works which the Landlord or Head Lessor may consider necessary or desirable to any part of the Premises or the water, electrical and other facilities and services of the Premises; without payment of compensation for any nuisance, annoyance, inconvenience or damage caused to the Tenant subject to the Landlord (or other person so entering) exercising such right in a reasonable manner.
|
3.11
|
Alterations and Additions
:
|
(a)
|
The Tenant shall not, without the prior written consent of the Landlord, Head Lessor and/or relevant Authorities, make or permit to be made any alterations or additions to or affecting the structure or exterior of the Premises or the appearance of the Premises as seen from the exterior.
|
(b)
|
The Tenant shall not and shall not permit any person to paint or make any additions or alterations or exert any force or load on the curtain wall, its frame structure and all its related parts or to place or affix any structures or articles or materials thereon which would otherwise render the warranty granted in favour of the Landlord in respect of such wall and structure null and void.
|
(i)
|
internal partitions, floors and ceilings within the Premises;
|
(ii)
|
electrical wiring, conduits, light fittings and fixtures;
|
(iii)
|
air conditioning installations, ducts and vents;
|
(iv)
|
fire protection devices;
|
(v)
|
all plumbing and gas installations, pipes, apparatus, fittings and fixtures;
|
(vi)
|
all mechanical and electrical engineering works; and
|
(vii)
|
painting of the Premises.
|
(c)
|
The Tenant shall, in connection with the alterations and additions:
|
(i)
|
remove all waste material and debris from the Property in a manner satisfactory to the Landlord; and
|
(ii)
|
make good to the satisfaction of the Landlord all damage to the Property resulting from the execution of the alterations and additions.
|
(d)
|
The Tenant undertakes to ensure that any such proposed alterations and additions shall be in compliance with all applicable laws and regulations and shall, furnish to the Landlord copies of all necessary permits, consents, licences, certificates and other approvals for the proposed alterations and additions. All planning and other consents necessary or required pursuant to the provisions
|
(e)
|
The Tenant shall carry out and complete all alterations and additions to the Premises in accordance with plans, layouts, designs, drawings, specifications and using materials approved by the Landlord in a good and workmanlike manner and in accordance with all planning and other consents referred to in Clause 3.11(d), and in compliance with the reasonable requirements of the Landlord's consultants.
|
(f)
|
The Tenant shall submit to the Landlord as-built drawings relating to all such alterations, additions or other works. If the Tenant fails to do so, the Landlord shall be entitled to take all action necessary (including engaging consultants to make necessary inspections and to prepare the relevant as-built drawings and making payments to the Tenant's consultants). All costs and expenses so incurred by the Landlord together with interest from the date of expenditure until the date they are paid by the Tenant to the Landlord shall be recoverable from the Tenant as if they were rent in arrears.
|
(g)
|
The Tenant shall effect and maintain at the Tenant's cost and expense, comprehensive risk insurance policies and public liability policies, from the period of the commencement of the additions and alterations, with an insurance company in Singapore approved by the Landlord. Copies of such policies shall be furnished to the Landlord by the Tenant without demand, prior to the commencement of the additions and alterations.
|
(h)
|
The Tenant shall indemnify the Landlord against (i) any breach, non-observance or non-performance in obtaining any of the consents mentioned in Clause 3.11(a) herein and (ii) any claims, losses, damages, demands or actions brought by any person arising out of or incidental to the execution of the additions and alterations.
|
(a)
|
The Tenant shall surrender to the Landlord all keys giving access to all parts of the Premises irrespective of whether or not the same have been supplied by the Landlord.
|
(b)
|
The Tenant shall reinstate (as set out in Clause 3.12(d)) within the Reinstatement Period and quietly yield up the Premises in the bare condition (fair wear and tear excepted) to the satisfaction of the Landlord after removal of all additions and improvements made by the Tenant to the Premises and all fixtures which may be fixed or fastened to or upon the Premises by the Tenant save for those which the Landlord has expressly agreed at its absolute discretion need not be reinstated.
|
(c)
|
Prior to yielding up of the Premises, the Landlord and the Tenant shall conduct one or more joint- inspections of the Premises, including but not limited to the fixtures and fittings thereon and on the mechanical and electrical equipment systems (where applicable) and any defects, damage or items requiring rectification (which shall include replacing) by the Landlord shall be rectified by the Tenant (at its own cost) to the satisfaction of the Landlord before yielding up of the Premises.
|
(d)
|
If the Tenant fails to reinstate the Premises by the end of the Reinstatement Period or fails to effect the rectification before yielding up of the Premises in accordance with the provisions of this Clause 3.12, the Landlord may effect the same at the Tenant's cost and expense. All costs and expenses incurred by the Landlord together with double the amount of Rent in accordance with Clause 3.13 which the Landlord shall be entitled to receive had the period within which such works effected by the Landlord been added to the Term, shall be paid by the Tenant within seven (7) days of the Landlord notifying the Tenant of the amount thereof, and in this connection, a certificate
|
(e)
|
For the purpose hereof, the term "reinstate" shall include, but not limited to, the washing of the whole of the interior of the Premises (including the cleaning of all glass, doors and windows) and the painting with two coats of oil paint or emulsion paint or other appropriate treatment of all of the internal parts of the premises previously so treated.
|
3.17
|
To Comply with Head Lease
:
|
(a)
|
The Tenant shall observe and promptly at the Tenant's own expense comply with and cause its servants, employees, agents, invitees, licensees and visitors to observe and comply with all such requirements as may be imposed on the occupier of the Premises by any statute, ordinance or Act now or hereafter in force and with all terms and conditions of the Head Lease.
|
(b)
|
The Tenant shall indemnify the Landlord for and against all costs, losses and damages suffered by the Landlord as a result of the Tenant's breach of this Clause 3.17.
|
(a)
|
all claims, demands, writs, summons, actions, suits, proceedings, judgments, orders, decrees,
|
(b)
|
all loss and damage to the Premises, the Building and to all property and goods therein caused directly or indirectly by the Tenant or the Tenant's employees, independent contractors, agents, invitees or licensees and in particular but without limiting the generality of the foregoing caused directly or indirectly by the use or misuse, waste or abuse of water, electricity or gas or by faulty fittings or fixtures of the Tenant or the failure of the Tenant to maintain the Premises and/or the Building or observe the covenants in accordance with its obligations herein.
|
3.21
|
Safety Measures and Fire Safety
:
|
(a)
|
The Tenant shall keep the Premises and all fixtures, fittings, installations and appliances therein in a safe condition by adopting all necessary measures to prevent any outbreak or occurrence of fire in the Premises, to comply with the requirements of the Singapore Civil Defence Force's Fire Safety Bureau and the Fire Safety Act (Chapter 109A) and upon written notice from the Landlord to comply with such reasonable requirements as the Landlord may in its discretion stipulate as to fire precautions relating to the Premises.
|
(b)
|
The Tenant shall comply with insurance, sprinkler and fire alarm regulations in respect of any partitions or other works which may be effected by the Tenant upon the Premises and to pay the costs, fees and expenses of the mechanical and engineering consultants appointed by the Landlord to ensure that the Tenant complies with such insurance, sprinkler and fire alarm regulations and to pay the costs of any alterations to the said partitions or other works or of repairing or replacing any damaged sprinklers and/or fire alarm installations incurred by reason of the non-compliance by the Tenant with such regulations.
|
3.26
|
Use of Lifts
:
|
(a)
|
The Tenant shall ensure that the use of the lifts does not exceed the permissible load limits prescribed for such lifts.
|
(b)
|
Where service and/or cargo lifts are available, the Tenant shall not permit or allow the contractors, workmen or cleaners (with or without equipment tools) engaged by the Tenant to use the passenger lifts of the Property and shall ensure that they use only the service and/or cargo lifts.
|
3.27
|
No Auction or Prohibited Trade
:
|
(a)
|
The Tenant shall not use or permit or suffer the Premises or any part thereof to be used for an auction sale or to conduct any sale described as a bankruptcy sale or closing down sale or any sale carrying a description which in the opinion of the Landlord has a negative connotation.
|
(b)
|
The Tenant shall not use the Premises or any part thereof for any gambling or any unlawful or immoral or improper purpose nor carry out or permit to be carried out any noxious, immoral, noisome, offensive or illegal act, trade, business, occupation or calling in or upon the Premises and shall not do or permit to be done any act or thing which may become a nuisance to or cause annoyance, grievance, damage or disturbance to or give cause for reasonable complaint from the tenants or occupants of neighbouring premises or of other buildings adjoining the Premises.
|
3.30
|
Cleaning, Servicing and Landscaping
:
|
(a)
|
The Tenant shall undertake at the Tenant's own cost and expense the regular cleaning, servicing and maintenance of all fixtures, fittings, installations and appliances in or serving the Premises including but not limited to ventilation system, gas valves, sanitary and waste pipes and domestic
|
(b)
|
The Tenant shall pay on demand to the Landlord the costs and expenses incurred by the Landlord in cleaning any drains and pipes choked or blocked up in the Premises due to the fault or default of the Tenant or its employees, customers, invitees or licensees.
|
(c)
|
The Tenant shall keep the Premises clean and free from dirt and rubbish and throw all trade waste, debris, dirt and rubbish (and in particular wet waste) in proper receptacles and shall arrange for the regular removal thereof from the Premises. The Tenant shall on demand pay to the Landlord the costs and
|
(d)
|
Any cleaners employed by the Tenant for the purposes of cleaning the Premises shall be at the sole expense and responsibility of the Tenant. The Landlord shall not be liable for any misconduct or negligent acts or defaults of the said cleaning contractor or contractors.
|
3.34
|
Signs and Advertisements
:
|
(a)
|
The Tenant shall not affix, paint, attach or otherwise exhibit or permit or suffer so to be upon any part of the Premises any new sign, device, furnishing, ornament, announcement, placard, poster, light, display, advertisement, nameplate, flag, flag pole, or any other object unless approved in writing by the Landlord and at such location as shall be approved by the Landlord. The Tenant shall obtain at its own cost and expense all approvals, permits and licences from the Authorities for the display of any nameplate or signboard approved by the Landlord. In this respect, the Landlord shall assist the Tenant in the submission and application by endorsing on such plans previously approved by the Landlord and all costs and expenses, if any, shall be borne by the Tenant. All installation costs and the electricity costs in respect of any nameplate or signboard shall be borne solely by the Tenant. Provided Always that any approval given by the Landlord pursuant to this Clause 3.34 may at the sole discretion of the Landlord be subsequently withdrawn, modified or varied.
|
(b)
|
The Tenant shall not erect or install any sign, device, furnishing, ornament or object which is visible
|
(c)
|
Upon written request of the Landlord, the Tenant shall immediately remove anything it may have done in contravention of this Clause 3.34.
|
(d)
|
If the Tenant shall fail to comply with the Landlord's written request under Clause 3.34(c), the Landlord may in addition to any other remedy available to it enter upon the Premises and do such acts and things as may be required to remedy such breach at the Tenant's expense without being liable to the Tenant for loss.
|
4.
|
T
HE
L
ANDLORD
'
S
C
OVENANTS
|
5.
|
R
IGHTS
R
ESERVED
B
Y
T
HE
L
ANDLORD
|
(a)
|
the Rent hereby reserved or any part thereof or any Interest payable thereon or any other monies payable under this Tenancy Agreement shall at any time be unpaid for fourteen (14) days after the same shall have become due (whether formally demanded or not); or
|
(b)
|
any covenant on the Tenant's part herein contained shall not be performed or observed; or
|
(c)
|
the Tenant being a company shall go into liquidation whether voluntarily (save for the purpose of amalgamation or reconstruction) or compulsorily or a receiver shall be appointed of its undertaking, property or assets; or
|
(d)
|
the Tenant shall make any arrangement with creditors for liquidation of its debts by composition or otherwise or if a judicial manager is appointed over the Tenant; or
|
(e)
|
any execution or attachment shall be levied upon or issued against any of the property or assets of the Tenant,
|
5.3
|
Rights Against the Tenant's Goods
:
|
(a)
|
Notwithstanding anything herein contained if this Tenancy Agreement shall come to an end whether by effluxion of time or otherwise and the Tenant shall within seven (7) days thereafter fail to remove all its goods whether belonging to the Tenant or otherwise (which expression shall include personal property of every description save for property and goods belonging to the Landlord) from the Premises or if the Tenant shall abandon the Premises (and the Tenant shall be deemed to have abandoned the Premises and terminated this Tenancy Agreement unilaterally if the Tenant without the consent in writing of the Landlord fails to open the Premises for a continuous period of seven (7) days) then and in any of the said events it shall be lawful for the Landlord to repossess the Premises for the purpose of mitigating damages and to sell or otherwise dispose of the said goods in the Premises at such time and at such price as the Landlord shall in its absolute discretion think fit without prejudice to all other rights and remedies of the Landlord. The Landlord shall after
|
(b)
|
The Tenant hereby unconditionally and irrevocably agrees to indemnify the Landlord against any liability incurred by the Landlord to any third party whose property is dealt with or disposed of by the Landlord in the mistaken belief (which will be presumed unless the contrary is proved) that such property belonged to the Tenant.
|
5.4
|
Option to Renew
:
|
(a)
|
If:
|
(i)
|
the Tenant gives a written request to the Landlord, not later than six (6) months before the expiry date of the Term (time being of the essence), that it requires an extension of the tenancy hereby created for a further term; and
|
(ii)
|
at and if there shall not at the time of such request or at the time of renewal be any existing breach or non-observance of any of the covenants on the part of the Tenant herein contained,
|
(b)
|
If after the new document for the Renewal Term has been signed but before commencement of the Renewal Term, the Tenant is in default of the provisions of this Tenancy Agreement, the Landlord is entitled to terminate the agreement for the Renewal Term by giving notice to the Tenant. Upon receipt of the notice, the Renewal Term will be terminated without affecting the other rights of the Landlord against the Tenant in respect of the default. The Landlord will not be liable for any loss, damage, cost, expense or compensation in connection with the termination.
|
(c)
|
The Tenant shall pay for (i) all fees payable to the Head Lessor in connection with the application for and grant of consent of the Head Lessor to the renewal of the Tenancy Agreement of the Premises; and (ii) stamp duty on the Tenancy Agreement (in duplicate) for the Renewal Term.
|
5.5
|
Power of The Landlord to Deal with Adjoining Property and the Premises
:
|
(a)
|
The Landlord may deal as it may think fit with other property belonging to the Landlord adjoining or nearby and may erect or suffer to be erected on such
|
(b)
|
The Landlord shall have the right at all times without obtaining any consent from the Tenant to develop the vacant land on the Property (if any) and to alter, reconstruct or modify in any way whatsoever any parts of the Building, so long as means of access to and egress from the Premises are possible and such development does not unreasonably interfere with the Tenant's operations.
|
(c)
|
For the avoidance of doubt, any such development or addition or alteration shall not reduce the Rent payable under this Tenancy Agreement. The Landlord shall have the absolute right to tenant
|
(a)
|
any failure or inability of or delay by the Landlord and/or the Landlord's agents, servants, employees or contractors in fulfilling any of its obligations under this Tenancy Agreement or any interruption in any of the services provided by the Landlord and/or the Landlord's agents, servants, employees or contractors by reason of necessary repair or maintenance of any installations or apparatus or damage thereto or destruction thereof or by reason of mechanical or other defect or breakdown or by reason of any events or circumstances beyond the control of the Landlord and/or the Landlord's agents, servants, employees or contractors (including but not limited to fire, flood, act of God, force majeure, escape of water, riot, civil commotion, curfew, emergency, labour disputes, shortage of manpower, fuel, materials, electricity or water and/or any acts, restrictions, regulations, by- laws, prohibitions or measures of any kind on the part of any government authorities); or
|
(b)
|
any act, omission, default, misconduct or negligence of any porter, attendant or other servant or employee, independent contractor or agent of the Landlord in or about the performance or purported performance of any duty relating to the provision of the services or any of them as provided by the Landlord; or
|
(c)
|
any act, omission, default, misconduct or negligence of any contractor nominated or approved by the Landlord and any such contractor appointed by the Tenant shall not be deemed to be an agent or employee of the Landlord; or
|
(d)
|
any damage, injury or loss arising out of the leakage or defect of the piping, wiring and sprinkler system in the Premises and/or the structure of the Premises; or
|
(e)
|
any damage, injury or loss caused by other tenants or persons in the Premises; or
|
5.14
|
Government Acquisition
: If:
|
(a)
|
the Property is acquired by any relevant authority; or
|
(b)
|
a notice, order or gazette notification is issued, made or published in respect of the intended or actual acquisition of the Property by any relevant authority,
|
5.15
|
Termination of Head Lease Term by Head Lessor
:
|
(a)
|
If the Head Lessor, at any time before the expiry of the Head Lease Term:
|
(i)
|
terminates the lease granted to the Landlord under the Head Lease, and in connection therewith, gives notice in writing thereof to the Landlord (
Head Lease Termination Notice
);
|
(ii)
|
notifies the Landlord of the revocation of its consent to the Tenancy Agreement (
Revocation Notice
); or
|
(iii)
|
becomes entitled to and re-enters the Property or any part thereof in the name of the whole, or
|
(b)
|
if upon the expiration of the initial leasehold term of 30 years under the Head Lease, the Head Lessor does not grant the further term of 30 years from the expiry of the said initial leasehold term,
|
5.16
|
Landlord May Assign
:
|
(a)
|
The Landlord may assign or charge all of its rights and benefits under this Tenancy Agreement to any lender of the Landlord or any mortgagee of the Property.
|
(b)
|
The Tenant acknowledges that the Landlord's rights and benefits under this Tenancy Agreement must accrue to the owner for the time being of the Property and that:
|
(i)
|
the Landlord shall be entitled to assign or transfer its rights and benefits under this Tenancy Agreement to any trustee for the time being of REIT; and
|
(ii)
|
on any disposal of the Property by any owner of the Property (including, without limitation, the Landlord or any trustee for the time being of REIT, such owner shall be entitled to, assign or transfer its rights and benefits under this Tenancy Agreement to any subsequent purchaser(s) of the Property.
|
(c)
|
Upon such assignment or transfer, the Tenant:
|
(i)
|
is treated to have consented to such assignment or transfer;
|
(ii)
|
must accept any transferee of the Landlord as its new Landlord;
|
(iii)
|
must release the Landlord from all its obligations in this Tenancy Agreement, particularly,
|
(iv)
|
must become a party to and sign any agreement with the Landlord and its transferee relating to the said assignment or transfer, if required by the Landlord. Such agreement will be prepared by the Landlord at its own cost and expense.
|
(a)
|
it has full power and authority to enter into, exercise its rights and perform and comply with its obligations (where applicable) under this Tenancy Agreement, and all transactions arising from and in connection to the same and this Tenancy Agreement constitutes legal valid binding and enforceable obligation on its part;
|
(b)
|
all actions, conditions and things required to be taken, fulfilled and done (including without limitation the obtaining of any necessary consents or licences or the making of any filing or registration) in order to (i) enable it lawfully to enter into, exercise its rights and perform and comply with its obligations (where applicable) under this Tenancy Agreement, and all transactions relating to the same; and (ii) ensure that those obligations which are legally binding and enforceable have been taken, fulfilled and done; and
|
(c)
|
its entry into, exercise of its rights and/or performance of or compliance with its obligations (where applicable) under this Tenancy Agreement, and all transactions
|
(i)
|
any law, regulation, authorisation, directive or order (whether or not having the force of law) to which it is subject; or
|
(ii)
|
the memorandum and articles and constitutive documents of it; or
|
(iii)
|
any agreement to which it is a party or which is binding on it; or
|
(iv)
|
any order, judgement or decree of any court or any governmental department or the Authorities.
|
(i)
|
(if the Building is subdivided and registered under the Act) the parts of the Building which are within the definition of common property under the Act; or
|
(ii)
|
(if the Building is not subdivided and registered under the Act) the parts of the Building which would reasonably be treated as common parts of the Building for common use or benefit if the Building had been subdivided and registered under the Act;
|
(i)
|
half the thickness of the walls/partitions/glass (as may be the case) which form the external boundaries of the Premises; and
|
(ii)
|
the area occupied by all pillars, columns, mullions and projections within the Premises.
|
1.2
|
General
:
|
(a)
|
Interpretation of restrictions on the Tenant
: In any case where the Tenant is placed under a restriction by reason of the covenants and conditions contained in this Tenancy Agreement, the restriction shall be deemed to include the obligation on the Tenant not to permit or allow the infringement of the restriction by any person claiming rights to use, enjoy or visit the Property through, under or in trust for the Tenant.
|
(b)
|
Schedules and Annexures
: The Schedules and Annexures hereto shall be taken, read and construed as parts of this Tenancy Agreement and the provisions thereof shall have the same force and effect as if expressly set out in the body of this Tenancy Agreement.
|
(c)
|
Clause and paragraph headings
: The clause and paragraph headings in this Tenancy Agreement are inserted for ease of reference only and shall not be taken into account in the construction or interpretation of any covenant, condition or proviso to which they refer.
|
(d)
|
Singular and plural meanings
: Words in this Tenancy Agreement importing the singular meaning shall where the context so admits include the plural meaning and vice versa.
|
(e)
|
Statutes and statutory instruments
: References in this Tenancy Agreement to any statutes or statutory instruments shall include and refer to any statute or statutory instrument amending, consolidating or replacing them respectively from time to time and for the time being in force.
|
(f)
|
Gender
: Words in this Tenancy Agreement for the masculine gender shall include the feminine and neuter genders and vice versa and words denoting
|
(g)
|
Joint and several obligations
: Where two or more persons are included in the term Tenant, all covenants, agreements, terms, conditions and restrictions shall be binding on and applicable to them jointly and each of them severally, and shall be binding on and applicable to their personal representatives and permitted assigns respectively jointly and severally.
|
1.
|
Date
|
|
December 8, 2016
|
2.
|
Landlord
|
|
|
|
Name
|
:
|
RBC INVESTOR SERVICES TRUST SINGAPORE LIMITED
in its capacity as trustee of Cambridge Industrial Trust
|
|
Company Registration No.
|
:
|
199504677Z
|
|
Country of Incorporation
|
:
|
Singapore
|
|
Registered Office Address
|
:
|
77 Robinson Road
#18-00 Robinson 77
Singapore 068896
|
|
Telephone No
|
:
|
62301988
|
3.
|
Tenant
|
|
|
|
Name
|
:
|
Cyberoptics (Singapore) Private Limited
|
|
Company Registration No.
|
:
|
200103162D
|
|
Country of Incorporation
|
:
|
Singapore
|
|
Registered Office Address
|
:
|
21 Ubi Road 1 #02-01
Singapore 408724
|
|
Telephone No
|
:
|
68445331
|
4.
|
Property
|
|
|
|
Address
Name
|
:
:
|
21 Ubi Road 1
Singapore 408724
such name as may be decided by the Landlord and approved by the relevant authorities
|
5.
|
Premises
|
|
|
|
Building Level
|
:
|
Level 2
|
|
Unit No(s).
|
:
|
#02-01
|
|
Demarcation
|
:
|
(for purpose of identification only) edged in red on the attached plan marked Annexure A
|
Unit No
|
Area (sft)
|
#02-01
|
19,805.58 square feet
|
7.
|
Term
|
8.
|
Security Deposit Amount
|
9.
|
Permitted Use
|
|
|
25 July 2017 to 24 July 2018
|
25 July 2018 to 24 July 2020
|
(a)
|
Rent Rate
(per square foot per month)
|
$1.80
|
$1.90
|
(b)
|
Month Rent
(per month)
|
$35,650.04
|
$37,630.60
|
(c)
|
Service Charge
(per square foot per month)
|
$0.60
|
$0.60
|
(d)
|
Monthly Service Charge
(per month)
|
$11,883.35
|
$11,883.35
|
(e)
|
Total monthly rent & service charge
(per month)
|
$47,533.39
|
$49,513.95
|
13.
(a)
(b)
(c)
(d)
(e)
|
Any Other Terms and Conditions
HDB sublet fees for the lease period
The amount of sublet fees shall be determined by HDB and subject to revision at each application. The HDB sublet fee shall be borne by Tenant.
Mode of Rental Payment
Tenant to pay monthly rent via GIRO.
Allocation of Carpark Lots
Landlord will allocate 4 complimentary carpark lots to the Tenant. As Landlord has appointed a third party carpark operator during the lease term, Tenant shall liaise with the appointed carpark operator directly on additional allotment of carpark lots and the carpark fees chargeable.
Reinstatement
The Tenant shall reinstate the Premises in the original condition upon the expiry of their tenancy period.
Air-Conditioning Hours
Air-conditioning will only be supplied from 0800 to 1800 (Mondays to Fridays, excluding Public Holidays).
Tenant is required to submit their request to the Landlord in advance should they require air-conditioning beyond the stipulated time, on weekend or public holiday. Additional request for air-conditioning beyond the stipulated time will be chargeable at S$100.00 per hour (minimum 2 hours).
|
1.
|
To keep the Premises and the Landlord's fixtures and fittings therein including without limiting the generality of the foregoing, all doors, locks, window frames, window glass, window fittings, floors, interior plaster and other finishing materials and rendering to walls and ceiling, drainage, water and other pipes and sanitary water, gas and electrical apparatus and wiring, air-conditioning and other installations from the points where the supplies enter into meters that may serve the Premises in good clean tenantable substantial and proper repair and condition (fair wear and tear alone excepted) and to so maintain the same at the expense of the Tenant and not to substitute or replace any external window of the Building but upon any window becoming damaged, broken or defective to give notice to the Landlord.
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2.
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The Tenant particularly agrees:
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(a)
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to reimburse the Landlord the cost of replacing all windows broken or damaged by the negligence of the Tenant or its employees, customers, invitees or licensees;
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(b)
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to preserve and protect the fire detection and fire fighting installations provided by the Landlord within the Premises against possible damage or unauthorised interference and to indemnify the Landlord against all costs claims and damages arising from all damage thereto;
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(c)
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to be wholly responsible for any damage or injury caused to any other person whomsoever directly or indirectly through the defective or damaged condition of any part of the Premises and to make good the same by payment or otherwise and to indemnify the Landlord against all costs, claims, demands, actions, liabilities and legal proceedings whatsoever made upon the Landlord by any person in respect thereof;
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(d)
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to make good to the satisfaction of the Landlord any damage or breakage caused to any part of the Premises and/or the Building and/or to the Landlord's fixtures and fittings by the transportation of the Tenant's goods or effects or as a consequence of any neglect or malicious act or default of the Tenant its employees or invitees.
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3.
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Waste collection service
: All waste disposals from the property, be it the Tenant's or the sub-Tenants' refuse, shall strictly follow the guidelines set by the Environment Public Health Act.
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4.
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Pest control service
: The Tenant shall regularly examine and exterminate all pests including and not limited to rodents, cockroaches, ants and termites in the Property at least once a month.
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5.
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Other periodic property maintenance programs
:
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(a)
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Ensure good up keeping of signage(s) and renewal of the relevant certificate(s).
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(b)
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The windows and doors are regularly painted and kept in a good state of repair.
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(c)
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The Premises is kept clean and free from scribbling or drawings on walls, floors or ceilings.
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(d)
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Adequate ventilation and lighting are provided in all common and circulation areas and lifts, and any blown fuses, bulbs or defective wires and switches are immediately replaced.
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(e)
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Roofing and gutters, when damaged, are to be repaired as soon as possible.
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(f)
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All drawings are to be kept at the maintenance department at all times. This is to ensure proper control of the building services records.
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·
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Conventional banking, conventional retail finance, conventional insurance and conventional stockbrokerage business;
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·
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Alcoholic beverages;
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·
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Beverages containing alcohol, regardless of % content;
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·
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Food containing alcohol, regardless of % content;
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·
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Pornography, lewd and sexually suggestive materials;
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·
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Food containing pork, lard and any produce derived from pigs, regardless of % content;
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·
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Consumable food related by-product and food related ingredients or enhancer containing produce derived from pigs, regardless of content;
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·
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Cosmetics, perfumery and other forms of beauty enhancer applied externally or otherwise, which contain alcohol, regardless of % content;
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·
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Any gadget, device or mechanism of any description, the primary purpose of which is to enable user to engage in any game of wager or gambling, regardless of motive behind such engagement;
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·
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Weaponry, ammunition or other device, gadget or mechanism of any description, the primary purpose of utilisation is capable of inflicting bodily harm to humans and may depending on severity of application, result in death to humans; and
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·
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Cigarette, cigar and any other device or gadget, the net of effect of usage thereof is to, seek relaxation through exhalation of smoke after inhalation of substance deemed harmful to bodily health of humans.
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1.
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Advertisement Licence;
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2.
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Vehicle Parking Certificate Parking Place Licence;
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3.
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Foodshop Licence;
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4.
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Dangerous Goods Licence;
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5.
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Flammable Materials Licence; and
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6.
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Any other requirements by Authorities, where such requirements are imposed due to the Tenant's or Sub-Tenants' use or requirements.
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SIGNED by
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for and on behalf of
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RBC INVESTOR SERVICES TRUST
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SINGAPORE LIMITED
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|||
(in its capacity as trustee of
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Cambridge Industrial Trust)
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in the presence of:
|
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|
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/s/ Farrah Begum Binte Abdul Salam
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Name: Farrah Begum Binte Abdul Salam
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|
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Designation: Authorised Signatory
|
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/s/ Debbie Yang Huashi
|
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Name: Debbie Yang Huashi
|
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|
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Designation: Authorised Signatory
|
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/s/ Tham Guang Zhen Andre
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|
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Witness' signature
|
|
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|
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Name: Tham Guang Zhen Andre
|
|
|
|
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Identity Card / Passport No: S9039812A
|
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|
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Signed by Jeffrey Bertelsen
|
|
|
|
|
for and on behalf of
|
|
|
|
|
CYBEROPTICS (SINGAPORE) PRIVATE
|
|
|
|
|
LIMITED
|
|
|
|
|
In the presence of: David Hatteberg
|
|
|
|
|
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|
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/s/ Jeffrey Bertelsen
|
|
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|
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Name: Jeffrey Bertelsen
|
|
|
|
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Designation: Executive Vice President
|
|
|
|
|
CFO/COO and Director
|
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|
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|
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/s/ David Hatteberg
|
|
|
|
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Witness' Signature
|
|
|
|
|
Name: David Hatteberg
|
|
|
|
|
Identity Card / Passport No: 439903670
|
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|
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Name
|
|
Jurisdiction of Formation
|
|
|
|
CyberOptics Ltd.
|
|
United Kingdom
|
|
|
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CyberOptics Holdings Ltd.
|
|
United Kingdom
|
|
|
|
CyberOptics (Singapore) Pte. Ltd
|
|
Singapore
|
|
|
|
Laser Design, Inc.
|
|
Minnesota
|
|
|
|
CyberOptics (China) Co., Ltd.
|
|
People’s Republic of China
|
1.
|
I have reviewed this Annual Report on Form 10-K of CyberOptics Corporation.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Subodh Kulkarni
|
|
Signature
|
|
Name: Subodh Kulkarni
|
|
Title: President and CEO
|
1.
|
I have reviewed this Annual Report on Form 10-K of CyberOptics Corporation.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Jeffrey A. Bertelsen
|
|
Signature
|
|
Name: Jeffrey A. Bertelsen
|
|
Title: Vice President, CFO and COO
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Subodh Kulkarni
|
|
Subodh Kulkarni
|
|
President and CEO
|
|
March 14, 2017
|
|
|
|
/s/ Jeffrey A. Bertelsen
|
|
Jeffrey A. Bertelsen
|
|
Vice President, CFO and COO
|
|
March 14, 2017
|