===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-Q
------------------
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1995
COMMISSION FILE NO. 1-4474
--------------------------
OAK INDUSTRIES INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-1569000
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
BAY COLONY CORPORATE CENTER
1000 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
(Address of principal executive offices)
(617) 890-0400
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
Indicate number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
As of October 31, 1995, the Company had outstanding 17,583,800 shares of
Common Stock, $0.01 par value per share.
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
ASSETS
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
(Unaudited)
--------------------- ---------------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents....................... $ 19,535 $ 37,648
Receivables, less reserve....................... 44,259 31,731
Inventories:
Raw materials................................. $ 12,598 $ 9,652
Work in process............................... 27,715 18,446
Finished goods................................ 12,251 52,564 7,540 35,638
--------- ---------
Other current assets............................ 16,292 14,550
-------- --------
Total current assets......................... 132,650 119,567
Plant & Equipment, at cost........................ 118,877 100,452
Less - Accumulated depreciation................... (69,243) 49,634 (63,879) 36,573
--------- ---------
Deferred Income Taxes............................. 25,822 31,750
Goodwill and Other Intangible Assets, less
accumulated amortization of $10,076 and $8,374.. 82,154 75,960
Other Assets...................................... 29,360 17,791
-------- --------
Total Assets................................. $319,620 $281,641
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt............... $ 14,697 $ 13,118
Accounts payable................................ 20,383 12,558
Accrued liabilities............................. 25,751 21,823
-------- --------
Total current liabilities.................... 60,831 47,499
Other Liabilities................................. 13,036 6,058
Long-term Debt.................................... 99,269 34,403
Minority Interest................................. 33,523 26,531
Stockholders' Equity:
Common stock.................................... 175 175
Additional paid-in capital...................... 279,703 278,976
Accumulated deficit............................. (165,711) (109,404)
Other........................................... (1,206) 112,961 (2,597) 167,150
--------- -------- --------- --------
Total Liabilities and Stockholders' Equity... $319,620 $281,641
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales............................................ $ 65,042 $ 58,400 $203,574 $185,866
Cost of sales........................................ (39,505) (36,597) (122,551) (116,489)
-------- -------- -------- --------
Gross margin......................................... 25,537 21,803 81,023 69,377
Selling, general and administrative expenses......... (13,222) (11,440) (38,672) (34,071)
Purchased in-process research and development........ (80,872) - (80,872) -
-------- -------- -------- --------
Operating income (loss).............................. (68,557) 10,363 (38,521) 35,306
Interest expense..................................... (1,469) (1,441) (4,068) (4,922)
Interest income...................................... 451 406 1,426 908
Equity in net income of affiliated companies......... 236 611 1,171 1,646
Other income ........................................ - 105 168 638
-------- -------- -------- --------
Income (loss) from continuing operations before
income taxes, minority interest and
extraordinary charge............................... (69,339) 10,044 (39,824) 33,576
Income taxes......................................... (4,496) (945) (7,135) (2,166)
Minority interest in net income of subsidiaries...... (2,400) (1,733) (7,738) (6,366)
-------- -------- -------- --------
Income (loss) from operations before
extraordinary charge............................... (76,235) 7,366 (54,697) 25,044
Extraordinary charge for early extinguishment
of debt, net of income tax benefit of $1,506
and minority interest benefit of $746.............. (1,610) - (1,610) -
-------- -------- -------- --------
Net income (loss).................................... $(77,845) $ 7,366 $(56,307) $ 25,044
======== ======== ======== ========
Income (loss) per common share:
Before extraordinary charge........................ $ (4.08) $ .40 $ (2.94) $ 1.36
Extraordinary charge............................... (.09) - (.09) -
-------- -------- -------- --------
Net income (loss).................................... $ (4.17) $ .40 $ (3.03) $ 1.36
======== ======== ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
----------------------
1995 1994
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM:
OPERATING ACTIVITIES:
Net Income (Loss)........................................... $ (56,307) $ 25,044
Adjustments to reconcile net income (loss) to net cash
provided by operations:
Purchased in-process research and development charge.... 80,872 -
Extraordinary charge for early extinguishment of debt... 1,610 -
Depreciation and amortization........................... 8,640 7,661
Change in minority interest............................. 7,738 6,366
Change in assets and liabilities, net of effects
from acquisition of businesses........................ (10,804) (153)
Other................................................... (1,928) (3,626)
--------- ---------
Net cash provided by operations............................... 29,821 35,292
--------- ---------
INVESTING ACTIVITIES:
Capital expenditures........................................ (11,261) (4,751)
Acquisitions of businesses, net of cash acquired............ (100,019) (8,309)
Other....................................................... 277 326
--------- ---------
Net cash used in investing activities......................... (111,003) (12,734)
--------- ---------
FINANCING ACTIVITIES:
Long-term borrowings........................................ 114,000 -
Repayment of borrowings..................................... (22,315) (13,892)
Early retirement of debt.................................... (28,610) -
Other....................................................... (1,186) 238
--------- ---------
Net cash provided by (used in) financing activities........... 61,889 (13,654)
--------- ---------
Effect of exchange rates...................................... 1,180 420
--------- ---------
CASH AND CASH EQUIVALENTS:
Net change during the period................................ (18,113) 9,324
Balance, beginning of period................................ 37,648 27,367
--------- ---------
Balance, end of period...................................... $ 19,535 $ 36,691
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
OAK INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements have been prepared by
Oak Industries Inc. (the "Company") without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes that the disclosures made in this report
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K. In the opinion of the
Company, all adjustments, consisting only of normal recurring adjustments
necessary to present fairly the financial position of Oak Industries Inc.
and subsidiaries as of September 30, 1995 and December 31, 1994, and the
results of their operations for the three and nine month periods ending
September 30, 1995 and 1994, and cash flows for the nine month periods
ending September 30, 1995 and 1994 have been included. The results of
operations for such interim periods are not necessarily indicative of the
results for the full year.
2. Income (loss) per common share amounts are based on the weighted
average number of shares of common stock and common stock equivalents
outstanding as follows:
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------------ ------------------------
1995 1994 1995 1994
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Primary......... 18,678,724 18,435,640 18,613,464 18,411,408
</TABLE>
3. Interest paid on debt for the three months ending September 30, 1995
and 1994 was $532,000 and $1,180,000, respectively, and for the nine months
ending September 30, 1995 and 1994, was $2,806,000 and $3,925,000,
respectively. Income taxes paid during the three months ended September
30, 1995 and 1994 was $1,020,000 and $485,000, respectively, and during the
nine months was $2,857,000 and $1,218,000, respectively.
4. On September 6, 1995 the Company acquired all of the outstanding common
stock of Lasertron, Inc. ("Lasertron"), a Burlington, Massachusetts
manufacturer of fiber optic components for the telecommunications and CATV
industries for approximately $108,238,000, including transaction expenses.
Lasertron had cash of $8,219,000 at the time of the acquisition. In
addition the Company assumed all of Lasertron's outstanding and unexercised
stock options to purchase shares of its common stock. Upon exercise of
such options, option holders shall receive shares of the Company's common
stock, adjusted to take into account the relative share prices of the
Company and Lasertron. In connection with the assumption of this
obligation, the Company has recorded a liability of approximately
$6,150,000.
The acquisition was accounted for as a purchase and, accordingly,
operating results of this business subsequent to the date of acquisition
were included in the Company's consolidated financial statements. The
excess purchase price over fair value of the net tangible assets acquired
was $88,106,000 of which $80,872,000 was allocated to purchased in-process
research and development and $7,234,000 was allocated to goodwill and other
intangible assets. The purchased in-process research and development was
charged to operations upon acquisition, and the goodwill and other
intangible assets are being amortized over 3 to 10 years.
The purchase price was financed with (i) the proceeds from a
$60,000,000 term loan and $20,000,000 of a $40,000,000 revolving credit
facility issued by various lenders, and (ii) cash of $28,238,000 held by
the Company..
5. On August 30, 1995, the Company entered into a Credit Agreement (the
"Oak Credit Agreement") and the Company's Connector Holding Company
("Connector") and Gilbert Engineering Co., Inc. ("Gilbert") subsidiaries,
entered into a Credit Agreement (the "Gilbert Credit Agreement", together
with the Oak Credit Agreement, the "Credit Facilities") with various
lenders.
The Oak Credit Agreement provides for a $40,000,000 revolving credit
facility, a $60,000,000 Tranche A term loan and a $60,000,000 Tranche B
term loan. The Tranche A term loan and $20,000,000 from the revolving
credit facility were advanced to the Company on September 6, 1995 in
connection with the Company's purchase of the capital stock of Lasertron.
The Tranche B term loan is available only to fund the Company's purchase of the
shares of the capital stock of Connector not presently owned by the
Company. The Company's previously existing $30,000,000 revolving credit
facility was terminated on August 30, 1995.
The Gilbert Credit Agreement provides for an $18,000,000 revolving
credit facility and a $22,000,000 term loan. The proceeds from the term
loan and $6,610,000 of the revolving credit facility were used to refinance
existing indebtedness of Gilbert and Connector.
Borrowings under the Credit Facilities bear interest, at the option of
the Company or Gilbert, either (i) at the prime rate (or, if higher, at
1/2% above the federal funds rate) or (ii) at a spread over the reserve-
adjusted 1,2,3 or 6 month LIBOR. The spread is initially 1% and is subject
to reduction when certain financial tests are met. Borrowings under the
Credit Facilities are secured by pledges of the stock and certain debt
securities of certain of the Company's subsidiaries. In addition, certain
of the Company's subsidiaries have guaranteed the obligations under the
Credit Facilities. The Company and Gilbert are required to meet certain
financial covenants and are prohibited from paying dividends.
The Credit Facilities mature through September 30, 2000. The
$60,000,000 Tranche A term loan under the Oak Credit Agreement and the
$22,000,000 term loan under the Gilbert Credit Agreement are repayable at
the end of each calendar quarter from December 31, 1995 through September
30, 2000.
6. On November 9, 1995, The Company announced that is has entered into a
definitive agreement with Telemundo of Chicago, Inc. to sell the Company's
indirectly held 49% interest in WSNS-TV (Channel 44), a Hispanic television
station located in Chicago. Cash proceeds from the sale of the Company's
equity interest are estimated to be approximately $29,000,000 and will be
used to reduce debt and for other corporate purposes. The Company expects to
report a gain related to this transaction, which is
expected to close in the first quarter of 1996. The transaction is subject
to FCC consent.
7. On June 10, 1994, the Company's subsidiary, Gilbert, acquired all of
the outstanding common stock of Cabel-Con A/S ("Cabel-Con"), a Danish
manufacturer of connectors for the worldwide cable television markets, for
$9,250,000. Cabel-Con had cash of $941,000 at the time of the acquisition.
The acquisition was financed by borrowing on Gilbert's revolving credit
facility in effect at that time. Concurrent with the acquisition, Gilbert
paid off $2,625,000 of Cabel-Con's bank borrowings. The acquisition was
accounted for as a purchase and, accordingly, operating results of this
business subsequent to the date of acquisition were included in the
Company's Consolidated Statement of Operations. Substantially all of the
goodwill resulting from this acquisition is being amortized over 40 years.
8. In the second quarter of 1994, the Company recorded a nonrecurring gain
of $900,000 resulting from the enactment of a new state income tax law. The
Company's income tax liability was reduced, and the benefit was recorded
in the income taxes line in the Consolidated Statement of Operations.
9. Certain items in the 1994 Consolidated Statement of Operations have
been reclassified to conform with the 1995 presentation.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This report has been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information normally
included in annual reports has been condensed or omitted pursuant to such
rules and regulations. It is suggested that this report be read in
conjunction with the Company's latest annual report on Form 10-K, a copy of
which may be obtained by writing to Oak Industries Inc., Bay Colony
Corporate Center, 1000 Winter Street, Waltham, MA 02154.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash decreased by $18.1 million during the first nine
months of 1995 to $19.5 million at September 30, 1995. Operations
generated $29.8 million of cash during the nine months ending September 30,
1995 compared to $35.3 million for the same period in the prior year
primarily due to increased working capital needs resulting from growth in
the Company's businesses. The Company paid $108.2 million of cash,
including transaction expenses, to acquire all of the outstanding stock of
Lasertron, Inc., a Burlington, Massachusetts manufacturer of fiber optic
components for the telecommunications and CATV industries. Lasertron had
cash of $8.2 million at the time of the acquisition. This acquisition was
financed with existing cash balances of $28.2 million and borrowings of
$80.0 million. Cash of $22.3 million was used to repay borrowings, and
$28.6 million of debt at Gilbert and Connector was refinanced. The Company
increased its capital expenditures from $4.8 million in 1994 to $11.3
million in 1995 primarily to automate production processes and to increase
capacity.
On August 30, 1995, the Company entered into a Credit Agreement (the
"Oak Credit Agreement") and the Company's Connector Holding Company
("Connector") and Gilbert subsidiaries, entered into a Credit Agreement
(the "Gilbert Credit Agreement", together with the Oak Credit Agreement,
the "Credit Facilities") with various lenders.
The Oak Credit Agreement provides for a $40.0 million revolving credit
facility, a $60.0 million Tranche A term loan and a $60.0 million Tranche B
term loan. The Tranche A term loan and $20.0 million of the revolving
credit facility were advanced to the Company on September 6, 1995 in
connection with the Company's purchase of the capital stock of Lasertron,
Inc. The Tranche B term loan is available only to fund the Company' s
purchase of the shares of the capital stock of Connector not presently
owned by the Company. The Company's previously existing $30.0 million
revolving credit facility was terminated on August 30, 1995.
The Gilbert Credit Agreement provides for a $18.0 million revolving
credit facility and a $22.0 million term loan. The proceeds from the term
loan and $6.6 million of the revolving credit facility were used to
refinance existing indebtedness of Gilbert and Connector.
Borrowings under the Credit Facilities bear interest, at the option of
the Company or Gilbert, either (i) at the prime rate (or, if higher, at
1/2% above the federal funds rate) or (ii) at a spread over the reserve-
adjusted 1,2,3 or 6 month LIBOR. The spread is initially 1% and is subject
to reduction when certain financial tests are met. Borrowings under the
Credit Facilities are secured by pledges of the stock and certain debt
securities of certain of the Company's subsidiaries. In addition,
certain of the Company's subsidiaries have guaranteed the obligations
under the Credit Facilities. The Company and Gilbert are required to meet
certain financial covenants and are prohibited from paying dividends. All
loans advanced pursuant to the Credit Facilities mature through September
30, 2000. The $60.0 million Tranche A term loan under the Oak Credit
Agreement and the $22.0 million term loan under the Gilbert Credit
Agreement are repayable at the end of each calendar quarter from December
31, 1995 through September 30, 2000.
In addition to the $60.0 million under the Tranche B term loan which is
available only to fund the Company's purchase of the capital stock of
Connector, at September 30, 1995, cash, cash equivalents and unused lines
of credit totaled $48.5 million of which $19.6 million was available only
to Gilbert and $28.9 million was available to the Company for general
corporate purposes, including acquisitions.
On November 9, 1995, the Company announced that it has entered into a
definitive agreement with Telemundo of Chicago, Inc. to sell the Company's
indirectly held 49% interest in WSNS-TV (Channel 44), a Hispanic television
station located in Chicago. Cash proceeds from the sale of the Company's
equity interest are estimated to be approximately $29.0 million and will be
used to reduce debt and for other corporate purposes. The Company expects to
report a gain related to this transaction, which is
expected to close in the first quarter of 1996. The transaction is subject
to FCC consent.
The Company believes its current financial resources are sufficient to
meet its continuing operating requirements, service its long-term debt,
make expected capital expenditures, and provide for future growth.
Although the Company operates internally with several businesses
functioning as profit centers, these businesses are also managed as a
group. That is, if a given business is performing strongly, corporate
management may use this opportunity to invest additional funds in product
development and marketing in another business. Certain agreements
applicable to Gilbert limit Gilbert's ability to make distributions or
advances to the Company.
RESULTS OF OPERATIONS
The Company's operations are conducted in two industry segments, the
Components Segment and the Other Segment. The Company's Components Segment
manufactures connectors for CATV systems and other precision applications,
fiber optic components, frequency control devices, controls for gas and
electric appliances, and electromechanical switches. The Other Segment is
composed of the Company's railway maintenance equipment business.
Third Quarter Results
Consolidated sales for the third quarter of 1995 were $65.0 million, a
$6.6 million, or 11.4%, increase over the third quarter of 1994.
Components Segment sales increased $5.3 million, or 9.7%, and Other Segment
sales increased $1.3 million, or 35.4% (see discussion under "Segment
Data").
<PAGE>
The Company recorded a net loss of $77.8 million in the third quarter
of 1995 compared to income of $7.4 million in the third quarter of 1994.
However, 1995 includes several nonrecurring items, detailed below.
Excluding nonrecurring items, income decreased $2.4 million.
<TABLE>
<CAPTION>
Income ($ millions)
Third Quarter
-------------
1995 1994
---- ----
<S> <C> <C>
Income from operations before
nonrecurring items ................................. $ 5.0 $ 7.4
Purchased in-process research and development (1)...... (80.9) _
Reversal of inventory write-up required by
purchase accounting (2)............................. (.5) _
Tax effect of reversal of inventory write-up (2)....... .2 _
Extraordinary charge for early extinguishment
of debt (3).......................................... (1.6) _
------ ------
Net income (loss)...................................... $(77.8) $ 7.4
====== ======
<FN>
(1) In the third quarter of 1995, the Company recorded a charge of $80.9
million related to purchased in-process research and development in
connection with the Lasertron acquisition.
(2) In the third quarter of 1995, the Company recorded a charge of $0.5
million, included in cost of goods sold, related to the partial reversal of
the write-up of Lasertron inventory required by purchase accounting. The
Company also recorded an income tax benefit of $0.2 million related to this
charge.
(3) In the third quarter of 1995, the Company recorded an extraordinary
charge of $1.6 million, net of taxes and minority interest, related to the
early extinguishment of debt at Gilbert and Connector.
</TABLE>
This $2.4 million decrease in income arises from a $2.9 million
increase in segment operating income, before nonrecurring items, (see
discussion under "Segment Data") offset by several non-operating items.
Income tax expense increased $3.8 million as the Company began recording a
full income tax provision in the third quarter of 1995 for financial
reporting purposes. However, the Company had approximately $85.0 million
of unused net operating loss carryforwards at September 30, 1995 and will
therefore continue to pay minimal federal income taxes until these
carryforwards are utilized. Minority interest expense increased $0.7
million due to higher earnings at Gilbert.
<TABLE>
<CAPTION>
Segment
Segment Data ($ millions) Sales Operating Income
-------------- ----------------
1995 1994 1995 1994
----- ----- ----- -----
<S> <C> <C> <C> <C>
Components.............. $59.9 $54.6 $ 13.8 $11.5
Other................... 5.1 3.8 .9 0.3
----- ----- ------ -----
$65.0 $58.4 $ 14.7 $11.8
===== =====
Nonrecurring items...... (81.4) -
------ -----
$(66.7) $11.8
====== =====
</TABLE>
<PAGE>
Sales of the Components Segment increased $5.3 million, or 9.7%, in the
third quarter of 1995 compared to the third quarter of 1994. Sales of
communications products increased sharply due primarily to growth in
domestic and international markets and to the incremental sales of
Lasertron, acquired in September 1995. Sales of controls products
decreased due primarily to softness in the appliance controls market. The
Company expects this market to remain soft through the fourth quarter of
1995. Components Segment operating income before nonrecurring items
increased $2.3 million, or 20.2%, due to the net sales increase discussed
above. Components Segment order backlog at September 30, 1995, which
includes backlog for Lasertron which was acquired in September 1995, was
$80.1 million, up $33.6 million from September 30, 1994.
Other Segment sales increased $1.3 million, or 35.4%, compared to the
third quarter of 1994 due to an increase in railway repair and maintenance
equipment sales partially offset by a decrease in sales due to the sale of
Carpenter Emergency Lighting in November 1994. Operating income was $0.6
million higher than the third quarter of 1994, due to the sales increase
discussed above. Order backlog for the segment was $1.6 million at
September 30, 1995, down from $2.0 million at September 30, 1994.
Consolidated gross profit for the third quarter before nonrecurring
items increased as a percentage of sales to 40.0% in 1995 from 37.3% in
1994 due to higher sales of higher margin products. Cost of sales in 1995
included $0.5 million of incremental expense related to the partial
reversal of a $2.0 million write-up of Lasertron inventory required by
purchase accounting. The Company expects the remaining $1.5 million to be
expensed in the fourth quarter of 1995.
Nine Month Results
Consolidated sales for the first nine months of 1995 were $203.6 million, a
$17.7 million, or 9.5% increase, over 1994. Components Segment sales
increased $16.3 million, or 9.6%, and Other Segment sales increased $1.4
million or 8.8%. (see discussion under "Segment Data").
The Company recorded a net loss of $56.3 million for the first nine
months of 1995 compared to net income of $25.0 million for the same period
of 1994. However, both periods include nonrecurring items as detailed
below. Excluding nonrecurring items, income increased $2.4 million.
<TABLE>
<CAPTION>
Income ($ millions)
First Nine Months
-----------------
1995 1994
---- ----
<S> <C> <C>
Income from operations before
nonrecurring items ................................. $ 26.5 $ 24.1
Purchased in-process research and development (1)...... (80.9) _
Reversal of inventory write-up required by
purchase accounting (2)............................. (.5) _
Tax effect of reversal of inventory write-up (2)....... .2 _
Extraordinary charge for early extinguishment
of debt (3).......................................... (1.6) _
Gain on state tax law change (4)....................... - 0.9
------ ------
Net income (loss)...................................... $(56.3) $ 25.0
====== ======
<FN>
(1) In the third quarter of 1995, the Company recorded a charge of $80.9
million for purchased in-process research and development in connection
with the Lasertron acquisition.
(2) In the third quarter of 1995, the Company recorded a charge of $0.5
million, included in cost of goods sold, related to the partial reversal of
the write-up of Lasertron inventory required by purchase accounting. The
Company also recorded an income tax benefit of $0.2 million related to this
charge.
(3) In the third quarter of 1995, the Company recorded an extraordinary
charge of $1.6 million, net of taxes and minority interest, related to the
early extinguishment of debt at Gilbert and Connector.
(4) In the second quarter of 1994, the Company recorded a gain of $0.9
million resulting from a state income tax law change.
</TABLE>
The $2.4 million improvement in income for the first nine months
of 1995 results primarily from an $8.6 million increase in segment
operating income (see discussion under "Segment Data") offset in part, by
the net effect of several non-operating items. Income tax expense
increased $4.3 million as the Company began recording a full income tax
provision in the third quarter of 1995 for financial reporting purposes.
However, the Company had approximately $85.0 million of unused net
operating loss carryforwards at September 30, 1995 and will therefore
continue to pay minimal federal income taxes until these carryforwards are
utilized. Minority interest expense increased $1.4 million due to higher
earnings at Gilbert.
<PAGE>
<TABLE>
<CAPTION>
Segment
Segment Data ($ millions) Sales Operating Income
-------------- ----------------
1995 1994 1995 1994
----- ----- ----- -----
<S> <C> <C> <C> <C>
Components.............. $186.3 $170.0 $ 46.0 $38.4
Other................... 17.3 15.9 2.9 1.9
------ ------ ------ -----
$203.6 $185.9 $ 48.9 $40.3
====== ======
Nonrecurring items...... (81.4) -
------ -----
$(32.5) $40.3
====== =====
</TABLE>
Sales of the Components Segment increased $16.3 million, or 9.6%
compared to the first nine months of 1994. Sales of communications
products increased sharply due primarily to growth in domestic and
international markets and to the incremental sales of Cabel-Con, acquired
in June of 1994 and Lasertron, acquired in September 1995. Sales of
controls products decreased due primarily to softness in the appliance
controls market. The Company expects this market to remain soft through
the fourth quarter of 1995. Components Segment operating income excluding
nonrecurring items increased $7.6 million, or 19.8%, from the first nine
months of 1994 due primarily to the sales increase discussed above.
Other Segment sales increased $1.4 million compared to the first nine
months of 1994, as sales increases in the railway repair and maintenance
business were partially offset by a decrease due to the sale of the
Carpenter Emergency Lighting business in November 1994. Operating income
was $1.0 million higher than the prior year due to the sales increase
discussed above and productivity improvements.
Consolidated gross profit before nonrecurring items increased as a
percentage of sales for the first nine months of 1995 to 40.0% from 37.3%
in the comparable 1994 period due to higher sales of higher margin
products. Cost of sales in 1995 included $0.5 million of incremental
expense related to the partial reversal of a $2.0 million write-up of
Lasertron inventory required by purchase accounting. The Company expects
the remaining $1.5 million to be expensed in the fourth quarter of 1995.
PART II. OTHER INFORMATION
ITEM I. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 1994 and to the Company's Quarterly Report on Form
10-Q for the quarters ended March 31, and June 30, 1995.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
27. Financial Data Schedule (Submitted only to the Securities
and Exchange Commission in electronic format for its
information only).
(b) Reports on Form 8-K:
A report on Form 8-K was filed on September 14, 1995 related to
the acquisition by the Company of Lasertron, Inc. and to the new
$200 million credit facilities issued by various lenders. This
Form 8-K includes certain financial statements of Lasertron, Inc.
and pro forma financial information required pursuant to Article
II of Regulation S-X.
<PAGE>
OAK INDUSTRIES INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OAK INDUSTRIES INC.
Date: November 13, 1995 /S/ THOMAS F. SHEEHAN
Thomas F. Sheehan
Vice President and Controller
(Chief Accounting Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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