FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the Quarterly period ended October 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from to
Commission file number 1-6711
OEA,INC.
(Exact name of registrant as specified in its charter)
Delaware 36-2362379
(State or other jurisdiction of (I.R.S.Employer Identification
incorporation or organization) Number)
P. O. Box 100488, Denver, Colorado 80250
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 693-1248
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
20,497,690 Shares of Common Stock at December 8, 1995.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Index to Financial Statements Page No.
--------
Consolidated Condensed Balance Sheets
October 31, 1995 (unaudited)
and July 31, 1995............................... 2
Consolidated Condensed Statements
of Earnings (unaudited)
Three Months Ended
October 31, 1995 and 1994....................... 3
Consolidated Condensed Statements
of Cash Flows (unaudited) Three Months
Ended October 31, 1995 and 1994................. 4
1
<PAGE>
OEA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
October 31, 1995 July 31, 1995
Current Assets: ............................................................................... (Unaudited)
<S> <C> <C>
Cash and Cash Equivalents ................................................................ $ 19,881,190 $ 19,342,034
Accounts Receivable, Net ................................................................. 21,689,587 23,879,495
Unbilled Costs and Accrued Earnings ...................................................... 6,192,500 3,974,500
Income Taxes Receivable .................................................................. 1,665,108 2,476,800
Inventories
Raw Material and Component Parts .................................................... 12,241,993 11,316,265
Work-in-Process ..................................................................... 10,360,268 10,754,339
Finished Goods ...................................................................... 3,096,645 2,586,202
--------- ---------
25,698,906 24,656,806
Prepaid Expenses and Other Current Assets ................................................ 646,056 541,724
------- -------
Total Current Assets ........................................................... 75,773,347 74,871,359
---------- ----------
Cash Value of Life Insurance .................................................................. 363,508 363,508
------- -------
Property, Plant and Equipment ................................................................. 117,161,372 110,721,515
Less: Accumulated Depreciation .......................................................... 33,594,743 31,276,450
---------- ----------
Property, Plant and Equipment, ................................................. 83,566,629 79,445,065
Net
Long-Term Receivable .......................................................................... 3,000,000 3,000,000
--------- ---------
Investment in Foreign Joint Venture ........................................................... 2,876,737 2,829,554
--------- ---------
Other Assets .................................................................................. 388,237 392,349
------- -------
Total Assets ................................................................... $ 165,968,458 $ 160,901,835
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable ......................................................................... $ 4,680,166 $ 5,769,163
Accrued Expenses ......................................................................... 2,477,985 5,106,831
Deferred Income .......................................................................... 206,168 206,168
Federal and State Income Taxes ........................................................... 4,058,031 1,078,113
--------- ---------
Total Current Liabilities ...................................................... 11,422,350 12,160,275
Deferred Compensation Payable ................................................................. 974,916 944,339
Deferred Income Taxes ......................................................................... 5,771,775 5,771,775
Deferred Income ............................................................................... 216,735 216,735
------- -------
Total Liabilities .............................................................. 18,385,776 19,093,124
---------- ----------
Minority Interest ............................................................................. 1,352,243 1,456,378
Stockholders' Equity:
Common Stock - $.10 par value, Authorized 50,000,000
shares:
Issued - 22,019,700 shares .......................................................... 2,201,970 2,201,970
Additional Paid-In Capital ............................................................... 12,021,633 12,012,450
Retained Earnings ........................................................................ 132,936,847 126,849,357
Less: Cost of Treasury Shares, 1,528,797 and 1,533,072.............................. (1,865,703) (1,869,483)
Equity Adjustment from Translation ....................................................... 935,692 1,158,039
------- ---------
Total Stockholders' Equity ..................................................... 146,230,439 140,352,333
----------- -----------
Total Liabilities and Stockholders' Equity...................................... $ 165,968,458 $ 160,901,835
============= =============
</TABLE>
2
<PAGE>
OEA, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31,
1995 1994
<S> <C> <C>
Net Sales .................................................. $ 34,569,386 $ 28,015,886
Cost of Sales .............................................. 22,517,106 17,938,560
---------- ----------
Gross Profit ..................................... 12,052,280 10,077,326
General and Administrative Expenses ........................ 1,632,319 1,457,584
Research and Development Expenses .......................... 769,476 573,133
------- -------
Operating Profit ................................. 9,650,485 8,046,609
Other Income (Expense):
Interest Income ....................................... 315,513 94,473
Interest Expense ...................................... (13,004) (13,709)
Other, Net ............................................ (125,150) (413,950)
Expenses from Settlement of Environmental Matters .. (1) -- (2,250,000)
-------- -----------
177,359 (2,583,186)
Earnings Before Minority Interest and Income Taxes 9,827,844 5,463,423
Minority Interest in Net Loss/(Gain) of Consolidated ..
Subsidiary (3,639) 97,401
------- ------
Earnings Before Income Taxes ..................... 9,824,205 5,560,824
Federal and State Income Tax Expense ....................... 3,736,716 3,269,042
--------- ---------
Net Earnings ..................................... $ 6,087,489 $ 2,291,782
============ ============
Earnings Per Share ............................... $ 0.30 $ 0.11
============ ============
Weighted Average Number of Shares Outstanding .............. 20,487,872 20,468,163
========== ==========
</TABLE>
Note: (1) On December 13, 1994, the Company reached a final settlement in
its environmental litigation in the net amount of $2,250,000.
3
<PAGE>
OEA, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31,
1995 1994
Operating Activities:
<S> <C> <C>
Net Earnings ......................................... $ 6,087,489 $ 2,291,782
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Undistributed (earnings)/loss of foreign joint venture (47,183) 12,162
Depreciation and amortization ........................ 2,412,874 1,488,532
Increase in deferred compensation payable............. 30,577 15,189
Loss on disposal of property, plant and equipment..... 49,685 122,388
Changes in operating assets and liabilities:
Accounts receivable ............................. 2,956,896 7,754,275
Unbilled costs and accrued earnings.............. (2,218,000) (2,766,379)
Inventories ..................................... (1,056,695) 327,327
Prepaid expenses and other ...................... (105,060) 221,431
Accounts payable and accrued expenses............ (3,677,985) (3,697,993)
Minority interest in gain/(loss) of consolidated
subsidiary......................................... 3,639 (97,401)
Settlement of Environmental Litigation ............ -- 2,250,000
Income taxes payable .............................. 2,979,918 2,829,040
--------- ---------
Net cash provided by operating activities..... 7,416,155 10,750,353
Investing activities:
Additions/(reductions) to investments in and advances (107,775) --
to affiliates
Capital expenditures ................................. (6,734,723) (3,318,793)
Proceeds from sale of property, plant, and equipment . 12,800 20,099
Decrease in Investment of Foreign Joint Venture....... -- 100,000
Decrease in other assets, net ........................ 4,114 4,114
----- -----
Net cash used in investing activities....... (6,825,584) (3,194,580)
Financing activities:
Purchases of common stock for treasury ............... -- --
Proceeds from issuance of treasury stock.............. 12,963 38,317
------ ------
Net cash provided by financing activities... 12,963 38,317
Effect of exchange rate changes on cash .... (64,378) --
------- ------
Net increase in cash and cash equivalents... 539,156 7,594,090
Cash and cash equivalents at beginning of period........... 19,342,034 4,820,669
---------- ---------
Cash and cash equivalents at end of period ................ $ 19,881,190 $ 12,414,759
============ ============
</TABLE>
4
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
A summary of the period to period changes in the principal items
included in the consolidated statements of earnings is shown below:
<TABLE>
<CAPTION>
Comparisons of
--------------
Three Months
Ended October 31, 1995 and 1994
Increase (Decrease)
------------------------------
<S> <C> <C>
Net Sales .................................. $6,553,500 23.4%
Cost of Sales .............................. 4,578,546 25.5%
General and Administrative
Expenses .............................. 174,735 12.0%
Research and Development
Expenses .............................. 196,343 34.3%
Net Earnings ............................... 3,795,707 165.6%
</TABLE>
4
<PAGE>
NET SALES
- ---------
The 23.4% increase in sales for the three months ended October 31,
1995, as compared to the prior-year period, was the result of
increased sales in both the automotive segment and the nonautomotive
segment. Sales for the automotive segment continued to increase due
to increased demand for driver and passenger side air bags for both
domestic and foreign automobile manufacturers. First quarter sales
for the automotive segment increased 28.0% to $24,851,400, as compared
to the prior-year period. Current year automotive sales are projected
to continue this strong growth over last year. Sales for the
nonautomotive segment over prior-year increased 12.9% for the three
months ended October 31, 1995, as compared to the prior-year period.
Nonautomotive sales for fiscal year 1996 are expected to be higher
than fiscal year 1995.
COST OF SALES
- -------------
Cost of sales increased by 25.5% for the three months ended October
31, 1995, as compared to the prior-year period. This was primarily
attributed to the increased sales of the automotive segment. Cost of
sales was further increased by production costs associated with
Pyroindustrie, OEA's new automotive subsidiary in France, which began
deliveries of air bag initiators late in the second quarter of fiscal
year 1995, and by start-up costs associated with OEA's passenger-side
hybrid inflator, which is expected to begin high volume production in
the third quarter of the current fiscal year.
GENERAL AND ADMINISTRATIVE EXPENSES
- -----------------------------------
General and Administrative expenses increased by $174,700 for the
three months ended October 31, 1995, as compared to the prior-year
period. The increase for the current period is primarily due to
expenses associated with the Pyroindustrie facility in France, which
was not operational in the prior-year period.
RESEARCH AND DEVELOPMENT EXPENSES
- ---------------------------------
Research and Development costs were $769,500 for the three months
ended October 31, 1995, as compared to $573,100 for the prior-year
period. These costs are expected to continue to increase for the
remainder of fiscal year 1996 due to continued development of
passenger, driver and side-impact hybrid inflators.
6
<PAGE>
NET EARNINGS
- ------------
The increase in net earnings of $3,795,700 for the three months ended
October 31, 1995, as compared to the prior-year period, is primarily
attributable to last year's settlement of the Company's environmental
matters in the net amount of $2,250,000, and to increased earnings
from operations in both the automotive and nonautomotive segments.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's working capital at October 31, 1995, increased to
$64,351,000. During the three-month period ended October 31, 1995,
the Company made capital expenditures totaling approximately
$6,734,700 which were funded from operations. The Company maintains
an $8,000,000 Revolving Credit Agreement with its principal bank and
at October 31, 1995, had no outstanding balance against this line of
credit. Anticipated working capital requirements, capital
expenditures, and facility expansions are expected to be met through
internally generated funds and, when necessary, borrowings from the
agreement mentioned above, which can be increased when required.
Foreign Currency Translation
- ----------------------------
Assets and liabilities of the Company's foreign subsidiary are
translated to U.S. dollars at period-end exchange rates. Income and
expense items are translated at average exchange rates prevailing
during the period. The local currency is used as the functional
currency for the subsidiary. A translation adjustment results from
translating the foreign subsidiary's accounts from functional
currencies to U.S. dollars. Exchange gains (losses) resulting from
foreign currency transactions are included in the consolidated
statements of earnings.
The unaudited financial statements furnished above reflect all adjustments
(consisting primarily of normal recurring accruals) which are, in the
opinion of OEA's management, necessary for a fair statement of the results
for the three-month period ended October 31, 1995.
Refer to the Company's annual financial statements for the year ended July
31, 1995, for a description of the accounting policies, which have been
continued without change. Also, refer to the footnotes with those
financial statements for additional details of the Company's financial
condition, results of operations, and changes in financial position. The
details in those notes have not changed except as a result of normal
transactions in the interim.
7
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults on Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
OEA, INC.
(Registrant)
December 14, 1995
Date Paul J. Martin
Vice President/Treasurer
December 14, 1995
Date Ahmed D. Kafadar
Chairman and
Chief Executive Officer
9
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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(Replace this text with the legend)
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<CIK>0000073864
<NAME> OEA, INC./DE/
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 19,881,190
<SECURITIES> 0
<RECEIVABLES> 21,689,587
<ALLOWANCES> 0
<INVENTORY> 25,698,906
<CURRENT-ASSETS> 75,773,347
<PP&E> 117,161,372
<DEPRECIATION> 33,594,743
<TOTAL-ASSETS> 165,968,458
<CURRENT-LIABILITIES> 11,422,350
<BONDS> 0
<COMMON> 2,201,970
0
0
<OTHER-SE> 144,028,469
<TOTAL-LIABILITY-AND-EQUITY> 165,968,458
<SALES> 34,569,386
<TOTAL-REVENUES> 34,569,386
<CGS> 22,517,106
<TOTAL-COSTS> 24,918,901
<OTHER-EXPENSES> 203,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,004
<INCOME-PRETAX> 9,824,205
<INCOME-TAX> 3,736,716
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<NET-INCOME> 6,087,489
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</TABLE>
