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 April 30, 1996
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.
20,512,705 Shares of Common Stock at June 10, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Index to Financial Statements Page No.
--------
Consolidated Condensed Balance Sheets
April 30, 1996 (unaudited)
and July 31, 1995............................... 2
Consolidated Condensed Statements
of Earnings (unaudited)
Three Months and Nine Months
Ended April 30, 1996 and 1995................... 3
Consolidated Condensed Statements
of Cash Flows (unaudited) Nine Months
Ended April 30, 1996 and 1995................... 4
-1-
<PAGE>
OEA, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
April 30, 1996 July 31, 1995
-------------- -------------
(Unaudited)
Current Assets:
<S> <C> <C>
Cash and Cash Equivalents ......................................... $ 1,204,830 $ 19,342,034
Accounts Receivable, Net ..............................................26,221,959 23,879,495
Unbilled Costs and Accrued Earnings ................................... 6,977,000 3,974,500
Income Taxes Receivable ................................................ -- 2,476,800
Inventories
Raw Material and Component Parts .................................14,739,316 11,316,265
Work-in-Process ..................................................14,849,344 10,754,339
Finished Goods ....................................................5,036,839 2,586,202
---------- ---------
34,625,499 24,656,806
Prepaid Expenses and Other Current Assets ................................375,875 541,724
-------- -------
Total Current Assets ........................................69,405,163 74,871,359
----------- ----------
Cash Value of Life Insurance ..................................................400,989 363,508
-------- -------
Property, Plant and Equipment .............................................133,542,879 110,721,515
Less: Accumulated Depreciation .......................................38,328,608 31,276,450
----------- ----------
Property, Plant and Equipment, Net ..........................95,214,271 79,445,065
Long-Term Receivable ........................................................3,000,000 3,000,000
Investment in Foreign Joint Venture .........................................3,040,470 2,829,554
Other Assets ................................................................1,096,183 392,349
---------- -------
Total Assets .............................................$ 172,157,076 $ 160,901,835
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable ...................................................$ 5,189,908 $ 5,769,163
Notes Payable ..........................................................1,000,000 --
Accrued Expenses .......................................................3,312,430 5,106,831
Deferred Income ..........................................................206,168 206,168
Federal and State Income Taxes .........................................2,302,990 1,078,113
---------- ---------
Total Current Liabilities ...................................12,011,496 12,160,275
Deferred Compensation Payable .................................................944,339 944,339
Deferred Income Taxes .......................................................5,771,775 5,771,775
Deferred Income ...............................................................216,735 216,735
-------- -------
Total Liabilities ...........................................18,944,345 19,093,124
----------- ----------
Minority Interest in Consolidated Subsidiary ............................... -- 1,456,378
Stockholders' Equity:
Common Stock - $.10 par value, Authorized 50,000,000 shares:
Issued - 22,019,700 shares ........................................2,201,970 2,201,970
Additional Paid-In Capital ............................................12,401,327 12,012,450
Retained Earnings ....................................................140,542,691 126,849,357
Less: Cost of Treasury Shares, 1,510,066 and 1,533,072 ..........(2,102,665) (1,869,483)
Equity Adjustment from Translation .......................................169,408 1,158,039
-------- ---------
Total Stockholders' Equity .................................153,212,731 140,352,333
------------ -----------
Total Liabilities and Stockholders' Equity ...............$ 172,157,076 $ 160,901,835
============= =============
</TABLE>
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OEA, INC.
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended April 30, Nine Months Ended April 30,
1996 1995 1996 1995
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net Sales .................................................... $ 35,907,188 $ 33,979,628 $107,214,679 $ 93,892,191
Cost of Sales ................................................. 21,879,025 21,431,832 67,209,694 60,780,996
---------- ---------- ---------- ----------
Gross Profit ........................................ 14,028,163 12,547,796 40,004,985 33,111,195
General and Administrative Expenses ........................... 1,606,184 1,534,895 5,121,719 4,593,789
Research and Development Expenses ............................. 2,726,124 819,689 5,584,395 2,287,985
--------- ------- --------- ---------
Operating Profit .................................... 9,695,855 10,193,212 29,298,871 26,229,421
Other Income (Expense):
Interest Income .......................................... 98,607 105,876 642,821 297,252
Interest Expense ......................................... (190) (2,407) (70,253) (24,117)
Other, Net ............................................... 222,059 (121,687) 10,506 (482,051)
Expenses From Settlement of Environmental Matters (Note 1) -- -- -- (2,250,000)
Minority Interest in Net Loss of Consolidated Subsidiary -- 206,512 24,594 391,288
-------- ------- ------ -------
320,476 188,294 607,668 (2,067,628)
------- ------- ------- ----------
Earnings Before Income Taxes ........................ 10,016,331 10,381,506 29,906,539 24,161,793
Federal and State Income Tax Expense .......................... 3,434,587 4,270,109 11,079,325 10,703,829
--------- --------- ---------- ----------
Net Earnings ........................................ $ 6,581,744 $ 6,111,397 $ 18,827,214 $ 13,457,964
============ ============ ============= ============
Earnings Per Share .................................. $ 0.32 $ 0.30 $ .92 $ 0.66
============ =========== ============ ===========
Weighted Average Number of Shares Outstanding ................. 20,502,645 20,483,974 20,495,394 20,477,996
========== ========== ========== ==========
Note: (1) On December 13, 1994, the Company reached a final settlement in its
environmental matters in the net amount of $2,250,000.
</TABLE>
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<PAGE>
OEA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended April 30,
1996 1995
------------- --------------
Operating Activities:
<S> <C> <C>
Net Earnings ................................................. $ 18,827,214 $ 13,457,964
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Undistributed earnings of foreign joint venture .............. (210,916) (181,269)
Minority interest in consolidated subsidiary ................. -- 838,187
Depreciation and amortization ................................ 7,521,176 5,193,784
Increase in deferred compensation payable .................... -- 91,728
Loss on disposal of property, plant and equipment ............ 146,549 327,540
Changes in operating assets and liabilities:
Accounts receivable ..................................... 6,023 5,220,972
Unbilled costs and accrued earnings ..................... (3,002,500) (702,879)
Inventories ............................................. (10,111,766) 3,765,453
Prepaid expenses and other .............................. 161,244 289,291
Accounts payable and accrued expenses ................... (2,189,098) (283,976)
Minority interest in loss of consolidated subsidiary .... (24,594) --
Income taxes payable .................................... 1,224,877 (181,122)
--------- --------
Net cash provided by operating activities .......... 12,348,209 27,835,673
---------- ----------
Investing activities:
Additions to investments in and advances to affiliates ....... (1,324,010) --
Capital expenditures ......................................... (24,218,149) (15,467,774)
Proceeds from sale of property, plant, and equipment ......... 36,000 64,949
Decrease in investment in foreign joint venture .............. -- 100,000
Increase in cash value of life insurance ..................... (37,481) --
(Increase) decrease in other assets, net ..................... (713,425) 38,400
-------- ------
Net cash used in investing activities .............. (26,257,065) (15,264,425)
----------- -----------
Financing activities:
Bank borrowings .............................................. 1,000,000 --
Purchases of common stock for treasury ....................... (275,310) --
Proceeds from issuance of treasury stock ..................... 431,003 133,923
Payment of dividends ......................................... (5,124,289) (4,096,415)
---------- ----------
Net cash used in financing activities .............. (3,968,596) (3,962,492)
---------- ----------
Effect of exchange rate changes on cash ............ (259,752) 932,514
Net increase (decrease) in cash and cash equivalents (17,877,452) 8,608,756
Cash and cash equivalents at beginning of period .................. 19,342,034 4,820,669
---------- ---------
Cash and cash equivalents at end of period ........................ $ 1,204,830 $ 14,361,939
============ ============
</TABLE>
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<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 Nine Months
Ended April 30, Ended April 30,
1996 and 1995 1996 and 1995
Increase (Decrease) Increase (Decrease)
-------------------- -------------------
<S> <C> <C> <C> <C>
Net Sales ................................. $1,927,560 5.7% 13,322,488 14.2%
Cost of Sales ............................. 447,193 2.1% 6,428,698 10.6%
General and
Administrative
Expenses .................................. 71,289 4.6% 527,930 11.5%
Research and
Development
Expenses .................................. 1,906,435 232.6% 3,296,410 144.1%
Net Earnings .............................. 470,347 7.7% 5,369,250 39.9%
</TABLE>
-5-
<PAGE>
NET SALES
The 5.7% increase in sales for the three months ended April 30, 1996,
and the 14.2% increase for the nine months ended April 30, 1996, as
compared to prior-year periods, were the result of increased sales in
the automotive segment which were partially offset by decreased sales
in the nonautomotive segment. Sales for the automotive segment
continued to increase due to increased demand for initiators, gas
generators and inflators for air bags for both domestic and foreign
automobile manufacturers. Third quarter sales for the automotive
segment increased 15.6% from $24,989,300 to $28,890,100 and nine-month
sales increased 23.3% from $65,522,700 to $80,781,700, as compared to
prior-year periods. Sales for the nonautomotive segment decreased by
21.9% and 6.8% for the third quarter and the nine months, respectively,
largely due to an accident and a voluntary shut down of certain
operations for a one month period in our Aerospace subsidiary during
the third quarter. Normal operations and shipments have resumed.
COST OF SALES
Cost of sales increased by 2.1% for the three months ended April 30,
1996, and 10.6% for the nine months ended April 30, 1996, as compared
to the prior-year periods. These increases were primarily attributed to
the increased sales of the automotive segment. Costs were further
impacted by start-up costs associated with OEA's passenger-side hybrid
inflator, which began high volume production in the third quarter of
the current fiscal year. The cost of sales, as a percentage of sales,
were as follows:
Three Months ended April 30, 1995 and 1996 63.1% to 60.9%
Nine Months ended April 30, 1995 and 1996 64.7% to 62.7%
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $71,289 for the three
months ended April 30, 1996, and by $527,930 for the nine months ended
April 30, 1996, as compared to the prior-year periods. The increases
for the current periods were primarily due to start-up costs associated
with OEA's passenger-side hybrid inflator. The general and
administrative expenses, as a percentage of sales, were as follows:
Three Months ended April 30, 1995 and 1996 4.5% to 4.5%
Nine Months ended April 30, 1995 and 1996 4.9% to 4.8%
-6-
<PAGE>
RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs increased by $1,906,435 for the three
months ended April 30, 1996, and $3,296,410 for the nine months ended
April 30, 1996, as compared to the prior-year periods. These costs are
expected to remain at a high level for the remainder of fiscal year
1996 due to continued development of passenger, driver and side-impact
hybrid inflators.
NET EARNINGS
Net earnings increased $470,347 for the three months ended April 30,
1996, and $5,369,250 for the nine months ended April 30, 1996, as
compared to prior-year periods. The increase during the third quarter
resulted primarily from increased sales in the automotive segment. The
increase for the nine months was further impacted by the settlement of
the Company's environmental matters in the amount of $2,250,000 in the
prior-year period. Earnings are expected to increase in the fourth
quarter consistent with fiscal year 1996 goals.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital increased during the quarter to
$57,393,700. During the nine-month period ended April 30, 1996, the
Company made capital expenditures totaling approximately $24,218,100
which were funded principally from operations. The Company maintains an
$8,000,000 Revolving Credit Agreement with its principal bank and at
April 30, 1996, had a $1,000,000 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 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.
-7-
<PAGE>
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 and the nine-month periods ended April 30, 1996.
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.
-8-
<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
The Registrant filed a current report on Form 8-K
dated February 21, 1996 reporting information under
Item 5.
-9-
<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)
June 13, 1996
Date Paul J. Martin
Vice President/Treasurer
June 13, 1996
Date Charles B. Kafadar
President
-10-
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000073864
<NAME> OEA, Inc./DE/
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1995
<PERIOD-END> Apr-30-1996
<CASH> 1,204,830
<SECURITIES> 0
<RECEIVABLES> 26,221,959
<ALLOWANCES> 0
<INVENTORY> 34,625,499
<CURRENT-ASSETS> 69,405,163
<PP&E> 133,542,879
<DEPRECIATION> 38,328,608
<TOTAL-ASSETS> 172,157,076
<CURRENT-LIABILITIES> 12,011,496
<BONDS> 0
0
0
<COMMON> 2,201,970
<OTHER-SE> 151,010,761
<TOTAL-LIABILITY-AND-EQUITY> 172,157,076
<SALES> 107,214,679
<TOTAL-REVENUES> 107,214,679
<CGS> 67,209,694
<TOTAL-COSTS> 77,915,808
<OTHER-EXPENSES> (607,668)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 70,253
<INCOME-PRETAX> 29,906,539
<INCOME-TAX> 11,079,325
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,827,214
<EPS-PRIMARY> 0.92
<EPS-DILUTED> 0.92
</TABLE>
