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 January 31, 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.
20,498,190 Shares of Common Stock at March 5, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Index to Financial Statements Page No.
Consolidated Condensed Balance Sheets
January 31, 1996 (unaudited)
and July 31, 1995............................... 2
Consolidated Condensed Statements
of Earnings (unaudited)
Three Months and Six Months
Ended January 31, 1996 and 1995................. 3
Consolidated Condensed Statements
of Cash Flows (unaudited) Six Months
Ended January 31, 1996 and 1995................. 4
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OEA, INC.
-------------
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
January 31, 1996 July 31, 1995
---------------- -------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 6,931,464 $ 19,342,034
Accounts Receivable, Net 21,879,438 23,879,495
Unbilled Costs and Accrued Earnings 8,130,600 3,974,500
Income Taxes Receivable 1,015,108 2,476,800
Inventories
Raw Material and Component Parts 13,946,290 11,316,265
Work-in-Process 11,576,758 10,754,339
Finished Goods 4,396,920 2,586,202
------------- -------------
29,919,968 24,656,806
Prepaid Expenses and Other Current Assets 557,823 541,724
------------- -------------
Total Current Assets 68,434,401 74,871,359
------------- -------------
Cash Value of Life Insurance 363,508 363,508
------------- -------------
Property, Plant and Equipment 125,250,237 110,721,515
Less: Accumulated Depreciation 36,090,935 31,276,450
------------- -------------
Property, Plant and Equipment, Net 89,159,302 79,445,065
Long-Term Receivable 3,000,000 3,000,000
Investment in Foreign Joint Venture 2,964,694 2,829,554
Other Assets 928,283 392,349
------------- -------------
Total Assets $ 164,850,188 $ 160,901,835
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 6,088,627 $ 5,769,163
Accrued Expenses 3,924,636 5,106,831
Deferred Income 206,168 206,168
Federal and State Income Taxes 866,796 1,078,113
------- ---------
Total Current Liabilities 11,086,227 12,160,275
Deferred Compensation Payable 1,005,491 944,339
Deferred Income Taxes 5,771,775 5,771,775
Deferred Income 216,735 216,735
------- -------
Total Liabilities 18,080,228 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 12,266,438 12,012,450
Retained Earnings 133,970,540 126,849,357
Less: Cost of Treasury Shares, 1,521,510 and 1,533,072 (2,011,551) (1,869,483)
Equity Adjustment from Translation 342,563 1,158,039
------- ---------
Total Stockholders' Equity 146,769,960 140,352,333
----------- -----------
Total Liabilities and Stockholders' Equity $ 164,850,188 $ 160,901,835
============= =============
</TABLE>
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<TABLE>
OEA, INC.
-------------
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited)
Three Months Ended January 31, Six Months Ended January 31,
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Sales ........................................................... $ 36,738,105 $ 31,896,677 $ 71,307,491 $ 59,912,563
Cost of Sales ....................................................... 22,813,563 21,410,604 45,330,669 39,349,164
---------- ---------- ---------- ----------
Gross Profit .............................................. 13,924,542 10,486,073 25,976,822 20,563,399
General and Administrative Expenses ................................. 1,883,216 1,601,310 3,515,535 3,058,894
Research and Development Expenses ................................... 2,088,795 895,163 2,858,271 1,468,296
--------- ------- --------- ---------
Operating Profit .......................................... 9,952,531 7,989,600 19,603,016 16,036,209
Other Income (Expense):
Interest Income ................................................ 228,701 96,903 544,214 191,376
Interest Expense ............................................... (57,059) (8,001) (70,063) (21,710)
Other, Net ..................................................... (86,403) 53,586 (211,553) (360,364)
Expenses From Settlement of Environmental Matters (1) .......... -- -- -- (2,250,000)
------------ ------------ ------------ ----------
85,239 142,488 262,598 (2,440,698)
------ ------- ------- ---------
Earnings Before Minority Interest and Income Taxes 10,037,770 8,132,088 9,865,614 13,595,511
Minority Interest in Net Loss of Consolidated Subsidiary ....... 28,233 87,375 24,594 184,776
------ ------ ------ -------
Earnings Before Income Taxes .............................. 10,066,003 8,219,463 19,890,208 13,780,287
Federal and State Income Tax Expense ................................ 3,908,022 3,164,678 7,644,738 6,433,720
--------- --------- --------- ---------
Net Earnings .............................................. $ 6,157,981 $ 5,054,785 $ 12,245,470 $ 7,346,567
============= =========== ============ ==============
Earnings Per Share ........................................ $ 0.30 $ 0.25 $ 0.60 $ 0.36
============= =========== =========== =============
Weighted Average Number of Shares Outstanding ....................... 20,495,789 20,482,045 20,491,894 20,475,105
========== ========== ========== ==========
</TABLE>
Note: (1) On December 13, 1994, the Company reached a final settlement in its
environmental matters in the net amount of $2,250,000.
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OEA, INC.
-------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Six Months Ended January 31,
1996 1995
------------ ------------
<S> <C> <C>
Operating Activities:
Net Earnings .............................................................. $ 12,245,470 $ 7,346,567
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Undistributed earnings of foreign joint venture ........................... (135,140) (172,966)
Depreciation and amortization ............................................. 5,011,949 3,152,753
Increase in deferred compensation payable ................................. 61,152 30,378
Loss on disposal of property, plant and equipment ......................... 94,331 282,671
Changes in operating assets and liabilities:
Accounts receivable .................................................. 3,376,498 2,402,086
Unbilled costs and accrued earnings .................................. (4,156,100) (1,372,579)
Inventories .......................................................... (5,361,468) 2,827,181
Prepaid expenses and other ........................................... (18,398) 17,024
Accounts payable and accrued expenses ................................ (682,718) (658,364)
Minority interest in loss of consolidated subsidiary ................. (24,594) --
Income taxes payable ................................................. (211,317) 89,743
-------- ------
Net cash provided by operating activities ....................... 10,199,665 13,944,494
Investing activities:
Additions/(reductions) to investments in and advances to affiliates (1,324,010) 907,345
Capital expenditures ...................................................... (15,458,629) (10,699,778)
Proceeds from sale of property, plant, and equipment ...................... 12,800 44,949
Decrease in investment of foreign joint venture ........................... -- 100,000
Decrease/(increase) in other assets, net .................................. (535,933) 8,225
-------- -----
Net cash used in investing activities ........................... (17,305,772) (9,639,259)
Financing activities:
Purchases of common stock for treasury .................................... (164,459) --
Proceeds from issuance of treasury stock .................................. 276,378 125,269
Payment of dividends ...................................................... (5,124,289) (4,096,415)
---------- ----------
Net cash provided by financing activities ....................... (5,012,370) (3,971,146)
Effect of exchange rate changes on cash ......................... (292,093) 253,343
-------- -------
Net increase/(decrease) in cash and cash equivalents (12,410,570) 587,432
Cash and cash equivalents at beginning of period ............................... 19,342,034 4,820,669
---------- ---------
Cash and cash equivalents at end of period ..................................... $ 6,931,464 $ 5,408,101
============ ============
</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 Six Months
Ended January 31, Ended January 31,
1996 and 1995 1996 and 1995
Increase (Decrease) Increase (Decrease)
------------------- -------------------
<S> <C> <C> <C> <C>
Net Sales ......................... $4,841,428 15.2% 11,394,928 19.0%
Cost of Sales ..................... 1,402,959 6.6% 5,981,505 15.2%
General and Administrative Expenses 281,906 17.6% 456,641 14.9%
Research and Development Expenses . 1,193,632 133.3% 1,389,975 94.7%
Net Earnings ...................... 1,103,196 21.8% 4,898,903 66.7%
</TABLE>
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<PAGE>
NET SALES
The 15.2% increase in sales for the three months ended January 31,
1996, and the 19.0% increase for the six months ended January 31, 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 air bags for both
domestic and foreign automobile manufacturers. Second quarter sales for
the automotive segment increased 28.0% from $21,125,200 to $27,040,300
and first-half sales increased 28.0% from $40,533,400 to $51,891,600,
as compared to prior-year periods. Current year automotive sales are
projected to continue this strong growth over last year. Sales for the
nonautomotive segment decreased by 10.0% for the second quarter and
remained flat for the first half. Nonautomotive sales for fiscal year
1996 are expected to be higher than fiscal year 1995 sales, due to an
increase in backlog.
COST OF SALES
Cost of sales increased by 6.6% for the three months ended January 31,
1996, and 15.2% for the six months ended January 31, 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 production costs associated with Pyroindustrie S.A., OEA's
automotive subsidiary in France, which began deliveries of air bag
initiators in February 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. The
cost of sales, as a percentage of sales, were as follows:
Three Months ended January 31, 1995 and 1996 67.1% to 62.1%
Six Months ended January 31, 1995 and 1996 65.7% to 63.6%
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increased by $281,900 for the three
months ended January 31, 1996, and increased by $456,600 for the six
months ended January 31, 1996, as compared to the prior-year periods.
The increases for the current periods are primarily due to expenses
associated with the Pyroindustrie facility in France, which was not
operational in the prior-year period, and to start-up costs associated
with OEA's passenger-side hybrid inflator. The expenses, as a
percentage of sales, were as follows:
Three Months ended January 31, 1995 and 1996 5.0% to 5.1%
Six Months ended January 31, 1995 and 1996 5.1% to 4.9%
-6-
<PAGE>
RESEARCH AND DEVELOPMENT EXPENSES
Research and development costs increased by $1,193,600 for the three
months ended January 31, 1996, and $1,390,000 for the six months ended
January 31, 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 $1,103,200 for the three months ended January
31, 1996, and $4,898,900 for the six months ended January 31, 1996, as
compared to prior-year periods. The increase during the second quarter
resulted primarily from increased sales in the automotive segment. The
increase in the first half 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 second half
consistent with fiscal year 1996 goals.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased during the quarter to
$57,348,200. During the six-month period ended January 31, 1996, the
Company made capital expenditures totaling approximately $15,458,600
which were funded principally from operations. The Company maintains an
$8,000,000 Revolving Credit Agreement with its principal bank and at
January 31, 1996, 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 and the six-month periods ended January 31, 1996.
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<PAGE>
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.
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
At the Company's annual stockholders' meeting held on January
12, 1996, nine directors were elected and the proposed
Nonemployee Directors' Stock Option Plan (the "Plan") was
adopted.
The Plan provides for awards of stock options to be made in
respect of a maximum of 50,000 shares of Common Stock, subject
to adjustment for capital changes. Shares in respect to which
grants are made may be either authorized but unissued shares
of Common Stock or issued shares reacquired by and held in
treasury, or both. Shares of Common Stock that are subject to
options that expire, terminate or are annulled for any reason
without having been exercised or are forfeited prior to
becoming exercisable will return to the pool of such shares
available for grant under the Plan. A detailed description of
the Plan was included in and is incorporated by reference from
the Registrant's definitive proxy statement for its 1996
annual shareholders meeting which was filed with the
Securities and Exchange Commission on December 8, 1995.
-8-
<PAGE>
Results of Shareholders' Voting at Annual Meeting
<TABLE>
<CAPTION>
Votes Cast
No Proxy Total Shares
Directors Elected: ...........................................................For Against Withheld Received Outstanding
<S> <C> <C> <C> <C> <C>
Ahmed D. Kafadar, Chairman ...........................................17,074,661 -- 16,777 3,404,065 20,495,503
Charles B. Kafadar ..................................................17,074,661 -- 16,777 3,404,065 20,495,503
Ralph A.L. Bogan, Jr ................................................ 17,074,661 -- 16,777 3,404,065 20,495,503
James R. Burnett .................................................... 17,074,661 -- 16,777 3,404,065 20,495,503
Lewis W. Watson ..................................................... 17,074,661 -- 16,777 3,404,065 20,495,503
Philip E. Johnson ................................................... 17,074,661 -- 16,777 3,404,065 20,495,503
George S. Ansell .................................................... 17,074,661 -- 16,777 3,404,065 20,495,503
Robert J. Schultz ................................................... 17,074,661 -- 16,777 3,404,065 20,495,503
Erwin H. Billig ..................................................... 17,074,661 -- 16,777 3,404,065 20,495,503
No Proxy Total Shares
For Against Abstain Received Outstanding
Nonemployee Directors' Stock .........................................16,679,609 346,483 65,346 3,404,065 20,495,503
Option Plan
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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<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)
March 8, 1996
Date Paul J. Martin
Vice President/Treasurer
March 8, 1996
Date Charles B. Kafadar
President
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<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> 6-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-1-1995
<PERIOD-END> JAN-31-1996
<CASH> 6,931,464
<SECURITIES> 0
<RECEIVABLES> 21,879,438
<ALLOWANCES> 0
<INVENTORY> 29,919,968
<CURRENT-ASSETS> 68,434,401
<PP&E> 125,250,237
<DEPRECIATION> 36,090,935
<TOTAL-ASSETS> 164,850,188
<CURRENT-LIABILITIES> 11,086,227
<BONDS> 0
0
0
<COMMON> 2,201,970
<OTHER-SE> 144,567,990
<TOTAL-LIABILITY-AND-EQUITY> 164,850,188
<SALES> 71,307,491
<TOTAL-REVENUES> 71,307,491
<CGS> 45,330,669
<TOTAL-COSTS> 51,704,475
<OTHER-EXPENSES> 262,598
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 19,890,208
<INCOME-TAX> 7,644,738
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,245,470
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
