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, 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.
20,540,694 Shares of Common Stock at December 6, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Index to Financial Statements Page No.
Consolidated Condensed Balance Sheets
October 31, 1996 (unaudited)
and July 31, 1996.............................................2
Consolidated Condensed Statements
of Earnings (unaudited)
Three Months Ended
October 31, 1996 and 1995.....................................3
Consolidated Condensed Statements
of Cash Flows (unaudited) Three Months
Ended October 31, 1996 and 1995...............................4
1
<PAGE>
OEA, INC.
-------------
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
October 31, 1996 July 31, 1996
---------------- -------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 5,084,500 $ 2,560,213
Accounts Receivable, Net 29,086,817 29,960,161
Unbilled Costs and Accrued Earnings 8,256,900 6,845,200
Income Taxes Receivable --- 832,906
Inventories
Raw Material and Component Parts 21,182,984 21,238,135
Work-in-Process 14,404,496 11,751,544
Finished Goods 4,538,492 3,623,341
--------- ---------
40,125,972 36,613,020
Prepaid Expenses and Other Current Assets 968,545 767,952
------- -------
Total Current Assets 83,522,734 77,579,452
---------- ----------
Cash Value of Life Insurance 317,094 317,094
------- -------
Property, Plant and Equipment 161,724,876 154,946,472
Less: Accumulated Depreciation 44,172,329 40,800,194
---------- ----------
Property, Plant and Equipment, Net 117,552,547 114,146,278
Long-Term Receivable 3,000,000 3,000,000
--------- ---------
Investment in Foreign Joint Venture 3,452,013 3,402,230
--------- ---------
Deferred Charges 4,182,314 3,610,300
--------- ---------
Other Assets 1,140,764 1,152,417
--------- ---------
Total Assets $ 213,167,466 $ 203,207,771
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 6,686,502 $ 12,230,628
Bank Borrowings 22,000,000 14,000,000
Accrued Expenses 2,306,717 5,630,624
Deferred Income 206,168 206,168
Federal and State Income Taxes 5,238,370 1,456,238
--------- ---------
Total Current Liabilities 36,437,757 33,523,658
Deferred Compensation Payable 974,915 944,339
Deferred Income Taxes 8,074,731 8,074,731
Deferred Income 216,735 216,735
------- -------
Total Liabilities 45,704,138 42,759,463
---------- ----------
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 12,647,392 12,467,556
Retained Earnings 154,373,141 147,267,964
Less: Cost of Treasury Shares, 1,480,506 and 1,528,797 (2,073,904) (2,104,218)
Equity Adjustment from Translation 314,729 615,036
------- -------
Total Stockholders' Equity 167,463,328 160,448,308
----------- -----------
Total Liabilities and Stockholders' Equity $ 213,167,466 $ 203,207,771
============== ==============
</TABLE>
2
<PAGE>
OEA, INC.
-------------
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31,
1996 1995
------------- -------------
<S> <C> <C>
Net Sales $ 45,339,708 $ 34,569,386
Cost of Sales 30,824,416 22,517,106
---------- ----------
Gross Profit 14,515,292 12,052,280
General and Administrative Expenses 1,573,833 1,632,319
Research and Development Expenses 1,183,667 769,476
--------- -------
Operating Profit 11,757,792 9,650,485
Other Income (Expense):
Interest Income 44,540 315,513
Interest Expense (13,319) (13,004)
Other, Net (113,800) (125,150)
-------- --------
(82,579) 177,359
------- -------
Earnings Before Minority Interest and Income Taxes 11,675,213 9,827,844
Minority Interest in Net Loss/(Gain) of Consolidated Subsidiary --- (3,639)
------------- -------------
Earnings Before Income Taxes 11,675,213 9,824,205
Federal and State Income Tax Expense 4,570,038 3,736,716
--------- ---------
Net Earnings $ 7,105,175 $ 6,087,489
============== ==============
Earnings Per Share $ 0.35 $ 0.30
============== ==============
Weighted Average Number of Shares Outstanding 20,520,151 20,487,872
========== ==========
</TABLE>
3
<PAGE>
OEA, INC.
-------------
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended October 31,
1996 1995
------------- -------------
<S> <C> <C>
Operating Activities:
Net Earnings $ 7,105,175 $ 6,087,489
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Undistributed (earnings) of foreign joint venture (49,783) (47,183)
Depreciation and amortization 3,618,319 2,412,874
Increase in deferred compensation payable 30,577 30,577
Loss on disposal of property, plant and equipment --- 49,685
Changes in operating assets and liabilities:
Accounts receivable 1,632,480 2,956,896
Unbilled costs and accrued earnings (1,411,700) (2,218,000)
Inventories (3,555,800) (1,056,695)
Prepaid expenses and other (202,847) (105,060)
Accounts payable and accrued expenses (8,813,035) (3,677,985)
Minority interest in gain of consolidated subsidiary --- 3,639
Income taxes payable 3,782,133 2,979,918
--------- ---------
Net cash provided by operating activities 2,135,519 7,416,155
Investing activities:
Reductions to investments in and advances to affiliates --- (107,775)
Capital expenditures (7,076,880) (6,734,723)
Proceeds from sale of property, plant, and equipment --- 12,800
Increase in deferred charges (752,529) ---
(Increase)/decrease in other assets, net (8,128) 4,114
------ -----
Net cash used in investing activities (7,837,537) (6,825,584)
Financing activities:
Purchases of common stock for treasury --- ---
Proceeds from issuance of treasury stock 210,150 12,963
Increase in borrowings 8,000,000 ---
--------- -------
Net cash provided by financing activities 8,210,150 12,963
Effect of exchange rate changes on cash 16,155 (64,378)
------ -------
Net increase in cash and cash equivalents 2,524,287 539,156
Cash and cash equivalents at beginning of period 2,560,213 19,342,034
--------- ----------
Cash and cash equivalents at end of period $ 5,084,500 $ 19,881,190
============== ==============
</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:
Comparisons of
Three Months
Ended October 31, 1996 and 1995
<TABLE>
<CAPTION>
Increase (Decrease)
<S> <C> <C>
Net Sales $10,770,322 31.2%
Cost of Sales 8,307,310 36.9%
General and Administrative
Expenses (58,486) (3.6%)
Research and Development
Expenses 414,191 53.8%
Net Earnings 1,017,686 16.7%
</TABLE>
NET SALES
The 31.2% increase in sales for the three months ended October
31, 1996, as compared to the prior-year period, was the result
of strong hybrid inflator sales. 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 46.3% to $36,362,400, as compared
to the prior-year period. Current year automotive sales are
projected to continue strong growth over last year. Sales for
the nonautomotive segment over prior year decreased 7.6% for
the three months ended October 31, 1996, as compared to the
prior-year period.
5
<PAGE>
COST OF SALES
Cost of sales increased by 36.9% for the three months ended
October 31, 1996, as compared to the prior-year period. This
was primarily attributed to increased sales of the automotive
segment. Cost of sales was further increased by production
costs associated with OEA's passenger side hybrid inflator,
which began high volume production in April 1996 and has
continued to increase production levels throughout the first
quarter as scheduled.
GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative expenses remained steady for the
three months ended October 31, 1996, as compared to the prior-
year period.
RESEARCH AND DEVELOPMENT EXPENSES
Research and Development costs were $1,183,700 for the three
months ended October 31, 1996, as compared to $769,500 for the
prior-year period. These costs are expected to decrease for
the remainder of fiscal year 1997 as OEA moves from the
development phase to the production phase for its passenger,
driver and side-impact hybrid inflators.
NET EARNINGS
The increase in net earnings of $1,017,700 for the three
months ended October 31, 1996, as compared to the prior-year
period, was primarily attributed to increased sales in the
automotive segment, partially offset by start-up expenses
associated with OEA's passenger side hybrid inflator high-
volume production line.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at October 31, 1996, increased
to $47,085,000. During the three-month period ended October
31, 1996, the Company made capital expenditures totaling
approximately $7,076,900 which were funded from operations and
bank borrowings. The Company maintains a $40,000,000
Revolving Credit Agreement with its principal bank and at
October 31, 1996, had an outstanding balance of $22,000,000
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
6
<PAGE>
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.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements with
respect to the Company's sales, plans, products, projections
and other matters. These statements are based on assumptions
as to future events and are therefore inherently uncertain.
A number of factors, including those discussed above, may
cause the Company's actual results to differ materially from
those contemplated by these forward-looking statements.
The Registrant's automotive safety products have historically
consisted of initiators which were sold to other companies for
incorporation into inflators and ultimately into air bag
modules. The Company's future sales in the automotive segment
are expected to consist increasingly of "smokeless" hybrid
inflators to be produced by the Company in new manufacturing
facilities being constructed and to be constructed. The
Company's inflator sales will depend on its success in
manufacturing inflators in volume which meet the expectations
of its customers in 1997 and increasing its penetration of the
inflator market over time.
The Company's expectations as to future sales are based upon
annual blanket purchase orders received by customers in the
automotive segment and governmental orders received in the
nonautomotive segment. Annual blanket purchase orders are not
binding on the Company's customers and actual quantities will
depend upon weekly releases received from these customers.
However, because the customers have designed the Company's
products into their air bag modules, the Company believes that
the actual quantity sold will vary based on its customers
sales. Governmental orders in the nonautomotive segment can
be cancelled or terminated for the convenience of the
government. In addition, future technological developments
could adversely impact sales of the Company's products.
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, 1996.
Refer to the Company's annual financial statements for the year
ended July 31, 1996, 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 13, 1996
Date J. Thompson McConathy
Vice President Finance
December 13, 1996
Date Charles B. Kafadar
President and
Chief Operating Officer
9
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK>0000073864
<NAME> OEA, INC / DE /
<MULTIPLIER> 1
<CURRENCY> <blank>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> AUG-1-1996
<PERIOD-END> OCT-31-1996
<CASH> 5,084,500
<SECURITIES> 0
<RECEIVABLES> 29,086,817
<ALLOWANCES> 0
<INVENTORY> 40,125,972
<CURRENT-ASSETS> 83,522,734
<PP&E> 161,724,876
<DEPRECIATION> 44,172,329
<TOTAL-ASSETS> 213,167,466
<CURRENT-LIABILITIES> 36,437,757
<BONDS> 0
0
0
<COMMON> 2,201,970
<OTHER-SE> 165,261,358
<TOTAL-LIABILITY-AND-EQUITY> 213,167,466
<SALES> 45,339,708
<TOTAL-REVENUES> 45,339,708
<CGS> 30,824,416
<TOTAL-COSTS> 33,581,916
<OTHER-EXPENSES> 82,579
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,319
<INCOME-PRETAX> 11,675,213
<INCOME-TAX> 4,570,038
<INCOME-CONTINUING> 7,105,175
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,105,175
<EPS-PRIMARY> .35
<EPS-DILUTED> .35
</TABLE>
