FIRST QUARTER 1996
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JANUARY 28, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-2537
OPTICAL COATING LABORATORY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
68-0164244
(I.R.S. Employer Identification No.)
2789 NORTHPOINT PARKWAY, SANTA ROSA, CA 95407-7397
(Address of principal executive offices)
(707) 545-6440
(Registrant's telephone number, including area code)
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 No
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Classes of Common Stock
COMMON STOCK, $.01 PAR VALUE
Outstanding at February 29, 1996: 9,530,477 shares
This document contains 16 pages.
The Exhibit listing appears on Page 15.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
January 28, October 31,
1996 1995
ASSETS (Unaudited)
Current Assets:
Cash and short-term investments $ 4,555 $ 6,602
Accounts receivable, net of
allowance for doubtful
accounts of $1,052 and $1,229 31,239 29,565
Inventories
16,474 15,886
Income taxes recoverable 1,665
Current deferred income tax assets 6,126 6,665
Other current assets 2,956 2,476
Total Current Assets 63,015 61,194
Deferred income tax assets 4,588 4,597
Other assets and investments 11,997 12,432
Property, Plant and Equipment:
Land and improvements 9,233 8,651
Buildings and improvements 33,608 31,461
Machinery and equipment 106,240 101,586
Construction-in-progress
15,182 23,717
164,263 165,415
Less accumulated depreciation (76,149) (73,804)
Property, Plant and Equipment - Net
88,114 91,611
Total Assets $167,714 $169,834
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable 9,253 10,324
Accrued expenses 9,291 9,515
Accrued compensation expenses 6,129 6,559
Current maturities on long-term debt 3,303 3,344
Notes payable 3,298 3,339
Deferred revenue 696 98
Total Current Liabilities 31,970 33,179
Accrued postretirement health benefits
and pension liabilities 2,140 2,150
Deferred income tax liabilities 2,325 2,239
Long-term debt
46,604 47,267
Minority interest 11,407 11,105
Convertible redeemable preferred
stock 11,357 11,357
Common Stockholders' Equity:
Common stock, $.01 par value;
authorized 30,000,000
shares; issued and outstanding
9,522,000 and 9,489,000 shares 95 95
Paid-in capital 44,780 44,461
Retained earnings 17,830 17,901
Cumulative foreign
currency translation adjustment (794) 80
Common Stockholders' Equity 61,911 62,537
Total Liabilities and
Stockholders' Equity $167,714 $169,834
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended January 28, 1996 and January 29, 1995
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
January 28, January 29,
1996 1995
Revenue $43,911 $35,993
Cost of sales 29,495 21,352
Gross profit 14,416 14,641
Operating Expenses:
Research and development 2,388 1,387
Selling and administrative 9,107 9,244
Amortization of intangibles 287 171
Total operating expenses 11,782 10,802
Income from operations 2,634 3,839
Other Income (Expense):
Interest income 74 226
Interest expense (911) (920)
Income before provision for
income taxes and minority interest 1,797 3,145
Provision for income taxes 754 1,321
Minority Interest 303
Net income 740 1,824
Dividend on convertible redeemable
preferred stock 240
Net income applicable
to common stock $ 500 $ 1,824
Net income per common and common
equivalent share $ .05 $ .20
Weighted average number of
common shares used to compute
net income per share 10,119 9,025
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMMON STOCKHOLDERS' EQUITY
For the three months ended January 28, 1996
(Amounts in thousands)
(Unaudited)
FOREIGN
COMMON STOCK PAID-IN RETAINED CURRENCY
SHARES AMOUNT CAPITAL EARNINGS TRANSLATION
BALANCE AT NOVEMBER 1, 1995 9,489 $95 $44,461 $17,901 $80
Shares issued to Employee
Stock Ownership Plan 5 55
Exercise of stock options,
including tax benefit 28 264
Foreign currency translation
adjustment for the period (874)
Net income for the period 740
Dividend on preferred stock (240)
Dividend on common stock (571)
BALANCE AT JANUARY 28, 1996 9,522 $95 $44,780 $17,830 $(794)
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended January 28, 1996 and January 29, 1995
(Amounts in thousands)
(Unaudited)
Three Months Ended
January 28, January 29,
1996 1995
Cash Flows from Operating Activities:
Cash received from customers $42,911 $37,258
Interest received 101 297
Cash paid to suppliers and employees (37,568) (35,037)
Interest paid (2,892) (1,270)
Income taxes paid, net of refunds (4,633) (369)
Net cash (used for) provided by
operating activities (2,081) 879
Cash Flows from Investing Activities:
Purchase of plant and equipment (5,421) (3,301)
Proceeds from sale/leaseback
of equipment 5,900
Net cash provided by (used for)
investing activities 479 (3,301)
Cash Flows from Financing Activities:
Proceeds from long term debt 2,600
Proceeds from notes payable 154 182
Proceeds from exercise of stock options 198 2
Repayment of long-term debt (2,468) (404)
Payment of dividend on preferred stock (240)
Payment of dividend on common stock (571) (539)
Net cash provided by (used for)
financing activities (327) (759)
Effect of exchange rate changes on cash (118) (30)
Decrease in cash and short-term
investments (2,047) (3,211)
Cash and short-term investments
at beginning of period 6,602 19,663
Cash and short-term investments
at end of period $4,555 $16,452
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended January 28, 1996 and January 29, 1995
(Amounts in thousands)
(Unaudited)
Three Months Ended
January 28, January 29,
1996 1995
Reconciliation of net income to cash flows
from operating activities:
Net income $ 740 $1,824
Adjustments to reconcile net income to
net cash (used for) provided
by operating activities:
Depreciation and amortization 3,178 1,821
Minority interest in earnings
of Flex Products, Inc. 302
Loss on disposal or abandonment
of equipment 2 19
Accrued postretirement health benefits 11 27
Deferred income tax liabilities 97 357
Other non-cash adjustments to net income (81) (60)
Change in:
Accounts receivable (1,337) (2,953)
Inventories (883) (1,689)
Income tax recoverable (1,589)
Deferred income tax assets 531 (711)
Other current assets and
other assets and investments (875) (1,328)
Accounts payable, accrued
expenses and accrued compensation
expenses (2,406) 2,013
Deferred revenue 74 208
Income taxes payable 155 1,351
Total adjustments (2,821) (945)
Net cash (used for) provided by
operating activities $(2,081) $ 879
See Notes to Consolidated Financial Statements
OPTICAL COATING LABORATORY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three Months Ended January 28, 1996 and January 29, 1995
(Unaudited)
1. GENERAL
Optical Coating Laboratory, Inc. (OCLI) develops, manufactures and
sells thin film coated products. Thin film coatings control and
enhance light by altering the transmission, reflection and absorption
of the various wavelengths of light energy to achieve a desired effect
such as antireflection, shielding, conductivity or abrasion
resistance. OCLI markets and sells its products worldwide to original
equipment manufacturers (OEM's) who utilize thin film coated
components or devices for optical and electro-optical systems for
computers, photocopiers, LCD desktop projectors, scanners, instruments
and satellites. OCLI sells its Glare/Guard(R) ergonomic computer
display products through distributors and office supply retailers.
Flex Products, Inc. (Flex Products), OCLI's 60% owned subsidiary,
develops and manufactures thin film coatings on plastic film with a
proprietary high speed process.
The Consolidated Balance Sheet as of January 28, 1996, the
Consolidated Statements of Income for the three month periods ended
January 28, 1996 and January 29, 1995, the Consolidated Statement of
Common Stockholders' Equity for the three month period ended January
28, 1996 and the Consolidated Statements of Cash Flows for the three
month periods ended January 28, 1996 and January 29, 1995 have been
prepared by the Company without audit. In the opinion of management,
all adjustments consisting of normal recurring accruals, necessary to
present fairly the financial position, results of operations and cash
flows at January 28, 1996 and for all periods presented have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the financial statements and notes included in the Company's
Annual Report to Stockholders for fiscal 1995.
The results of operations for the period ended January 28, 1996 are
not necessarily indicative of the operating results anticipated for
the full year.
2. INVENTORIES
Inventories consisted of the following:
January 28, October 31,
1996 1995
(Amounts in thousands)
Raw materials and supplies $7,464 $7,330
Work-in-process and finished goods 9,010 8,556
$16,474 $15,886
3. ACCRUED EXPENSES
Accrued expenses consisted of the following:
January 28, October 31,
1996 1995
(Amounts in thousands)
Workers' compensation reserve $ 992 $ 937
Ground water remediation reserve 1,182 1,187
Other accrued liabilities 7,079 7,391
$9,253 $9,515
4. LONG-TERM DEBT
Long-term debt consisted of: January 28, October 31,
1996 1995
(Amounts in thousands)
Unsecured senior notes. Interest at 8.71%
payable semiannually. Principal payable in
annual installments of $3.6 million from
1998 through 2002. $18,000 $18,000
Unsecured bank term loan. Variable interest
rates averaging 7.3% at January 28, 1996,
payable quarterly. Principal payable
semiannually as follows:
Payment Dates Amounts
April 1996 $ 500,000
October 1996 and
April 1997 1,000,000
Each October and
April thereafter 2,000,000 14,500 14,500
Mortgage payable. Interest at 8%.
Collateralized by a 72,000 sq. ft.
newly constructed building and
related land area. Principal and
interest payable over 15 years at
$25,000 per month. 2,600
Unsecured borrowings under
revolving bank line of
credit. Repaid during first
quarter of fiscal 1996. 2,000
Land improvement assessment. Interest
at an average rate of 6.75%. Principal
and interest payable in semiannual
installments of $77,000 through 1998. 330 401
Scottish Development Agency (SDA) building loan,
with a conditional interest moratorium
through January 31, 1998 with interest at 9.5%
thereafter. Semiannual principal payments of
approximately $100,000 are payable through
January 1998 with subsequent payments of $331,000,
comprising principal and interest, through 2006.
Collateralized by the land and building of the
Company's Scottish subsidiary. 3,823 4,026
Notes payable to private parties in
connection with the purchase of MMG.
Principal and interest at 8% payable
over ten years in quarterly installments
of approximately $420,000 through 2003. 7,035 7,721
Bank loans of MMG with interest rates
ranging from 4.5% to 8.0%. Payable in
semiannual and annual installments through
2005. Partly collateralized by
mortgages on MMG land and buildings
and liens on equipment. 2,787 3,050
Present value of obligations under
capital leases at an assumed interest rate
of 8.0% payable in monthly installments
through 2004. 832 913
49,907 50,611
Less current maturities (3,303) (3,344)
$46,604 $47,267
The Company has a $30 million unsecured credit facility comprised of a
$15 million term loan and a $15 million revolving line of credit. During
fiscal 1995, $2 million was borrowed under the $15 million revolving credit
facility which balance was repaid during the first quarter of fiscal 1996.
The revolving line of credit carries a commitment fee of .375% per year on
the unused portion of the facility and expires on April 28, 2000. The
Company has an incremental credit facility to cover a surety letter for
approximately $3.5 million issued to secure 50% of the Company's notes
payable arising from the purchase of MMG. The Company also has a letter of
credit for approximately $1.5 million to satisfy the Company's workers'
compensation self-insurance requirements. The surety commitment and letter
of credit facilities carry a fee of 1.25% per year.
During the first quarter of fiscal 1996 the Company entered into an
operating lease arrangement in the amount of $5.9 million for a newly
acquired continuous coating machine and related equipment. The term of the
operating lease is six years and provides for an early buyout at fair value
at the end of five years.
The Company's subsidiary in Scotland has a credit arrangement of up to
approximately $470,000 at market interest rates and has outstanding letters
of credit of approximately $320,000 to guarantee import duty. There were
no borrowings under the credit arrangement in the first quarter of fiscal
1996 or in fiscal year 1995.
The Company's subsidiary in Germany has various credit facilities with
local banks totaling approximately $3.5 million which are used for working
capital requirements. These credit facilities are utilized as part of
normal local payment practices.
The Company has certain financial covenants and restrictions under its
bank credit arrangements and the unsecured senior notes.
5. STOCK OPTIONS
During the first quarter of 1996, no options were granted under the
Company's incentive compensation and employee stock option plans. At
January 28, 1996, 1,502,500 shares are subject to outstanding options, of
which 1,138,125 options are exercisable. Options to purchase 307,713 shares
of common stock are available for future grants under the plans.
PART I. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF MATERIAL CHANGES IN RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
REVENUE. Revenue for the first quarter of fiscal 1996 was $43.9 million,
an increase of $7.9 million, or 22%, over revenue of $36 million in the
first quarter of fiscal 1995. Fiscal 1996 first quarter revenue includes
$7.4 million of revenue from Flex Products, Inc. (Flex Products). The
Company increased its ownership in Flex Products from 40% to a controlling
60% in May of 1995, resulting in the consolidation of Flex Products'
financial results into the Company's financial statements beginning in the
third quarter of fiscal 1995.
For the first quarter of fiscal 1996 compared to the first quarter of
fiscal 1995, revenue was higher in the office automation, defense and
aerospace and specialty products markets served by the Company. Revenue in
the instrumentation and the Glare/Guard(R) computer display markets was
substantially the same in the comparative quarters. However, revenue in
the OEM (original equipment manufacturer) display market was substantially
down, by approximately 40%, in the current year first quarter versus the
year ago quarter. The Company experienced price declines of approximately
3% in segments of its office automation market during the first quarter of
fiscal 1996.
GROSS PROFIT. Gross profit, while substantially at the same dollar level,
was 32.8% of revenue for the first quarter of fiscal 1996 compared to 40.7%
of revenue for the first quarter of fiscal 1995. The gross profit margin
decline in the current year first quarter was in the OEM display area where
manufacturing costs could not be sufficiently reduced to compensate for the
impact of lower volume, the impact of start up costs and incremental
depreciation and rental expense associated with the new continuous coating
platform being brought on line.
OPERATING EXPENSES. Research and development expenditures in the first
quarter of 1996 were up $1.0 million, or 72%, compared to the first quarter
of 1995. The current quarter increase reflects the realignment of
engineering resources to new product development programs ($477,000) and
the consolidation of Flex Products' research and development costs
($524,000). Selling and administrative expenses in the first quarter of
fiscal 1996 were 20.7% of revenue compared to 25.7% for the first quarter
of 1995, while substantially at the same dollar amount for the comparative
quarters. The lower selling and administrative expense ratio for the
current quarter reflects primarily the consolidation of Flex Products whose
selling expenses per revenue dollar are substantially less than those for
the other product areas of the Company.
INCOME FROM OPERATIONS. As a result of the foregoing changes in revenue,
gross profit and operating expenses, the Company's income from operations
was $2.6 million for the first quarter of fiscal 1996 compared to $3.8
million for the first quarter of fiscal 1995, a decrease of $1.2 million or
31%.
INTEREST INCOME AND EXPENSE. Interest income for the first quarter of
fiscal 1996 was significantly down, by $152,000 or 67%, compared to the
first quarter of fiscal 1995 reflecting the lower average cash balances
available for investment in the current quarter compared to the year ago
quarter. Interest expense, net of capitalized interest, was substantially
the same for the first quarter of 1996 and 1995; however, capitalized
interest relating to ongoing building and equipment projects was $76,000
higher for the current quarter versus the prior year quarter.
INCOME TAXES AND MINORITY INTEREST. The effective income tax rate was 42%
for the first quarter of fiscal 1996 and 1995. Minority interest was
$303,000 for the first quarter of fiscal 1996, representing the 40% share
of Flex Products' net income for the period accruing to the minority
shareholder.
NET INCOME. The Company had net income applicable to common stock of
$500,000, or $.05 per share, for the first quarter of fiscal 1996, compared
to $1.8 million, or $.20 per share, for the first quarter of fiscal 1995.
FINANCIAL CONDITION
During the first quarter of fiscal 1996, the Company used $2.1 million,
net, for its operating activities. Net income, depreciation and
amortization, generated $3.9 million in cash flow, while increases in
working capital and other operating activities required $6.0 million.
The Company's investing activities provided $479,000 of cash for the first
quarter of 1996. Approximately $5.4 million was invested in plant and
equipment while $5.9 million was generated by an operating lease
arrangement for a newly acquired continuous coating machine and related
equipment.
During the first quarter of fiscal 1996, the Company entered into a
mortgage loan agreement in the amount of $2.6 million, collateralized by a
newly constructed 72,000 square foot manufacturing facility located on the
Company's Santa Rosa, California campus. Separately, the Company repaid
approximately $2.5 million of long-term debt.
As a result of these operating, investment and financing activities, the
Company's cash and short-term investment position decreased by $2.0 million
during the first quarter of fiscal 1996.
At January 28,1996, the Company had financial obligations of approximately
$2.0 million for the completion of a new manufacturing and office building
to be leased on its completion to Flex Products. Separately, Flex Products
has remaining financial obligations of approximately $8.6 million on two
large-scale coating machines and $3.5 million for site, facilities and
leasehold improvements at the end of the first quarter of fiscal 1996. The
Company anticipates that it will obtain mortgage debt financing on the
building being constructed for Flex Products and that Flex Products will
enter into equipment financing arrangements on the coating machines it is
acquiring.
Management believes that the cash on hand at January 28, 1996, cash
anticipated to be generated from future operations, the available funds
from revolving credit arrangements, the anticipated building financing and
Flex Products' equipment financing will be sufficient for the Company,
including the Flex Products subsidiary, to meet near-term working capital
needs, capital expenditures, debt service requirements and payment of
dividends as declared.
INDEPENDENT ACCOUNTANTS' REVIEW
The January 28,1996 consolidated financial statements included in this
filing on Form 10-Q have been reviewed by Deloitte & Touche LLP (which
makes reference to the report of other accountants), independent
accountants, in accordance with established professional standards and
procedures for such a review.
The report of Deloitte & Touche LLP commenting on their review follows.
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
and Stockholders of
Optical Coating Laboratory, Inc.
Santa Rosa, California
We have reviewed the accompanying condensed consolidated balance sheet of
Optical Coating Laboratory, Inc. and subsidiaries as of January 31, 1996,
and the related condensed consolidated statements of income and cash flows
for the three-month periods ended January 31, 1996 and 1995 and the related
condensed consolidated statement of stockholders' equity for the three-
month period ended January 31, 1996. These financial statements are the
responsibility of the Company's management. We were furnished with the
report of other accountants on their review of the interim financial
information of Flex Products, Inc. (a consolidated subsidiary), whose total
assets constituted, 20% of consolidated total assets at January 31, 1996
and whose total revenues constituted 17% of consolidated total revenues for
the three-month period ended January 31, 1996.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists of applying analytical review procedures to
financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.
Based on our review and the report of other accountants, we are not aware
of any material modifications that should be made to such condensed
consolidated financial statements for them to be in conformity with
generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Optical Coating Laboratory,
Inc. and subsidiaries as of October 31, 1995, and the related consolidated
statements of income, stockholders' equity, and cash flows for the year
then ended (not presented herein); and in our report dated December 18,
1995, we expressed an unqualified opinion on those consolidated financial
statements based on our audit. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of October 31,
1995 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
San Francisco, California
February 14, 1996
PART II. OTHER INFORMATION
Item 1. Legal Proceedings Page(s)
None
Item 2. Changes in Securities
None
Item 3. Defaults upon 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) The following are filed as Exhibits to this
Quarterly Report. The numbers refer to the
Exhibit Table of Item 601 of Regulation S-K.
(2) None
(4) None
(11)* Computation of per share earnings
for the three months ended January 28,
1996 and January 29, 1995.
(15)* Letter of Deloitte & Touche LLP regarding
unaudited interim financial information.
(18) None
(19)* Items not previously filed are designated
by an asterisk.
(22) None
(23) None
(24) None
(27) None
(b) Reports on Form 8-K filed for the three
months ended January 28, 1996.
None
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 and in the capacity indicated.
OPTICAL COATING LABORATORY, INC.
(Registrant)
/s/ JOHN M. MARKOVICH
Date: March 14, 1996 John M. Markovich
Vice President Finance
and Chief Financial Officer
(Principal Financial Officer)
EXHIBIT 11.
COMPUTATION OF EARNINGS PER SHARE
(Dollars in thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED
JANUARY 28, JANUARY 29,
1996 1995
PRIMARY SHARES:
Average common shares outstanding 9,514 8,978
Common equivalent shares 605 47
10,119 9,025
Net income $ 740 $1,824
Dividend on preferred stock (240)
Net earnings applicable to
common stock $ 500 $1,824
Net income per common and common
equivalent share, primary $ .05 $ .20
FULLY DILUTED SHARES:
Average common shares outstanding 9,514 8,978
Common equivalent shares 605 117
Potential dilution of convertible
preferred stock 1,143
11,262 9,095
Net earnings applicable to
common stock $ 500 $1,824
Add back dividend on
preferred stock 240
Net income for calculating
fully diluted earnings per share $ 740 $1,824
Net income per common and common
equivalent share, fully diluted $ .07 $ .20
Note: Fully diluted earnings per common and common equivalent share do not
result in dilution of three percent or more or are anti-dilutive and are,
therefore, not presented separately in the consolidated statements of
income.
EXHIBIT 15
To the Board of Directors and Stockholders
of Optical Coating Laboratory, Inc.
Santa Rosa, California
We have reviewed, in accordance with standards established by the
American Institute of Certified Public Accountants, the unaudited
interim financial information of Optical Coating Laboratory, Inc. and
subsidiaries for the periods ended January 31, 1996 and 1995 as
indicated in our report (which report makes reference to the report of
other accountants), dated February 14, 1996. Because we did not
perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended January 31,
1996, is incorporated by reference in Registration Statements
No. 33-41050, No. 33-26271, No. 33-12276, No. 33-48808, No. 33-65132,
and No. 33-60891 on Forms S-8 and Registration Statement No. 33-61177
and No. 33-65319 on Form S-3.
We are also aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act, is not considered a part of the
Registration Statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
Deloitte & Touche LLP
San Francisco, California
March 14, 1996
