FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended: April 28, 1995
Commission File Number: 0-16304
OPTEK TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
State of Delaware
(State or other jurisdiction of incorporation or organization)
75-1962405
(I.R.S. Employer Identification No.)
1215 West Crosby Road, Carrollton, Texas 75006
(Address of principle executive offices) (Zip Code)
(214) 323-2200
(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 [X] No [ ]
Number of common shares outstanding as of April 28, 1995:
3,297,195 par value $.01 per share
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Optek Technology, Inc. Consolidated Balance Sheets as of April 28, 1995
(unaudited) and October 28, 1994.
Optek Technology, Inc. Consolidated Statements of Operations (unaudited)
for the Three Months and Six Months Ended April 28, 1995 and April 29, 1994.
Optek Technology, Inc. Consolidated Statements of Cash Flows (unaudited) for
the Six Months Ended April 28, 1995 and April 29, 1994.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
Item 6. Exhibits and Reports on Form 8-K.
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<TABLE>
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands)
FORM 10-Q
PART I
<CAPTION>
Assets April 28, 1995 Oct 28, 1994
(unaudited)
<S> <C> <C>
Current Assets:
Cash $ 667 $ 722
Accounts receivable, net of
allowance for doubtful accounts &
customer returns of $717 in 1995
and $738 in 1994 6,488 6,689
Inventories (note 2) 4,573 5,517
Prepaid expenses 100 61
_______ _______
Total current assets 11,828 12,989
_______ _______
Property, plant and equipment,
at cost 33,274 32,761
Less accumulated depreciation (19,800) (18,576)
_______ _______
Net property, plant and equip 13,474 14,185
Assets held for disposal at the
lower of cost or
estimated net realizable value 281 297
Other assets 376 356
_______ _______
Total assets $25,959 $27,827
</TABLE>
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<TABLE>
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands except share and per share data)
FORM 10-Q
PART I
<CAPTION>
Liabilities and Stockholders'
Deficit April 28, 1995 Oct 28, 1994
(unaudited)
<S> <C> <C>
Current Liabilities:
Checks not presented for payment $ 823 $ 749
Accounts payable 1,698 1,938
Accrued expenses 5,017 4,996
Accrued restructuring costs 503 476
______ ______
Total current liabilities 8,041 8,159
Long-term debt 24,088 28,692
Other liabilities 83 124
_______ ______
Total liabilities 32,212 36,975
Stockholders' deficit:
Preferred Stock, $.01 par value.
Authorized 1,000,000 shares;
none issued. - -
Common stock, $.01 par value.
Authorized 12,000,000 shares;
issued 3,297,195 shares in
1995 and 3,232,861 shares
in 1994 33 32
Additional paid-in capital 12,909 12,898
Accumulated deficit (19,195) (22,078)
Total stockholders' deficit (6,253) (9,148)
_______ _______
Total liabilities and
stockholders' deficit $25,959 $27,827
<FN>
(See accompanying notes to consolidated financial statements)
</TABLE>
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<TABLE>
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands except share and per share data)
FORM 10-Q
PART I
<CAPTION>
THREE MONTHS ENDED
April 28, 1995 April 29, 1994
<S> <C> <C>
Net sales $15,584 $14,479
Cost and expenses:
Cost of sales 9,595 9,445
Provision for excess and
obsolete inventories 137 300
Product development expenses 116 174
Engineering expenses 835 815
Selling expenses 1,046 1,067
General and administrative
expenses 753 799
_______ ______
Total cost and expenses 12,482 12,600
Operating income 3,102 1,879
Other expense:
Interest expense 801 936
Other expense, net 289 56
______ ______
Total other expenses 1,090 992
Earnings before income tax 2,012 887
Income tax expense 10 -
______ ______
Net earnings $ 2,002 $ 887
Earnings per common and common
equivalent shares outstanding $ 0.29 $ 0.13
Weighted average number of common
and common equivalent shares
outstanding 6,975,906 7,160,116
<FN>
(See accompanying notes to consolidated financial statements)
</TABLE>
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<TABLE>
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands except share and per share data)
FORM 10-Q
PART I
<CAPTION>
SIX MONTHS ENDED
April 28, 1995 April 29, 1994
<S> <C> <C>
Net sales $28,834 $26,699
Cost and expenses:
Cost of sales 18,424 18,047
Provision for excess and
obsolete inventories 288 510
Product development expenses 249 275
Engineering expenses 1,550 1,522
Selling expenses 2,031 1,988
General and administrative
expenses 1,409 1,365
______ ______
Total cost and expenses 23,951 23,707
______ ______
Operating income 4,883 2,992
Other expense:
Interest expense 1,690 1,879
Other expense, net 288 55
______ ______
Total other expenses 1,978 1,934
______ ______
Earnings before income tax 2,905 1,058
______ ______
Income tax expense 22 -
______ ______
Net earnings 2,883 1,058
______ ______
Earnings per common and common
equivalent shares outstanding $ 0.42 $ 0.16
Weighted average number of
common and common equivalent
shares outstanding 6,971,766 7,160,116
<FN>
(See accompanying notes to consolidated financial statements)
</TABLE>
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<TABLE>
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
FORM 10-Q
PART I
<CAPTION>
SIX MONTHS ENDED
April 28, 1995 April 29, 1994
<S> <C> <C>
Cash flows from operating
activities:
Net earnings $ 2,883 $ 1,058
Adjustment to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and amortization 1,316 1,356
(Gain) loss on sale or
retirement of property,
plant and equipment (2) 159
Reduction in value of assets
held for disposal - 30
Changes in assets and
liabilities:
Accounts receivable 201 14
Inventory, prepaid expense
and other assets 870 1,124
Accounts payable, accrued
expenses and other
liabilities (225) (801)
______ ______
Net cash provided by operating
activities 5,043 2,940
Cash flows from investing
activities:
Purchase of property, plant
and equipment (583) (139)
Proceeds from sale of property,
plant and equipment 2 169
Net cash provided by (used in)
investing activities (581) 30
______ ______
Cash flows from financing
activities:
Proceeds from long-term debt 6,461 6,656
Repayment of long-term debt (11,065) (9,628)
Net proceeds from exercise
of stock options 12 -
Other financing activities 75 (5)
______ ______
Net cash used in financing
activities (4,517) (2,977)
Effect of exchange rate changes
on monetary items - 18
Net increase (decrease) in cash (55) 11
Cash at beginning of period 722 658
_______ _______
Cash at end of period $ 667 $ 669
_______ _______
Interest payments $ 1,691 $ 1,768
_______ _______
Income tax payments $ 2 $ -
<FN>
(See accompanying notes to consolidated financial statements)
</TABLE>
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
April 28, 1995
FORM 10-Q
PART I
NOTE 1
The interim consolidated financial statements presented
herein were prepared in accordance with generally accepted
accounting principles without audit except as noted and
contain all adjustments, consisting of only normal and
recurring adjustments, which are, in the opinion of management,
necessary for a fair presentation. Results for the periods
reported are not necessarily indicative of results to be obtained
for the entire fiscal year.
NOTE 2
A summary of inventories at April 28, 1995 and October 28,
1994 follows:
April 28, 1995 October 28, 1994
Finished Goods $1,032 $1,267
Work-in-process 3,601 4,504
Raw materials 2,828 2,776
Reserves for excess and
obsolete inventory (2,888) (3,030)
______ ______
$4,573 $5,517
NOTE 3
The registrant has no material pending legal proceedings.
NOTE 4
Earnings per common share is based on the weighted average
number of shares and, when dilutive, equivalent shares outstanding
during each of the periods presented. Primary earnings per share
were substantially the same as fully diluted earnings per share
during the second quarter of fiscal 1995 and fiscal 1994.
Weighted average common shares and common share equivalents
were 6,971,766 at April 28, 1995 and 7,160,116 at April 29, 1994.
The calculation of net earnings per share in 1995 and 1994 uses
the modified treasury stock method.
NOTE 5
Other notes have been omitted pursuant to Rule 10-01 (a) (5)
of Regulation S-X.
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Changes in Results of Operations
Net sales for the second quarter of 1995 were $15.6 million
compared to $14.5 million in the second quarter of 1994
representing an increase of $1.1 million or 8%. All product
lines are ahead of 1994 with commercial products up 4%,
automotive products also up 4% and Hi-Rel products up 43%.
Cost of sales in the second quarter of 1995 were $9.6 million,
or 62% of sales, compared to the second quarter of 1994 which
was $9.5 million or 65% of sales. The improvement was largely
due to favorable manufacturing absorbtion rates resulting from
the increased sales volume as well as excellent results from
ongoing process improvements and favorable exchange rates in
Mexico which lower the cost of manufacturing in the Company's
Mexican facilities.
Product development and engineering expenses for the second
quarter of 1995 were $1.0 million, or 6% of sales, compared to
$1.0 million, or 7%, in the same period of 1994.
Selling, General and Administrative expenses were $1.8 million,
or 12% of sales; this compared to $1.9 million, or 13% of sales,
in the prior year.
Other expense, which consists primarily of interest expense,
was $1.0 million in the second quarter of 1995 and $1.0 million
in the same period of 1994.
As a result, the net income for the second quarter of 1995 was
$2.0 million versus $.9 million for the second quarter of 1994.
Net sales for the first six months of 1995 were $28.8 million
compared to $26.7 million for the same period in 1994, an 8%
increase. The increase was across all product lines with
commercial products up 5%, automotive products up 9% and
Hi-Rel products were up 29%.
Cost of sales for the first half of 1995 was $18.4 million,
or 64% of Sales; this compares to $18.0 million, or 68% of sales,
in 1994. Again, the improvement cost of sales as a percent of
sales is due to higher sales volume, process improvements and
favorable exchange rates in Mexico.
Product development and engineering in the first six months of
1995 were $1.8 million, or 6% of sales, compared to $1.8 million,
or 7%, in 1994.
Selling, General and Administrative expenses were $3.4 million,
or 12% of Sales, for the first six months of 1995; this compares
to $3.4 million, or 13%, for the first half of 1994.
Other expenses, consisting primarily of interest expense,
were $2.0 million in the first half of 1995 and $1.9 million in 1994.
The resulting net earning for the first six months of 1995 were
$2.9 million compared to $1.1 million in the same period of 1994.
<PAGE>
Liquidity and Capital Resources
As reflected in the Company's Consolidated Statements of Cash Flows,
Optek generated about $5 million from operations, almost all of which
was applied to reduce the Company's outstanding debt. However,
the largest single source and use of cash flow continues to be
the secured financing obtained under the Company's credit agreement.
The credit agreement provided a $38.8 million line of credit
consisting of a $10.5 million working capital line and a
$28.3 million revolving term loan. Amounts drawn on the working
capital line bear interest at 1 1/2% over the reference rate announced
from time to time by the First National Bank of Chicago, Chicago,
Illinois and mature on October 31, 1995, with three one year
extensions if no default exists under the loan documents at maturity.
Interest accrues on the revolving line of credit at rates specific
to various tranches.
The revolving line was orignally scheduled to reduce to $27,300,000
as of November 1, 1994, with additional reductions in the revolving
line to occur in the event that the Company used less than the
available line for the sixty days preceding the scheduled reduction
date. On November 2, 1994, the commitment on the revolving line was
reduced to approximately $21,900,000 through operation of these
provisions. Additional scheduled reductions in the revolving line
(which may be increased by operation of the previously described
provisions) are as follows:
Amount of Reduction Scheduled Date
$ 1,750,000 11/01/96
$ 2,500,000 11/01/97
$ 16,400,000 10/31/98
The Company is currently in compliance with the financial and
other covenants contained in its loan documents. Although Optek
is dependent upon this financing to fund its operations and its
ability to fund research and development and capital expenditures
is constrained by the terms of the loan documents, management
believes that its working relationship with its lender is good
and that these facilities will be adequate to finance the Company's
needs for the foreseeable future.
<PAGE>
OPTEK TECHNOLOGY, INC.
PART II. OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security-Holders.
The Annual Meeting of Stockholders of Optek Technology, Inc. was
held on March 21, 1995, at which time the stockholders were asked
to vote upon election of Directors and amendments to the Optek
Technology, Inc. Long-Term Stock Investment Plan (the "Plan").
All Directors of the Company were reelected. The votes cast in
such election were tabulated as follows:
Nominees For Votes Withheld
Grant A. Dove 2,930,529 9,600
Thomas R. Filesi 2,928,779 13,100
Rodes Ennis 2,930,779 9,100
Michael E. Cahr 2,920,779 29,100
William H. Daughtrey, Jr. 2,921,029 28,600
Wayne Stevenson 2,931,029 8,600
The votes to approve the amendment to the Plan to increase from
1,000,000 to 1,500,000 the number of shares for which options may
be granted under the Plan were tabulated as follows:
For Against Abstain
1,444,252 849,603 17,240
Therefore, the amendment was approved. Actual issuance of options
is subject to the approval of the Company's secured lender under
the Company's loan documents.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: EX-27 .FINANCIAL DATA SCHEDULE.
<PAGE>
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on to behalf of the
undersigned thereunto duly authorized.
Optek Technology, Inc.
Date: 5/18/95 By: Thomas R. Filesi
Thomas R. Filesi
President and CEO
(Principal Executive Officer)
Date: 5/18/95 By: D. Vinson Marley
D. Vinson Marley
Vice President - Finance
(Principal Financial Officer)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> October-28-1994
<PERIOD START> October-29-1994
<PERIOD END> April-28-1995
<CASH> 667
<SECURITIES> 0
<RECEIVABLES> 6488
<ALLOWANCES> (717)
<INVENTORY> 4573
<CURRENT-ASSETS> 11828
<PP&E> 33274
<DEPRECIATION> 19800
<TOTAL-ASSETS> 25959
<CURRENT-LIABILITIES> 32212
<BONDS> 0
<COMMON> 33
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0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25959
<SALES> 28834
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<TOTAL-COSTS> 23951
<OTHER-EXPENSES> 1978
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1690
<INCOME-PRETAX> 2905
<INCOME-TAX> 22
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<NET-INCOME> 2883
<EPS-PRIMARY> .42
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</TABLE>
