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: January 26, 1996
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.
X
Yes No
Number of common shares outstanding as of January 26, 1996:
3,520,880 par value $.01 per share
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Optek Technology, Inc. Consolidated Balance Sheets as of
January 26, 1996 (unaudited) and October 27, 1995.
Optek Technology, Inc. Consolidated Statements of Operations
(unaudited) for the Three Months Ended January 26, 1996 and
January 27, 1995.
Optek Technology, Inc. Consolidated Statements of Cash Flows
(unaudited) for the Three Months Ended January 26, 1996 and
January 27, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II OTHER INFORMATION
Item 5. Other information.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
Assets January 26, 1996 October 27, 1995
(unaudited)
<S> <C> <C>
Current Assets:
Cash $ 618 $ 928
Accounts receivable, net of
allowance for doubtful
accounts and customer
returns of $1,097 in 1996
and $975 in 1995 5,996 6,931
Inventories (note 2) 5,587 5,284
Prepaid expenses 72 60
Total current assets 12,273 13,203
Property, plant and
equipment, at cost 33,581 33,282
Less accumulated depreciation 21,228 20,618
_______ _______
12,353 12,664
Assets held for disposal at
the lower of cost or esti-
mated net realizable valu 102 141
Other assets 40 57
______ _____
$24,768 $26,065
(continued)
</TABLE>
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Liabilities and Stockholders'
Equity
January 26, 1996 October 27, 1995
(unaudited)
<S> <C> <C>
Current Liabilities:
Checks not presented for
payment $ 1,131 $ 979
Accounts payable 1,632 2,339
Accrued expenses 4,702 5,857
______ _______
Total current liabilities 7,465 9,175
Long-term debt 14,321 15,996
Other liabilities 84 84
Stockholders' equity:
Preferred Stock, $.01 par
value. Authorized 1,000,000
shares; none issued. -
Common stock, $.01 par value.
Authorized 12,000,000 shares;
issued 3,520,880 shares in
1996 and 3,444,624 shares
in 1995 35 34
Additional paid-in capital 13,058 13,016
Accumulated deficit (10,195) (12,240)
______ ______
Total stockholders' equity 2,898 810
______ ______
$24,768 $26,065
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands except share and per share data)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
January 26, 1996 January 27, 1995
<S> <C> <C>
Net sales $15,040 $13,250
Cost and expenses:
Cost of sales 9,275 8,939
Product development expenses 195 131
Engineering expenses 948 700
Selling expenses 1,297 962
General and administrative
expenses 826 737
Total cost and expenses 12,541 11,469
______ ______
Operating income 2,499 1,781
Other (income) expense:
Interest expense 449 889
Other, net (50) (1)
_____ ______
Total other expenses 399 888
Earnings before income
taxes 2,100 893
Income tax expense 55 12
_____ ______
Net earnings $ 2,045 $ 881
Earnings per common share $ 0.28 $ 0.13
Weighted average number of
common shares and common
equivalent shares outstanding 7,420,683 6,967,625
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
January 26, 1996 January 27, 1995
<S> <C> <C>
Cash flows from operating
activities:
Net earnings $ 2,045 $ 881
Adjustment to reconcile net
earnings to net cash
provided by operating
activities:
Depreciation and amorti-
zation 618 665
Gain on sale of property,
plant and equipment - (1)
Changes in assets and
liabilities:
Accounts receivable 935 861
Inventories, prepaid expenses
and other assets (298) 655
Accounts payable, accrued
expenses and other
liabilities (1,822) (1,972)
Net cash provided by
operating activities 1,478 1,089
Cash flows from investing
activities:
Purchase of property, plant
and equipment (307) (363)
Proceeds from sale of
property, plant and equipment - 1
_____ _____
Net cash used in investing
activities (307) (362)
Cash flows from financing
activities:
Net repayment under
long-term bank debt (1,675) (1,204)
Net proceeds from exercise of
stock options 42 6
Other financing activities 152 270
_____ _____
Net cash used in
financing activities (1,481) (928)
Net increase (decrease) in cash (310) (201)
Cash at beginning of period 928 722
_____ _____
Cash at end of period $ 618 $ 521
Interest payments $ 480 $ 896
Income tax payments $ - $ 2
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 26, 1996
NOTE 1
The interim consolidated financial statements presented herein were
prepared in accordance with generally accepted accounting principles
without audit 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
The components of inventories in thousands of dollars are as follows:
January 26, 1996 October 27, 1995
Finished Goods $1,156 $1,186
Work-in-process 3,582 3,393
Raw materials 3,384 3,158
Reserves for surplus and
obsolete inventory (2,535) (2,453)
_____ _____
$5,587 $5,284
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 and
fully diluted earnings per share were substantially the same for
the first quarter of fiscal 1996 and fiscal 1995. Weighted average
common shares and common share equivalents when dilutive were
7,420,683 at January 26, 1996 and 6,967,625 at January 27, 1995.
The calculation of net earnings per share in 1996 and 1995 uses the
modified treasury stock method.
NOTE 5
Other notes have been omitted pursuant to Rule 10-01 (a) (5) of
Regulation S-X.
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Changes in Results of Operations
Net sales for the first quarter of 1996 were $15.0 million, up 14%
compared to the prior year net sales of $13.3 million. The
year-to-year increase was the result of both an increase in demand for
chips used in the production of computer modems and an increase in
magnetic sensor components (Hall Effect) related to a new automotive
theft-deterrent system. Commercial products, including chips, were up
$1.1 million, or 11%; automotive products were up $.9 million, or 44%;
and Hi-Rel (high reliability) products were down $.2 million, or 13%.
Cost of sales was $9.3 million, or 62% of sales, in the first quarter of
1996 versus $8.9 million, or 67%, during the comparable period of 1995.
This results in gross margin of 38% in 1996 versus 33% in 1995. This
improvement is the result of increased production volumes without a
corresponding increase in fixed costs, favorable exchange rates in Mexico,
cost reductions related to continued improvements in manufacturing cycle
times and favorable results from numerous other cost reduction programs.
Product development and engineering expense during the first quarter of
1996 was $1.1 million, or 8% of sales, compared to $.8 million, or 6%
of sales in the previous year. The increase is related to the addition
of resources to develop and support new programs.
Selling, general and administrative expenses in the first quarter of
1996 were $2.1 million, or 14% of sales. This compared to $1.7
million, or 13% of sales, during the same period of 1995 and is in
support of increasing sales volumes.
Operating income for the quarter was $2.5 million, or 17% of sales,
compared to $1.8 million, or 13% of sales, in the first quarter of
1995. The improvement from 1995 was primarily the result of the
aforementioned increase in sales volume and improvement in cost of sales.
Other expenses, consisting primarily of interest expense, were $.4
million in the first quarter of 1996 compared to $.9 million in 1995.
This decrease in expenses is the result of the continued reduction in
long term debt.
As a result of the factors discussed above, net earnings for the first
quarter of 1996 were $2.0 million versus $.9 million in the first
quarter of 1995.
<PAGE>
Liquidity and Capital Resources
_______________________________
As reflected in the Company's consolidated statements of cash flows,
Optek generated approximately $1.5 million in cash from operations
in the first quarter of fiscal year 1996. The largest single use of
cash flow continues to be the reduction of the Company's outstanding
debt, approximately $1.7 million in the current quarter. Operating
cash flows were $1.1 million in the first quarter of fiscal 1995.
The year-to-year improvement was a direct result of the factors
discussed above under the heading of Changes in Results of Operations.
A credit agreement with a financial institution at January 20, 1994,
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, 1996, with two
one year extensions if no default exists under the loan documents at
maturity.
The revolving line was scheduled to reduce to $20,650,000 as of
November 1, 1995, with additional reductions in the revolving line
to occur in the event that the Company required less than the available
line for the sixty days preceding a scheduled reduction date. On
November 1, 1995, the commitment on the revolving line was reduced to
approximately $8,000,000 through operation of these provisions. The
final scheduled reduction in the revolving line of $8,000,000 is to occur
October 31, 1998.
The Company is currently in compliance with the financial and other
covenants contained in its loan documents. Although Optek's 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 5. Other Information.
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None
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: February 14, 1996 By: /s/ Thomas R. Filesi
Thomas R. Filesi
President and CEO
(Principal Executive Officer)
Date: February 14, 1996 By: /s/ D. Vinson Marley
D. Vinson Marley
Vice President - Finance
(Principal Financial Officer)
