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: July 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 July 26, 1996:
3,847,681 par value $.01 per share
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Optek Technology, Inc. Consolidated Balance Sheets as of July 26, 1996
and October 27, 1995.
Optek Technology, Inc. Consolidated Statements of Operations for the
Three Months and Nine Months Ended July 26, 1996 and July 28, 1995.
Optek Technology, Inc. Consolidated Statements of Cash Flows for the
Nine Months Ended July 26, 1996 and July 28, 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 except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Assets July 26, 1996 October 27, 1995
<S> <C> <C>
Current Assets:
Cash $ 557 $ 928
Accounts receivable, net
of allowance for doubtful
accounts and customer
returns of $1,313 in 1996
and $975 in 1995 6,599 6,931
Inventories (note 2) 5,607 5,284
Prepaid expenses 127 60
Total current assets 12,890 13,203
Net property, plant and equipment 11,524 12,664
Other assets 102 198
_______ _______
$24,516 $26,065
</TABLE>
(continued)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Balance Sheets
(in thousands except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity July 26, 1996 October 27, 1995
<S> <C> <C>
Current Liabilities:
Checks not presented for payment $ 806 $ 979
Accounts payable 1,946 2,339
Accrued expenses 4,941 5,857
Total current liabilities 7,693 9,175
Long-term debt 6,353 15,996
Other liabilities 95 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
3,847,681 shares in 1996 and
3,444,624 shares in 1995 39 34
Additional paid-in capital 13,345 13,016
Accumulated deficit (3,009) (12,240)
Total stockholders' equity 10,375 810
_______ _______
$24,516 $26,065
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(in thousands except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
July 26, 1996 July 28, 1995
<S> <C> <C>
Net sales $16,834 $16,497
Cost and expenses:
Cost of sales 9,464 9,305
Product development expenses 464 170
Engineering expenses 822 834
Selling expenses 1,184 1,120
General and administrative expenses 685 821
Total cost and expenses 12,619 12,250
______ ______
Operating income 4,215 4,247
Other (income) expense:
Interest expense 267 721
Other, net 29 (38)
Total other expenses 296 683
______ ______
Earnings before income taxes 3,919 3,564
Income tax expense 352 94
_______ _______
Net earnings $ 3,567 $ 3,470
Earnings per common share $ 0.46 $ 0.49
Weighted average number of common
shares and common equivalent
shares outstanding 7,753,359 6,992,470
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Operations
(in thousands except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
July 26, 1996 July 28, 1995
<S> <C> <C>
Net sales $49,925 $45,331
Cost and expenses:
Cost of sales 29,108 28,017
Product development expenses 1,006 419
Engineering expenses 2,730 2,384
Selling expenses 3,821 3,151
General and administrative expenses 2,342 2,230
Total cost and expenses 39,007 36,201
______ ______
Operating income 10,918 9,130
Other (income) expense:
Interest expense 1,124 2,411
Other, net (118) 250
Total other expenses 1,006 2,661
______ ______
Earnings before income taxes 9,912 6,469
Income tax expense 681 116
______ ______
Net earnings $ 9,231 $ 6,353
Earnings per common share $ 1.21 $ 0.91
Weighted average number of common
shares and common equivalent
shares outstanding 7,625,909 6,978,667
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
July 26, 1996 July 28, 1995
<S> <C> <C>
Cash flows from operating
activities:
Net earnings $ 9,231 $ 6,353
Adjustment to reconcile
net earnings to net cash
provided by operating activities:
Depreciation and amortization 2,055 2,031
Gain on sale of property,
plant and equipment - (23)
Changes in assets and liabilities:
Accounts receivable 332 (66)
Inventories, prepaid expenses
and other assets (359) 759
Accounts payable, accrued
expenses and other liabilities (1,037) 77
______ ______
Net cash provided by
operating activities 10,222 9,131
Cash flows from investing activities:
Purchase of property, plant and
equipment (1,111) (981)
Proceeds from sale of property,
plant and equipment - 23
_______ ______
Net cash used in investing
activities (1,111) (958)
Cash flows from
financing activities:
Net repayment under
long-term bank debt (9,643) (8,556)
Net proceeds from exercise
of stock options 334 35
Other financing activities (173) 217
_______ ______
Net cash used in financing
activities (9,482) (8,304)
Net decrease in cash (371) (131)
Cash at beginning of period 928 722
Cash at end of period $ 557 $ 591
Interest payments $1,562 $2,466
Income tax payments $ 605 $ 32
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
FORM 10-Q
PART I
OPTEK TECHNOLOGY, INC.
Notes To Consolidated Financial Statements
July 26, 1996
(Unaudited)
NOTE 1
The condensed consolidated financial statements of Optek Technology,
Inc. (the "Company") are unaudited and reflect all adjustments,
consisting of normal recurring adjustments, which are, in the opinion
of management, necessary for a fair presentation of the results for
the interim periods. Those condensed consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the
year ended October 27, 1995. The results of operations for the nine
months ended July 26, 1996 are not necessarily indicative of the
results for the entire year ending October 25, 1996.
NOTE 2
The components of inventories in thousands of dollars are as follows:
<TABLE>
<CAPTION>
July 26, 1996 October 27, 1995
<S> <C> <C>
Finished Goods $1,193 $1,186
Work-in-process 3,468 3,393
Raw materials 3,063 3,158
Reserves for surplus and
obsolete inventory (2,117) (2,453)
_______ ______
$5,607 $5,284
</TABLE>
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 through the third quarter
of fiscal 1996 and fiscal 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 third quarter of fiscal 1996 were $16.8 million,
up 2.0% from sales of $16.5 million for the same period of fiscal
1995. An increased demand for magnetic sensor (Hall Effect) products
related to a new automotive theft deterrent system produced a $1.0
million increase in automotive sales versus the same quarter in fiscal
1995. When compared to the third quarter of fiscal 1995 Commercial
sales were down slightly, by $.2 million, and Hi-Rel sales decreased
by $.5 million.
Cost of sales for the third quarter of fiscal 1996 was $9.5 million,
or 56.2% of net sales versus $9.3 million, or 56.4% in the third quarter
of 1995. The performance in cost of sales essentially repeated the
record performance in the same period of fiscal 1995. The continued
strong performance is the result of containment of increases in
production costs; favorable exchange rates for the Mexican peso; and
continued efforts to improve production cycle times.
Product development costs in the third quarter of 1996 were $.5 million
compared to $.2 million in the same period of fiscal 1995. The increase
is due to spending for development efforts of MR (magneto resistive)
devices, used primarily in the automotive industry; and Fiber Optic
connectors, used in telecommunications.
Engineering costs in the third quarter of 1996 were $.8 million,
essentially equal to engineering costs for the same period in the third
quarter of 1995.
Selling expenses of $1.2 million during the third quarter of 1996 were
7.0% of sales. This expense is essentially the same as the same period
of 1995.
General and administrative expenses of $.7 million, or 4.1% of sales in
the third quarter of 1996 were slightly lower than the $.8 million, or
5.0% of sales, in the third quarter of 1995.
Other expenses of $.3 million, or 1.6% of sales, for the third quarter
of 1996 were down from $.7 million, or 4.4% of sales, for the third
quarter of 1995. This decrease in expense is due primarily to lower
interest expense due to reductions in long term debt.
Income tax expense for the third quarter of 1996 was $.4 million or 2.1%
of sales compared to $.1 million or .6% of sales for the third quarter
of 1995. The increase in the income tax expense is due to the near term
full utilization of NOL carry forward tax benefits. Optek will attain
a fully taxable status in fiscal 1997.
As a result, net earnings for the third quarter of 1996 was $3.6 million,
or $0.46 per share, compared to the third quarter 1995 net earnings of
$3.5 million, or $0.49 per share.
<PAGE>
Net sales for the first nine months of fiscal 1996 were $49.9 million,
up 10.1% from sales of $45.3 million for the same period of fiscal 1995.
The year-to-year increase in sales was due to an increased demand for
magnetic sensor (Hall Effect) products related to a new automotive
theft deterrent system and chips used in the production of computer
modems. When compared to the same period of fiscal 1995, Commercial
sales increased by $2.5 million, Automotive sales increased by $2.5
million, and Hi-Rel sales were down slightly, decreasing by $.4
million.
Cost of sales for the first nine months of fiscal 1996 was $29.1
million, or 58.3% of net sales, versus $28.0 million, or 61.8% of
net sales, for the same period of 1995. The improved performance in
cost of sales is primarily the result of containment of increases in
production costs while increasing the level of sales; favorable
exchange rates for the Mexican peso; and continued efforts to improve
production cycle times.
Product development costs for the first nine months of 1996 were
$1.0 million compared to $.4 million in the same period of fiscal 1995.
The increase is due to spending for development efforts of MR (magneto
resistive) devices, used primarily in the automotive industry; and
Fiber Optic connectors, used in telecommunications.
Engineering costs for the first nine months of 1996 were $2.7 million
compared to $2.4 million for the same period of 1995. Most of the
year-to-year increase is due to expenditures for the refurbishment
of engineering offices and lab areas.
Selling expenses of $3.8 million during the first nine months of 1996
were 7.7% of sales compared to $3.2 million, or 7.0% of sales for the
same period in fiscal 1995. The change is due to higher commissions
related to the increase in sales volume and expenditures made during
the second quarter to upgrade and refurbish the sales and customer
service office area.
General and administrative expenses of $2.3 million, or 4.7% of sales
for the first nine months of 1996 compares with $2.2 million, or 4.9%
of sales, in the first nine months of 1995.
Other expenses of $1.0 million, or 2.0% of sales, for the first nine
months of 1996 were down from $2.7 million, or 5.9% of sales, for the
first nine month of 1995. This decrease in expense is due primarily
to lower interest expense resulting from the reduction of long term debt.
Income tax expense for the first nine months of 1996 was $.7 million
or 1.4% of sales compared to $.1 million or .3% of sales for the first
nine months of 1995. The increase in the income tax expense is due to
the near term full utilization of NOL carry forward tax benefits. Optek
will attain a fully taxable status in fiscal 1997.
<PAGE>
As a result, net earnings for the first nine months of 1996 was
$9.2 million, or $1.21 per share, compared to the first nine months of
1995 net earnings of $6.4 million or $0.91 per share.
Liquidity and Capital resources
As reflected in the Company's consolidated cash flows, Optek generated
approximately $10.2 million in cash from operations for the first nine
months of fiscal year 1996 versus $9.1 million in the same period of
fiscal 1995. The largest single use of cash continues to be the
reduction of the Company's outstanding debt, $9.6 million in the first
nine months of the year. The year to year improvement in cash flows was
a direct result of the factors discussed 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 Company is currently in compliance with all financial
and other covenants contained in its loan documents.
The revolving credit 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 sixty days preceding that 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.
At July 26, 1996, the Company's total remaining debt under these
facilities was $6,353,000. Therefore, the Company anticipates that
the revolving line will terminate at November 1, 1996.
Although the Company'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: August 19, 1996 By: /s/ Thomas R. Filesi
Thomas R. Filesi
President and CEO
(Principal Executive Officer)
Date: August 19, 1996 By: /s/ Daniel M. Bankus
Daniel M. Bankus
Director of Finance
and Corporate Controller
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
SEC Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-25-1996
<PERIOD-END> JUL-26-1996
<CASH> 557
<SECURITIES> 0
<RECEIVABLES> 6599
<ALLOWANCES> 1383
<INVENTORY> 5607
<CURRENT-ASSETS> 12890
<PP&E> 26573
<DEPRECIATION> 15049
<TOTAL-ASSETS> 24516
<CURRENT-LIABILITIES> 7693
<BONDS> 0
0
0
<COMMON> 39
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 24516
<SALES> 16834
<TOTAL-REVENUES> 16834
<CGS> 9464
<TOTAL-COSTS> 12619
<OTHER-EXPENSES> 29
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 267
<INCOME-PRETAX> 3919
<INCOME-TAX> 352
<INCOME-CONTINUING> 3567
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3567
<EPS-PRIMARY> 0.46
<EPS-DILUTED> .46
</TABLE>
